AMENDED AND RESTATED SECURITY AGREEMENT
(Accounts and Inventory)
Between
TESORO REFINING, MARKETING & SUPPLY COMPANY
and
BANQUE PARIBAS,
AS ADMINISTRATIVE AGENT
June 7, 1996
AMENDED AND RESTATED SECURITY AGREEMENT
Accounts and Inventory
THIS AMENDED AND RESTATED SECURITY AGREEMENT is made as of June 7, 1996,
between TESORO REFINING, MARKETING & SUPPLY COMPANY, a Delaware corporation
("Debtor"), and BANQUE PARIBAS, as Administrative Agent ("Secured Party") for
the Issuing Banks and the Lenders parties to the Credit Agreement referred to
below.
RECITALS
A. On April 20, 1994, Tesoro Petroleum Corporation (the "Company"), Texas
Commerce Bank National Association, individually and as agent, Banque Paribas,
individually and as co-agent and the other financial institutions parties
thereto entered into a Credit Agreement (as amended from time to time, the
"Prior Credit Agreement").
B. The conditions precedent to the effectiveness of the Credit Agreement
included the execution and delivery by Debtor of that certain Security Agreement
dated of even date therewith (the "Prior Security Agreement").
C. On even date herewith, the Company, Secured Party, The Bank of Nova
Scotia, as Documentation Agent and the other financial institutions parties
thereto (the "Lenders") are entering into an Amended and Restated Credit
Agreement (as amended from time to time, the "Credit Agreement").
D. Therefore, in view of the foregoing and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Debtor and Secured Party agree to amend and restate the Prior Security Agreement
as follows:
ARTICLE I
Definitions
Section 1.01 Terms Defined Above. As used in this Security Agreement, the
terms "Company," "Credit Agreement," "Debtor" and "Secured Party" shall have the
meanings respectively assigned to them.
Section 1.02 Certain Definitions. As used in this Security Agreement, the
following terms shall have the following meanings, unless the context otherwise
requires:
"Accounts" shall mean all accounts (as such term is defined in the
Code).
"Account Debtor" shall mean any Person liable (whether directly or
indirectly, primarily or secondarily) for the payment or performance of any
obligations included in
the Collateral, whether as an account debtor (as defined in the Code),
obligor on an instrument, issuer of documents or securities, guarantor or
otherwise.
"Code" shall mean the Uniform Commercial Code as presently in effect in
the State of Texas, Texas Business and Commerce Code, Chapters 1 through 9.
"Collateral" shall mean the following types or items of Property
(including Property hereafter acquired by Debtor as well as Property which
Debtor now owns or in which Debtor has rights):
(a) all of Debtor's Accounts and Inventory;
(b) (i) any Property from time to time delivered to or deposited with
Secured Party by or for the account of Debtor which is related to any
Property referred to in clause (a) of this definition; and (ii) all
certificates of title or other documents evidencing ownership or possession
of or otherwise relating to any Property referred to in clause (a) of this
definition;
(c) (i) all goods which were at any time included in the Collateral
described in clause (a) of this definition and which are returned to or for
the account of Debtor following their sale, lease or other disposition; (ii)
all policies of insurance (whether or not required by Secured Party)
covering any Property referred to in this definition; and (iii) all
proceeds, products, replacements, additions to, substitutions for,
accessions of, and Property necessary for the operation of any of the
Property referred to in this definition, including, without limitation,
insurance payable as a result of loss or damage to any of the Property
referred to in this definition, refunds of unearned premiums of any such
insurance policy and claims against third parties;
(d) all books and records related to any of the Property referred to
in this definition, including, without limitation, any and all books of
account, customer lists and other records relating in any way to the
Collateral described in this definition;
(e) all of Debtor's general intangibles (as defined in the Code) which
are related (but only those related) to any Property referred to in this
definition, including, without limitation, all (i) letters of credit, bonds,
guaranties, purchase or sales agreements and other contractual rights,
rights to performance, and claims for damages, refunds (including tax
refunds) or other monies due or to become due; (ii) orders, franchises,
permits, certificates, licenses, consents, exemptions, variances,
authorizations or other approvals by any Governmental Authority; (iii)
business records, computer tapes and computer software; and (iv) other
intangible personal property, whether similar or dissimilar to the Property
referred to in clause (a) of this definition; and
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(f) all of Debtor's chattel paper, documents and instruments (as such
terms are defined in the Code) related to or arising out of any Property
referred to in clause (a) of this definition.
It is expressly contemplated that additional Property may from time to
time be pledged, assigned or granted to Secured Party as additional security
for the Obligations, and, if so, then the term "Collateral" as used herein
shall be deemed for all purposes hereof to include all such additional
Property, together with all other Property of the types described above
related thereto. It is expressly agreed that Collateral shall not include
and shall be exclusive of any equipment.
"Event of Default" shall have the meaning assigned such term in Section
6.01 of this Security Agreement.
"Inventory" shall mean all inventory (as defined in the Code).
"Obligations" shall mean with respect to the Debtor, the Obligations
(as defined in the Guaranty Agreement) to the extent the Debtor is liable
therefor as provided in the Guaranty Agreement. The Obligations are Senior
Debt as such term is defined in that certain Subordination Agreement dated
December 15, 1992 among the Company, Tesoro Alaska Petroleum Company and the
State of Alaska attached to the Settlement Agreement among the Company,
Tesoro Alaska Petroleum Company and the State of Alaska.
