Exhibit 4.12
================================================================================
TESORO PETROLEUM CORPORATION
SENIOR SECURED TERM LOANS DUE 2008
8% SENIOR SECURED NOTES DUE 2008
PLEDGE AND SECURITY AGREEMENT
Dated as of April 17, 2003
================================================================================
TABLE OF CONTENTS
PAGE
----
ARTICLE I
DEFINITIONS; PRINCIPLES OF CONSTRUCTION
SECTION 1.01. Defined Terms.......................................................................... 2
ARTICLE II
SECURITY INTEREST
SECTION 2.01. Grant of Security Interest............................................................. 6
SECTION 2.02. Retention of Certain Rights............................................................ 8
SECTION 2.03. Obligations Secured.................................................................... 8
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Jurisdiction of Organization........................................................... 1
SECTION 3.02. Patents................................................................................ 1
ARTICLE IV.
COVENANTS OF GRANTORS
SECTION 4.01. Delivery of Instruments................................................................ 1
SECTION 4.02. UCC Article 8.......................................................................... 1
SECTION 4.03. Preservation of Value; Limitation of Liens............................................. 1
SECTION 4.04. Defense of Collateral.................................................................. 1
SECTION 4.05. Maintenance of Insurance............................................................... 1
SECTION 4.06. Maintenance of Perfected Security Interest; Further Documentation...................... 2
SECTION 4.07. Change of Name; Change of Jurisdiction of Organization................................. 2
SECTION 4.08. Post Closing Collateral................................................................ 3
ARTICLE V
RIGHTS AND REMEDIES
SECTION 5.01. Event of Default Defined............................................................... 3
SECTION 5.02. Remedies Upon Event of Default......................................................... 3
SECTION 5.03. Compliance With Limitations and Restrictions; No Discount.............................. 5
SECTION 5.04. Registration of Securities............................................................. 6
SECTION 5.05. Right to Cure.......................................................................... 6
SECTION 5.06. No Impairment of Remedies.............................................................. 6
SECTION 5.07. Application of Proceeds................................................................ 7
SECTION 5.08. Foreclosure Waiver..................................................................... 7
SECTION 5.09. Attorney-in-Fact....................................................................... 7
ARTICLE VI
MISCELLANEOUS PROVISIONS
SECTION 6.01. Notices................................................................................ 7
SECTION 6.02. Benefit of Agreement................................................................... 8
SECTION 6.03. No Waiver; Remedies Cumulative......................................................... 8
SECTION 6.04. Severability........................................................................... 8
SECTION 6.05. Amendments............................................................................. 9
SECTION 6.06. Headings............................................................................... 9
SECTION 6.07. Governing Law.......................................................................... 9
SECTION 6.08. CONSENT TO JURISDICTION................................................................ 9
SECTION 6.09. WAIVER OF JURY TRIAL................................................................... 9
SECTION 6.10. Successors and Assigns................................................................. 10
SECTION 6.11. Entire Agreement....................................................................... 10
SECTION 6.12. Survival of Agreements................................................................. 10
ii
SECTION 6.13. Counterparts........................................................................... 10
SECTION 6.14. Integration of Terms................................................................... 10
SECTION 6.15. Effectiveness.......................................................................... 10
SECTION 6.16. Collateral Agent's Obligations......................................................... 10
SECTION 6.17. Additional Obligors.................................................................... 10
iii
EXHIBITS: A Joinder Agreement
B Control Agreement
SCHEDULES: I Intellectual Property
i
This SECURITY AND PLEDGE AGREEMENT, dated as of April 17,
2003, (this "Agreement") is entered into by and among TESORO PETROLEUM
CORPORATION, a Delaware corporation (the "Company"), CERTAIN SUBSIDIARIES OF THE
COMPANY (each a "Grantor" and together with the Company, the "Grantors") and
WILMINGTON TRUST COMPANY, as Collateral Agent (together with its successors in
such capacity, the "Collateral Agent").
RECITALS
1. The Company intends to borrow $200,000,000 in principal amount
of Term Loans (the "Initial Term Loans") under the Term Loan Agreement dated as
of April 17, 2003 (the "Term Loan Agreement") by and among the Company, the
other Grantors, the lenders from time to time party thereto, the Administrative
Agent (together with its successors in such capacity, the "Administrative
Agent") and ▇▇▇▇▇▇▇ ▇▇▇▇▇ Credit Partners L.P., as sole lead arranger, sole
bookrunner and syndication agent.
2. The Company intends to issue $375,000,000 in principal amount
of 8.00% Senior Secured Notes due April 15, 2008 (the "Initial Notes") pursuant
to the Indenture dated as of April 17, 2003 (the "Indenture") by and among the
Company, the other Grantors and The Bank of New York, as Trustee (together with
its successors in such capacity, the "Trustee").
3. Pursuant to the Term Loan Agreement, each Grantor (other than
the Company) guarantees payment of the Initial Term Loans and all other Term
Loan Obligations (the "Term Loan Guarantees"). Pursuant to the Indenture, each
Grantor (other than the Company) guarantees payment of the Initial Notes and all
other Note Obligations (the "Note Guarantees").
4. The Term Loan Agreement and Indenture require the Company and
the other Grantors to secure payment of the Initial Term Loans and the Initial
Notes and other Secured Obligations, Equally and Ratably, by security interests
in the Collateral. Without providing any commitments to the Company as to the
funding of any future indebtedness, the Term Loan Agreement and Indenture permit
the Company from time to time to incur Indebtedness which it is otherwise
permitted to incur under the Term Loan Agreement and Indenture in the form of
additional Term Loans borrowed under the Term Loan Agreement or additional Notes
issued under the Indenture (or both) and to secure such additional Term Loans
and additional Notes, Equally and Ratably with the Initial Term Loans and the
Initial Notes, by such security interests in the Collateral, up to an aggregate
principal amount (including the Initial Term Loans and the Initial Notes) not
exceeding $725,000,000 at any one time outstanding.
5. The Term Loan Agreement and Indenture further require that
such security interests in the Collateral be granted pursuant to the Security
Documents to a collateral agent acting for the benefit of the holders of Term
Loans, Notes and other Secured Obligations. This Agreement sets forth the terms
on which the Collateral Agent has undertaken to accept, hold and enforce such
security interests and all related rights, interests and powers as agent for,
and for the benefit exclusively of, the present and future holders of the Term
Loans, Notes and other Secured Obligations.
NOW THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS; PRINCIPLES OF CONSTRUCTION
SECTION 1.01. Defined Terms.
(a) Capitalized terms used in this Agreement that are defined in
the Term Loan Agreement and Indenture and not otherwise defined herein shall
have the meanings set forth in the Term Loan Agreement and Indenture.
