EXECUTION COPY
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TESORO PETROLEUM CORPORATION
SENIOR SECURED TERM LOANS DUE 2008
8% SENIOR SECURED NOTES DUE 2008
CONTROL AGREEMENT
Dated as of May 16, 2003
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TABLE OF CONTENTS
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PAGE
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ARTICLE I
DEFINITIONS
SECTION 1.01. Credit Agreement and UCC Definitions........................................................2
SECTION 1.02. Rules of Interpretation.....................................................................2
ARTICLE II
ASSET SALE PROCEEDS ACCOUNT
SECTION 2.01. Asset Sale Proceeds Account.................................................................2
SECTION 2.02. Permitted Investments.......................................................................5
SECTION 2.03. Monies Received by the Company..............................................................6
SECTION 2.04. Books of Asset Sale Proceeds Account; Statements............................................7
ARTICLE III
SECURITY AND RELATED PROVISIONS; SECURITIES INTERMEDIARY
SECTION 3.01. Securities Asset Sale Proceeds Account......................................................7
SECTION 3.02. Certain Rights and Powers in Respect of Asset Sale Proceeds Account and Funds...............8
SECTION 3.03. Security Interest..........................................................................10
SECTION 3.04. Duties and Certain Rights of Depositary Agent..............................................11
SECTION 3.05. Remedies...................................................................................17
ARTICLE IV
TERMINATION OF AGREEMENT
SECTION 4.01. Rights and Obligations of Collateral Agent and Depositary Agent............................17
SECTION 4.02. Secured Obligations........................................................................17
ARTICLE V
MISCELLANEOUS
SECTION 5.01. Notices....................................................................................18
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SECTION 5.02. Benefit of Agreement.......................................................................19
SECTION 5.03. No Waiver; Remedies Cumulative.............................................................20
SECTION 5.04. Severability...............................................................................20
SECTION 5.05. Amendments.................................................................................20
SECTION 5.06. Headings...................................................................................20
SECTION 5.07. Governing Law..............................................................................20
SECTION 5.08. CONSENT TO JURISDICTION....................................................................20
SECTION 5.09. WAIVER OF JURY TRIAL.......................................................................21
SECTION 5.10. Successors and Assigns.....................................................................22
SECTION 5.11. Entire Agreement...........................................................................22
SECTION 5.12. Survival of Agreements.....................................................................22
SECTION 5.13. Further Information........................................................................22
SECTION 5.14. Additional Depositary Agent Provisions.....................................................22
SECTION 5.15. Counterparts...............................................................................23
SECTION 5.16. Effectiveness..............................................................................23
SECTION 5.17. Collateral Agent's Obligations.............................................................23
EXHIBIT: A Remittance Instruction Form
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This CONTROL AGREEMENT, dated as of May 16, 2003 (this "Agreement"), is
entered into by and among TESORO PETROLEUM CORPORATION, a Delaware corporation
(the "Company"), The Frost National Bank, as the bank and the securities
intermediary (together with its permitted successors in such capacity, the
"Depositary Agent") and WILMINGTON TRUST COMPANY, as Collateral Agent (together
with its successors in such capacity, the "Collateral Agent").
RECITALS:
1. The Company has borrowed $200,000,000 in principal amount of Term Loans (the
"Initial Term Loans") under the Credit and Guaranty Agreement dated as of April
17, 2003 (the "Term Loan Agreement") by and among the Company, the Guarantors,
the lenders from time to time party thereto, the Administrative Agent (together
with its successors in such capacity, the "Administrative Agent") and Goldman
Sachs Credit Partners L.P., as sole lead arranger, sole bookrunner and
syndication agent.
2. The Company has issued $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
Guarantors and The Bank of New York, as Trustee (together with its successors in
such capacity, the "Trustee").
3. Pursuant to the Term Loan Agreement, the Guarantors guarantee payment of the
Initial Term Loans and all other Term Loan Obligations. Pursuant to the
Indenture, the Guarantors guarantee payment of the Initial Notes and all other
Note Obligations.
4. The Term Loan Agreement and Indenture require the Company and the Guarantors
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.
6. The Depositary Agent has agreed to act as depositary agent and, with
respect to any securities entitlements held by it pursuant to this Agreement, as
securities intermediary pursuant to the terms of this Agreement.
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
SECTION 1.01. Definitions. 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. 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
New York, and not otherwise defined herein shall have the meanings therein set
forth.
SECTION 1.02. Rules of Interpretation. The rules of interpretation or
construction set forth in Section 1.03 of the Term Loan Agreement and Section
1.04 of the Indenture shall apply with like effect to this Agreement.
ARTICLE II
ASSET SALE PROCEEDS ACCOUNT
SECTION 2.01. Asset Sale Proceeds Account.
(a) Establishment of Asset Sale Proceeds Account. The Company
hereby directs the Depositary Agent to establish and maintain at its San Antonio
office an account in the name of the Company (as the entitlement holder)
entitled "Asset Sale Proceeds Blocked Account Subject to the Security Interest
of Wilmington Trust Company, as Collateral Agent" and numbered 61-8083487 (the
"Asset Sale Proceeds Account"). The Asset Sales Proceeds Account shall at all
times be under the sole and exclusive dominion and control of the Collateral
Agent.
(b) Deposits of Net Sale Consideration. The Collateral Agent
and the Company shall, and the Company shall cause each Guarantor to, promptly
deposit or cause to be deposited into the Asset Sale Proceeds Account all Net
Sale Consideration (including all amounts and proceeds (including instruments)
received by the Company, any Guarantor or the Collateral Agent (as loss payee or
additional insured) under any insurance policy maintained by the Company or any
Guarantor or any Person in respect of Collateral (the "Insurance Proceeds") or
any amounts and proceeds (including instruments) received by the Company or any
Guarantor by reason of any means any compulsory transfer or taking by
condemnation, eminent domain or
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exercise of a similar power, or transfer under threat of such compulsory
transfer or taking, of any part of the Collateral, other than an immaterial
portion thereof, by any agency, department, authority, commission, board,
instrumentality or political subdivision of the state in which such Collateral
is located, the United States or another Governmental Authority having
jurisdiction which is not rescinded or revoked within 60 days after the date of
such transfer or taking (the "Eminent Domain Proceeds" and, together with the
Insurance Proceeds, the "Loss Proceeds")).
(c) Withdrawals.