"Obligor" shall mean the Company and any other Person, other than
Debtor, liable (whether directly or indirectly, primarily or secondarily)
for the payment or performance of any of the Obligations whether as maker,
co-maker, endorser, guarantor, accommodation party, general partner or
otherwise; and the term "Obligor" shall specifically include each Guarantor,
other than Debtor, named in the Credit Agreement.
"Property" shall mean any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
"Security Agreement" shall mean this Amended and Restated Security
Agreement, as the same may be amended, modified or supplemented from time to
time.
Section 1.03 Other Defined Terms. Unless otherwise defined herein,
all terms beginning with a capital letter which are defined in the Credit
Agreement shall have the meanings assigned therein, unless the context hereof
requires otherwise. All uncapitalized terms which are defined in the Code shall
have their respective meanings as used in the Code, unless the context hereof
requires otherwise.
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ARTICLE II
Security Interest
Section 2.01 Grant of Security Interest. Debtor hereby assigns and grants
to Secured Party, for its benefit and the benefit of the Lenders and the Issuing
Banks, a security interest in, lien upon and right of set-off against the
Collateral to secure the prompt payment and performance of the Obligations.
ARTICLE III
Representations and Warranties
Debtor represents and warrants to Secured Party, the Issuing Banks and the
Lenders (which representations and warranties will survive the creation and
payment of the Obligations) that:
Section 3.01 First Priority Security Interest. The grant of the security
interest in the Collateral pursuant to this Security Agreement creates a valid
and perfected first priority security interest in the Collateral, enforceable
against Debtor and all third parties and securing payment of the Obligations.
Section 3.02 No Filings By Third Parties. No financing statement or other
public notice or recording covering the Collateral is on file in any public
office (other than any financing statement or other public notice or recording
naming Secured Party as the secured party therein), and Debtor will not execute
any such financing statement or other public notice or recording so long as any
of the Obligations are outstanding.
Section 3.03 No Name Changes. Debtor has not, during the preceding five
years, entered into any contract, agreement, security instrument or other
document using a name other than, or been known by or otherwise used any name
other than, the name used by Debtor herein.
Section 3.04 Location of Debtor and Collateral. Debtor's chief executive
office and Debtor's records concerning the Collateral are located at the address
or location set forth on the signature page hereof. The Collateral is located
at such address or at the location(s), if any, specified in Exhibit A hereto.
Any Collateral not at such location(s) nevertheless remains subject to Secured
Party's security interest.
Section 3.05 Collateral. All statements or other information provided by
Debtor to Secured Party, any Issuing Bank or any Lender with respect to the
Collateral is or (in the case of subsequently furnished information) will be
when provided correct and complete in all material respects. The delivery at
any time by Debtor to Secured Party of additional Collateral or of additional
descriptions of Collateral shall constitute a representation and warranty by
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Debtor to Secured Party hereunder that the representations and warranties of
this Article III are correct insofar as they would pertain to such Collateral or
the descriptions thereof.
Section 3.06 Accounts.
(a) Each Account represents the genuine, valid and legally enforceable
indebtedness of an Account Debtor arising from the sale, lease or rendition by
Debtor of goods or services and is not and will not be subject to contra
accounts, set-offs, defenses, counterclaims, allowances or adjustments (other
than discounts for prompt payment shown on the invoice), or objections or
complaints by the Account Debtor concerning its liability on the Account; and
any goods, the sale of which gave rise to an Account, have not been returned or
rejected by the Account Debtor or lost or damaged prior to receipt by the
Account Debtor.
(b) The amount shown as to each Account on Debtor's books is or will be the
true and undisputed amount owing and unpaid thereon. Except as disclosed in
writing to Secured Party, each Account arose or shall have arisen in the
ordinary course of Debtor's business; provided, however, that any Accounts which
arose or hereafter arise outside the ordinary course of Debtor's business shall
nevertheless be included as part of the Collateral. Debtor has no knowledge of
any bankruptcy, insolvency or other action affecting creditors' rights with
respect to any Account Debtor.
(c) Except as disclosed in writing to Secured Party, each invoice or
agreement evidencing the Accounts is or will be due and payable not more than 90
days from the date thereof; provided, however, that any Accounts not so due and
payable shall nevertheless be included as part of the Collateral.
Section 3.07 Delivery of Documents or Letters of Credit. With respect to
any Inventory or other Collateral covered by one or more certificates of title
or other documents evidencing ownership or possession thereof, and with respect
to any Accounts or other Collateral supported by letters of credit, each of such
certificates, documents or letters of credit has been delivered to Secured Party
(provided, however, that all certificates, documents and letters of credit
referred to in Section 1.02 shall be subject to the security interest created by
this Security Agreement irrespective of whether or not such delivery shall have
been made).
Section 3.08 Ownership of Collateral; Encumbrances; Valid and Binding
Agreement. Debtor is the legal and beneficial owner of the Collateral free and
clear of any adverse claim, lien, security interest, option or other charge or
encumbrance except for the security interest created by this Agreement or as
permitted by the Credit Agreement, and Debtor has full right, power and
authority to assign and grant a security interest in the Collateral to Secured
Party. This Agreement constitutes a legal, valid and binding obligation of
Debtor enforceable against Debtor in accordance with its terms. The execution,
delivery and performance of this Agreement will not violate the terms of any
contract, agreement, law, regulation, order, injunction, judgment, decree or
writ to which Debtor is subject and does not require the consent or approval of
any other Person.