(b) All capitalized terms used in this Agreement that are defined
in Article 9 of the UCC, as in effect on the date of this Agreement in the State
of California, and not otherwise defined herein shall have the meanings therein
set forth.
(c) The following terms shall have the following meanings:
"Associated Leased Terminals" means any terminals or any other
facilities at which any inventory is stored or distributed that are leased by
any Grantor and that are necessary for or used in connection with the operation,
use or maintenance of any of the Existing Refineries.
"Collateral" has the meaning given in Section 2.01 of this Agreement.
"Credit Facility Collateral" means, at any time in respect of any
Credit Facility:
(1) all now owned and hereafter acquired inventory (as defined in
Article 9 of the UCC as in effect in any applicable jurisdiction), all documents
(as defined in Article 9 of the UCC as in effect in any applicable jurisdiction)
related thereto and all rights under any existing or future policy of property
loss or casualty insurance on such inventory;
(2) all now owned and hereafter acquired rights to payment from
inventory sold or leased and services rendered (whether such rights to payment
constitute accounts or payment intangibles, or arise under or in connection with
chattel paper or instruments, each as defined in Article 9 of the UCC in effect
in any applicable jurisdiction, and whether or not such rights to payment
constitute Indebtedness or conform to the underlying contract), together with
(i) all rights in and to any merchandise or goods which such rights to payment
may represent, whether as returned or repossessed goods or otherwise; and (ii)
all Liens, letters of credit, insurance, guarantees and other obligations
securing or supporting such rights to payment;
(3) all now owned and hereafter acquired money, deposit accounts
(as defined in Article 9 of the UCC as in effect in any applicable jurisdiction)
and deposits therein and Cash Equivalents (whether held directly or in
securities accounts (as defined in Article 9 of the UCC as in effect in any
applicable jurisdiction)), except (i) the Asset Sale Proceeds Account and
2
deposits therein and (ii) money, deposit accounts, deposits and Cash Equivalents
(whether held directly or in securities accounts) constituting identifiable
proceeds of Collateral;
(4) all now owned and hereafter acquired rights to payment
constituting intercompany debt obligations (whether such rights to payment
constitute accounts or payment intangibles, or arise under or in connection with
chattel paper or instruments, and whether or not such rights to payment
constitute Indebtedness), together with all Liens, letters of credit, insurance,
guarantees and other obligations securing or supporting such rights to payment;
provided, however, that such intercompany debt obligations shall not include (x)
Specified Intercompany Debt, (y) any Liens, letters of credit, insurance,
guarantees and other obligations securing or supporting Specified Intercompany
Debt or (z) any cash or non-cash proceeds of Specified Intercompany Debt;
(5) all now owned and hereafter acquired rights under contracts
and other general intangibles, but only to the extent necessary, used or useful
in (i) the collection, sale or other disposition of the rights to payment
described in clause (2) above or (ii) the processing, shipment (including any
rights of stoppage in transit), offtake, storage, completion, supply, lease,
sale or other disposition (collectively, "Inventory Disposition Actions") of
inventory which is owned or has been sold as of the date of any such Inventory
Disposition Action; and
(6) all cash and non-cash proceeds (as defined in Article 9 of the
UCC as in effect in any applicable jurisdiction) of the foregoing.
"Excluded Assets" means:
(1) Credit Facility Collateral;
(2) any lease of premises used only as office space or to
warehouse inventory;
(3) all easements, rights-of-way, licenses and other real property
interests for or pertaining to the construction, operation, use or maintenance
of any pipeline over, upon or under land owned by another;
(4) the fixtures and equipment of any pipeline and the Capital
Stock of Tesoro High Plains Pipeline Company if, to the extent that and for as
long as (i) the ownership or operation of such pipeline is regulated by any
federal or state regulatory authority and (ii) under the law applicable to such
regulatory authority the grant of a security interest in such fixtures and
equipment or such Capital Stock, respectively, is prohibited or a security
interest in such fixtures and equipment or such Capital Stock, respectively, may
be granted only after completion of a filing with, or receipt of consent from,
such regulatory authority which has not been effectively completed or received;
provided, however, that (a) such fixtures and equipment or such Capital Stock,
respectively, will be an Excluded Asset only to the extent and for as long as
the conditions set forth in clauses (i) and (ii) in this definition are and
remain satisfied and to the extent such assets otherwise constitute Collateral,
will cease to be an Excluded Asset, and will become subject to the security
interests granted to the Collateral Agent under the Security Documents,
immediately and automatically at such time as the such conditions cease to
exist, including by reason of the effective completion of any required filing or
effective receipt of any required
3
regulatory approval; and (b) unless prohibited by law, the proceeds of any sale,
lease or other disposition of any such fixtures, equipment or Capital Stock that
are Excluded Assets shall not be an Excluded Asset and shall at all times be and
remain subject to the security interests granted to the Collateral Agent under
the Security Documents;
(5) with respect to personal property, any lease, license, permit,
franchise, power, authority or right if, to the extent that and for as long as
(i) the grant of a security interest therein constitutes or would result in the
abandonment, invalidation or unenforceability of such lease, license, interest,
permit, franchise, power, authority or right or the termination of or a default
under the instrument or agreement by which such lease, license, interest,
permit, franchise, power, authority or right is governed and (ii) such
abandonment, invalidation, unenforceability, breach, termination or default is
not rendered ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of
the UCC (or any successor provision) of any relevant jurisdiction or any other
applicable law (including the United States Bankruptcy Code) or principles of
equity; provided, however, that (a) such lease, license, interest, permit,
franchise, power, authority or right will be an Excluded Asset only to the
extent and for as long as the conditions set forth in clauses (i) and (ii) in
this definition are and remain satisfied and to the extent such assets otherwise
constitute Collateral, will cease to be an Excluded Asset, and will become
subject to the security interests granted to the Collateral Agent under the
Security Documents, immediately and automatically at such time as such
conditions cease to exist, including by reason of any waiver or consent under
the applicable instrument or agreement, and (b) the proceeds of any sale, lease
or other disposition of any such lease, license, interest, permit, franchise,
power, authority or right that is or becomes an Excluded Asset shall not be an
Excluded Asset and shall at all times be and remain subject to the security
interests granted to the Collateral Agent under the Security Documents;
(6) with respect to any real property, any lease, license, permit,
franchise, power, authority or right if, to the extent that and for as long as
the grant of a security interest therein (i) requires a third party consent or
(ii) constitutes or would result in the abandonment, invalidation or
unenforceability of such lease, license, interest, permit, franchise, power,
authority or right or the termination of or a default under the instrument or
agreement by which such lease, license, interest, permit, franchise, power,
authority or right is governed; provided, however, that such lease, license,
interest, permit, franchise, power, authority or right will be an Excluded Asset
only to the extent and for as long as the conditions set forth in this
definition are and remain satisfied and to the extent such assets otherwise
constitute Collateral, will cease to be an Excluded Asset, and will become
subject to the security interests granted to the Collateral Agent under the
Security Documents, immediately and automatically at such time as such
conditions cease to exist, including by reason of any waiver or consent under
the applicable instrument or agreement;
(7) all trademarks;
(8) the Marine Services Business;
(9) the Retail Properties; and
4
(10) (a) other property in which a security interest cannot be
perfected by the filing of a financing statement under the UCC and (b) without
duplication, motor vehicles, that have, in the aggregate for all such property
and motor vehicles, a fair market value (as determined in good faith by the
Company) not exceeding $10,000,000.