(i) General Provisions Regarding Release of Net Sale
Consideration. Deposits of Net Sale Consideration in the Asset Sales
Proceeds Account, and income therefrom, may be withdrawn only upon
order of the Collateral Agent. Upon the Collateral Agent's receipt of
an Officer's Certificate from the Company stating that a specified
amount of the funds on deposit in the Asset Sale Proceeds Account:
(A) (1) will be used, promptly upon withdrawal from
the Asset Sale Proceeds Account, to acquire a controlling
interest in another business or all or substantially all of
the assets of another business, in each case engaged in a
Permitted Business and principally owing Refinery Assets that
have (in the good faith judgment of the Company) a value, net
of the value of any Credit Facility Collateral included
therein, at least equal to the amount of such Net Sale
Consideration, and income therefrom, or (2) to make capital
expenditures on (including, but not limited to, repairing,
restoring or replacing Collateral which was the subject of a
Minor Loss) or to acquire Refinery Assets, but not to repair
or replace Collateral that has suffered a Major Loss, except
as provided below, in each case, in accordance with the
provisions of Section 4.10 of the Indenture and 5.10 of the
Term Loan Agreement; or
(B) will be applied, promptly upon withdrawal from
the Asset Sale Proceeds Account, to fund payments due to the
Holders of Notes and the Lenders under accepted Collateral
Proceeds Offers made pursuant to Section 4.10 of the Indenture
and Section 5.10 of the Term Loan Agreement; or
(C) have been offered to the Holders of Notes and the
Lenders in compliance with the provisions of Section 4.10 of
the Indenture and Section 5.10 of the Term Loan Agreement in
Collateral Proceeds Offers that were not accepted and have
been released from the Collateral Agent's Liens and are
required to be released to the Company pursuant to such
provisions;
then, if the conditions set forth in Section 3.01 of the Collateral Agency
Agreement are satisfied, the Collateral Agent promptly shall instruct the
Depositary Agent in writing using the form attached hereto as Exhibit A, to
remit such amount to the Company as directed in any remittance instruction
delivered to the Collateral Agent by the Company. The Depositary Agent shall
comply with such instructions.
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(ii) General Provisions Regarding a Major Loss. Provided
that the conditions set forth in clauses (A) or (B) below have been
satisfied or have been waived by the Collateral Agent, if there shall
occur any damage, destruction, condemnation or other similar taking of
Collateral or other event with respect to which Loss Proceeds for any
single loss in excess of $25,000,000 are payable (a "Major Loss") such
Loss Proceeds shall be released by the Collateral Agent to Company in
accordance with clauses (A) and (B) below.
(A) Release with no Provision for Repair, Replacement
or Restoration. If there shall occur any Major Loss and upon
the Collateral Agent's receipt of an Officer's Certificate
from the Company (in addition to such other statements and
certifications required pursuant to Section 2.01(c)(i)):
(1) certifying that the Company has
determined in its good faith judgment not to repair,
restore or replace the property subject to a Major
Loss and that such determination is not expected to
result in a Material Adverse Effect; and
(2) stating that no Default or Event of
Default has occurred and is continuing,
then, such Loss Proceeds shall be released by the Collateral
Agent to Company in accordance with Section 2.01(c)(i).
(B) Repair and Restoration Procedures. In regard to a
Major Loss, the Collateral Agent shall instruct the Depositary
Agent, in writing using the form attached hereto as Exhibit A,
to remit to the Company, from the Asset Sales Proceeds
Account, such amounts as directed in any remittance
instruction delivered to the Collateral Agent by the Company,
and, upon such remittance, the Collateral Agent's Liens
thereon shall be released, for application to such Major Loss,
only in accordance with the following requirements, and the
Depository Agent shall comply with such instructions:
(1) the Company will cause any restoration
or replacement to be commenced and completed promptly
and diligently;
(2) disbursements of Loss Proceeds for
application toward repair, restoration or replacement
shall be instructed by the Collateral Agent upon the
Company's written request and the presentation to the
Collateral Agent of an Officer's Certificate:
(I) describing in reasonable detail the
nature of the proposed repair, restoration or
replacement to be effected with such release;
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(II) if the entity or entities that are
required to pay Loss Proceeds to the Company are not
collectively required to pay for all costs and
expenses associated with completing any repair,
restoration or replacement, without limitation, and
until the final completion of such repair,
restoration or replacement (other than a deductible
which the Company has certified has been paid in
full), then providing (A) a project budget for the
proposed repair, restoration or replacement (which
shall include a 10% contingency allowance) prepared
in good faith and upon reasonable assumptions by the
Company and (B) a certification from the Company that
the aggregate amount requested by the Company in
respect of such repair, restoration or replacement
(when added to (x) any other Loss Proceeds received
by the Company in respect of the event giving rise to
the receipt of such Loss Proceeds, (y) the income
therefrom and (z) other funds as are available or
committed to complete the repair, restoration or
replacement) will provide funding sufficient to pay
the budgeted project costs (including the contingency
allowance) in full to complete such proposed project;
and
(III) stating (A) the reasonably
estimated overall cost of the proposed project, (B)
the specific amount requested to be released from the
Asset Sales Proceeds Account and (C) that such amount
promptly will be applied to pay the costs associated
with such proposed project and, if clause (II) above
is applicable, in accordance with the budget referred
to in clause (II) above;
(IV) stating that no Default or Event
of Default has occurred and is continuing.
(iii) General Provisions Regarding a Minor Loss. If there
shall occur any damage, destruction, condemnation or other similar
taking of Collateral or other event with respect to which Loss Proceeds
for any single loss less than $25,000,000 are payable (a "Minor Loss"),
such Loss Proceeds, and related income, shall be released by the
Collateral Agent to the Company in accordance with Section 2.01(c)(i).
SECTION 2.02. Permitted Investments.
(a) Directing the Making of Investments. No amount on deposit
in the Asset Sale Proceeds Account maintained hereunder or interest paid
thereon, if any, may be held as "investment property" (as defined in Section
9-102(49) of the UCC, and as so defined, the term investment property is used
throughout this Agreement) or invested by the Company (or the Depositary Agent
on its behalf) and the Asset Sale Proceeds Account shall be maintained as a
"deposit account" (as defined in Section 9-102(a)(29) of the UCC), in each case,
unless the
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Depositary Agent has provided its prior written consent (and containing the
agreements with respect thereto), which consent, if any, shall be at the sole
discretion of the Depositary Agent.
