EXHIBIT 10.44
SECURITY AGREEMENT
THIS SECURITY AGREEMENT is entered into as of April 17, 2003 by and
between Tesoro Petroleum Corporation, a Delaware corporation (the "Borrower"),
the Subsidiaries of the Borrower party hereto on the date thereof (together with
the Borrower, collectively, the "Initial Grantors," and together with any
additional Subsidiaries, whether now existing or hereafter formed, which become
parties to this Agreement by executing a Supplement hereto in substantially the
form of Annex I, the "Grantors"), and Bank One, NA, a national banking
association having its principal office in Chicago, Illinois, in its capacity as
agent (the "Agent") for the lenders party to the Credit Agreement referred to
below.
PRELIMINARY STATEMENT
The Borrower, the Agent and the Lenders are entering into a Credit
Agreement dated as of April 17, 2003 (as it may be amended or modified from time
to time, the "Credit Agreement"). The Grantors are entering into this Security
Agreement (as it may be amended or modified from time to time, the "Security
Agreement") in order to induce the Lenders to enter into and extend credit to
the Borrower under the Credit Agreement.
The Grantors (other than the Borrower) are entering into a Subsidiary
Guaranty dated as of April 17, 2003 (as it may be amended or modified from time
to time, the "Guaranty") pursuant to which such Grantors have guaranteed the
"Guaranteed Obligations" (as defined in the Guaranty).
ACCORDINGLY, the Grantors and the Agent, on behalf of the Holders of
Secured Obligations, hereby agree as follows:
ARTICLE 1
DEFINITIONS
1.1. Terms Defined in Credit Agreement. All capitalized terms used
herein and not otherwise defined shall have the meanings assigned to such terms
in the Credit Agreement.
1.2. Terms Defined in New York Uniform Commercial Code. Terms defined
in the New York UCC which are not otherwise defined in this Security Agreement
are used herein as defined in the New York UCC.
1.3. Definitions of Certain Terms Used Herein. As used in this Security
Agreement, in addition to the terms defined in the Preliminary Statement, the
following terms shall have the following meanings:
"Accounts" shall have the meaning set forth in Article 9 of the New
York UCC.
"Article" means a numbered article of this Security Agreement, unless
another document is specifically referenced.
"Asset Sale Proceeds Account" shall have the meaning set forth in the
Senior Note Indenture.
"Cash Equivalents" means:
(1) United States Dollars;
(2) securities issued or directly and fully guaranteed or
insured by the United States government or any agency or
instrumentality thereof having maturities of not more than one year
from the date of acquisition;
(3) certificates of deposit and Eurodollar time deposits with
maturities of not more than one year form the date of acquisition,
bankers' acceptances with maturities of not more than one year from the
date of acquisition and overnight bank deposits, in each case, with any
domestic commercial bank having capital and surplus in excess of
$500,000,000 and a Thompson Bank Watch Rating of "B" or better;
(4) repurchase obligations with a term of not more than seven
days for underlying securities of the types described in clauses (2)
and (3) above entered into with any financial institution meeting the
qualifications specified in clause (3) above; and
(5) commercial paper having the highest rating obtainable from
Moody's or S&P with maturities of not more than one year from the date
of acquisition
"Cash Proceeds" shall have the meaning set forth in Article 9 of the
New York UCC.
"Chattel Paper" shall have the meaning set forth in Article 9 of the
New York UCC.
"Collateral" means:
(1) all now owned and hereafter acquired Inventory, all
Documents related thereto and all rights under any existing or future
policy of property loss or casualty insurance on such Inventory:
(2) all now owned and hereafter acquired rights to payment
from Inventory sold or leased and services rendered (whether such
rights to payment constitute Accounts or Payment Intangibles, or arise
under or in connection with Chattel Paper or Instruments, whether or
not such rights to payment constitute Indebtedness or conform to the
underlying contract), together with (i) all rights in and to any
merchandise or goods which such rights to payment may represent,
whether as returned or repossessed goods or otherwise; and (ii) all
Liens, letters of credit, insurance, guarantees and other obligations
securing or supporting such rights to payment (collectively, "Pledged
Accounts");
(3) all now owned and hereafter acquired money, Deposit
Accounts, Pledged Deposits and deposits therein and Cash Equivalents
(whether held directly or in
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Securities Accounts), except (i) the Asset Sale Proceeds Account and
deposits therein and (ii) money, Deposit Accounts, deposits and Cash
Equivalents (whether held directly or in securities accounts)
constituting identifiable proceeds of Senior Note Collateral;
(4) all now owned and hereafter acquired rights to payment
constituting intercompany debt obligations (whether such rights to
payment constitute Accounts or Payment Intangibles, or arise under or
in connection with Chattel Paper or Instruments, and whether or not
such rights to payment constitute Indebtedness), together with all
Liens, letters of credit, insurance guarantees and other obligations
securing or supporting such rights to payment; provided, however, that
such intercompany debt obligations shall not include (x) Specified
Intercompany Debt, (y) any Liens, letters of credit, insurance,
guarantees and other obligations securing or supporting Specified
Intercompany Debt or (z) any Cash Proceeds or Noncash Proceeds of
Specified Intercompany Debt;
(5) all now owned and hereafter acquired rights under
contracts and other General Intangibles, but only to the extent
necessary, used or useful in (i) the collection, sale or other
disposition of the rights to payment described in clause (2) above or
(ii) the processing, shipment (including any rights of stoppage in
transit), offtake, storage, completion, supply, lease, sale or other
disposition (collectively, "Inventory Disposition Actions") of
Inventory which is owned or has been sold as of the date of any such
Inventory Disposition Action; and
(6) all Cash Proceeds and Noncash Proceeds of the foregoing.
"Control" shall have the meaning set forth in Article 8 or, if
applicable, in Section 9-104, 9-105, 9-106 or 9-107 of Article 9 of the New York
UCC.
"Default" means an event described in Section 5.1.
"Deposit Accounts" shall have the meaning set forth in Article 9 of the
New York UCC.
"Documents" shall have the meaning set forth in Article 9 of the New
York UCC.
"Exhibit" refers to a specific exhibit to this Security Agreement,
unless another document is specifically referenced.
"General Intangibles" shall have the meaning set forth in Article 9 of
the New York UCC.
"Instruments" shall have the meaning set forth in Article 9 of the New
York UCC.
"Inventory" shall have the meaning set forth in Article 9 of the New
York UCC.
"New York UCC" means the New York Uniform Commercial Code as in effect
from time to time.
"Noncash Proceeds" shall have the meaning set forth in Article 9 of the
New York UCC.
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"Payment Intangibles" shall have the meaning set forth in Article 9 of
the New York UCC.
"Pledged Deposits" means all time deposits of money (other than Deposit
Accounts), whether or not evidenced by certificates, which a Grantor may from
time to time designate as pledged to the Agent or to any Holder of Secured
Obligations as security for any Obligation, and all rights to receive interest
on said deposits.
"Receivables" means the Pledged Accounts, Pledged Deposits, and any
other rights or claims to receive money which are General Intangibles which are
otherwise included as Collateral.
"Section" means a numbered section of this Security Agreement, unless
another document is specifically referenced.