"Existing Refinery" means any of the six refineries and connected
terminal assets owned on the date hereof by any Grantor and located in or near
Martinez, California, Anacortes, Washington, Kenai, Alaska, Kapolei, Hawaii,
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇.
"Joinder Agreement" means an agreement substantially in form of Exhibit
A hereto.
"Marine Services Business" means (1) all assets involved in the
marketing and distribution of petroleum products and provision of logistical
support services to the marine and offshore exploration and production
industries operating in the Gulf of Mexico, including, without limitation, the
15 terminals located on the Texas and Louisiana coast and all related tugboats,
barges and trucks, provided that such assets are owned by either entity referred
to in clauses (2) or (3) of this definition and such assets are located on or
near either the Texas or Louisiana coast, (2) the Capital Stock of Tesoro Marine
Services Holding Company and (3) the membership interests of Tesoro Marine
Services, LLC; provided that such assets will not include any assets relating to
the sale of petroleum products in bulk and wholesale markets.
"Owned Terminals" means the two terminals owned on the date hereof by
any Grantor and located in Burley, Idaho and Boise, Idaho.
"Pledged Securities" means the Capital Stock designated as follows: (i)
a certificate issued by Tesoro Alaska Pipeline Company to the Company
representing all shares of common stock of such issuer; (ii) a certificate
issued by Kenai Pipe Line Company to Tesoro Alaska Company representing all
shares of common stock of such issuer; and (iii) a certificate issued by Tesoro
High Plains Pipeline Company to the Company representing two thirds of all
shares of common stock of such issuer.
"Pipelines" means collectively (1) the pipelines serving and connected
to the Existing Refineries on the date hereof, which are a 71-mile pipeline from
the Kenai refinery to Anchorage, Alaska, a 24-mile pipeline from ▇▇▇▇▇▇▇ River
Field to the Kenai refinery, a 23-mile pipeline system connected to the Kapolei
refinery and a 700-mile pipeline system in North Dakota and Montana, or (2) any
other pipeline acquired at any time after the date hereof by any Grantor to
serve and that is connected to any of the Existing Refineries.
"Retail Properties" means all assets directly related to the retail
sale of gasoline and diesel fuel in retail markets in the mid-continental and
western United States (including Alaska and Hawaii), including, without
limitation, all related gas stations, convenience stores, merchandise items, tow
trucks, auto maintenance facilities, oil change facilities, and car washes;
provided that such assets will not include any assets relating to the sale of
petroleum products in bulk and wholesale markets.
"Securities Laws" has the meaning given in Section 5.02(c) of this
Agreement.
5
"Specified Intercompany Debt" means (1) intercompany Indebtedness
resulting from the declaration of a dividend or a debt distribution on account
of Capital Stock of a Subsidiary of the Company or a redemption,
reclassification or recapitalization of the Capital Stock of any such Subsidiary
and (2) intercompany Indebtedness resulting from the funding of proceeds of any
transaction raising capital (whether by the issuance of debt or equity) for the
Company or any Subsidiary of the Company as an intercompany loan to the Company
or any such Subsidiary (other than the funding of proceeds of any extension of
credit or borrowing under a Credit Facility), in each case, whether such rights
to payment constitute accounts or payment intangibles, or arise under or in
connection with chattel paper or instruments.
ARTICLE II
SECURITY INTEREST
SECTION 2.01. Grant of Security Interest. To secure the timely payment and
performance in full of its Secured Obligations, whether now outstanding or
hereafter acquired, each Grantor does hereby assign, grant and pledge to the
Collateral Agent, for the benefit of the Secured Parties, as of the date hereof
(or in the case of the property consisting of the Capital Stock of Tesoro High
Plains Pipeline Company, or any property referred to below that is owned by
Tesoro High Plains Pipeline Company, promptly upon the receipt of any necessary
approval required of the North Dakota Public Service Commission) all the estate,
right, title and interest of such Grantor in, to and under the following
property (all of the collateral described in clauses (a) through (i) being
herein collectively referred to as the "Collateral"), including (1) all rights
of each Grantor to receive moneys due and to become due under or pursuant to the
Collateral, (2) all rights of each Grantor to receive return of any premiums for
or proceeds of any insurance, indemnity, warranty or guaranty with respect to
the Collateral or to receive condemnation proceeds, (3) all claims of each
Grantor for damages arising out of or for breach of or default under the
agreements assigned, granted or pledged to the Collateral Agent or any other
Collateral, (4) all rights of each Grantor to terminate, amend, supplement,
modify or waive performance under any agreements assigned, granted or pledged to
the Collateral Agent to perform thereunder and to compel performance and
otherwise exercise all remedies thereunder and (5) to the extent not included in
the foregoing, all proceeds receivable or received when any and all of the
foregoing Collateral is sold, collected, exchanged or otherwise disposed,
whether voluntarily or involuntarily:
(a) the fixtures and equipment comprising or used or useful for or
in connection with the Existing Refineries;
(b) the fixtures and equipment comprising or used or useful for or
in connection with the Owned Terminals;
(c) all fixtures or equipment acquired at any time after the date
hereof by the Company or any Grantor (i) located on, or contiguous to or
connected with and in reasonable proximity to, any of the Existing Refineries or
Owned Terminals and (ii) necessary, used or useful for or in connection with the
ownership, expansion, operation, use or maintenance of any of the Existing
Refineries or Owned Terminals and (b) any owned or acquired interest in leases
6
or contracts with governmental authorities, where such leases or contracts are
in real estate in navigable waters contiguous to or connected with and in
reasonable proximity to any of the Existing Refineries or Owned Terminals;
(d) all fixtures and equipment at any time owned or acquired by
any Grantor comprising or acquired for use with the Pipelines;
(e) (A)(1)all of the indebtedness or other obligations of Tesoro
Alaska Pipeline Company, Kenai Pipe Line Company and each additional Pipeline
Subsidiary (other than Tesoro High Plains Pipeline Company at any time owed to
each Grantor and (2) 66 2/3% of the indebtedness or other obligations of Tesoro
High Plains Pipeline Company owed to each Grantor and (2) the interests at any
time owned or acquired of each Grantor in respect of all of the Capital Stock of
each of Tesoro Alaska Pipeline Company, Kenai Pipe Line Company and each
additional Pipeline Subsidiary (other than Tesoro High Plains Pipeline Company)
and 66 2/3% of the Capital Stock of Tesoro High Plains Pipeline Company,
including the following rights and interests in respect thereof:
(i) the rights to receive income, gain, profit, dividends
and other distributions allocated or distributed to any Grantor in
respect of or in exchange for all or any portion of such Capital Stock;
(ii) each Grantor's capital or ownership interest,
including capital accounts in respect thereof;
(iii) each Grantor's voting rights in or rights to control