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Section 3.09 No Required Consent. No authorization, consent, approval or
other action by, and no notice to or filing with, any governmental authority or
regulatory body (other than the filing of financing statements) is required for
(i) the due execution, delivery and performance by Debtor of this Agreement,
(ii) the grant by Debtor of the security interest granted by this Agreement,
(iii) the perfection of such security interest or (iv) the exercise by Secured
Party of its rights and remedies under this Agreement.
ARTICLE IV
Covenants and Agreements
Debtor covenants and agrees that so long as any part of the Obligations are
outstanding:
Section 4.01 Change in Location of Collateral or Debtor. Debtor will give
Secured Party 30 days' prior written notice of (i) any change in location of the
Collateral to a jurisdiction other than Texas, Alaska, California, Oregon or
Washington and which would cause the Secured Party to be unperfected in the
Collateral, (ii) the opening or closing of any place of Debtor's business or
(iii) any change in the location of Debtor's chief executive office or address.
Section 4.02 Documents; Collateral in Possession of Third Parties. If
certificates of title or other documents evidencing ownership or possession of
the Collateral are issued or outstanding, Debtor will cause the security
interest of Secured Party to be properly noted thereon and will, forthwith upon
receipt, deliver same to Secured Party. If any Collateral is at any time in the
possession or control of any warehouseman, bailee, agent or independent
contractor, Debtor shall notify such Person of Secured Party's security interest
in such Collateral. Upon Secured Party's request, Debtor shall instruct any
such Person to hold all such Collateral for Secured Party's account subject to
Debtor's instructions, or, if an Event of Default shall have occurred, subject
to Secured Party's instructions.
Section 4.03 Delivery of Letters of Credit and Instruments; Proceeds.
Debtor will deliver each letter of credit, if any, included in the Collateral to
Secured Party, in each case forthwith upon receipt by or for the account of
Debtor. If any Account becomes evidenced by a promissory note, trade acceptance
or any other instrument for the payment of money (other than checks or drafts in
payment of Accounts collected by Debtor in the ordinary course of business prior
to notification by Secured Party under Section 5.04), Debtor will immediately
deliver such instrument to Secured Party appropriately endorsed to Secured
Party, as collateral assignee and, regardless of the form of presentment,
demand, notice of dishonor, protest and notice of protest with respect thereto,
Debtor will remain liable thereon until such instrument is paid in full. Except
as permitted by Sections 4.03, 4.08 and 4.09, Debtor will deliver to Secured
Party all proceeds from the sale or other disposition of the Collateral promptly
upon receipt. If chattel paper, documents or instruments are received as
proceeds, which are required to be delivered to Secured Party, they will be,
immediately upon receipt, properly endorsed or assigned and delivered to Secured
Party as Collateral.
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Section 4.04 Sale, Disposition or Encumbrance of Collateral. Except (i)
as permitted by Section 4.08, or (ii) with the prior written consent of the
Majority Lenders, Debtor will not in any way encumber any of the Collateral (or
permit or suffer any of the Collateral to be encumbered) or sell, assign, lend,
rent, lease or otherwise dispose of or transfer any of the Collateral to or in
favor of any Person other than Secured Party.
Section 4.05 Intentionally left blank.
Section 4.06 Records and Information.
(a) Debtor shall keep accurate and complete records of the Collateral
(including proceeds). These records shall reflect complete and accurate stock
records of the Inventory and all facts concerning each Account. Debtor shall
conduct a physical count of the Inventory at such intervals as Secured Party
requests and promptly supply Secured Party with a copy of such count accompanied
by a report of the value (valued at the lower of cost or market value) of the
Inventory. Secured Party may at any time have access to, examine, audit, make
extracts from and inspect without hindrance or delay Debtor's records, files and
the Collateral.
(b) Debtor will promptly furnish such information as Secured Party may from
time to time reasonably request regarding (i) the business, affairs or financial
condition of Debtor or (ii) the Collateral or Secured Party's rights or remedies
with respect thereto. Any balance sheets or financial statements requested by
Secured Party pursuant to this Section 4.06(b) shall conform to generally
accepted accounting principles.
(c) Debtor recognizes that financing statements pertaining to the
Collateral will be filed with the offices of the Secretary of State of Texas,
the Alaska Department of Natural Resources, the Secretary of State of
California, the Secretary of State of Oregon and the Department of Licensing of
the State of Washington. Debtor will immediately notify Secured Party of any
condition or event that may change the proper location for the filing of any
financing statements or other public notice or recordings for the purpose of
perfecting a security interest in the Collateral. Without limiting the
generality of the foregoing, Debtor will (i) immediately notify Secured Party of
any change to a jurisdiction other than as represented in Section 3.04 (A) in
the location of Debtor's chief executive office or chief place of business, (B)
in the location of the office where Debtor keeps its records concerning the
Accounts, or (C) in the "location" of Debtor within the meaning of Section
9-103(c) of the Code; (ii) immediately notify Secured Party of any change in the
location of the Collateral to any jurisdiction other than the States of Texas,
Alaska, California, Oregon and Washington; and (ii) notify Secured Party 30 days
prior to any change in Debtor's name, identity or corporate structure or Tax
Identification Number. In any notice furnished pursuant to this paragraph,
Debtor will expressly state that the notice is required by this Security
Agreement and contains facts that will or may require additional filings of
financing statements or other notices for the purpose of continuing perfection
of Secured Party's security interest in the Collateral. Debtor will promptly
provide written notice to Secured Party of all information which in any way
relates to or affects the Collateral generally, Secured Party's rights or
remedies with respect thereto, the filing of any
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financing statement or other public notices or recordings, or the delivery and
possession of items of Collateral for the purpose of perfecting a security
interest in the Collateral.