(b) Application of Permitted Investments. Permitted
Investments, if any, purchased upon the direction of the Company under the
provisions of this Agreement shall be deemed at all times to be a part of the
Asset Sale Proceeds Account from which funds were withdrawn in order to acquire
the Permitted Investment and shall be deemed to constitute funds on deposit in
and credited to the Asset Sale Proceeds Account, and the income or interest
earned and gains realized in excess of losses suffered by the Asset Sale
Proceeds Account due to the investment of funds deposited therein shall be
credited and retained in the Asset Sale Proceeds Account, except as otherwise
expressly provided by the terms hereof.
(c) Earnings. All earnings, if any, on funds in the Asset Sale
Proceeds Account maintained hereunder shall be credited to the Company for tax
reporting purposes. The Depositary Agent shall provide to the Company a
statement with respect to all interest earned on the Asset Sale Proceeds Account
as of the close of each calendar year for which income is earned on the Asset
Sale Proceeds Account. The Company shall provide the Depositary Agent with its
taxpayer identification number, documented, to the extent necessary, by an
appropriate executed Form W-9, upon execution of this Agreement. This form
shall, to the extent necessary, be renewed as required by the Internal Revenue
Service and provided to the Depositary Agent. The Depositary Agent shall be
entitled to rely on an opinion of legal counsel (which may be counsel to the
Company) in connection with the reporting of any earnings with respect hereto.
(d) Liquidation of Investments for Distributions. The
Collateral Agent is hereby authorized to direct the Depositary Agent, in writing
using the form attached hereto as Exhibit A, to liquidate or direct the
liquidation of any Permitted Investment (without regard to maturity) in order to
make or cause to be made any application required by any Section of this Article
2. In furtherance, and not in limitation, of any other indemnity or limitation
of liability with respect to the Collateral Agent contained herein or in any
other Term Loan Document or Note Document, the Collateral Agent and the
Depositary Agent shall in no way be liable for any losses suffered by the
Company, including losses due to early liquidation or market risk, which are a
result of the Collateral Agent's exercise of its authority under this provision.
(e) Value of Permitted Investments. Permitted Investments, if
any, credited to the Asset Sale Proceeds Account shall be valued at their
current market value.
SECTION 2.03. Monies Received by the Company. In the event that the Company or
any Guarantor receives any cash or Cash Equivalents constituting Net Sale
Consideration (including any Loss Proceeds) or other amounts required by the
terms hereof to be deposited into the Asset Sale Proceeds Account, the Company
shall, or shall cause such Guarantor to, hold the same in precisely the form
received in trust for and on behalf of the Secured Parties, segregated from
other funds of the Company or such Guarantor, and without any notice or demand
whatsoever, shall promptly deliver the same to the Depositary Agent for
application in accordance with the terms of this Agreement. No balance in, or
financial asset or other asset credited to, the Asset
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Sale Proceeds Account maintained hereunder shall be disbursed or transferred by
the Depositary Agent, except in accordance with the provisions hereof.
SECTION 2.04. Books of Asset Sale Proceeds Account; Statements. The Depositary
Agent shall maintain books of account on a cash basis and record therein all
deposits into and transfers to and from the Asset Sale Proceeds Account and all
investment transactions effected by the Depositary Agent pursuant to the terms
hereof, and any such recordation shall constitute prima facie evidence of the
information recorded. Not later than the tenth Business Day of each month or as
soon as practicable thereof, but in no event later than the twentieth calendar
day of each month, commencing with the first month to occur after the earliest
of the receipt of Net Sale Consideration into the Asset Sale Proceeds Account in
accordance with the terms hereof, the Depositary Agent shall deliver to the
Company a statement setting forth the transactions in the Asset Sale Proceeds
Account during the preceding month (including deposits, withdrawals and
transfers from and to the Asset Sale Proceeds Account) and specifying the Net
Sale Consideration, Permitted Investments and other amounts held in or credited
to the Asset Sale Proceeds Account at the close of business on the last Business
Day of the preceding month. In addition, the Depositary Agent shall promptly
respond (during normal business hours) to requests by the Company for
information regarding deposits, investments and transfers into, in respect of
the Asset Sale Proceeds Account.
ARTICLE III
SECURITY AND RELATED PROVISIONS; SECURITIES INTERMEDIARY
SECTION 3.01. Securities Asset Sale Proceeds Account.
(a) Acknowledgement. The Depositary Agent hereby agrees and
confirms that the Depositary Agent has established the Asset Sale Proceeds
Account as set forth and defined in this Agreement.
(b) Agreement. Each of the parties hereto agrees that:
(i) the Asset Sale Proceeds Account will be maintained,
to the extent that "financial assets" (within the meaning of Section
8-102(a)(9) of the UCC, and as so defined the term financial asset is
so used throughout this Agreement) are deposited therein or credited
thereto, as a "securities account" (within the meaning of Section 8-501
of the UCC), and, to the extent that credit balances not constituting
financial assets are credited thereto, as a "deposit account" (within
the meaning of Section 9-102(a)(29) of the UCC);
(ii) the Company is an "entitlement holder" (within the
meaning of Section 8-102(a)(7) of the UCC) in respect of any "financial
assets" credited to the Asset Sale Proceeds Account;
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(iii) all property (including a security, security
entitlement, investment property, instrument or obligation, share,
participation, interest, cash or other property whatsoever) delivered
to the Depositary Agent will be promptly credited by the Depositary
Agent to the Asset Sale Proceeds Account by an appropriate entry in its
records in accordance with this Agreement;
(iv) all financial assets and other assets in registered
form or payable to or to order and credited to the Asset Sale Proceeds
Account shall be registered in the name of, payable to or to the order
of, or specially endorsed to, the Depositary Agent or in blank, or
credited to another securities account maintained in the name of the
Depositary Agent, and in no case will any such financial asset or other
asset be credited to the Asset Sale Proceeds Account at any time, if,
at such time, such asset is registered in the name of, payable to or to
the order of, or endorsed to, the Collateral Agent (in such capacity)
or the Company, except to the extent the foregoing have been
subsequently endorsed by the Collateral Agent (in such capacity) or the
Company to the Depositary Agent or in blank;
(v) the Depositary Agent is acting as "securities
intermediary" (within the meaning of Section 8-102(a)(14) of the UCC)
with respect to the Asset Sale Proceeds Account and financial assets
deposited therein or credited thereto and as a "bank" (within the
meaning of Section 9-304 of the UCC) with respect to the Asset Sale
Proceeds Account and credit balances not constituting financial assets
credited thereto; and
(vi) the Depositary Agent shall not change the name or
account number of the Asset Sale Proceeds Account without the prior
written consent of the Collateral Agent.
SECTION 3.02. Certain Rights and Powers in Respect of Asset Sale Proceeds
Account and Funds.