"Secured Obligations" means the "Secured Obligations" (as defined in
the Credit Agreement) and the "Guaranteed Obligations" (as defined in the
Guaranty).
"Securities Accounts" has the meaning set forth in Article 8 of the New
York UCC.
"Security" has the meaning set forth in Article 8 of the New York UCC.
"Senior Note Collateral" means the "Collateral" as identified and
defined in the Senior Note Indenture.
"Specified Intercompany Debt" shall have the meaning set forth the in
the Senior Note Indenture.
The foregoing definitions shall be equally applicable to both the
singular and plural forms of the defined terms.
ARTICLE 2
GRANT OF SECURITY INTEREST
Each of the Grantors hereby pledges, assigns and grants to the Agent,
on behalf of and for the ratable benefit of the Holders of Secured Obligations
and (to the extent specifically provided herein) their Affiliates, a security
interest in all of such Grantor's right, title and interest, whether now owned
or hereafter acquired, in and to the Collateral to secure the prompt and
complete payment and performance of (i) the Secured Obligations in the case of
the Borrower and (ii) the "Guaranteed Obligations" (as defined in the Guaranty)
in the case of each other Grantor.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
Each of the Initial Grantors represents and warrants to the Agent and
the Holders of Secured Obligations, and each Grantor that becomes a party to
this Security Agreement pursuant
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to the execution of a Security Agreement Supplement in substantially the form of
Annex I represents and warrants (after giving effect to supplements to each of
the Exhibits hereto with respect to such subsequent Grantor as attached to such
Security Agreement Supplement), that:
3.1. Title, Authorization, Validity and Enforceability. Such Grantor
has good and valid rights in or the power to transfer the Collateral owned by it
and title to the Collateral with respect to which it has purported to grant a
security interest hereunder, free and clear of all Liens except for Liens
permitted under Section 4.1.6, and has full power and authority to grant to the
Agent the security interest in such Collateral pursuant hereto. The execution
and delivery by such Grantor of this Security Agreement has been duly authorized
by proper corporate or other proceedings, and this Security Agreement
constitutes a legal, valid and binding obligation of such Grantor and creates a
security interest which is enforceable against such Grantor in all Collateral it
now owns or hereafter acquires, except as enforceability may be limited by (i)
bankruptcy, insolvency, fraudulent conveyances, reorganization or similar laws
relating to or affecting the enforcement of creditors' rights generally, (ii)
general equitable principles (whether considered in a proceeding in equity or at
law), and (iii) requirements of reasonableness, good faith and fair dealing.
When financing statements have been filed in the appropriate offices against
such Grantor in the locations listed on Exhibit "B", the Agent will have a fully
perfected first priority security interest in the Collateral owned by such
Grantor in which a security interest may be perfected by filing, subject only to
Liens permitted under Section 6.15 of the Credit Agreement.
3.2. Conflicting Laws and Contracts. Neither the execution and delivery
by such Grantor of this Security Agreement, the creation and perfection of the
security interest in the Collateral granted hereunder, nor compliance with the
terms and provisions hereof will violate (i) any law, rule, regulation, order,
writ, judgment, injunction, decree or award binding on such Grantor, or (ii)
such Grantor's charter, by laws or similar constitutive documents, or (iii) the
provisions of any indenture, instrument or agreement to which such Grantor is a
party or is subject, or by which it, or its Property may be bound or affected,
or conflict with or constitute a default thereunder, or result in or require the
creation or imposition of any Lien in, of or on the Property of such Grantor
pursuant to the terms of any such indenture, instrument or agreement (other than
any Lien of the Agent on behalf of the Holders of Secured Obligations).
3.3. Type and Jurisdiction of Organization. Each Grantor's exact legal
name and jurisdiction of incorporation, organization or formation (as the case
may be) are disclosed in Exhibit "A".
3.4. Principal Location. Such Grantor's mailing address and the
location of its place of business (if it has only one) or its chief executive
office (if it has more than one place of business), is disclosed in Exhibit "A";
such Grantor has no other places of business except those set forth in Exhibit
"A".
3.5. Property Locations. The Inventory of each Grantor is located
solely at the locations of such Grantor described in Exhibit "A". All of said
locations are owned by such Grantor except for locations (i) which are leased by
such Grantor as lessee and designated in Part B of Exhibit "A" and (ii) at which
Inventory is held by a bailee or an Eligible Carrier or on consignment by such
Grantor as designated in Part C of Exhibit "A", with respect to which
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Inventory such Grantor has delivered bailment agreements, warehouse receipts,
bills of lading, financing statements or other documents, as required by Section
4.3.2 hereof and otherwise satisfactory to the Agent to protect the Agent's and
the Holders of Secured Obligations' security interest in such Inventory.
3.6. No Other Names. Except as disclosed on Schedule 3.6, such Grantor
has not conducted business under any name except the name in which it has
executed this Security Agreement, which is the exact name as it appears in such
Grantor's organizational documents, as amended, as filed with such Grantor's
jurisdiction of organization as of the Closing Date.
3.7. No Default. No Default or Unmatured Default exists.
3.8. Accounts and related Chattel Paper. The names of the obligors,
amounts owing, due dates and other information with respect to the Pledged
Accounts owned by such Grantor are and will be correctly stated in all records
of such Grantor relating thereto and in all invoices and reports with respect
thereto furnished to the Agent by such Grantor from time to time. As of the time
when each Account or each item of Chattel Paper arises, such Grantor shall be
deemed to have represented and warranted that such Account or Chattel Paper, as
the case may be, and all records relating thereto, are genuine and in all
respects what they purport to be.
3.9. Filing Requirements. None of the Collateral owned by such Grantor
is of a type for which security interests or liens may be perfected by filing
under any federal statute.
3.10. No Financing Statements. No financing statement describing all or
any portion of the Collateral which has not lapsed or been terminated naming
such Grantor as debtor has been filed in any jurisdiction except financing
statements naming the Agent on behalf of the Holders of Secured Obligations as
the secured party.
3.11. Federal Employer Identification Number; State Organization
Number. Such Grantor's Federal employer identification number, and if such
Grantor is a registered organization, such Grantor's State organization number,
are disclosed on Exhibit "A".
ARTICLE 4
COVENANTS
From the date of this Security Agreement and thereafter until this
Security Agreement is terminated, each of the Initial Grantors agrees, and from
and after the effective date of any Security Agreement Supplement applicable to
any Grantor (and after giving effect to supplements to each of the Exhibits
hereto with respect to such subsequent Grantor as attached to such Security
Agreement Supplement) and thereafter until this Security Agreement is terminated
each such subsequent Grantor agrees:
4.1. General.
4.1.1 Notification of Default. Each Grantor will give prompt
notice in writing to the Agent and the Lenders of the occurrence of any
Default or Unmatured Default and of
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any other development, financial or otherwise, which might materially
and adversely affect the Collateral.