or direct the affairs in respect thereof;
(iv) all other rights, title and interest therein or
thereto or derived therefrom;
(v) all rights of any Grantor to terminate, amend,
supplement, modify, or cancel, take actions under, to compel
performance under and otherwise exercise all remedies under the
certificate of incorporation, by-laws or other organizational documents
in respect thereof; and
(vi) all securities, notes, certificates and other
instruments representing or evidencing any of the foregoing rights and
interests or the ownership thereof, including the Pledged Securities,
and any interest of each Grantor reflected in the books of any
financial intermediary pertaining to such rights and interests and all
non-cash dividends, cash, options, warrants, stock splits,
reclassifications, rights, instruments or other investment property 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 rights and interests;
(f) all fixtures and equipment at any time owned or acquired by
any Grantor located at any of the Associated Leased Terminals;
7
(g) all general intangibles (including patents, copyrights, trade
secrets and other intellectual property, whether owned or licensed, customer and
supplier contracts, drawings, plans, books and records, employment, consulting,
operating, maintenance or services agreements and other contractual rights,
public and private licenses, permits, franchises, powers, authorities, pollution
or environmental credits and allowances, goodwill and other intangible property
of every type or description) at any time owned or acquired by any Grantor
necessary, used or useful for or in connection with, or in any respect related,
incidental or ancillary to, the ownership, expansion, operation, use,
maintenance or sale or other disposition of any of the Existing Refineries, the
Owned Terminals, the Associated Leased Terminals or the Pipelines;
(h) all rights to payment at any time owned or acquired by any
Grantor constituting Specified Intercompany Debt; and
(i) each Asset Sale Proceeds Account and all deposits therein and
interest thereon and investments thereof, and all property of every type and
description in which any proceeds of any Sale of Collateral or other disposition
of Collateral are invested or upon which the Collateral Agent is at any time
granted, or required to be granted, a Lien to secure the Secured Obligations as
set forth in Section 5.10 of the Term Loan Agreement, Section 4.10 of the
Indenture or in clause (3) of the proviso in the definition of "Asset Sale"; and
(j) all proceeds of any of the foregoing;
provided, that the Collateral will not at any time include any property that is,
at such time, an Excluded Asset.
SECTION 2.02. Retention of Certain Rights. So long as the Collateral Agent
has not exercised remedies with respect to the Collateral under this Agreement
or any other Security Document upon the occurrence and during the continuance of
an Event of Default, each Grantor reserves the right to exercise all voting and
other rights with respect to the Collateral (except as limited by the Security
Documents) and to receive all income, dividends and other distributions from the
Collateral (except as limited by the Security Documents); provided that no vote
shall be cast, right exercised or other action taken which could materially
impair the Collateral.
SECTION 2.03. Obligations Secured. Each Grantor hereby agrees that the
Collateral shall secure, Equally and Ratably, all of the Term Loan Obligations
and the Note Obligations of such Grantor (including, in the case of the Company,
all of its present and future liability under or for the Terms Loans (including
Additional Term Loans) or Notes (including Additional Notes) or any other
Secured Obligation, and, in the case of each other Grantor, all of its present
and future liability under the Term Loan Guarantees or the Note Guarantees or
for any other Secured Obligation) and further agrees that the security interest
granted hereby grants the Collateral Agent, for the benefit of Secured Parties,
a first priority security interest (subject to Permitted Prior Liens) on the
Collateral.
8
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Jurisdiction of Organization. On the date hereof, such
Grantor's jurisdiction of organization and identification number from the
jurisdiction of organization (if any) are specified on Schedule I. Such Grantor
has furnished to the Collateral Agent a certified charter, certificate of
incorporation or other organization document and long-form good standing
certificate as of a date which is recent to the date hereof.
SECTION 3.02. Patents. Schedule II lists all rights, priorities and
privileges relating to patents and patent applications that constitute
Collateral (other than such interests in respect of which Grantor is a licensee)
owned by such Grantor in its own name on the date hereof.
ARTICLE IV.
COVENANTS OF GRANTORS
SECTION 4.01. Delivery of Instruments. All Collateral consisting of Capital
Stock of Pipeline Subsidiaries will be represented by certificated securities
and each Grantor shall deliver all promissory notes and other instruments
evidencing or representing any Collateral to the Collateral Agent for the
benefit of the Secured Parties as security for all of the Secured Obligations,
accompanied by duly executed instruments of transfer or assignment in blank.
SECTION 4.02. UCC Article 8. To the extent that any Capital Stock of any
Pipeline Subsidiary constitutes membership or partnership interests, the Grantor
owing such interests shall elect for such securities to be governed by Article 8
of the UCC and any limited liability company agreement or partnership agreement
of such Pipeline Subsidiary, as the case may be, shall explicitly state that
such interests in such Pipeline Subsidiary are securities governed by Article 8
of the UCC. Each Grantor shall cause the Capital Stock of each Pipeline
Subsidiary owned by it to be evidenced by and remain "certificated securities"
as defined in Article 8 of the UCC.
SECTION 4.03. Preservation of Value; Limitation of Liens. No Grantor shall
take any action in connection with the Collateral which would impair in any
material respect the interests or rights of the Collateral Agent therein or with
respect thereto.
SECTION 4.04. Defense of Collateral. Each Grantor shall defend its title to
the Collateral against the claims and demands of all Persons whomsoever.
SECTION 4.05. Maintenance of Insurance
(a) Except to the extent that the requirements in respect of
insurance are inconsistent with those set forth in this Section, Each Grantor
shall maintain, with financially sound and reputable companies, insurance on all
its property in such amounts, subject to deductibles and self-insurance
retentions, and covering such risks as is consistent with sound
business practice, and the Company will furnish to the Collateral Agent (for
distribution to any Secured Party) upon request full information as to the
insurance carried. In the event any Grantor at any time or times hereafter shall
fail to obtain or maintain any of the policies of insurance required herein or
to pay any premium in whole or in part relating thereto, then the Collateral
Agent, without waiving or releasing any obligation or resulting Default, may at
any time or times thereafter (but shall be under no obligation to do so) obtain
and maintain such policies of insurance and pay such premiums and take any other
action with respect thereto which the Collateral Agent deems advisable. All sums
so disbursed by the Collateral Agent shall constitute part of the Secured
Obligations payable as provided in the Term Loan Agreement or the Indenture, as
applicable.