Section 4.07 Further Assurances. Upon the request of Secured Party,
Debtor shall (at Debtor's expense) execute and deliver all such assignments,
certificates, financing statements or other documents and give further
assurances and do all other acts and things as Secured Party may reasonably
request to perfect Secured Party's interest in the Collateral or to protect,
enforce or otherwise effect Secured Party's rights and remedies hereunder.
Section 4.08 Inventory. Unless an Event of Default has occurred and is
continuing and after any applicable notice and cure periods provided for in the
Credit Agreement, Debtor may use the Inventory in any lawful manner not
inconsistent with this Security Agreement and with the terms of insurance
thereon and may sell, lease or otherwise dispose of its Inventory for cash or
terms in the ordinary course of business, and Debtor may retain the proceeds of
such sales, leases or other dispositions (subject to Section 4.03 and Section
4.09); provided, however, the Inventory shall remain in Debtor's possession and
control at all times prior to sale, lease or other disposition at Debtor's
address set forth in Section 3.04. Debtor shall bear any risk of loss of the
Inventory. Debtor shall not use any item of Inventory in a manner inconsistent
with the holding thereof for sale, lease or other disposition in the ordinary
course of business or in contravention of the terms of any agreement. Upon the
occurrence and continuance of an Event of Default and after any applicable cure
period, Debtor shall immediately deliver to Secured Party any checks, cash or
other forms of payment which Debtor receives in connection with any Inventory,
appropriately endorsed.
Section 4.09 Accounts.
(a) Prior to notification by Secured Party under Section 6.02(i), Debtor
will collect the Accounts in the ordinary course of its business and may retain
the proceeds of such collections (subject to Section 4.03).
(b) Debtor shall immediately notify Secured Party in writing in the event
that any representation given in Article III with respect to any Account ceases
to be true and correct in all material respects; such notice specifying other
representation(s) that cease to be true and correct and the action, if any, that
Debtor proposes to take with respect thereto.
(c) Debtor will not modify, extend or substitute any contract, the terms of
which shall at any time have given rise to an Account, except in the ordinary
course of business or with the prior written consent of Secured Party. Debtor
will not re-date any invoice or sale or make sales with an extended payment date
beyond that customary in the industry, and in no event longer than 90 days.
Debtor shall not adjust, settle, discount or compromise any of the Accounts,
except in the ordinary course of business, as permitted by the Credit Agreement
or with the prior written consent of Secured Party.
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(d) Debtor will duly perform or cause to be performed all of Debtor's
obligations with respect to the Accounts and the underlying sales of goods or
other transactions giving rise to the Accounts.
Section 4.10 Condition of Collateral. Debtor will maintain all Collateral
in good condition and in accordance with industry standards and practices.
Debtor will not misuse, abuse, waste, destroy or endanger the Collateral nor
allow it to be used in any manner other than its intended use. Debtor will not
use any Collateral in violation of any Governmental Requirement, or suffer it to
be so used.
Section 4.11 Collateral Separate and Distinct. Debtor shall at all times
keep the Collateral, including proceeds, or cause it to be kept (when in the
possession of warehousemen, bailees, agents, independent contractors or other
third parties), separate and distinct from other Property; provided, however,
proceeds of the Collateral may be kept in various concentration accounts of the
Parent or the Guarantors.
Section 4.12 Change in Debtor's Name or Corporate Structure. Debtor will
not change its name, identity or corporate structure (including, without
limitation, any merger, consolidation or sale of substantially all of its
assets) without notifying Secured Party of such change in writing at least 30
days prior to the effective date of such change. Without the express written
consent of Secured Party, however, Debtor will not engage in any other business
or transaction under any name other than Debtor's name hereunder.
ARTICLE V
Rights, Duties, and Powers of Secured Party
The following rights, duties and powers of Secured Party are applicable
irrespective of whether an Event of Default has occurred and is continuing, but
only after having given Debtor at least three (3) days prior notice:
Section 5.01 Attorney-in-Fact. Secured Party is hereby fully authorized
and empowered (without the necessity of any further consent or authorization
from Debtor) and the right is expressly granted to Secured Party, and Debtor
hereby irrevocably appoints and makes Secured Party as Debtor's
attorney-in-fact, with full authority in the place and stead of Debtor and in
the name of Debtor or otherwise, from time to time in Secured Party's
discretion, but at Debtor's cost and expense to:
(a) obtain, adjust, sell and cancel any insurance with respect to the
Collateral and endorse any draft drawn by insurers of the Collateral, and
Secured Party may apply any proceeds or unearned premiums of such insurance
to the Obligations (whether or not due); and
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(b) take any action and to execute any assignment, certificate,
financing statement, notification, document or instrument which Secured
Party may deem necessary or advisable to accomplish the purposes of this
Security Agreement, including, without limitation, to receive, endorse and
collect all instruments made payable to Debtor representing any payment or
other distribution in respect of the Collateral or any part thereof and to
give full discharge for the same.
Section 5.02 Transfer of Collateral. Secured Party may transfer any or
all of the Obligations, and upon any such transfer, Secured Party may transfer
its interest in any or all of the Collateral and shall be fully discharged
thereafter from all liability therefor. Any transferee of the Collateral shall
be vested with all rights, powers and remedies of Secured Party hereunder.