4.1.2 Financing Statements and Other Actions; Defense of
Title. Each Grantor hereby authorizes the Agent to file, and if
requested will execute and deliver to the Agent, all financing
statements describing the Collateral owned by such Grantor and other
documents and take such other actions as may from time to time
reasonably be requested by the Agent in order to maintain a first
perfected security interest in and, if applicable, Control of, the
Collateral owned by such Grantor. Such financing statements may
describe the Collateral in the same manner as described herein or may
contain an indication or description of collateral that describes such
property in any other manner as the Agent may determine, in its sole
discretion, is necessary, advisable or prudent to ensure that the
perfection of the security interest in the Collateral granted to the
Agent herein. Each Grantor will take any and all commercially
reasonable actions necessary to defend title to the Collateral owned by
such Grantor against all persons and to defend the security interest of
the Agent in such Collateral and the priority thereof against any Lien
not expressly permitted hereunder.
4.1.3 Change in Corporate Existence, Type or Jurisdiction of
Organization, Location, Name. Each Grantor will:
(i) preserve its existence and corporate/entity structure as in
effect on the Closing Date; and
(ii) not change its jurisdiction of organization,
unless, in each such case, such Grantor shall have given the Agent not
less than 30 days' prior written notice of such event or occurrence and
the Agent shall have either (x) determined that such event or
occurrence will not adversely affect the validity, perfection or
priority of the Agent's security interest in the Collateral, or (y)
taken such steps (with the cooperation of such Grantor to the extent
necessary or advisable) as are necessary or advisable to properly
maintain the validity, perfection and priority of the Agent's security
interest in the Collateral owned by such Grantor.
4.1.4 Other Financing Statements. No Grantor will suffer to
exist, or sign or authorize the signing on its behalf or the filing of
any financing statement naming it as debtor covering all or any portion
of the Collateral owned by such Grantor, except any Financing Statement
authorized under Section 4.1.2.
4.2. Receivables.
4.2.1 Certain Agreements on Receivables. No Grantor will make
or agree to make any discount, credit, rebate or other reduction in the
original amount owing on a Receivable or accept in satisfaction of a
Receivable less than the original amount thereof, except that, prior to
the occurrence of a Default, such Grantor may reduce the amount of
Accounts arising from the sale of Inventory or the rendering of
services in accordance with its present policies and in the ordinary
course of business.
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4.2.2 Collection of Receivables. Except as otherwise provided
in this Security Agreement, each Grantor will collect and enforce, at
such Grantor's sole expense, all amounts due or hereafter due to such
Grantor under the Receivables owned by such Grantor.
4.2.3 Delivery of Invoices. Each Grantor will deliver to the
Agent immediately upon its request after the occurrence and during the
continuance of a Default duplicate invoices with respect to each
Account owned by such Grantor bearing such language of assignment as
the Agent shall specify.
4.2.4 Disclosure of Counterclaims on Receivables. If (i) any
discount, credit or agreement to make a rebate or to otherwise reduce
the amount owing on a Receivable owned by such Grantor by an amount in
excess of $250,000 exists or (ii) if, to the knowledge of such Grantor,
any dispute, setoff (other than in the ordinary course of business),
claim, counterclaim or defense exists or has been asserted or
threatened with respect to a Receivable, such Grantor will promptly
disclose such fact to the Agent in writing in connection with the
inspection by the Agent of any record of such Grantor relating to such
Receivable and in connection with any invoice or report furnished by
such Grantor to the Agent relating to such Receivable.
4.3. Inventory.
4.3.1 Maintenance of Goods. Each Grantor will do all things
necessary to maintain, preserve, protect and keep the Inventory owned
by such Grantor in saleable condition.
4.3.2 Documents; Waivers. Each Grantor shall perform any and
all steps reasonably requested by the Agent to perfect, maintain and
protect the Agent's security interests in and Liens on and against such
Grantor's Collateral composed of Inventory to enable the Agent to
exercise its rights and remedies hereunder with respect to any
Collateral, including, without limitation:
(i) if requested by the Agent, delivering to the Agent
documents of title covering that portion of the Collateral, if any,
located with third parties which issue documents of title;
(ii) using its commercially reasonable best efforts to obtain
waivers of Liens and access agreements in substantially the form of
Exhibit "C" hereto or Exhibit "D" hereto, as applicable (or such other
form as may be agreed to by the Agent), from landlords or Eligible
Carriers or other third parties in possession of Inventory of such
Grantor as of the date hereof within 90 days after the date hereof;
(iii) using its commercially reasonable best efforts to obtain
waivers of Liens and access agreements in substantially the form of
Exhibit "C" hereto or Exhibit "D" hereto, as applicable (or such other
form as may be agreed to by the Agent), from landlords or Eligible
Carriers or other third parties in possession of Inventory (in
connection with which such Grantor shall be permitted to and hereby is
required to update Exhibit "A");
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(iv) at the request of the Agent, appearing in and defending
any action or proceeding which may affect adversely the Grantor's title
to, or the security interest of Agent in, any of such Collateral; and
(v) executing and delivering all further instruments and
documents, and taking all further action, as the Agent or any Holder of
Secured Obligations may reasonably request.
4.3.3 Notification of Bailees. If any Inventory that is part
of the Collateral is in the possession or control of any warehouseman
or Eligible Carrier or any Grantor's agents or processors, such Grantor
shall, upon the Agent's request, notify such warehouseman, agent or
processor of the Agent's security interest in such Inventory and, upon
the Agent's request, instruct them to hold all such Inventory for the
Agent's account and subject to the Agent's instructions.
4.4. Chattel Paper, Documents and Pledged Deposits. Each Grantor will
(i) deliver to the Agent immediately upon execution of this Security Agreement
the originals of all Chattel Paper constituting Collateral (if any then exist),
(ii) hold in trust for the Agent upon receipt and immediately thereafter deliver
to the Agent any Chattel Paper constituting Collateral, (iii) upon the
designation of any Pledged Deposits (as set forth in the definition thereof),
deliver to the Agent such Pledged Deposits which are evidenced by certificates
included in the Collateral endorsed in blank, marked with such legends and
assigned as the Agent shall specify, and (iv) upon the Agent's request, after
the occurrence and during the continuance of a Default, deliver to the Agent
(and thereafter hold in trust for the Agent upon receipt and immediately deliver
to the Agent) any Document evidencing or constituting Collateral.
4.5. Pledged Deposits. No Grantor will withdraw all or any portion of
any Pledged Deposit or fail to rollover said Pledged Deposit without the prior
written consent of the Agent.
4.6. Deposit Accounts. Each Grantor will, to the extent required by
Section 6.25 of the Credit Agreement, upon the Agent's request, cause each bank
or other financial institution in which it maintains (a) a Deposit Account
(other than a Deposit Account maintained for collections from retail sales) to
enter into a control agreement with the Agent, in form and substance
satisfactory to the Agent in order to give the Agent Control of the Deposit
Account or (b) other deposits (general or special, time or demand, provisional
or final) to be notified of the security interest granted to the Agent hereunder
and cause each such bank or other financial institution to acknowledge such
notification in writing. In the case of deposits maintained with Lenders, the
terms of such letter shall be subject to the provisions of the Credit Agreement
regarding setoffs.
4.7. Federal, State or Municipal Claims. Each Grantor will notify the
Agent of any Collateral owned by such Grantor which constitutes a claim against
the United States government or any state or local government or any
instrumentality or agency thereof, the assignment of which claim is restricted
by federal, state or municipal law.