(b) All such insurance shall (i) provide that no cancellation
thereof shall be effective until at least 30 days after receipt by the
Collateral Agent of written notice thereof, (ii) name the Collateral Agent as
insured party or loss payee, (iii) if reasonably requested by the Collateral
Agent, include a breach of warranty clause and (iv) be reasonably satisfactory
in all other respects to the Collateral Agent, provided insurance provided by or
through Oil Insurance Limited shall not be subject to the requirements of clause
(i) above.
SECTION 4.06. Maintenance of Perfected Security Interest; Further
Documentation.
Each Grantor shall maintain the security interest created by this Agreement
as a perfected security interest having a first priority security interest
(subject to Permitted Prior Liens) and shall defend such security interest
against the claims and demands of all Persons whomsoever.
(a) Each Grantor will furnish to the Collateral Agent and the
Secured Parties from time to time statements and schedules further identifying
and describing the assets and property of such Grantor and such other reports in
connection with the Collateral as the Collateral Agent may reasonably request,
all in reasonable detail.
(b) Each Grantor shall at the expense of such Grantor execute and
deliver such instruments and documents as may be required by the Collateral
Agent or applicable legal requirements to maintain a first priority perfected
security interest (subject to Permitted Prior Liens) in the Collateral.
(c) At any time and from time to time, upon the written request of
the Collateral Agent, and at the sole expense of such Grantor, such Grantor will
promptly and duly execute and deliver, and have recorded, such further
instruments and documents and take such further actions as the Collateral Agent
may reasonably request for the purpose of obtaining or preserving the full
benefits of this Agreement and of the rights and powers herein granted,
including, without limitation, (i) the filing of any financing or continuation
statements under the UCC (or other similar laws) in effect in any jurisdiction
with respect to the security interests created hereby and (ii) in the case of
any other relevant Collateral, taking any actions necessary to enable the
Collateral Agent to obtain "control" (within the meaning of the UCC as in effect
in any applicable jurisdiction) with respect thereto.
SECTION 4.07. Change of Name; Change of Jurisdiction of Organization.
2
(a) Each Grantor shall give the Collateral Agent at least 30 days
prior written notice before such Grantor changes its name, jurisdiction of
organization or entity type.
SECTION 4.08. Post Closing Collateral.
The Company shall at the Company's expense within 30 days after the Closing
Date duly execute and deliver to the Collateral Agent, a Control Agreement in
respect of an Asset Sale Proceeds Account and shall take such other actions
which are necessary or advisable in the reasonable opinion of the Collateral
Agent to vest in the Collateral Agent acting on behalf of the Secured Parties a
valid and perfected first priority security interest in such Asset Sale Proceeds
Account. Concurrently with the execution and delivery of such Control Agreement,
the Company shall provide the Collateral Agent with an Opinion of Counsel in
form and substance satisfactory to the Collateral Agent.
ARTICLE V
RIGHTS AND REMEDIES
SECTION 5.01. Event of Default Defined. The occurrence of an Event of
Default under the Term Loan Agreement or the Indenture, whatever the reason for
such Event of Default and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any Collateral or governmental body,
shall constitute an Event of Default hereunder.
SECTION 5.02. Remedies Upon Event of Default.
(a) During any period during which an Event of Default shall have
occurred and be continuing, the Collateral Agent shall have the right to (but
shall be under no obligation to), directly or by using an agent or broker do any
of the following:
(i) proceed to protect and enforce the rights vested in
it by this Agreement and under the UCC;
(ii) cause all revenues hereby pledged as security and all
other moneys and other property pledged hereunder to be paid and/or
delivered directly to it, and demand, ▇▇▇ for, collect and receive any
part or all of such moneys and property;
(iii) cause any action at law or suit in equity or other
proceeding to be instituted and prosecuted to collect or enforce any
Secured Obligations of any Grantor, or rights included in the
Collateral, or for specific enforcement of any covenant or agreement
contained herein, in the Term Loan Agreement or in the Indenture or
under the agreements assigned, granted or pledged to the Collateral
Agent, or in aid of the exercise of any power therein or herein
granted, or for any foreclosure hereunder and sale under a judgment or
decree in any judicial proceeding, or to enforce any other legal or
equitable right vested in it by this Agreement or by law;
3
(iv) foreclose or enforce any other agreement or other
instrument by or under or pursuant to which the Secured Obligations of
any Grantor are issued or secured;
(v) in connection with any acceleration and foreclosure,
vote or exercise any and all of Grantors' rights or powers incident to
its ownership of the Capital Stock and interests referred to in clause
(d) of the definition of Collateral herein;
(vi) subject to clause (b) of this Section 5.02, sell,
lease or otherwise dispose of any or all of the Collateral, in one or
more transactions, at such prices as the Collateral Agent may deem
best, and for cash or on credit or for future delivery, without
assumption of any credit risk, at any broker's board or at public or
private sale, without demand of performance or notice of intention to
sell, lease or otherwise dispose of, or of time or place of disposition
(except such notice as is required by applicable statute and cannot be
waived), it being agreed that the Collateral Agent may be a purchaser
or lessee on behalf of the Secured Parties or on its own behalf at any
such sale and that the Collateral Agent or anyone else who may be the
purchaser, lessee or recipient for value of any or all of the
Collateral so disposed of shall, upon such disposition, acquire all of
any Grantor's rights therein. The Collateral Agent may adjourn any
public or private sale or cause the same to be adjourned from time to
time by announcement at the time and place fixed for the same, and such
sale may, without further notice or publication, be made at any time or
place to which the same may be so adjourned;
(vii) incur expenses, including reasonable attorneys' fees,
consultants' fees, and other costs appropriate to the exercise of any
right or power under this Agreement;
(viii) perform any obligation of any Grantor hereunder or
under any other Security Document, and make payments, purchase, contest
or compromise any encumbrance, charge, or lien, and pay taxes and
expenses;
(ix) take possession of the Collateral and render it
usable, and repair and renovate the same, without, however, any
obligation so to do, and enter upon any site where the same may be
located for that purpose, control, manage, operate, rent and lease the
Collateral, either separately from or in conjunction with the other
Collateral necessary or useful to such renovated Collateral, collect
all rents and income from the Collateral and apply the same to the
payment or performance of the Secured Obligations of any Grantor;
(x) make any reasonable compromise or settlement deemed
desirable with respect to any of the Collateral and may extend the time
of payment, arrange for payment installments, or otherwise modify the
terms of, any Collateral; and
(xi) secure the appointment of a receiver of the
Collateral or any part thereof, without notice to any Grantor.