Section 5.03 Purchase Money Financing. To the extent that the Lenders
have advanced or will advance funds to or for the account of Debtor to enable
Debtor to purchase or otherwise acquire specific types or items of Collateral,
the Lenders may at their option pay such funds (i) directly to the Person from
whom Debtor will make such purchase or acquire such rights or (ii) to Debtor, in
which case Debtor covenants promptly to pay the same to such Person and
forthwith furnish to Secured Party, on request, evidence satisfactory to Secured
Party that such payment has been made from the funds so provided by Secured
Party for such payment.
Section 5.04 Proceeds. If so requested by Debtor, any payments received
by Secured Party on the Accounts or as proceeds of other Collateral shall upon
final collection by Secured Party be credited towards payment of the
Obligations. In the absence of such request from Debtor, and until so
requested, Secured Party may hold such collected payments as cash Collateral
(and Secured Party may at any time place a hold or freeze on all or a part of
any deposit account of Debtor containing deposits of such payments up to the
amount of such deposits).
Section 5.05 Discharge Encumbrances. Secured Party may, at its option,
discharge any taxes, Liens, security interests or other encumbrances at any time
levied or placed on the Collateral, may pay for insurance on the Collateral and
may pay for the maintenance and preservation of the Collateral. Debtor agrees
to reimburse Secured Party upon demand for any payment so made, plus interest on
the portion thereof from time to time remaining unpaid from the date of Secured
Party's demand at the rate for overdue principal and interest set forth in
Section 2.06(c) of the Credit Agreement.
Section 5.06 Disclaimer of Certain Duties.
(a) The powers conferred upon Secured Party by this Security Agreement are
to protect the interest of Secured Party, the Issuing Banks and the Lenders in
the Collateral and shall not impose any duty upon Secured Party, the Issuing
Banks or any Lender to exercise any such powers. Debtor hereby agrees that
Secured Party, the Issuing Banks and the Lenders shall not be liable for, nor
shall the indebtedness evidenced by the Obligations be diminished by,
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Secured Party's delay or failure to collect upon, foreclose, sell, take
possession of or otherwise obtain value for the Collateral.
(b) Except as provided in the Credit Agreement, Secured Party shall be
under no duty whatsoever to make or give any presentment, notice of dishonor,
protest, demand for performance, notice of non-performance, notice of intent to
accelerate, notice of acceleration, or other notice or demand in connection with
any Collateral or the Obligations, or to take any steps necessary to preserve
any rights against any Obligor, Account Debtor or other Person.
Section 5.07 Modification of Obligations; Other Security. Debtor waives
(i) any and all notice of acceptance, creation, modification, rearrangement,
renewal or extension for any period of any instrument executed by any Obligor in
connection with the Obligations and (ii) any defense of any Obligor by reason of
disability, lack of authorization, cessation of the liability of any Obligor or
for any other reason. Debtor authorizes Secured Party, without notice or demand
and without any reservation of rights against Debtor and without affecting
Debtor's liability hereunder or on the Obligations, from time to time to (x)
take and hold other Property, other than the Collateral, as security for the
Obligations, and exchange, enforce, waive and release any or all of the
Collateral, (y) apply the Collateral in the manner permitted by this Security
Agreement and (z) renew, extend for any period, accelerate, amend or modify,
supplement, enforce, compromise, settle, waive or release the obligations of any
Obligor or any instrument or agreement of such other Person with respect to any
or all of the Obligations or Collateral.
Section 5.08 Waiver of Notice; Demand and Presentment; etc. Except for
any notice required under the Credit Agreement, Debtor hereby waives any demand,
notice of default, notice of acceleration of the maturity of the Obligations,
notice of intent to accelerate the maturity of the Obligations, presentment,
protest and notice of dishonor as to any action taken by Secured Party in
connection with this Security Agreement, or any instrument or document. Debtor
waives any right of marshaling in respect of any and all Collateral, and waives
any right to require Secured Party, any Issuing Bank or any Lender to proceed
against any Obligor, Account Debtor or other Person, exhaust any Collateral or
enforce any other remedy which Secured Party, any Issuing Bank or any Lender now
has or may hereafter have against any Obligor or other Person.
Section 5.09 Non-judicial Enforcement. To the fullest extent allowed by
applicable law, Secured Party may enforce its rights hereunder without prior
judicial process or judicial hearing, and to the fullest extent permitted by law
Debtor expressly waives any and all legal rights which might otherwise require
Secured Party to enforce its rights by judicial process.
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ARTICLE VI
Events of Default
Section 6.01 Events of Default. An Event of Default under the Credit
Agreement shall constitute an "Event of Default" under this Security Agreement.
Section 6.02 Remedies. Upon the occurrence and during the continuance of
any Event of Default, Secured Party may take any or all of the following actions
without notice (except where expressly required under the Credit Agreement or
below) or demand to Debtor:
(a) Declare all or part of the indebtedness pursuant to the
Obligations immediately due and payable and enforce payment of the same by
Debtor or any Obligor.
(b) Take possession of the Collateral, or at Secured Party's request
Debtor shall, at Debtor's cost, assemble the Collateral and make it
available at a location to be specified by Secured Party which is reasonably
convenient to Debtor and Secured Party. In any event, Debtor shall bear the
risk of accidental loss or damage to or diminution in value of the
Collateral, and Secured Party shall have no liability whatsoever for failure
to obtain or maintain insurance, nor to determine whether any insurance ever
in force is adequate as to amount or as to risk insured.