(a) Rights to Asset Sale Proceeds Account. The Company shall
not make, attempt to make or consent to the making of any withdrawal or transfer
from the Asset Sale Proceeds Account except in strict adherence to the terms and
conditions of this Agreement. The Company shall not have any rights or powers
with respect to the remittance of amounts credited to, the disbursement of
credited amounts out of, or the investment of credited amounts in, the Asset
Sale Proceeds Account, except to have amounts credited thereto applied in
accordance with this Agreement; provided, however, that the parties hereto
acknowledge and agree that the foregoing provisions of this Section 3.02(a)
shall not be deemed to divest the Company of its interest as an "entitlement
holder" under the UCC, as provided in this Agreement.
(b) Certain Powers of the Collateral Agent and the Depositary
Agent. The Collateral Agent and, where appropriate, the Depositary Agent will
have the right, but not the obligation, to (i) refuse any item for credit to the
Asset Sale Proceeds Account except as required by the terms of this Agreement
and (ii) refuse to honor any request for transfer on the Asset Sale Proceeds
Account which is not consistent with this Agreement. If the Company fails to
perform
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any agreement contained herein and such failure to perform is continuing for a
period of 30 days, the Collateral Agent may itself perform, or cause the
performance of, such agreement, and the expenses of the Collateral Agent
incurred in connection therewith shall be payable by the Company upon written
demand. The Company hereby irrevocably appoints the Collateral Agent as the
Company's attorney-in-fact, with full authority in the place and stead of the
Company, and in the name of the Company 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 which the
Collateral Agent may deem necessary or advisable to accomplish the purposes of
this Agreement, including:
(i) to ask, demand, collect, sue for, recover,
compromise, receive and give acquittance and receipts for moneys due
and to become due under or in respect of any of the Asset Sale Proceeds
Account or the proceeds of financial assets or other assets held
therein or credited thereto;
(ii) to receive, endorse, and collect any drafts or other
instruments, documents and chattel paper, in connection with clause (i)
above;
(iii) to file any claims or take any action or institute
any proceedings which the Collateral Agent may deem necessary or
desirable for the collection of any of the Asset Sale Proceeds Account
or the proceeds of financial assets or other assets held therein or
credited thereto or otherwise to enforce the rights of the Collateral
Agent with respect to the Asset Sale Proceeds Account or the proceeds
of financial assets or other assets held therein or credited thereto,
provided that, with respect to this clause (iii), such rights shall be
exercised in accordance with Section 3.06; and
(iv) to perform the affirmative obligations of the
Company hereunder if, and to the extent that, the Company fails to
perform such obligations and such failure to perform is continuing for
a period of 30 days.
The Company hereby acknowledges, consents and agrees that the power of attorney
granted pursuant to this Section 3.02(b) is irrevocable and coupled with an
interest. The powers conferred on the Collateral Agent hereunder are solely to
protect its interest (on behalf of the applicable Secured Parties) in the Asset
Sale Proceeds Account and the proceeds of financial assets and other assets held
therein or credited thereto and shall not impose any duty on the Collateral
Agent to exercise any such powers. Except for the reasonable care of the Asset
Sale Proceeds Account in its possession or under its control (as the case may
be) and the accounting for moneys actually received by it hereunder, neither the
Depositary Agent nor the Collateral Agent shall have any duty as to the Asset
Sale Proceeds Account or the proceeds of financial assets or other assets held
therein or credited thereto, or as to the taking of any necessary steps to
preserve rights against prior parties or any other rights pertaining to the
Asset Sale Proceeds Account or proceeds. Each of the Depositary Agent and the
Collateral Agent is required to exercise reasonable care in the custody and
preservation of the Asset Sale Proceeds Account and the financial assets and
other assets held therein or credited thereto in its possession or under its
control (as the case may be); provided, however, that the Collateral Agent in
any event shall be
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deemed to have exercised reasonable care in the custody and preservation of the
Asset Sale Proceeds Account if it takes such action for that purpose as the
Company reasonably requests in writing at times other than upon the occurrence
and during the continuance of any Event of Default, but, notwithstanding the
foregoing, the failure of the Collateral Agent to comply with any such request
at any time shall not in itself be deemed a failure to exercise reasonable care.
SECTION 3.03. Security Interest.
(a) Grant. To secure the timely payment in full in cash and
performance in full of the Secured Obligations of the Company, the Company does
hereby assign, grant, hypothecate and pledge to, and grant a first priority
security interest in favor of the Collateral Agent, on behalf of and for the
sole and exclusive benefit of the Secured Parties on all the estate, right,
title, interest and security entitlements of the Company, whether now owned or
hereafter acquired, in the Asset Sale Proceeds Account and in all cash, cash
equivalents, instruments, investments, other securities, financial assets and
other assets held therein or credited thereto and all proceeds thereof,
including all rights of the Company to receive moneys due in respect of such
Asset Sale Proceeds Account, all claims with respect to such Asset Sale Proceeds
Account, all income or gain earned in respect of the financial assets and other
assets held in or credited to such Asset Sale Proceeds Account, and all proceeds
receivable or received when any financial asset or other asset held in or
credited to an Asset Sale Proceeds Account is collected, exchanged or otherwise
disposed of, whether voluntarily or involuntarily.
(b) Acknowledgment. The Depositary Agent hereby acknowledges
the first priority security interest in, and the pledge by the Company to the
Collateral Agent for the benefit of the Secured Parties of all of the Company's
assets held in or credited to the Asset Sale Proceeds Account and all proceeds
thereof, and will so indicate on the records maintained by the Depositary Agent
with respect to the Asset Sale Proceeds Account. The Depositary Agent agrees to
hold all such assets for the purposes of, and on the terms set forth in, this
Agreement.
(c) Other Liens; Adverse Claim.
(i) The Company represents and warrants that:
(A) it has not assigned any of its rights under the
Asset Sale Proceeds Account;
(B) it has not executed and is not aware of any
effective financing statement, security agreement, control
agreement or other instrument similar in effect covering all
or any part of the Asset Sale Proceeds Account except in favor
of the Collateral Agent; and
(C) it has full power and authority to grant a
security interest in and assign its right, title and interest
in the Asset Sale Proceeds Account and all financial assets
and other assets held therein or credited thereto and all
proceeds thereof hereunder.
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(ii) The Company represents, warrants and covenants that
it has not granted, and shall not grant, to any Person other than the
Collateral Agent any interest in Asset Sale Proceeds Account and that
it has kept, and shall keep, the Asset Sale Proceeds Account free from
all Liens other than Permitted Liens.