(b) If, pursuant to applicable law, prior notice of any action
described in Section 5.02(a) is required to be given to a Grantor, such Grantor
hereby acknowledges that the
4
minimum time required by such applicable law, or if no minimum is specified, ten
Business Days, shall be deemed a reasonable notice period.
(c) The Grantor recognizes that, by reason of certain prohibitions
contained in the Securities Act and applicable state securities laws
(collectively, the "Securities Laws"), the Collateral Agent may be compelled,
with respect to any sale of all or any part of the Collateral constituting
"securities," however defined in the Securities Laws, to limit purchasers to
those who will agree, among other things, to acquire such Collateral for their
own account, for investment and not with a view to the distribution or resale
thereof. Each Grantor acknowledges that any such private sales may be at prices
and on terms less favorable to the Collateral Agent than those obtainable
through a public sale without the restrictions applicable to a private sale and
waives any claims against the Collateral Agent and the Secured Parties arising
by reason of the fact that the price at which the Collateral may have been sold
at such a private sale was less than the price that might have been obtained at
a public sale, provided that such private sale is conducted in a commercially
reasonable manner.
(d) Any action or proceeding to enforce this Agreement or any
agreement under the agreements assigned, granted or pledged to the Collateral
Agent may be taken by the Collateral Agent either in a Grantor's name or in the
Collateral Agent's name, as the Collateral Agent may deem necessary.
(e) All rights of marshaling of assets of any Grantor, including
any such right with respect to the Collateral, are hereby waived by each
Grantor.
(f) The Collateral Agent shall incur no liability as a result of
the sale of the Collateral, or any part thereof, at any private sale pursuant to
Section 5.02(a) conducted in a commercially reasonable manner. Each Grantor
hereby waives any claims against the Collateral Agent and the Secured Parties
arising by reason of the fact that the price at which the Collateral may have
been sold at such a private sale was less than the price that might have
obtained at a public sale or was less than the aggregate amount of the Secured
Obligations of the Grantor, even if the Collateral Agent accepts the first offer
received and does not offer the Collateral to more than one offeree, provided,
that such private sale is conducted in a commercially reasonable manner.
SECTION 5.03. Compliance With Limitations and Restrictions; No Discount.
Each Grantor hereby agrees that in respect of any sale of any of the Collateral
pursuant to the terms hereof, the Collateral Agent is hereby authorized to
comply with any limitation or restriction in connection with such sale as it may
be advised by counsel is necessary in order to avoid any violation of applicable
legal requirements, or in order to obtain any required approval of the sale or
of the purchaser by any Governmental Authority or official, and each Grantor
further agrees that such compliance shall not result in such sale being
considered or deemed not to have been made in a commercially reasonable manner,
nor shall the Collateral Agent be liable or accountable to such Grantor for any
discount allowed by reason of the fact that such Collateral is sold in
compliance with any such limitation or restriction.
5
SECTION 5.04. Registration of Securities. If the Collateral Agent shall
decide to exercise its right to sell any or all of the Collateral, and if, in
the reasonable opinion of counsel to the Collateral Agent, it is necessary to
have such Collateral, or that portion thereof to be sold, registered under the
provisions of the Securities Laws, each Grantor will execute and deliver, all at
such Grantor's expense, all such instruments and documents which, in the opinion
of the Collateral Agent, are necessary to register or qualify such Collateral,
or that portion thereof to be sold, under the provisions of the Securities Laws.
Each Grantor will execute and will use commercially reasonable efforts to cause
any registration statement relating thereto to become effective and to remain
effective for a period of not less than six months from the date of the first
public offering of such Collateral, or that portion thereof to be sold, and to
make all amendments thereto and/or to any related prospectus or similar document
which, in the reasonable opinion of the Collateral Agent, are necessary, all in
conformity with the Securities Laws applicable thereto. Without limiting the
generality of the foregoing, each Grantor agrees to comply with the applicable
provisions of the securities or "Blue Sky" laws of any jurisdiction(s) which the
Collateral Agent shall reasonably designate and to make available to its
security holders, as soon as practicable, an earnings statement which will
satisfy the provisions of Section 11(a) of the Securities Act.
SECTION 5.05. Right to Cure. In addition to the foregoing remedies, the
Collateral Agent may, but shall not be obligated to, cure any Event of Default
and incur reasonable fees, costs and expenses in doing so, in which event the
Company shall immediately reimburse the Collateral Agent within 10 days after
demand for all such fees, costs and expenses, together with interest thereon at
the Default Rate from the date payable until the date repaid in full.
SECTION 5.06. No Impairment of Remedies. If the Collateral Agent may, under
applicable legal requirements, proceed to realize its benefits under this
Agreement, either by judicial foreclosure or by non-judicial sale or
enforcement, the Collateral Agent may, at its sole option, determine which of
its remedies or rights it may pursue without affecting any of the rights and
remedies of the Collateral Agent under this Agreement. If, in the exercise of
any of such rights and remedies, the Collateral Agent shall forfeit any of its
rights or remedies, including any right to enter a deficiency judgment against
such Grantor or any other Person, whether because of any applicable legal
requirements pertaining to "election of remedies" or the like, such Grantor
hereby consents to such action by the Collateral Agent and, to the extent
permitted by applicable legal requirements, waives any claim based upon such
action, even if such action by the Collateral Agent shall result in a full or
partial loss of any rights of subrogation, indemnification or reimbursement
which such Grantor might otherwise have had but for such action by the
Collateral Agent or the terms herein. Any election of remedies which results in
the denial or impairment of the right of the Collateral Agent to seek a
deficiency judgment against any of the parties to any of the Security Documents
shall not, to the extent permitted by applicable legal requirements, impair such
Grantor's obligation hereunder. In the event the Collateral Agent shall bid at
any foreclosure or trustee's sale or at any private sale permitted by legal
requirements or this Agreement, the Collateral Agent may bid all or less than
the amount of the Secured Obligations. To the extent permitted by applicable
legal requirements, the amount of the successful bid at any such sale, whether
the Collateral Agent or any other party is the successful bidder, shall be
conclusively deemed to be the fair market value
6
of the Collateral and the difference between such bid amount and the remaining
balance of the Secured Obligations shall be conclusively deemed to be the amount
of the Secured Obligations.
SECTION 5.07. Application of Proceeds. Upon the occurrence and during the
continuation of an Actionable Default, the proceeds of any sale of or other
realization upon, all or any part of the Collateral shall be applied in
accordance with Section 2.6 of the Collateral Agency Agreement. Each Grantor
shall remain liable for any deficiency.