(c) Sell or lease, in one or more sales or leases and in one or more
parcels, or otherwise dispose of any or all of the Collateral in its then
condition or in any other commercially reasonable manner as Secured Party
may elect, in a public or private transaction, at any location as deemed
reasonable by Secured Party (including, without limitation, Debtor's
premises), either for cash or credit or for future delivery at such price as
Secured Party may deem fair, and (unless prohibited by the Code, as adopted
in any applicable jurisdiction) Secured Party, any Issuing Bank or any
Lender may be the purchaser of any or all Collateral so sold and may apply
upon the purchase price therefor any Obligations secured hereby. Any such
sale or transfer by Secured Party either to itself or to any other Person
shall be absolutely free from any claim of right by Debtor, including any
equity or right of redemption, stay or appraisal which Debtor has or may
have under any rule of law, regulation or statute now existing or hereafter
adopted. Upon any such sale or transfer, Secured Party shall have the right
to deliver, assign and transfer to the purchaser or transferee thereof the
Collateral so sold or transferred. It shall not be necessary that the
Collateral or any part thereof be present at the location of any such sale
or transfer. Secured Party may, at its discretion, provide for a public
sale, and any such public sale shall be held at such time or times within
ordinary business hours and at such place or places as Secured Party may fix
in the notice of such sale. Secured Party shall not be obligated to make
any sale pursuant to any such notice. Secured Party may, without notice or
publication, adjourn any public or private sale by announcement at any time
and place fixed for such sale, and such sale may be made at any time or
place to which the same may be so adjourned. In the event any sale or
transfer hereunder is not
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completed or is defective in the opinion of Secured Party, such sale or
transfer shall not exhaust the rights of Secured Party hereunder, and
Secured Party shall have the right to cause one or more subsequent sales or
transfers to be made hereunder. In the event that any of the Collateral is
sold or transferred on credit, or to be held by Secured Party for future
delivery to a purchaser or transferee, the Collateral so sold or transferred
may be retained by Secured Party until the purchase price or other
consideration is paid by the purchaser or transferee thereof, but in the
event that such purchaser or transferee fails to pay for the Collateral so
sold or transferred or to take delivery thereof, neither Secured Party, any
Issuing Bank nor any Lender shall incur any liability in connection
therewith. If only part of the Collateral is sold or transferred such that
the Obligations remain outstanding (in whole or in part), Secured Party's
rights and remedies hereunder shall not be exhausted, waived or modified,
and Secured Party is specifically empowered to make one or more successive
sales or transfers until all the Collateral shall be sold or transferred and
all the Obligations are paid. In the event that Secured Party elects not to
sell the Collateral, Secured Party retains its rights to lease or otherwise
dispose of or utilize the Collateral or any part or parts thereof in any
manner authorized or permitted by law or in equity, and to apply the
proceeds of the same towards payment of the Obligations. Each and every
method of disposition of the Collateral described in this Section 6.02(c) or
in Section 6.02(f) shall constitute disposition in a commercially reasonable
manner.
(d) Take possession of all books and records of Debtor pertaining to
the Collateral. Secured Party shall have the authority to enter upon any
real or immoveable property or improvements thereon in order to obtain any
such books or records, or any Collateral located thereon, and remove the
same therefrom without liability.
(e) Apply proceeds of the disposition of the Collateral to the
Obligations in any manner elected by Secured Party and permitted by the Code
or otherwise permitted by law or in equity. Such application may include,
without limitation, the reasonable expenses of retaking, holding, preparing
for sale or other disposition, and the reasonable attorneys' fees and legal
expenses incurred by Secured Party, the Issuing Banks and the Lenders.
(f) Appoint any Person as agent to perform any act or acts necessary
or incident to any sale or transfer by Secured Party of the Collateral.
Additionally, any sale or transfer hereunder may be conducted by an
auctioneer or any officer or agent of Secured Party.
(g) Apply and set-off (i) any deposits of Debtor now or hereafter held
by Secured Party, the Issuing Banks and the Lenders; (ii) all claims of
Debtor against Secured Party, now or hereafter existing; (iii) any other
Property, rights or interests of Debtor which come into the possession or
custody or under the control of Secured Party; and (iv) the proceeds of any
of the foregoing as if the same were included in the Collateral. Secured
Party agrees to notify Debtor promptly after any such set-off or
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application; provided, however, the failure of Secured Party to give any
notice shall not affect the validity of such set-off or application.
(h) With respect to the Collateral, receive, change the address for
delivery, open and dispose of mail addressed to Debtor, and to execute,
assign and endorse negotiable and other instruments for the payment of
money, documents of title or other evidences of payment, shipment or storage
for any form of Collateral on behalf of and in the name of Debtor.
(i) Notify or require Debtor to notify Account Debtors that the
Accounts have been assigned to Secured Party and direct such Account Debtors
to make payments on the Accounts directly to Secured Party. To the extent
Secured Party does not so elect, Debtor shall continue to collect and retain
the Accounts. Secured Party or its designee shall also have the right, in
its own name or in the name of Debtor, to do any of the following: (i) to
demand, collect, receipt for, settle, compromise any amounts due, give
acquittances for, prosecute or defend any action which may be in relation to
any monies due or to become due by virtue of, the Accounts; (ii) to sell,
transfer or assign or otherwise deal in the Accounts or the proceeds thereof
or the related goods, as fully and effectively as if Secured Party were the
absolute owner thereof; (iii) to extend the time of payment of any of the
Accounts, to grant waivers and make any allowance or other adjustment with
reference thereto; (iv) to endorse the name of Debtor on notes, checks or
other evidences of payments on Collateral that may come into possession of
Secured Party; (v) to take control of cash and other proceeds of any
Collateral; (vi) to sign the name of Debtor on any invoice or bill of lading
relating to any Collateral, or any drafts against Account Debtors or other
persons making payment with respect to Collateral; (vii) to send a request
for verification of Accounts to any Account Debtor; and (viii) to do all
other acts and things necessary to carry out the intent of this Agreement.