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ARTICLE 5
DEFAULT
5.1. The occurrence of any "Default" under, and as defined in, the
Credit Agreement shall constitute a Default.
5.2. Acceleration and Remedies. Upon the acceleration of the Secured
Obligations under the Credit Agreement pursuant to Section 8.1 thereof, the
Obligations and, to the extent provided for under the Rate Management
Transactions evidencing the same, the Rate Management Obligations, shall
immediately become due and payable without presentment, demand, protest or
notice of any kind, all of which are hereby expressly waived, and the Agent may,
with the concurrence or at the direction of the Required Lenders, exercise any
or all of the following rights and remedies:
5.2.1 Those rights and remedies provided in this Security
Agreement, the Credit Agreement, or any other Loan Document, provided
that this Section 5.2.1 shall not be understood to limit any rights or
remedies available to the Agent and the Holders of Secured Obligations
prior to a Default.
5.2.2 Those rights and remedies available to a secured party
under the New York UCC (whether or not the New York UCC applies to the
affected Collateral) or under any other applicable law (including,
without limitation, any law governing the exercise of a bank's right of
setoff or bankers' lien) when a debtor is in default under a security
agreement.
5.2.3 Without notice except as specifically provided in
Section 8.1 or elsewhere herein, sell, lease, assign, grant an option
or options to purchase or otherwise dispose of the Collateral or any
part thereof in one or more parcels at public or private sale, for
cash, on credit or for future delivery, and upon such other terms as
the Agent may deem commercially reasonable.
The Agent, on behalf of the secured parties, may comply with any applicable
state or federal law requirements in connection with a disposition of the
Collateral, and such compliance will not be considered to adversely affect the
commercial reasonableness of any sale of the Collateral.
If, after the Credit Agreement has terminated by its terms and all of the
Obligations have been paid in full, there remain Rate Management Obligations
outstanding, Lenders party thereto may exercise the remedies provided in this
Section 5.2 upon the occurrence of any event which would allow or require the
termination or acceleration of any Rate Management Obligations pursuant to the
terms of the agreement governing any Rate Management Transaction.
5.3. Grantors' Obligations Upon Default. Upon the request of the Agent
after the occurrence and during the continuance of a Default, each Grantor will
permit the Agent, by the Agent's representatives and agents, to enter any
premises where all or any part of the Collateral, or the books and records
relating thereto, or both, are located, to take possession of all or any part of
the Collateral and to remove all or any part of the Collateral.
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5.4. License. The Agent is hereby granted an irrevocable license or
other right to use, following the occurrence and during the continuance of a
Default, without charge, each Grantor's labels, patents, copyrights, rights of
use of any name, trade secrets, trade names, trademarks, service marks, customer
lists and advertising matter, or any property of a similar nature, as it
pertains to the Collateral, in completing production of, advertising for sale,
and selling any Collateral, and, following the occurrence and during the
continuance of a Default, such Grantor's rights under all licenses and all
franchise agreements shall inure to the Agent's benefit. In addition, each
Grantor hereby irrevocably agrees that the Agent may, following the occurrence
and during the continuance of a Default, sell any of such Grantor's Inventory
directly to any person, including without limitation persons who have previously
purchased such Grantor's Inventory from such Grantor and in connection with any
such sale or other enforcement of the Agent's rights under this Agreement, may
sell Inventory which bears any trademark owned by or licensed to such Grantor
and any Inventory that is covered by any copyright owned by or licensed to such
Grantor and the Agent may finish any work in process and affix any trademark
owned by or licensed to such Grantor and sell such Inventory as provided herein.
ARTICLE 6
WAIVERS, AMENDMENTS AND REMEDIES
No delay or omission of the Agent or any Holder of Secured Obligations
to exercise any right or remedy granted under this Security Agreement shall
impair such right or remedy or be construed to be a waiver of any Default or an
acquiescence therein, and any single or partial exercise of any such right or
remedy shall not preclude any other or further exercise thereof or the exercise
of any other right or remedy. No waiver, amendment or other variation of the
terms, conditions or provisions of this Security Agreement whatsoever shall be
valid unless in writing signed by the Agent with the concurrence or at the
direction of the Lenders required under Section 8.2 of the Credit Agreement and
each Grantor, and then only to the extent in such writing specifically set
forth, provided that the addition of any Domestic Subsidiary as a Grantor
hereunder by execution of a Security Agreement Supplement in the form of Annex I
(with such modifications as shall be acceptable to the Agent) shall not require
receipt of any consent from or execution of any documentation by any other
Grantor party hereto. All rights and remedies contained in this Security
Agreement or by law afforded shall be cumulative and all shall be available to
the Agent and the Holders of Secured Obligations until the Secured Obligations
have been paid in full.
ARTICLE 7
PROCEEDS; COLLECTION OF RECEIVABLES
7.1. Collection Amount Agreements. Upon request of the Agent, each
Grantor shall execute and deliver to the Agent Collection Account Agreements in
the form provided by or otherwise acceptable to the Agent, which agreements
shall be accompanied by an acknowledgment by the bank where the account is
located of the Lien of the Agent granted hereunder and of irrevocable
instructions to wire all amounts collected therein to a special collateral
account at the Agent.
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7.2. Collection of Receivables. Each Grantor shall manage its deposits,
collections and accounts in accordance with Section 6.25 of the Credit
Agreement. The Agent may at any time after the occurrence and during that
continuance of a Default, by giving each Grantor written notice, elect to
require that the Receivables be paid directly to the Agent for the benefit of
the Holders of Secured Obligations. In such event, each Grantor shall, and shall
permit the Agent to, promptly notify the account debtors or obligors under the
Receivables owned by such Grantor of the Agent's interest therein and direct
such account debtors or obligors to make payment of all amounts then or
thereafter due under such Receivables directly to the Agent. Upon receipt of any
such notice from the Agent, each Grantor shall thereafter hold in trust for the
Agent, on behalf of the Holders of Secured Obligations, all amounts and proceeds
received by it with respect to the Receivables and immediately and at all times
thereafter deliver to the Agent all such amounts and proceeds in the same form
as so received, whether by cash, check, draft or otherwise, with any necessary
endorsements.
ARTICLE 8
GENERAL PROVISIONS
8.1. Notice of Disposition of Collateral; Condition of Collateral. Each
Grantor hereby waives notice of the time and place of any public sale or the
time after which any private sale or other disposition of all or any part of the
Collateral may be made. To the extent such notice may not be waived under
applicable law, any notice made shall be deemed reasonable if sent to the
Borrower, addressed as set forth in Article IX, at least ten days prior to (i)
the date of any such public sale or (ii) the time after which any such private
sale or other disposition may be made. Agent shall have no obligation to
clean-up or otherwise prepare the Collateral for sale.
8.2. Compromises and Collection of Collateral. Each Grantor and the
Agent recognize that setoffs, counterclaims, defenses and other claims may be
asserted by obligors with respect to certain of the Receivables, that certain of
the Receivables may be or become uncollectible in whole or in part and that the
expense and probability of success in litigating a disputed Receivable may
exceed the amount that reasonably may be expected to be recovered with respect
to a Receivable. In view of the foregoing, each Grantor agrees that the Agent
may at any time and from time to time, if a Default has occurred and is
continuing, compromise with the obligor on any Receivable, accept in full
payment of any Receivable such amount as the Agent in its sole discretion shall
determine or abandon any Receivable, and any such action by the Agent shall be
commercially reasonable so long as the Agent acts in good faith based on
information known to it at the time it takes any such action.
8.3. Secured Party Performance of Grantor's Obligations. Without having
any obligation to do so, the Agent may perform or pay any obligation which any
Grantor has agreed to perform or pay in this Security Agreement and such Grantor
shall reimburse the Agent for any reasonable amounts paid by the Agent pursuant
to this Section 8.3. Each Grantor's obligation to reimburse the Agent pursuant
to the preceding sentence shall be a Secured Obligation payable on demand.
8.4. Authorization for Secured Party to Take Certain Action. Each
Grantor irrevocably authorizes the Agent at any time and from time to time in
the sole discretion of the
12
Agent and appoints the Agent as its attorney in fact (i) to indorse and collect
any cash proceeds of the Collateral, (ii) to file a carbon, photographic or
other reproduction of this Security Agreement or any financing statement with
respect to the Collateral as a financing statement and to file any other
financing statement or amendment of a financing statement (which does not add
new collateral or add a debtor) in such offices as the Agent in its sole
discretion deems necessary or desirable to perfect and to maintain the
perfection and priority of the Agent's security interest in the Collateral,
(iii) to enforce payment of the Accounts and Receivables in the name of the
Agent or such Grantor, (iv) to apply the proceeds of any Collateral received by
the Agent to the Secured Obligations as provided in the Credit Agreement and (v)
to discharge past due taxes, assessments, charges, fees or Liens on the
Collateral (except for such Liens as are specifically permitted hereunder or
under any other Loan Document), and each Grantor agrees to reimburse the Agent
on demand for any reasonable payment made or any reasonable expense incurred by
the Agent in connection therewith, provided that this authorization shall not
relieve any Grantor of any of its obligations under this Security Agreement or
under the Credit Agreement.
8.5. Specific Performance of Certain Covenants. Each Grantor
acknowledges and agrees that a breach of any of the covenants contained in
Sections 4.4, 5.3, or 8.7 or in Article VII will cause irreparable injury to the
Agent and the Holders of Secured Obligations, that the Agent and Holders of
Secured Obligations have no adequate remedy at law in respect of such breaches
and therefore agrees, without limiting the right of the Agent or the Holders of
Secured Obligations to seek and obtain specific performance of other obligations
of the Grantors contained in this Security Agreement, that the covenants of the
Grantors contained in the Sections referred to in this Section 8.5 shall be
specifically enforceable against the Grantors.
8.6. Use and Possession of Certain Premises. Upon the occurrence of a
Default, the Agent shall be entitled to occupy and use any premises owned or
leased by the Grantors where any of the Collateral without any obligation to pay
any Grantor for such use and occupancy to the extent provided in Section
11.04(c) of the Senior Note Indenture and Section 10.04(c) of the Senior Term
Loan Agreement.
8.7. Benefit of Agreement. The terms and provisions of this Security
Agreement shall be binding upon and inure to the benefit of the Grantors, the
Agent and the Holders of Secured Obligations and their respective successors and
assigns (including all persons who become bound as a debtor to this Security
Agreement), except that the Grantors shall not have the right to assign their
rights or delegate their obligations under this Security Agreement or any
interest herein, without the prior written consent of the Agent.
8.8. Survival of Representations. All representations and warranties of
the Grantors contained in this Security Agreement shall survive the execution
and delivery of this Security Agreement.
8.9. Taxes and Expenses. Any taxes payable or ruled payable by Federal
or State authority in respect of this Security Agreement shall be paid by the
Grantors, together with interest and penalties, if any. The Grantors shall
reimburse the Agent for any and all reasonable out-of-pocket expenses and
internal charges (including reasonable attorneys', auditors' and accountants'
fees and reasonable time charges of attorneys, paralegals, auditors and
accountants who may be employees of the Agent) paid or incurred by the Agent in
connection with the
13
preparation, execution, delivery, administration, collection and enforcement of
this Security Agreement and in the audit, analysis, administration, collection,
preservation or sale of the Collateral (including the expenses and charges
associated with any periodic or special audit of the Collateral). Any and all
costs and expenses incurred by the Grantors in the performance of actions
required pursuant to the terms hereof shall be borne solely by the Grantors.
8.10. Headings. The title of and section headings in this Security
Agreement are for convenience of reference only, and shall not govern the
interpretation of any of the terms and provisions of this Security Agreement.
8.11. Termination. This Security Agreement shall continue in effect
(notwithstanding the fact that from time to time there may be no Secured
Obligations outstanding) until (i) the Credit Agreement has terminated pursuant
to its express terms and (ii) all of the Secured Obligations have been
indefeasibly paid and performed in full and no commitments of the Agent or the
Holders of Secured Obligations which would give rise to any Secured Obligations
are outstanding.
8.12. Entire Agreement. This Security Agreement embodies the entire
agreement and understanding between the Grantors and the Agent relating to the
Collateral and supersedes all prior agreements and understandings between the
Grantors and the Agent relating to the Collateral.
8.13. CHOICE OF LAW. THIS SECURITY AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK
(INCLUDING SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAWS OF THE STATE OF NEW
YORK, BUT OTHERWISE WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES) BUT GIVING
EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS. IF ANY COURT, TRIBUNAL OR
OTHER ENTITY WITH JURISDICTION OVER THIS SECURITY AGREEMENT, THE OTHER LOAN
DOCUMENTS, AND THE TRANSACTIONS EVIDENCED HEREBY AND THEREBY REJECTS THE
FOREGOING CHOICE OF NEW YORK LAW, THIS SECURITY AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF ILLINOIS
(INCLUDING 735 ILCS SECTION 105/5-1 ET SEQ., BUT OTHERWISE WITHOUT REGARD TO
CONFLICTS OF LAW PRINCIPLES) BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO
NATIONAL BANKS.
8.14. Indemnity. Each Grantor hereby agrees, jointly with the other
Grantors and severally, to indemnify the Agent and the Holders of Secured
Obligations, and their respective successors, assigns, agents and employees,
from and against any and all liabilities, damages, penalties, suits, costs, and
expenses of any kind and nature (including, without limitation, all expenses of
litigation or preparation therefor whether or not the Agent or any Holder of
Secured Obligations is a party thereto) imposed on, incurred by or asserted
against the Agent or the Holders of Secured Obligations, or their respective
successors, assigns, agents and employees, in any way relating to or arising out
of this Security Agreement, or the manufacture, purchase, acceptance, rejection,
ownership, delivery, lease, possession, use, operation, condition, sale,
14
return or other disposition of any Collateral (including, without limitation,
latent and other defects, whether or not discoverable by the Agent or the
Holders of Secured Obligations or any Grantor, and any claim for patent,
trademark or copyright infringement) except for acts or omissions of the Agent
or any Holder of Secured Obligations after such Person has taken possession and
control of the Collateral.
8.15. Subordination of Intercompany Indebtedness. Each Grantor agrees
that any and all claims of such Grantor against any other Grantor (each an
"Obligor") with respect to any "Intercompany Indebtedness" (as hereinafter
defined), any endorser, obligor or any other guarantor of all or any part of the
Secured Obligations, or against any of its properties shall be subordinate and
subject in right of payment to the prior payment, in full and in cash, of all
Secured Obligations. Notwithstanding any right of any Grantor to ask, demand,
sue for, take or receive any payment from any Obligor, all rights, liens and
security interests of such Grantor, whether now or hereafter arising and
howsoever existing, in any assets of any other Obligor shall be and are
subordinated to the rights of the Holders of Secured Obligations and the Agent
in those assets. No Grantor shall have any right to possession of any such asset
or to foreclose upon any such asset, whether by judicial action or otherwise,
unless and until all of the Secured Obligations (other than contingent indemnity
obligations) shall have been fully paid and satisfied (in cash) and all
Commitments and Facility LCs issued under the Credit Agreement have terminated
or expired. If all or any part of the assets of any Obligor, or the proceeds
thereof, are subject to any distribution, division or application to the
creditors of such Obligor, whether partial or complete, voluntary or
involuntary, and whether by reason of liquidation, bankruptcy, arrangement,
receivership, assignment for the benefit of creditors or any other action or
proceeding, or if the business of any such Obligor is dissolved or if
substantially all of the assets of any such Obligor are sold, then, and in any
such event (such events being herein referred to as an "Insolvency Event"), any
payment or distribution of any kind or character, either in cash, securities or
other property, which shall be payable or deliverable upon or with respect to
any indebtedness of any Obligor to any Grantor ("Intercompany Indebtedness")
shall be paid or delivered directly to the Agent for application on any of the
Secured Obligations, due or to become due, until such Secured Obligations (other
than contingent indemnity obligations) shall have first been fully paid and
satisfied (in cash). Should any payment, distribution, security or instrument or
proceeds thereof be received by the applicable Grantor upon or with respect to
the Intercompany Indebtedness after any Insolvency Event and prior to the
satisfaction of all of the Secured Obligations (other than contingent indemnity
obligations) and the termination or expiration of all Commitments of the Lenders
and Facility LCs issued pursuant to the Credit Agreement, such Grantor shall
receive and hold the same in trust, as trustee, for the benefit of the Holders
of Secured Obligations and shall forthwith deliver the same to the Agent, for
the benefit of the Holders of Secured Obligations, in precisely the form
received (except for the endorsement or assignment of the Grantor where
necessary), for application to any of the Secured Obligations, due or not due,
and, until so delivered, the same shall be held in trust by the Grantor as the
property of the Holders of Secured Obligations. If any such Grantor fails to
make any such endorsement or assignment to the Agent, the Agent or any of its
officers or employees is irrevocably authorized to make the same. Each Grantor
agrees that until the Secured Obligations (other than the contingent indemnity
obligations) have been paid in full (in cash) and satisfied and all Commitments
and Facility LCs issued under the Credit Agreement have terminated or expired,
no Grantor will assign or transfer to any Person (other than the Agent or
15
the Borrower or another Grantor) any claim any such Grantor has or may have
against any Obligor.
8.16. Partial Invalidity. If and to the extent that any Grantor's
obligations hereunder are terminated or are otherwise deemed to be invalid or
unenforceable, such termination, invalidity or unenforceability shall not affect
the continued effectiveness, validity or enforceability of this Security
Agreement with respect to any one or more of the other Grantors.
ARTICLE 9
NOTICES
9.1. Sending Notices. Any notice required or permitted to be given
under this Security Agreement shall be sent (and deemed received) in the manner
and to the addresses set forth in Article XIII of the Credit Agreement; and any
such notice delivered to the Borrower shall be deemed to have been delivered to
all of the Grantors.
9.2. Change in Address for Notices. Each of the Grantors, the Agent and
the Lenders may change the address for service of notice upon it by a notice in
writing to the other parties.
ARTICLE 10
THE AGENT
Bank One, NA has been appointed Agent for the Holders of Secured
Obligations hereunder pursuant to Article X of the Credit Agreement. It is
expressly understood and agreed by the parties to this Security Agreement that
any authority conferred upon the Agent hereunder is subject to the terms of the
delegation of authority made by the Holders of Secured Obligations to the Agent
pursuant to the Credit Agreement, and that the Agent has agreed to act (and any
successor Agent shall act) as such hereunder only on the express conditions
contained in such Article X. Any successor Agent appointed pursuant to Article X
of the Credit Agreement shall be entitled to all the rights, interests and
benefits of the Agent hereunder.
The remainder of this page is intentionally blank.
16
IN WITNESS WHEREOF, each of the Grantors and the Agent have executed
this Security Agreement as of the date first above written.
TESORO PETROLEUM CORPORATION
By: /s/ Gregory A. Wright
----------------------------------------
Name: Gregory A. Wright
Title: Senior Vice President and Chief
Financial Officer
DIGICOMP, INC.
TESORO AVIATION COMPANY
TESORO ALASKA COMPANY
TESORO HAWAII CORPORATION
TESORO REFINING AND MARKETING COMPANY
SMILEY'S SUPER SERVICE, INC.
TESORO MARINE SERVICES HOLDING COMPANY
TESORO MARINE SERVICES, LLC
TESORO MARITIME COMPANY
TESORO NORTHSHORE COMPANY
TESORO PETROLEUM COMPANIES, INC.
TESORO TECHNOLOGY COMPANY
TESORO TRADING COMPANY
TESORO VOSTOCK COMPANY
TESORO WASATCH, LLC
By: /s/ Sharon L. Layman
----------------------------------------
Name: Sharon L. Layman
Title: Vice President and Treasurer
TESORO FINANCIAL SERVICES HOLDING COMPANY
VICTORY FINANCE COMPANY
FAR EAST MARITIME COMPANY
GOLD STAR MARITIME COMPANY
By: /s/ G. Scott Spendlove
----------------------------------------
Name: G. Scott Spendlove
Title: Attorney-in-Fact
SECURITY AGREEMENT SIGNATURE PAGE
TESORO GAS RESOURCES COMPANY, INC.
By: /s/ Sharon L. Layman
----------------------------------------
Name: Sharon L. Layman
Title: Vice President and Treasurer
SECURITY AGREEMENT SIGNATURE PAGE
Acknowledged this 17th day of April, 2003
BANK ONE, NA (MAIN OFFICE
CHICAGO), as Administrative Agent
By: /s/ James Gurgone
------------------------------
Name: James Gurgone
Title: Director
SECURITY AGREEMENT SIGNATURE PAGE
EXHIBIT "A"
(See Sections 3.3, 3.4, 3.5 and 4.1.3 of Security Agreement)
Exact Legal Name of Grantor: Digicomp, Inc.
Chief Executive Officer:
300 Concord Plaza Drive
San Antonio, Texas 78216-6999
FEIN: 74-2521015
Jurisdiction of Incorporation/Organization/formation: Delaware
Location of Inventory: N/A
Exact Legal Name of Grantor: Far East Maritime Company
Chief Executive Officer:
300 Concord Plaza Drive
San Antonio, Texas 78216-6999
FEIN: 74-2886469
Jurisdiction of Incorporation/Organization/formation: Delaware
Location of Inventory: N/A
Exact Legal Name of Grantor: Gold Star Maritime Company
Chief Executive Officer:
300 Concord Plaza Drive
San Antonio, Texas 78216-6999
FEIN: 74-2886462
Jurisdiction of Incorporation/Organization/formation: Delaware
Location of Inventory: N/A
Exact Legal Name of Grantor: Smiley's Super Service, Inc.
300 Concord Plaza Drive
San Antonio, Texas 78216-6999
FEIN: 99-0088611
Jurisdiction of Incorporation/Organization/formation: Hawaii
Location of Inventory: N/A
Exact Legal Name of Grantor: Tesoro Alaska Company
Chief Executive Office:
300 Concord Plaza Drive
San Antonio, Texas 78216-6999
FEIN: 74-1646130
Jurisdiction of Incorporation/Organization/formation: Delaware
Location of Inventory: Alaska
Exact Legal Name of Grantor: Tesoro Aviation Company
Chief Executive Office:
300 Concord Plaza Drive
San Antonio, Texas 78216-6999
FEIN: 74-2922277
Jurisdiction of Incorporation/Organization/formation: Delaware
Location of Inventory: N/A
Exact Legal Name of Grantor: Tesoro Financial Services Holding Company
Chief Executive Office:
1105 North Market Street
Wilmington, DE 19801
FEIN: 51-0377202
Jurisdiction of Incorporation/Organization/formation: Delaware
Location of Inventory: N/A
Exact Legal Name of Grantor: Tesoro Gas Resources Company, Inc.
Chief Executive Office:
1105 North Market Street
Wilmington, DE 19801
FEIN: 92-0150083
Jurisdiction of Incorporation/Organization/formation: Delaware
Location of Inventory: N/A
Exact Legal Name of Grantor: Tesoro Hawaii Corporation
Chief Executive Office:
300 Concord Plaza Drive
San Antonio, Texas 78216-6999
FEIN: 99-0143882
Jurisdiction of Incorporation/Organization/formation: Hawaii
Location of Inventory: Hawaii
Exact Legal Name of Grantor: Tesoro Marine Services Holding Company
Chief Executive Office:
300 Concord Plaza Drive
San Antonio, Texas 78216-6999
FEIN: 74-2807425
Jurisdiction of Incorporation/Organization/formation: Delaware
Location of Inventory: N/A
Exact Legal Name of Grantor: Tesoro Marine Services, LLC
Chief Executive Office:
300 Concord Plaza Drive
San Antonio, Texas 78216-6999
FEIN: 74-2766974
Jurisdiction of Incorporation/Organization/formation: Delaware
Location of Inventory: Texas, Louisiana
Exact Legal Name of Grantor: Tesoro Maritime Company
300 Concord Plaza Drive
San Antonio, Texas 78216-6999
FEIN: 74-2886466
Jurisdiction of Incorporation/Organization/formation: Delaware
Location of Inventory: N/A
Exact Legal Name of Grantor: Tesoro Northstore Company
Chief Executive Office
6927 Old Seward Highway
Anchorage, Alaska 99518
FEIN: 92-0098209
Jurisdiction of Incorporation/Organization/formation: Alaska
Location of Inventory: Alaska
Exact Legal Name of Grantor: Tesoro Petroleum Companies, Inc.
Chief Executive Office:
300 Concord Plaza Drive
San Antonio, Texas 78216-6999
FEIN: 74-2385513
Jurisdiction of Incorporation/Organization/formation: Delaware
Location of Inventory: N/A
Exact Legal Name of Grantor: Tesoro Refining and Marketing Company
Chief Executive Office:
300 Concord Plaza Drive
San Antonio, Texas 78216-6999
FEIN: 76-0489496
Jurisdiction of Incorporation/Organization/formation: Delaware
Location of Inventory: North Dakota, California, Idaho, Utah, Washington
Exact Legal Name of Grantor: Tesoro Technology Company
Chief Executive Office:
300 Concord Plaza Drive
San Antonio, Texas 78216-6999
FEIN: 74-25210313
Jurisdiction of Incorporation/Organization/formation: Delaware
Location of Inventory: N/A
Exact Legal Name of Grantor: Tesoro Trading Company
Chief Executive Office:
300 Concord Plaza Drive
San Antonio, Texas 78216-6999
FEIN: 75-3025497
Jurisdiction of Incorporation/Organization/formation: Delaware
Location of Inventory: Delaware
Exact Legal Name of Grantor: Tesoro Vostok Company
Chief Executive Office:
300 Concord Plaza Drive
San Antonio, Texas 78216-6999
FEIN: 74-2257610
Jurisdiction of Incorporation/Organization/formation: Delaware
Location of Inventory: N/A
Exact Legal Name of Grantor: Tesoro Wasatch, LLC
Chief Executive Office:
300 Concord Plaza Drive
San Antonio, Texas 78216-6999
FEIN: 74-3009694
Jurisdiction of Incorporation/Organization/formation: Delaware
Location of Inventory: N/A
Exact Legal Name of Grantor: Victory Finance Company
Chief Executive Office:
1105 North Market Street
Wilmington, Delaware 19801
FEIN: 51-0377203
Jurisdiction of Incorporation/Organization/formation: Delaware
Location of Inventory: N/A
1
EXHIBIT "B"
(See Section 3.1 of Security Agreement)
OFFICES IN WHICH FINANCING STATEMENTS HAVE BEEN FILED
2
EXHIBIT "C"
Form of Landlord Agreement(1)
To: BANK ONE, NA,
as Agent
1 Bank One Plaza
Chicago, IL 60670
Attention: [______]
[Name of Entity], a [Type of Entity] ("Grantor"), is the
lessee under a lease between Grantor and _________________ (the "Lessor")
covering the premises located at ___________________ (the "Premises") as more
fully described in the lease attached hereto as Exhibit A and as modified by any
amendments, if any, attached thereto (collectively, the "Lease"). The Lessor is
the sole owner of the Premises. Grantor has certain of its assets located on the
Premises.
Grantor has entered into that certain Security Agreement dated
as of April 17, 2003 by and among Tesoro Petroleum Corporation (the "Company"),
certain subsidiaries of the Company and Bank One, NA, as Agent (the "Agent") (as
the same may be amended, restated, supplemented or otherwise modified from time
to time, the "Security Agreement") to secure the obligations of the Company
under that certain Credit Agreement dated as of April 17, 2003 by and among the
Company, the financial institutions from time to time parties thereto as lenders
(the "Lenders") and the Agent (as the same may be amended, restated,
supplemented or otherwise modified from time to time, the "Credit Agreement").
Capitalized terms used herein but not defined herein or in the Security
Agreement shall have the meanings ascribed thereto in the Credit Agreement.
In order to induce the Agent and the Lenders (together with
their respective agents, successors and assigns) to continue such financing
arrangements, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the undersigned hereby certifies
and agrees as follows:
(i) The Lease is in full force and effect, and in the form
attached hereto as Exhibit A, represents the full and complete
agreement between the Grantor and the undersigned concerning the
Premises and the Lease shall not be amended or modified in any material
respect without the Agent's prior written consent, which consent shall
not be unreasonably withheld.
(ii) Grantor is not in default under the Lease, nor, to the
undersigned's knowledge, are there any events or conditions which, by
the passage of time or giving of notice or both, would constitute a
default thereunder by Grantor.
- --------
(1) To be modified to be in recordable form in the applicable jurisdiction.
3
(iii) The undersigned will not assert against any of Grantor's
assets any statutory or possessory liens, including, without
limitation, rights of levy or distraint for rent.
(iv) The undersigned is not aware of any dispute, action,
suit, condemnation proceeding, claim, or right of setoff pending or
threatened with respect to the Lease or the Premises.
(v) None of the Collateral located on the Premises shall be
deemed to be fixtures.
(vi) The undersigned will notify the Agent if Grantor defaults
on its lease obligations to the undersigned and allow the Agent thirty
(30) days from the Agent's receipt of notice in which to cure or cause
Grantor to cure any such defaults. If such default cannot reasonably be
cured within the thirty (30) day period, and provided the Agent is
diligently pursuing a cure, then the Agent shall have a reasonable
period to cure such default.
(vii) The undersigned shall accept performance by the Agent of
the Grantor's obligations under the Lease as though the same had been
performed by the holder of the Grantor's interest therein at the time
of such performance. Upon the cure of any such default, any notice of
Landlord advising of any default or any action of the undersigned to
terminate the Lease or to interfere with the occupancy, use or
enjoyment of the Premises by reason thereof, which action has not been
completed, shall be deemed rescinded and the Lease shall continue in
full force and effect. The undersigned shall not be required to
continue any possession or continue any action to obtain possession
upon the cure of any such default.
(viii) If, for any reason whatsoever, the undersigned either
deems itself entitled to redeem or to take possession of the Premises
during the term of Grantor's lease, the undersigned will notify the
Agent five (5) days before taking such action.
(ix) If Grantor defaults on its obligations to the Agent or
any Lender and, as a result, the Agent undertakes to enforce its
security interest in the Collateral, the undersigned will permit the
Agent to remain on the Premises for one-hundred and twenty (120) days
(provided, that the foregoing period shall be tolled from and during
the pendency of any bankruptcy or other insolvency proceedings with
respect to the Grantor) after the later to occur of (a) the date on
which the Agent gives the undersigned notice of the default and (b) the
date on which the Agent is given access to the Premises, provided the
Agent pays the rental payments due under the Lease for the period of
time the Agent occupies the Premises, or, at the Agent's option, to
remove the Collateral from the Premises within a reasonable time, not
to exceed one-hundred and twenty (120) days (provided, that the
foregoing period shall be tolled from and during the pendency of any
bankruptcy or other insolvency proceedings with respect to the Grantor)
after the later to occur of (i) the date on which the Agent gives the
undersigned notice of the default and (ii) the date on which the Agent
is given access to the Premises, provided the Agent pays
4
the rental payments due under the Lease for the period of time the
Agent occupies the Premises, and will not hinder the Agent's actions in
enforcing its liens on the Collateral.
(x) In the event that Grantor shall become a debtor under the
Federal Bankruptcy Code and, in connection therewith, Grantor shall
reject the Lease or Option as an executory contract, then within thirty
(30) days following such rejection, upon the written request by the
Agent, the undersigned shall enter into a new lease of the Premises
with the Agent or its designee (who shall be reasonably acceptable to
the undersigned), for the benefit of the Lenders which new lease (1)
shall be effective as of the date of the termination of the Lease, (2)
shall be for a term expiring as of the last day of the term of the
Lease, and (3) shall be on substantially the same terms and conditions
as the Lease (including any provisions for renewal or extension of the
term of the Lease); provided that the Agent or such designee, as the
case may be, shall be required, as a condition to the effectiveness of
such new lease, to pay the Lessor any amount equal to any rent
remaining unpaid by Grantor under the Lease.
Any notice(s) required or desired to be given hereunder shall
be directed to the party to be notified at the address stated herein.
The agreements contained herein shall continue in force until
the earlier of (i) the expiration date of the Lease (provided no provision is
made for the extension or renewal of the Lease) or (ii) the date on which all of
Grantor's obligations and liabilities to the Agent and the Lenders are paid and
satisfied in full and all financing arrangements between Agent and the Lenders
and Grantor have been terminated.
The Lessor will notify all successor owners, transferees,
purchasers and mortgagees of the existence of this waiver. This waiver may not
be modified or terminated orally and shall be binding upon the successors,
assigns and personal representatives of the Lessor, upon any successor owner or
transferee of the Premises, and upon any purchasers, including any mortgagee,
from the Lessor.
THE LESSOR AGREES THAT NOTHING CONTAINED IN THIS WAIVER SHALL
BE CONSTRUED AS AN ASSUMPTION BY THE AGENT OR ANY LENDERS OF ANY OBLIGATIONS OF
GRANTOR CONTAINED IN THE LEASE.
THIS WAIVER SHALL NOT IMPAIR OR OTHERWISE AFFECT GRANTOR'S
OBLIGATIONS TO PAY RENT AND ANY OTHER SUMS PAYABLE BY GRANTOR OR TO OTHERWISE
PERFORM ITS OBLIGATIONS TO THE LESSOR PURSUANT TO THE TERMS OF THE LEASE.
Executed and delivered this ____ day of ______________, ____,
at _______________________, _______________.
5
[Name of Lessor]
By:
--------------------------------------
Title:
Address:
AGREED &ACKNOWLEDGED:
[GRANTOR]
By:
-------------------------------
Title:
Address:
6
ACKNOWLEDGMENT
STATE OF )
) SS.
COUNTY OF )
----------------------
Before me, a Notary Public in and for said County, personally
appeared ______________, a ________________ [type of entity], by the
________________ of such [type of entity], who acknowledged that (s)he did sign
the foregoing instrument on behalf of said [type of entity] and that said
instrument is the voluntary act and deed of said [type of entity] and his/her
voluntary act and deed as such officer of said [type of entity].
IN TESTIMONY WHEREOF, I have hereunto subscribed my name and
affixed my official seal this ____ day of _________________________, _____ at
__________________, _____________________.
--------------------------------
Notary Public
My Commission Expires:
(Notarial Seal)
7
ACKNOWLEDGMENT
STATE OF )
) SS.
COUNTY OF )
----------------------
Before me, a Notary Public in and for said County, personally
appeared _________________________, a ____________________, by the of such
_________________, who acknowledged that (s)he did sign the foregoing instrument
on behalf of said _________________ and that said instrument is the voluntary
act and deed of said ______________ and his/her voluntary act and deed as such
officer of said ______________.
IN TESTIMONY WHEREOF, I have hereunto subscribed my name and
affixed my official seal this ____ day of _____________________, ____ at
______________, _____________________.
--------------------------------------
Notary Public
My Commission Expires:
(Notarial Seal)
8