SECTION 5.08. Foreclosure Waiver. To the extent permitted by legal
requirements, each Grantor waives the posting of any bond otherwise required of
the Collateral Agent in connection with any judicial process or proceeding to
obtain possession of, replevy, attach, or levy upon the Collateral, to enforce
any judgment or other security for its Secured Obligations, to enforce any
judgment or other court order entered in favor of the Collateral Agent, or to
enforce by specific performance, temporary restraining order, preliminary or
permanent injunction, this Agreement or any other agreement or document between
any Grantor, the Collateral Agent and the Secured Parties. Each Grantor further
agrees that upon the occurrence and during the continuation of an Event of
Default, the Collateral Agent may elect to nonjudicially or judicially foreclose
against any real or personal property security it holds for the Secured
Obligations or any part thereof, or to exercise any other remedy against any
Grantor or any other Person, any security or any guarantor, even if the effect
of that action is to deprive such Grantor of the right to collect reimbursement
from any Person for any sums paid by such Grantor to the Collateral Agent or any
Secured Party.
SECTION 5.09. Attorney-in-Fact. Each Grantor hereby irrevocably appoints the
Collateral Agent attorney-in-fact, with full authority in the place and stead of
such Grantor and in the name of such Grantor or otherwise from time to time in
the Collateral Agent's discretion, if an Event of Default shall have occurred
and be continuing, to take any action and to execute any instrument to enforce
all rights of such Grantor with respect to the Collateral, including the right
to give appropriate receipts, releases and satisfactions for and on behalf of
and in the name of the Grantor or, at the option of the Collateral Agent, in the
name of the Collateral Agent, with the same force and effect as the Grantor
could do if this Agreement had not been made. Each Grantor hereby acknowledges,
consents and agrees that the power of attorney granted pursuant to this Section
5.08 is irrevocable and coupled with an interest.
ARTICLE VI
MISCELLANEOUS PROVISIONS
SECTION 6.01. Notices. Any communications, including notices and
instructions, between the parties hereto or notices provided herein to be given
may be given to the following addresses:
If to the Collateral Agent: Wilmington Trust Company
Attention: ▇▇▇▇ St. ▇▇▇▇▇
Assistant Vice President
Corporate Trust Administration
7
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
If to the Company
or any Grantor: Tesoro Petroleum Corporation
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Finance Department
Phone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Each notice hereunder shall be in writing and may be personally served, telexed
or sent by telefacsimile or United States mail or courier service and shall be
deemed to have been given when delivered in person or by courier service and
signed for against receipt thereof, upon receipt of telefacsimile or telex, or
three Business Days after depositing it in the United States mail with postage
prepaid and properly addressed; provided, no notice to the Collateral Agent
shall be effective until received by such Person. Any party shall have the right
to change its address for notice hereunder to any other location within the
continental United States by giving of 30 days' notice to the other parties in
the manner set forth hereinabove.
SECTION 6.02. Benefit of Agreement. Nothing in this Agreement, expressed or
implied, shall give or be construed to give to any Person other than the parties
hereto, the Secured Parties, any legal or equitable right, remedy or claim under
this Agreement, or under any covenants and provisions of this Agreement, each
such covenant and provision being for the sole benefit of the parties hereto and
the Secured Parties.
SECTION 6.03. No Waiver; Remedies Cumulative. No failure or delay on the
part of the Collateral Agent in the exercise of any power, right or privilege
hereunder or under any other Term Loan Document or Note 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. The rights, powers and remedies given to the
Collateral Agent hereby are cumulative and shall be in addition to and
independent of all rights, powers and remedies existing by virtue of any statute
or rule of law or in any of the other Term Loan Documents or Note Documents. Any
forbearance or failure to exercise, and any delay in exercising, any right,
power or remedy hereunder shall not impair any such right, power or remedy or be
construed to be a waiver thereof, nor shall it preclude the further exercise of
any such right, power or remedy.
SECTION 6.04. Severability. In case any provision in or obligation hereunder
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.
8
SECTION 6.05. Amendments. This Agreement may not be amended, modified or
supplemented, except in a writing signed by each of the parties hereto and in
accordance with the Collateral Agency Agreement.
SECTION 6.06. Headings. Section headings herein are included herein for
convenience of reference only and shall not constitute a part hereof for any
other purpose or be given any substantive effect.
SECTION 6.07. Governing Law. THIS AGREEMENT, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE AND MATTERS RELATING TO THE CREATION,
VALIDITY, PERFECTION, EFFECT OF PERFECTION OR NON-PERFECTION, PRIORITY OR
ENFORCEMENT OF THE LIEN OF, AND SECURITY INTERESTS CREATED BY, THIS AGREEMENT
UPON THE COLLATERAL SHALL BE GOVERNED BY THE LAWS OF THE STATE OF CALIFORNIA,
WITHOUT REFERENCE TO THE RULES OF CONFLICT OF LAW (OTHER THAN SECTION 410.40 OF
THE CALIFORNIA CODE OF CIVIL PROCEDURE), EXCEPT TO THE EXTENT THAT PURSUANT TO
THE PROVISIONS OF THE MORTGAGES OR MANDATORY CHOICE OF LAW PROVISIONS THE
PERFECTION, EFFECT OF PERFECTION OR NON-PERFECTION OR PRIORITY OF THE LIEN AND
SECURITY INTERESTS HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY
PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN
CALIFORNIA.
SECTION 6.08. CONSENT TO JURISDICTION. ALL JUDICIAL PROCEEDINGS BROUGHT
AGAINST ANY PARTY HERETO ARISING OUT OF OR RELATING HERETO OR ANY OTHER TERM
LOAN DOCUMENT, OR ANY OF THE OBLIGATIONS, MAY BE BROUGHT IN ANY STATE OR FEDERAL
COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY OF LOS ANGELES. BY
EXECUTING AND DELIVERING THIS AGREEMENT, EACH PARTY HERETO, FOR ITSELF AND IN
CONNECTION WITH ITS PROPERTIES, IRREVOCABLY (a) ACCEPTS GENERALLY AND
UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS; (b)
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS; (c) AGREES THAT SERVICE OF ALL
PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR
CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO THE APPLICABLE OBLIGOR AT ITS
ADDRESS PROVIDED IN ACCORDANCE WITH SECTION 6.01; (d) AGREES THAT SERVICE AS
PROVIDED IN CLAUSE (c) ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER
THE APPLICABLE OBLIGOR IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE
CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; AND (e) AGREES THAT
EACH PARTY THERETO (INCLUDING EACH BENEFICIARY HEREOF) RETAINS THE RIGHT TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS
AGAINST ANY OBLIGOR IN THE COURTS OF ANY OTHER JURISDICTION.