(j) Exercise all other rights and remedies permitted by law or in
equity.
Section 6.03 Liability for Deficiency. If any sale or other disposition
of Collateral by Secured Party or any Issuing Bank or any other action of
Secured Party, any Issuing Bank or any Lender hereunder results in reduction of
the Obligations, such action will not release Debtor from its liability to
Secured Party, the Issuing Banks and the Lenders for any unpaid Obligations,
including costs, charges and expenses incurred in the liquidation of Collateral,
together with interest thereon, and the same shall be immediately due and
payable to Secured Party at Secured Party's address set forth on the signature
page of this Security Agreement.
Section 6.04 Reasonable Notice. If any applicable provision of any law
requires Secured Party any Issuing Bank or any Lender to give reasonable notice
of any sale or disposition or other action, Debtor hereby agrees that fifteen
(15) days' prior written notice shall constitute reasonable notice thereof.
Such notice, in the case of public sale, shall state the time and place fixed
for such sale and, in the case of private sale, the time after which such sale
is to be made.
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Section 6.05 Account Debtors. Any payment or settlement of an Account
made by an Account Debtor will be, to the extent of such payment or to the
extent provided under such settlement, a release, discharge and acquittance of
the Account Debtor with respect to such Account, and Debtor shall take any
action as may be required by Secured Party in connection therewith. No Account
Debtor on any Account will ever be bound to make inquiry as to the termination
of this Agreement or the rights of Secured Party to act hereunder, but shall be
fully protected by Debtor in making payment directly to Secured Party.
ARTICLE VIII
Miscellaneous
Section 7.01 Notices. Any notice required or permitted to be given under
or in connection with this Security Agreement shall be given in accordance with
the notice provisions of the Guaranty Agreement.
Section 7.02 Amendments and Waivers. Secured Party's, any Issuing Bank's
or any Lender's acceptance of partial or delinquent payments or any forbearance,
failure or delay by the Secured Party in exercising any right, power or remedy
hereunder shall not be deemed a waiver of any obligation of Debtor or any
Obligor, or of any right, power or remedy of Secured Party; and no partial
exercise of any right, power or remedy shall preclude any other or further
exercise thereof. Secured Party may remedy any Event of Default hereunder or in
connection with the Obligations without waiving the Event of Default so
remedied. Debtor hereby agrees that if Secured Party agrees to a waiver of any
provision hereunder, or an exchange of or release of the Collateral, or the
addition or release of any Obligor, any such action shall not constitute a
waiver of any of Secured Party's other rights or of Debtor's obligations
hereunder. This Security Agreement may be amended only by the manner set forth
in Section 9.02 of the Credit Agreement by an instrument in writing executed
jointly by Debtor and Secured Party and may be supplemented only by documents
delivered or to be delivered in accordance with the express terms hereof.
Section 7.03 Copy as Financing Statement. A photocopy or other
reproduction of this Security Agreement or any financing statement covering the
Collateral is sufficient as a financing statement, and the same may be filed
with any appropriate filing authority for the purpose of perfecting Secured
Party's security interest in the Collateral.
Section 7.04 Possession of Collateral. Secured Party shall be deemed to
have possession of any Collateral in transit to it or set apart for it (or, in
either case, any of its agents, affiliates or correspondents).
Section 7.05 Redelivery of Collateral. If any sale or transfer of
Collateral by Secured Party results in full satisfaction of the Obligations, and
after such sale or transfer and discharge there remains a surplus of proceeds,
Secured Party will deliver to Debtor such excess proceeds
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in a commercially reasonable time; provided, however, that neither Secured
Party, any Issuing Bank nor any Lender shall be liable for any interest, cost or
expense in connection with any delay in delivering such proceeds to Debtor.
Section 7.06 Governing Law; Jurisdiction. This Security Agreement and the
security interest granted hereby shall be construed in accordance with and
governed by the laws of the State of Texas (except to the extent that the laws
of any other jurisdiction govern the perfection and priority of the security
interests granted hereby). Debtor consents to and submits to in personam
jurisdiction and venue in the state district and county courts of the county
wherein Secured Party's offices are located at the address specified on the
signature page hereof, and in the Federal District Courts of the district
wherein such offices of Secured Party are located. This submission to
jurisdiction is nonexclusive and does not preclude Secured Party, any Issuing
Bank or any Lender from obtaining jurisdiction over Debtor or the Collateral in
any court otherwise having jurisdiction.
Section 7.07 Cumulative and Other Rights. The rights, powers and remedies
of Secured Party hereunder are in addition to all rights, powers and remedies
given by law or in equity. The exercise by Secured Party, any Issuing Bank or
any Lender of any one or more of the rights, powers and remedies herein shall
not be construed as a waiver of any other rights, powers and remedies,
including, without limitation, any other rights of set-off. If any of the
Obligations are given in renewal, extension for any period or rearrangement, or
applied toward the payment of debt secured by any lien, Secured Party shall be,
and is hereby, subrogated to all the rights, titles, interests and liens
securing the debt so renewed, extended, rearranged or paid.
Section 7.08 Subrogation. Until the Obligations have been paid in full,
Debtor hereby waives any claim, right or remedy which Debtor may now have or
hereafter acquire against the Company which arises out of this Security
Agreement or from the performance by Debtor hereunder, including without
limitation, any claim, remedy or right of subrogation, reimbursement,
exoneration, indemnification, or participation in any such claim, right or
remedy of any other Person against the Company; provided, however,
notwithstanding the foregoing, Debtor reserves its rights of contribution and
reimbursement, if any, from any Obligor. Until the Obligations have been paid
in full, Debtor further waives any benefit of any right to participate in any
security now or hereafter held by Secured Party, the Issuing Banks and/or the
Lenders.
Section 7.09 Continuing Security Agreement.
(a) This Security Agreement shall constitute a continuing security
agreement, and all representations and warranties, covenants and agreements
shall, as applicable, apply to all future as well as existing transactions.
Provisions of this Security Agreement, unless they are by their terms exclusive,
shall be in addition to other agreements between the parties.
(b) Except as may be expressly applicable pursuant to Section 9.505 of the
Code, no action taken or omission to act by Secured Party, the Issuing Banks or
the Lenders hereunder,
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including, without limitation, any action taken or inaction pursuant to Section
6.02, shall be deemed to constitute a retention of the Collateral in
satisfaction of the Obligations or otherwise to be in full satisfaction of the
Obligations, and the Obligations shall remain in full force and effect, until
Secured Party, the Issuing Banks and the Lenders shall have applied payments
(including, without limitation, collections from Collateral) towards the
Obligations in the full amount then outstanding or until such subsequent time as
is hereinafter provided in subsection (c) below.
(c) To the extent that any payments on the Obligations or proceeds of the
Collateral are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, debtor in
possession, receiver or other Person under any bankruptcy law, common law or
equitable cause, then to such extent the Obligations so satisfied shall be
revived and continue as if such payment or proceeds had not been received by
Secured Party, the Issuing Banks or the Lenders, and Secured Party's, the
Issuing Banks' and the Lenders' security interests, rights, powers and remedies
hereunder shall continue in full force and effect. In such event, this Security
Agreement shall be automatically reinstated if it shall theretofore have been
terminated pursuant to Section 7.10.
(d) In the event that the Obligations are structured such that there are
times when no Indebtedness is owing thereunder, this Security Agreement shall
remain valid and in full force and effect as to all subsequent indebtedness
included in the Obligations, provided Secured Party has not in the interim
period executed a written release or termination statement or returned
possession of or reassigned the Collateral to Debtor.
Section 7.10 Termination. The grant of a security interest hereunder and
all of Secured Party's, the Issuing Banks' and the Lenders' rights, powers and
remedies in connection therewith shall remain in full force and effect until
Secured Party has retransferred and delivered all Collateral in its possession
to Debtor, and executed a written release or termination statement and
reassigned to Debtor without recourse or warranty any remaining Collateral and
all rights conveyed hereby. Upon the complete payment of the Obligations and
the compliance by Debtor with all covenants and agreements hereof, Secured
Party, at the written request and expense of Debtor, will release, reassign and
transfer the Collateral to Debtor and declare this Security Agreement to be of
no further force or effect. Notwithstanding the foregoing, the provisions of
Section 7.09(c) shall survive the termination of this Security Agreement.
Section 7.11 Counterparts, Effectiveness. This Security Agreement may be
executed in two or more counterparts. Each counterpart is deemed an original,
but all such counterparts taken together constitute one and the same instrument.
This Security Agreement becomes effective upon the execution hereof by Debtor
and delivery of the same to Secured Party, and it is not necessary for Secured
Party, the Issuing Banks or any Lender to execute any acceptance hereof or
otherwise signify or express its acceptance hereof.
Section 7.12 Headings Descriptive. All titles or headings to articles,
sections, subsections or other divisions of this Security Agreement or the
exhibits hereto are only for the
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convenience of the parties and shall not be construed to have any effect or
meaning with respect to the other content of such articles, sections,
subsections or other divisions, such other content being controlling as to the
agreement between the parties hereto.
Section 7.13 Delivery of Copy/Waiver. The Debtor hereby acknowledges
receiving a copy of this Security Agreement. The Debtor waives all rights to
receive from the Secured Party a copy of any financing statement or financing
change statement filed or registered or verification statement issued at any
time in respect of this Security Agreement.
Section 7.14 Amendment and Restatement. This Security Agreement amends
and restates in its entirety the Prior Security Agreement and all its terms,
provisions and conditions. Debtor acknowledges that the liens, claims, rights,
titles, interests and benefits created and granted by the Prior Security
Agreement continue to exist, remain valid and subsisting, shall not be impaired
or released hereby, shall remain in full force and effect and are hereby
renewed, extended, carried forward and conveyed as security for the Obligations.
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DEBTOR: TESORO REFINING, MARKETING & SUPPLY
COMPANY
By: /s/ G. A. Wright
Name: G. A. Wright
Title: Vice President and Treasurer
Address of Chief Executive Office and Location of
the Collateral:
8700 Tesoro Drive
San Antonio, Texas 78217
SECURED PARTY: BANQUE PARIBAS, AS ADMINISTRATIVE
AGENT
By: /s/ Brian Malone
Name: Brian Malone
Title: Vice President
By: /s/ Barton D. Schouest
Name: Barton D. Schouest
Title: Group Vice President
Address:
1200 Smith Street, Suite 3100
Houston, Texas 77002
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