(iii) The Depositary Agent represents and warrants that
it has no knowledge (without having conducted an independent
investigation) of any Lien on the Asset Sale Proceeds Account other
than the claims and interest of the parties hereto as provided herein.
In the event that the Depositary Agent has or subsequently obtains by
agreement, operation of law or otherwise a security interest in the
Asset Sale Proceeds Account or any financial asset or other asset
credited thereto, the Depositary Agent hereby agrees that such security
interest shall be subordinate to the security interest of the
Collateral Agent for the benefit of the Secured Parties.
(iv) Each of the Collateral Agent and the Depositary
Agent represents and warrants that it has no notice (without having
conducted an independent investigation) of any adverse claim to the
financial assets or other assets deposited in or credited to the Asset
Sale Proceeds Account or to security entitlements with respect thereto.
(v) The financial assets and other assets credited to the
Asset Sale Proceeds Account shall not be subject to deduction, set-off,
banker's lien, or any other right in favor of any Person other than the
Collateral Agent, except as set forth in clause (vi) below.
(vi) The Company authorizes the Depositary Agent to debit
its primary account number 01-0322466 to pay for all usual and
customary service charges, transfer fees and account maintenance fees
of the Depositary Agent in connection with the Asset Sale Proceeds
Account. If the Company has insufficient funds in its primary account
to pay such charges and fees, the Depositary Agent may thereafter
exercise its right of set-off against amounts on deposit in the Asset
Sale Proceeds Account, but only to the extent of such fees in respect
of the Asset Sale Proceeds Account.
SECTION 3.04. Duties and Certain Rights of Depositary Agent.
(a) General. The duties of the Depositary Agent shall be
determined solely by the express provisions of this Agreement and by applicable
law and no duties, implied covenants or obligations shall be read into this
Agreement against the Depositary Agent as depositary agent, securities
intermediary and bank.
(b) Acceptance of Appointment. The Depositary Agent hereby
agrees to act as depositary agent and securities intermediary with respect to
the Asset Sale Proceeds Account and pursuant to this Agreement. The other
parties hereto hereby acknowledge that the Depositary Agent shall act as
depositary agent, securities intermediary and bank with respect to the Asset
Sale Proceeds Account and pursuant to this Agreement.
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(c) Financial Assets Election. The Depositary Agent hereby
agrees that each item of property (including a security, security entitlement,
investment property, instrument or obligation, share or participation) credited
to the Asset Sale Proceeds Account shall be treated as a financial asset under
Article 8 of the UCC other than cash from time to time and at any time deposited
in the Asset Sale Proceeds Account, and interest accrued or paid thereon.
(d) Negative Pledge. Subject to the terms of this Agreement,
the Depositary Agent hereby agrees that it shall not grant any Lien in the
financial assets and other assets that it is obligated to maintain under this
Agreement.
(e) Entitlement Orders, Instructions. If at any time the
Depositary Agent shall receive any entitlement order, instruction or any other
order from the Collateral Agent directing the transfer or redemption of any
financial asset or other asset relating to the Asset Sale Proceeds Account, or
directing the disposition of any funds in the Asset Sale Proceeds Account, the
Depositary Agent shall comply with such entitlement order, instruction or other
order without further consent by the Company or any other Person. The parties
hereto agree that until the Depositary Agent's obligations under this Agreement
shall terminate in accordance with the terms hereof, the Collateral Agent shall
have control of each of the Company's security entitlements with respect to the
financial assets and other assets credited to the Asset Sale Proceeds Account;
provided, however, that the Company, as the entitlement holder with respect to
the financial assets credited to the Asset Sale Proceeds Account and the Person
for whom the Asset Sale Proceeds Account are maintained, is entitled, subject to
Section 2.02 and the other provisions of this Agreement, to make substitutions
for the security entitlements with respect to the financial assets credited to
the Asset Sale Proceeds Account. The Depositary Agent hereby represents that it
has not entered into, and agrees that, until the termination of this Agreement
and the other Term Loan Documents or Note Documents in accordance their terms,
it will not enter into, any agreement with any other Person in respect such
Asset Sale Proceeds Account pursuant to which it would agree to comply with
entitlement orders made by such Person.
(f) Degree of Care. The Depositary Agent shall exercise due
care in accordance with reasonable commercial standards in administering the
Asset Sale Proceeds Account, accounting for assets credited to the Asset Sale
Proceeds Account and performing its duties as a bank with respect to the Asset
Sale Proceeds Account, and to the extent that any "investment property" is on
deposit, accounting for financial assets and other assets credited to the Asset
Sale Proceeds Account and performing its duties as securities intermediary with
respect to the Asset Sale Proceeds Account and, in each case, such assets
deposited therein or credited thereto and the credit balances credited thereto
under this Agreement.
(g) Action Upon Notices; Exercise of Judgment. The Depositary
Agent shall be permitted to conclusively rely and act upon any notice,
entitlement order, instruction, request, waiver, consent, receipt or other paper
or document whether in its original or facsimile form reasonably believed by the
Depositary Agent to be signed by the Collateral Agent, the Company or any other
authorized Person. The Depositary Agent shall not be liable for any error of
judgment or for any act done or step taken or omitted by it in good faith or for
any mistake of fact or law or for anything which the Depositary Agent may do or
refrain from doing in
12
connection herewith, except its own gross negligence or willful misconduct. The
Depositary Agent shall have duties only to the Collateral Agent (on behalf of
the Secured Parties).
(h) Indemnification and Liability. In consideration of the
appointment of Depositary Agent, the Company agrees:
(i) to fully indemnify and hold the Depositary Agent and
each Affiliate, officer, director, shareholder, employee and agent of
the Depositary Agent (each, an "Indemnified Person") harmless from and
against any and all claim, loss, liability, damage, cost or expense
(including reasonable legal fees and expenses) incurred by the
Indemnified Person by reason of or resulting from this Agreement
(including its having accepted such appointment or by reason of its
carrying out of any of the terms of this Agreement); and
(ii) to reimburse each Indemnified Person for all its
expenses, including reasonable fees and expenses of counsel and court
costs incurred by reason of any position or action taken by the
Indemnified Person pursuant to this Agreement or in connection with any
action brought to interpret or enforce the provisions of this Agreement
or any part thereof;
except, with respect to each of clauses (i) and (ii), to the extent that any
such claim, loss, liability, damage, cost or expense is determined by a court of
competent jurisdiction in a final non-appealable judgment to have been caused by
the Indemnified Person's gross negligence or willful misconduct. The parties
hereto hereby agree that no Indemnified Person shall be liable to such parties
for any actions taken by any Indemnified Person pursuant to and in compliance
with the terms hereof except in respect of any liability or expenses incurred by
the Indemnified Person arising from its gross negligence or willful misconduct.
Any Indemnified Person may consult with legal counsel of its selection in the
event of any dispute or question as to the construction of this Agreement or the
Indemnified Person's duties hereunder, and the Indemnified Person shall incur no
liability and shall be fully protected in acting in accordance with the opinion
and instructions of such counsel.
(i) Court Orders. The Depositary Agent is hereby authorized,
in its exclusive discretion, to obey and comply with all writs, orders,
judgments or decrees issued by any court or administrative agency affecting the
Asset Sale Proceeds Account or any financial asset credited to the Asset Sale
Proceeds Account. The Depositary Agent shall not be liable to any of the parties
hereto, their successors or assigns by reason of the Depositary Agent's
compliance with such writs, orders, judgments or decrees, notwithstanding that
such writ, order, judgment or decree may later be reversed, modified, set aside
or vacated.
(j) Resignation and Termination.
(i) The Depositary Agent may at any time resign by giving
notice to each other party to this Agreement, such resignation to be
effective upon the appointment of a successor Depositary Agent as
provided below. The Collateral Agent may remove
13
the Depositary Agent at any time by giving notice to each other party
to this Agreement, such removal to be effective upon the appointment of
a successor Depositary Agent as provided below.
(ii) In the event of any removal of the Depositary Agent,
a successor Depositary Agent, which shall be a bank or trust company
organized under the laws of the United States of America or of the
State of New York capable of acting as a "securities intermediary"
(within the meaning of Section 8-102(a)(14) of the UCC) and a "bank"
(within the meaning of Section 9-102(a)(8) of the UCC), having a
corporate trust office in New York, New York and a capital and surplus
of not less than $50,000,000, shall be appointed by the Collateral
Agent upon agreement by the Company, and such agreement shall not be
unreasonably withheld. If a successor Depositary Agent shall not have
been appointed and accepted its appointment as Depositary Agent within
45 days after such notice of removal of the Depositary Agent, the
Depositary Agent, the Collateral Agent or the Company may apply to any
court of competent jurisdiction at the expense of the Company to
appoint a successor Depositary Agent to act until such time, if any, as
a successor Depositary Agent shall have accepted its appointment as
provided above. Any such successor Depositary Agent shall deliver to
each party to this Agreement a written instrument accepting such
appointment and thereupon:
(A) the Company or the Collateral Agent shall deliver
an entitlement order, instruction or any other order to the
predecessor Depositary Agent directing it to transfer to the
successor Depositary Agent all balances deposited in and all
financial assets and other assets credited to, the Asset Sale
Proceeds Account;
(B) the successor Depositary Agent shall establish
and maintain at its New York office the Asset Sale Proceeds
Account and deposit in and credit to the Asset Sale Proceeds
Account all financial assets and other assets from the Asset
Sale Proceeds Account maintained by the predecessor Depositary
Agent transferred by the predecessor Depositary Agent to the
successor Depositary Agent; and
(C) the successor Depositary Agent shall succeed to
all the rights and duties of the Depositary Agent under this
Agreement and under applicable law.
(iii) In the event of any resignation of the Depositary
Agent, a successor Depositary Agent, which shall be a bank or trust
company organized under the laws of the United States of America or of
any state thereof capable of acting as a "securities intermediary"
(within the meaning of Section 8-102(a)(14) of the UCC) and a "bank"
(within the meaning of Section 9-102(a)(8) of the UCC) and having a
capital and surplus of not less than $50,000,000, shall be appointed by
the Collateral Agent upon agreement by the Company, and such agreement
shall not be unreasonably withheld.
14
Any such successor Depositary Agent shall deliver to each party to this
Agreement a written instrument accepting such appointment and
thereupon:
(A) the Company or the Collateral Agent shall deliver
an entitlement order, instruction or any other order to the
predecessor Depositary Agent directing it to transfer to the
Collateral Agent all balances deposited in and all financial
assets credited to, the Asset Sale Proceeds Account;
(B) the successor Depositary Agent shall establish
and maintain at its New York office the Asset Sale Proceeds
Account and deposit in and credit to the Asset Sale Proceeds
Account all financial assets and other assets from the Asset
Sale Proceeds Account maintained by the predecessor Depositary
Agent transferred by the predecessor Depositary Agent to the
successor Depositary Agent; and
(C) the successor Depositary Agent, unless the
Collateral Agent is acting in such capacity, shall succeed to
all the rights and duties of the Depositary Agent under this
Agreement and under applicable law.
(iv) In the event that a successor Depositary Agent is
not appointed within 30 Business Days after such notice of resignation
of the Depositary Agent:
(A) the Depositary Agent shall, if any "investment
property" is then on deposit, liquidate such investments;
(B) the Collateral Agent shall act as the successor
to the Depositary Agent until such time as a successor
Depositary Agent is appointed pursuant to Section
3.04(j)(iii), and in so acting shall maintain a deposit
account as the Asset Sale Proceeds Account to be held in the
name of the Collateral Agent, and shall succeed to all the
rights and duties of the Depositary Agent under applicable
law;
(C) the provisions of Article 2 shall survive the
termination of this Agreement and shall continue to apply to
such account held by the Collateral Agent into which the
predecessor Depositary Agent has transferred all balances
deposited in the Asset Sale Proceeds Account; and
(D) the Company shall deliver to the Collateral Agent
such legal opinion or opinions and such other documentation,
in each case, in form and substance satisfactory to the
Collateral Agent.
In the event of the resignation or termination of the Depositary Agent, the
Depositary Agent shall be entitled to its fees and expenses in accordance with
the terms hereof up to the time such resignation becomes effective in accordance
with this Section 3.04(j).
15
(k) General.
(i) No provision of this Agreement shall require the
Depositary Agent to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties hereunder,
or in the exercise of any of its rights or powers, except to the extent
resulting from the gross negligence or willful misconduct of the
Depositary Agent.
(ii) All written directions and instructions (which may
be provided by facsimile transmission) by the Company or the Collateral
Agent to the Depository Agent pursuant to this Agreement shall be
executed by an authorized signatory of the Company or the Collateral
Agent, as applicable.
(iii) The Depository Agent shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, or any other evidence
of indebtedness or other paper or document, but the Depositary Agent,
in its discretion, may make further inquiry or investigation into such
facts or matters as it may see fit.
(iv) The Depository Agent shall not be liable for any
action taken, suffered, or omitted to be taken by it in good faith and
reasonably believed by it to be authorized or within the discretion or
rights or powers conferred upon it by this Agreement.
(v) The Depositary Agent shall not be deemed to have
notice of any Default or Event of Default unless the Depositary Agent
has actual knowledge thereof or unless written notice thereof is
received by the Depositary Agent.
(vi) The Depositary Agent shall be under no obligation to
notify the Collateral Agent of any Event of Default or any other event
except for those events for which this Agreement specifically provides
that such notice is required.
(vii) If any checks, drafts or other items deposited in
the Asset Sale Proceeds Account are returned or unpaid or otherwise
dishonored, the Depositary Agent shall have the right to charge any and
all such returned or dishonored items against the Asset Sale Proceeds
Account or to demand reimbursement therefor directly from the Company.
(viii) In no event shall the Depositary Agent be liable
for losses or delays resulting from computer malfunction, interruption
of communication facilities, labor difficulties, in each case, that are
beyond the Depositary Agent's reasonable control or other causes beyond
the Depositary Agent's reasonable control or for indirect, special or
consequential damages.
16
SECTION 3.05. Remedies. If an Event of Default shall have occurred and be
continuing:
(i) the Collateral Agent may exercise in respect of the
Asset Sale Proceeds Account, in addition to other rights and remedies
provided for herein or otherwise available to it, all the rights and
remedies of a secured party on default under the UCC at that time and
consistent with the provisions of the other Term Loan Documents or Note
Documents, including the right to proceed to protect and enforce the
rights vested in it by this Agreement, to sell, liquidate or otherwise
dispose of the Asset Sale Proceeds Account, and to cause the Asset Sale
Proceeds Account to be sold, liquidated or otherwise disposed of, in
each case in such manner as the Collateral Agent may elect; and
(ii) the proceeds of any financial assets and other
assets credited to or held in the Asset Sale Proceeds Account and all
cash proceeds received by the Collateral Agent in respect of any sale
of, collection from or other realization upon all or any part of the
Asset Sale Proceeds Account may, in the discretion of the Collateral
Agent, then or at any time thereafter, be applied (after payment of any
amounts payable to the Depositary Agent pursuant to the terms hereof)
in whole or in part by the Collateral Agent against all or any part of
the Secured Obligations of the Company in accordance with the
Collateral Agency Agreement.
No right, power or remedy herein conferred upon or reserved to the Collateral
Agent is intended to be exclusive of any other right, power or remedy and every
such right, power and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right, power and remedy given
hereunder or now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder or otherwise shall not
prevent the concurrent assertion or employment of any other appropriate right or
remedy. Resort to any or all security now or hereafter held by the Collateral
Agent may be taken concurrently or successively and in one or several
consolidated or independent judicial actions or lawfully taken nonjudicial
proceedings, or both.
ARTICLE IV
TERMINATION OF AGREEMENT
SECTION 4.01. Rights and Obligations of Collateral Agent and Depositary Agent.
The rights and powers granted herein to the Collateral Agent have been granted
in order, among other things, to perfect its security interests in the Asset
Sale Proceeds Account, are powers coupled with an interest, and will neither be
affected by the bankruptcy of the Company nor by the lapse of time. Except as
otherwise provided herein, the obligations of the Depositary Agent hereunder
shall continue in effect until the security interests of the Collateral Agent in
the Asset Sale Proceeds Account have been terminated pursuant to the terms of
this Agreement, the other Term Loan Documents and Note Documents and the
Collateral Agent has notified the Depositary Agent of such termination in
writing.
SECTION 4.02. Secured Obligations. When each of the Term Loan Agreement and the
Indenture has expired or has otherwise terminated and all Secured Obligations of
the Company
17
to the Secured Parties under the Term Loan Documents and the Notes Documents
have been paid in full, all commitments thereunder have terminated, all of the
Hedging Obligations owed to any Secured Party have terminated, all right, title
and interest of the Collateral Agent in the Asset Sale Proceeds Account shall be
released. At such time, the Collateral Agent shall notify the Depositary Agent
in writing using the form attached hereto as Exhibit A to, and upon such
notification the Depositary Agent shall, pay any amounts (including Permitted
Investments) then remaining in the applicable Asset Sale Proceeds Account to the
Company. No termination of any interest of a Secured Party hereunder shall
affect the rights of any other Secured Party hereunder.
ARTICLE V
MISCELLANEOUS
SECTION 5.01. 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:
18
If to the Collateral Agent: Wilmington Trust Company
Attention: Mary St. Amand
Assistant Vice President
Corporate Trust Administration
1100 North Market Street
Wilmington, DE 19890
Phone: 302-636-6436
Fax: 302-636-4145
If to the Company: Tesoro Petroleum Corporation
Attention: Finance Department
300 Concord Plaza Drive
San Antonio, TX 78216-6999
Phone: 210-828-8484
Fax: 210-283-2080
If to the Depositary Agent: The Frost National Bank
100 West Houston Street
San Antonio, TX 78205
Attention: Jennifer Slator
Phone: 210-220-5388
Fax: 210-220-6816
With a copy to: The Frost National Bank
100 West Houston Street
San Antonio, TX 78205
Attention: Deposit Services
Phone: 210-220-4711
Fax: 210-220-4681
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 any Agent shall be
effective until received by such Agent. 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 5.02. 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.
19
SECTION 5.03. No Waiver; Remedies Cumulative. No failure or delay on the part of
the Collateral Agent or the Depositary 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 and the Depositary 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 5.04. 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.
SECTION 5.05. 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 5.06. 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 5.07. Governing Law. This Agreement, including all matters of
construction, validity, performance and the creation, validity, enforcement or
priority of the lien of, and security interests created by, this Agreement in or
upon the Asset Sale Proceeds Account shall be governed by the laws of the State
of New York, without reference to conflicts of law (other than Section 5-1401 of
the New York General Obligations Law), except as required by mandatory
provisions of law and except to the extent that the validity or perfection of
the lien and security interest hereunder, or remedies hereunder, in respect of
the Asset Sale Proceeds Account are governed by the laws of a jurisdiction other
than the State of New York. Regardless of any provision in any other agreement,
for purposes of the UCC, the jurisdiction of the Depositary Agent as securities
intermediary (under Section 8-110(e) of the UCC) and as bank (under Section
9-304(b) of the UCC) with respect to the Asset Sale Proceeds Account is the
State of New York.
SECTION 5.08. CONSENT TO JURISDICTION. ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST
ANY PARTY HERETO ARISING OUT OF OR RELATING HERETO OR ANY OTHER TERM LOAN
DOCUMENT OR NOTE 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 NEW YORK. BY EXECUTING AND DELIVERING THIS AGREEMENT, EACH PARTY HERETO, FOR
ITSELF AND IN CONNECTION WITH ITS PROPERTIES,
20
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 5.01; (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 AGENTS AND SECURED PARTIES
RETAIN 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 5.09. 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
NOTE DOCUMENTS OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF
THIS CONTROL AGREEMENT 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 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 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 SUBJECT MATTER OF THIS AGREEMENT. IN THE
EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL
BY THE COURT.
21
SECTION 5.10. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns, provided that (a) the Company may not assign or otherwise
transfer any of its rights or obligations hereunder without the prior written
consent of the Collateral Agent (which consent may be withheld in its sole
discretion) and (b) the Depositary Agent may only assign or otherwise transfer
any of its rights or obligations hereunder in accordance with the terms of this
Agreement.
SECTION 5.11. 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 5.12. Survival of Agreements. The provisions regarding the payment of
expenses and indemnification obligations, including Section 3.04(h) and the
provisions set forth in Sections 3.04(j) and 5.14, and in the event that the
Depositary Agent resigns in accordance with Section 3.04(j)(iii) or 3.04(j)(iv),
Article 2 shall survive and remain in full force and effect regardless of the
consummation of the transactions contemplated hereby, the expiration or
termination of the Term Loan Agreement or the Indenture, the payment in full of
all Secured Obligations, the termination of any commitments thereunder, or the
termination of this Agreement or any provision hereof.
SECTION 5.13. Further Information. The Depositary Agent shall promptly provide
the Collateral Agent and the Company with any information reasonably requested
by the Collateral Agent or the Company concerning balances in the Asset Sale
Proceeds Account and payments from the Asset Sale Proceeds Account.
SECTION 5.14. Additional Depositary Agent Provisions. The Depositary Agent may
engage or be interested in any financial or other transactions with any party to
this Agreement and may act on, or as depositary, trustee or agent for, any
committee or body of holders of obligations of such Persons as freely as if it
were not the Depositary Agent hereunder. The Depositary Agent shall not be
obligated to take any action which in its reasonable judgment would involve it
in expense or liability unless it has been furnished with an indemnity
reasonably satisfactory to it. The Depositary Agent shall act as an agent only
and shall not be responsible or liable in any manner for soliciting any funds or
for the sufficiency, correctness, genuineness or validity of any funds or
securities deposited with or held by it, except in the case of its gross
negligence or willful misconduct. The Depositary Agent shall be fully protected
in acting or refraining from acting upon any written notice, certificate,
instruction, request or other paper or document, (whether in its original or
facsimile form) as to the due execution thereof and the validity and
effectiveness of the provisions thereof and as to the truth of any information
contained therein, which the Depositary Agent in good faith believes to be
genuine. The Depositary Agent shall not be liable for any error of judgment or
for any act done or step taken or omitted except in the case of its gross
negligence or willful misconduct. In the event of any
22
dispute as to the construction or interpretation of any provision of this
Agreement, the Depository Agent may consult with counsel of its own selection
and the advice or opinion of such counsel shall be full and complete
authorization and protection in respect of any action taken suffered or omitted
by it hereunder in good faith and reliance thereon.
SECTION 5.15. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument. The delivery of an executed signature page of this Agreement by
facsimile transmission shall be effective as delivery of a manually executed
counterpart hereof.
SECTION 5.16. Effectiveness. This Agreement shall become effective upon the
execution of a counterpart hereof by each of the parties hereto and receipt by
the Company, the Depositary Agent and the Collateral Agent of written or
telephonic notification of such execution and authorization of delivery thereof.
SECTION 5.17. 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.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
23
IN WITNESS WHEREOF, the parties hereto, by their officers duly
authorized, intending to be legally bound, have caused this Depositary Agreement
to be duly executed and delivered as of the date first above written.
TESORO PETROLEUM CORPORATION
By:
---------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY,
as the Collateral Agent
By:
---------------------------------
Name:
Title:
THE FROST NATIONAL BANK,
as Depositary Agent
By:
---------------------------------
Name:
Title:
[Depositary Agreement Signature Page]
EXHIBIT A
DATE: _______________
THE FROST NATIONAL BANK
P. O. BOX 1600
SAN ANTONIO, TEXAS 78209
ATTENTION: JENNIFER SLATOR
PHONE: 210/220-5388
FAX: 210/220-6816
WITH COPY TO:
THE FROST NATIONAL BANK
P. O. BOX 1600
SAN ANTONIO, TEXAS 78209
ATTENTION: DEPOSIT SERVICES
PHONE: 210/220-4711
FAX: 210/220-4681
RE: CONTROL AGREEMENT DATED MAY 16, 2003;
ASSET SALE PROCEEDS ACCOUNT
LADIES AND GENTLEMEN:
REFERENCE IS MADE TO THE CONTROL AGREEMENT DATED MAY 16, 2003 (THE
"AGREEMENT"; CAPITALIZED TERMS USED HEREIN SHALL HAVE THE MEANINGS ASSIGNED
THERETO IN THE AGREEMENT) AMONG WILMINGTON TRUST COMPANY (THE "COLLATERAL
AGENT"), THE FROST NATIONAL BANK (THE "DEPOSITARY AGENT") AND TESORO PETROLEUM
CORPORATION (THE "COMPANY"). THIS LETTER CONSTITUTES AN INSTRUCTION UNDER THE
AGREEMENT.
You are hereby instructed and authorized to remit:
Written $ Amount US
---------------------
Numeric $ Amount $
---------------------
VIA WIRE TRANSFER TO: ACCOUNT #: ABA #
--------- -------------------------------
ACCOUNT NAME:
--------------------------------------------
ATTENTION:
-----------------------------------------------
FROM THE ASSET SALES PROCEEDS ACCOUNT # MAINTAINED AT THE
------------------- FROST NATIONAL BANK
THE UNDERSIGNED REPRESENTS AND WARRANTS TO THE FROST NATIONAL BANK THAT
THE UNDERSIGNED IS AN AUTHORIZED SIGNATORY OF COLLATERAL AGENT.
COLLATERAL AGENT
BY:
--------------------------------------
NAME:
--------------------------------------
TITLE:
--------------------------------------