SECTION 6.09. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY AGREES
TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING HEREUNDER OR UNDER ANY OF THE OTHER TERM LOAN DOCUMENTS OR
ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN
TRANSACTION OR THE LENDER/COMPANY RELATIONSHIP THAT IS BEING ESTABLISHED. THE
SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES
THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS
TRANSACTION, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND
ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY HERETO ACKNOWLEDGES THAT
THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT
EACH HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS AGREEMENT, AND THAT
EACH WILL CONTINUE TO RELY ON THIS WAIVER IN ITS RELATED FUTURE DEALINGS. EACH
PARTY HERETO FURTHER WARRANTS AND
9
REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE
MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER
SPECIFICALLY REFERRING TO THIS SECTION 6.09 AND EXECUTED BY EACH OF THE PARTIES
HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS HERETO OR ANY OF THE OTHER TERM LOAN DOCUMENTS OR
TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS MADE HEREUNDER. IN
THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A
TRIAL BY THE COURT.
SECTION 6.10. Successors and Assigns. The provisions of this Agreement shall
be binding upon, and inure to the benefit of, the parties hereto and their
respective successors and assigns, provided that no Grantor may assign or
otherwise transfer any of its rights or obligations under this Agreement without
the consent of the Collateral Agent (which consent may be withheld in its sole
discretion).
SECTION 6.11. Entire Agreement. This Agreement and any agreement, document
or instrument attached hereto or referred to herein among the parties hereto
integrate all the terms and conditions mentioned herein or incidental hereto and
supersede all oral negotiations and prior writings in respect of the subject
matter hereof. In the event of any conflict between the terms, conditions and
provisions of this Agreement and any such agreement, document or instrument, the
terms, conditions and provisions of this Agreement shall prevail.
SECTION 6.12. Survival of Agreements. All agreements, covenants,
representations and warranties made herein shall survive the execution and
delivery of this Agreement.
SECTION 6.13. Counterparts. This Agreement may be executed in any number of
counterparts (including by telecopy), 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.
SECTION 6.14. Integration of Terms. This Agreement contains the entire
agreement among the parties hereto relating to the subject matter hereof and
supersedes all oral statements and prior writings with respect hereto.
SECTION 6.15. Effectiveness. This Agreement shall become effective upon the
execution of a counterpart hereof by each of the parties hereto and receipt by
each Grantor and the Collateral Agent of written or telephonic notification of
such execution and authorization of delivery thereof.
SECTION 6.16. Collateral Agent's Obligations. The performance by the
Collateral Agent of its obligations under this Agreement and the exercise of its
rights hereunder is subject in all respects to the provisions of the Collateral
Agency Agreement.
SECTION 6.17. Additional Obligors. The Company will cause each Subsidiary
of the Company that becomes a Grantor or is required to become a party to this
Agreement under Section 5.17 of the Term Loan Agreement and Section 4.17 of the
Indenture to become party to this Agreement, for all purposes of this Agreement
on the terms set forth herein applicable to a
10
Grantor, by causing such Subsidiary to execute and deliver to the parties hereto
a Joinder Agreement, whereupon such Subsidiary shall be bound by the terms
hereof to the same extent as if it had executed and delivered this Agreement as
a Grantor as of the date hereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
11
IN WITNESS WHEREOF, the Grantor and the Collateral Agent have caused
this Agreement to be duly executed by their member or officer thereunto duly
authorized, as of the day and year first written above.
TESORO PETROLEUM CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President and Chief
Financial Officer
(signatures continue on next page)
[Security Agreement]
THE GUARANTORS:
DIGICOMP INC.
KENAI PIPE LINE COMPANY
SMILEY'S SUPER SERVICE, INC.
TESORO ALASKA COMPANY
TESORO ALASKA PIPELINE COMPANY
TESORO AVIATION COMPANY
TESORO GAS RESOURCES COMPANY, INC.
TESORO HAWAII CORPORATION
TESORO HIGH PLAINS PIPELINE COMPANY
TESORO MARINE SERVICES HOLDING COMPANY
TESORO MARINE SERVICES, LLC
By: Tesoro Marine Services Holding
Company, as sole member
TESORO MARITIME COMPANY
TESORO NORTHSTORE COMPANY
TESORO PETROLEUM COMPANIES, INC.
TESORO REFINING AND MARKETING COMPANY
TESORO TECHNOLOGY COMPANY
TESORO TRADING COMPANY
TESORO VOSTOK COMPANY
TESORO WASATCH, LLC
By: Tesoro Petroleum Corporation, as
sole member
Executing this Agreement as Senior Vice
President and Chief Financial Officer and
on behalf of and so as to bind, each of
the Persons named above under the caption
"The Guarantors"
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Vice President and Treasurer
(signatures continue on next page)
[Security Agreement]
THE GUARANTORS:
FAR EAST MARITIME COMPANY
GOLD STAR MARITIME COMPANY
TESORO FINANCIAL SERVICES
HOLDING COMPANY
VICTORY FINANCE COMPANY
Executing this Agreement as Vice President
and Treasurer and on behalf of and so as
to bind, each of the Persons named above
under the caption "The Guarantors"
By: /s/ G. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------------------
Name: G. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Attorney in Fact
[Pledge and Security Agreement - Signature Page]
WILMINGTON TRUST COMPANY,
as Collateral Agent
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Authorized Signer
(signatures continue on next page)
[Collateral Agency Agreement]
Schedule I
Assignment of Patents
-------------------------------------------------------------------------------------------------------------------
Filing Date/Serial Registration Date/
Owner Type Number Registration Number
-------------------------------------------------------------------------------------------------------------------
Tesoro Alaska Company "Analog Hall-Effect 5/16/94 6/10/97
Liquid Level Detector and Method" 245,142 5,636,548
-------------------------------------------------------------------------------------------------------------------
[Pledge and Security Agreement - Signature Page]
EXHIBIT A
to the Security Agreement
Wilmington Trust Company,
as Collateral Agent
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ St. ▇▇▇▇▇,
Corporate Trust Administration
JOINDER AGREEMENT
The undersigned, [INSERT OBLIGOR'S NAME], a [INSERT
DESCRIPTION OF OBLIGOR], hereby agrees to become party to the Pledge and
Security Agreement dated as of April 17, 2003 (the "Security Agreement"), by and
among Tesoro Petroleum Corporation, a Delaware corporation (the "Company"), the
subsidiaries of the Company party thereto, and Wilmington Trust Company, as
Collateral Agent, for all purposes thereof on the terms set forth therein
applicable to a "Grantor", as defined therein, and to be bound by the terms of
the Security Agreement as fully as if the undersigned had executed and delivered
the Security Agreement as a Grantor thereunder as of the date thereof. The
undersigned hereby assigns, grants and pledges to the Collateral Agent all of
the estate, right, title and interest of such Grantor the Collateral to secure
the timely payment and performance in full of its Secured Obligations, whether
now outstanding or hereafter acquired.
The provisions of Article VI of the Security Agreement shall
apply with like effect to this Joinder.
IN WITNESS WHEREOF, the undersigned has executed and delivered
this Joinder as of ___________________, 20____.
[______________________________________]
By: ______________________________________
Name:
Title: