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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
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Filed by the Registrant / /
Filed by a Party other than the Registrant /x/
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/x/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
TESORO PETROLEUM CORPORATION
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(Name of Registrant as Specified in Its Charter)
THE STOCKHOLDERS' COMMITTEE FOR NEW MANAGEMENT OF
TESORO PETROLEUM CORPORATION
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined.):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/x/ Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: $
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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CONSENT SOLICITATION STATEMENT OF THE STOCKHOLDERS'
COMMITTEE FOR NEW MANAGEMENT OF TESORO PETROLEUM CORPORATION
To the Stockholders of Tesoro Petroleum Corporation:
The time has come for the stockholders of Tesoro Petroleum Corporation, a
Delaware corporation (the 'Company'), to take charge of the future of their
investments in the Company. Toward that end, a group of concerned stockholders
has formed The Stockholders' Committee for New Management of Tesoro Petroleum
Corporation (the 'Committee') in order to solicit consents from the holders of
common stock, par value $0.16 2/3 per share (the 'Common Stock'), of the Company
to take action without a stockholders' meeting, as permitted by Delaware law.
The Committee is soliciting consents with respect to:
1. The amendment of Sections 2.1, 2.2 and 2.7 of Article II of the By-Laws
of the Company to:
(a) set the number of directors that constitute the Board of Directors
of the Company (the 'Board') at five;
(b) unambiguously provide that stockholders may remove any or all
directors, with or without cause, whether at an annual or special
meeting or by written consent;
(c) provide that vacancies created on the Board by the removal of one
or more directors be filled only by stockholder action; and
(d) repeal any and all By-Law provisions or amendments thereto adopted
after November 14, 1995;
2. The removal of all seven of the present members of the Board and any
person or persons elected or appointed to the Board prior to the effective date
of the proposed actions set forth herein; and
3. The election of George F. Baker, Gale L. Galloway, Alan J. Kaufman,
M.D., James H. Stone and Douglas B. Thompson as directors of the Company
(collectively, the 'Committee Nominees'), to serve until their successors are
elected and qualified.
On February 5, 1996, pursuant to Section 213(b) of the Delaware General
Corporation Law (the 'DGCL') and in accordance with the By-Laws of the Company
as believed to be currently in effect (the 'By-Laws'), the Committee requested
by written notice delivered to the Secretary of the Company that the Board fix a
record date for this consent solicitation. On February 15, 1996, the Company
announced that the Board had set February 24, 1996, as the record date for the
purposes of this solicitation (the 'Record Date'). This Consent Statement and
the related WHITE Consent Card are first being sent or given on or about
February 29, 1996, to holders of record of Common Stock on the Record Date.
YOU ARE URGED TO CONSENT TO THE REMOVAL OF THE BOARD AND THE ELECTION OF
THE COMMITTEE NOMINEES BY MARKING, SIGNING, DATING, AND RETURNING PROMPTLY THE
ENCLOSED WHITE CONSENT CARD IN THE POSTAGE-PAID ENVELOPE PROVIDED. FAILURE TO
EXECUTE A CONSENT WILL HAVE THE SAME EFFECT AS WITHHOLDING A CONSENT. SEE 'THE
CONSENT PROCEDURE--SPECIAL INSTRUCTIONS.'
THE COMMITTEE URGES YOU NOT TO SIGN ANY GREEN REVOCATION OF CONSENT CARDS
SENT TO YOU BY THE COMPANY. IF YOU HAVE PREVIOUSLY SIGNED AND RETURNED A GREEN
REVOCATION OF CONSENT CARD, YOU HAVE EVERY REASON TO CHANGE YOUR MIND AND MAY DO
SO BY MARKING, SIGNING, DATING AND RETURNING A LATER-DATED WHITE CONSENT CARD.
If your shares of Common Stock are held in the name of a brokerage firm,
bank nominee or other institution, only it can execute a Consent Card with
respect to your shares. Accordingly, please contact the person responsible for
your account and give instructions for a WHITE Consent Card to be signed
representing your shares. The Committee requests that you confirm your
instructions to the person responsible for your account in writing and provide a
copy of such instructions to the Committee, c/o Morrow & Co., Inc., 909 Third
Avenue, New York, New York 10022, so that the Committee will be aware of all
instructions given and can attempt to ensure that such instructions are
followed.
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THE PROPOSED ACTIONS WILL BECOME EFFECTIVE AT THE TIME THAT WRITTEN
UNREVOKED CONSENTS OF THE HOLDERS OF A MAJORITY OF THE SHARES OF COMMON STOCK
OUTSTANDING AT THE CLOSE OF BUSINESS ON THE RECORD DATE ARE DELIVERED TO THE
COMPANY, PROVIDED THAT THE REQUISITE CONSENTS ARE SO DELIVERED WITHIN 60 DAYS OF
THE EARLIEST DATED CONSENT SO DELIVERED TO THE COMPANY (THE 'EFFECTIVE TIME').
AS OF THE DATE HEREOF, NO CONSENTS HAVE BEEN DELIVERED BY THE COMMITTEE TO THE
COMPANY. ACCORDINGLY, THE 60-DAY PERIOD HAS NOT COMMENCED.
If you have any questions about completing or signing the WHITE Consent
Card or require assistance, including assistance in assuring that any of your
shares held by brokers or other nominees are voted, please call Morrow & Co.,
Inc. at (800) 634-4458.
REASONS FOR THE CONSENT SOLICITATION
The Committee is soliciting the consent of holders of the Common Stock to
actions that would result in the removal of all incumbent members of the Board
and their replacement with the Committee Nominees, who will devote their
energies to reorganizing and revitalizing the Company.
THE BASIC ISSUE WE ARE RAISING THROUGH THIS CONSENT SOLICITATION IS WHETHER
THE INCUMBENT DIRECTORS' RECORD JUSTIFIES THEIR CONTINUATION IN OFFICE OR
WHETHER A NEW BOARD OF DIRECTORS SHOULD BE GIVEN THE OPPORTUNITY TO SEEK NEW
DIRECTIONS FOR THE BENEFIT OF ALL STOCKHOLDERS OF THE COMPANY.
In our view the answer is clear: We think that the Company's current
management has failed to perform its primary function--maximizing stockholder
value.
WE THINK THAT MANAGEMENT WILL CONTINUE WITH BUSINESS AS USUAL FOR THE
FORESEEABLE FUTURE UNLESS STOCKHOLDERS ELECT A NEW BOARD.
We believe that many of you share our discontent and concerns. In order to
address those concerns, the Committee seeks your help to remove the directors
now in office and elect five new directors who, we believe, will be responsive
to stockholders and firmly committed to the goal of increasing stockholder
value.
Your consent is important. No matter how many or how few shares you own,
please help us to improve stockholder value by completing, signing, dating and
mailing the enclosed WHITE Consent Card promptly. The Committee urges you not to
sign any green revocation of consent cards sent to you by the Company. If you
have previously signed and returned a green revocation of consent card, you have
every reason to change your mind and may do so by marking, signing, dating and
returning a later-dated WHITE Consent Card.
THE COMMITTEE AND ITS NOMINEES
THE COMMITTEE
The Committee consists of George F. Baker, Kevin S. Flannery, Alan J.
Kaufman, M.D., James H. Stone and Robert S. Washburn. Dr. Kaufman and Messrs.
Baker and Stone also are Committee Nominees.
Kevin S. Flannery, age 51, has been, since May 1993, President, a director
and the principal stockholder of Whelan Management Corp. ('Whelan'), an
investment advisory firm, and of Whelan Securities Inc., a securities
broker-dealer. From September 1991 until April 1993, he was Senior Vice
President and head equity trader at George Weiss Associates, Inc., a money
management and brokerage firm in Hartford, Connecticut. From 1975 until
September 1991, Mr. Flannery was with Bear, Stearns & Co. Inc. as Senior
Managing Director and head of the block trading desk.
Robert S. Washburn, age 64, has a background in law, real estate
development and investment banking, and currently manages his private investment
portfolio. From 1974 to 1987, Mr. Washburn was a general partner of Montgomery
Securities, a New York Stock Exchange member firm, serving as head of its
investment banking activities and as Chairman of its Executive Committee for
several of those years.
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THE COMMITTEE NOMINEES
The Committee Nominees are Dr. Kaufman, Messrs. Baker and Stone, Gale L.
Galloway and Douglas B. Thompson. Brief biographical information about each of
these individuals follows:
George F. Baker, age 56, has been President of Cambridge Capital Holdings,
an investment advisory firm, since 1987, and a general partner of Baker, Nye
L.P., an investment partnership, since 1967. Mr. Baker also is Chairman,
President and Chief Executive Officer of Whitehall Corporation, a New York Stock
Exchange company in the electronics, aerospace and earth sciences fields. He is
a director of Digicon, Inc., an American Stock Exchange company engaged
primarily in the business of collecting, processing and interpreting geophysical
data for the oil and gas exploration and development industry.
Gale L. Galloway, age 66, has had a long career in the oil and natural gas
industry, and for more than the past five years has been Chairman of the Board
and Chief Executive Officer of GLG Energy, Inc., an independent oil and gas
producer. Mr. Galloway formerly served as Chairman and Chief Executive Officer
of Louisiana Intrastate Gas Corporation and Entex. Prior to his employment with
Entex, Mr. Galloway was Chairman, President and Chief Executive Officer of
Celeron Corporation and a member of the Board of Directors of The Goodyear Tire
& Rubber Company. Celeron and Entex were Fortune 500, New York Stock Exchange
companies. As of August 1994, Mr. Galloway has been a part owner and a member of
the Board of Directors of Prodevco S.A., a project development company,
headquartered in Santiago, Chile, and involved principally in the design and
development of refinery units in South America. Since September of 1994, Mr.
Galloway has been a part owner and director of Pennacle Natural Gas Co., a
natural gas gathering company, and, from May of 1995 until the present, Mr.
Galloway has served as a member and owner of 1836 L.L.C., a product distribution
company.
Alan J. Kaufman, M.D., age 58, has been a practicing neurosurgeon for over
25 years and an investor in a number of companies. Since 1987, he has been a
director of Newpark Resources, Inc., a New York Stock Exchange company engaged
primarily in providing oilfield services.
James H. Stone, age 70, has served since March of 1993 as Chairman of the
Board and Chief Executive Officer of Stone Energy Corporation, a New York Stock
Exchange company engaged primarily in oil and natural gas exploration and
development. Stone Energy Corporation was formed in March 1993 to become a
holding company for The Stone Petroleum Corporation ('TSPC') and its
subsidiaries and certain partnership interests. Mr. Stone served as Chairman of
the Board of TSPC from 1981 until March of 1993 and served as President of TSPC
from September of 1992 to July of 1993. He also is a director and member of the
Executive Committee of the Board of Directors of Newpark Resources, Inc., a New
York Stock Exchange company, engaged primarily in providing oilfield services,
and a director and member of the Executive Committee of the Board of Directors
of Hibernia Corp., a bank holding company listed on the New York Stock Exchange,
and of its subsidiary, Hibernia National Bank.
Douglas B. Thompson, age 46, has served since July of 1991 as a director
and member of the Executive Committee of Digicon, Inc., a worldwide integrated
geophysical service company listed on the American Stock Exchange, and as
Digicon's Chairman of the Board commencing in April of 1994. Since June of 1991,
Mr. Thompson has been Chairman of the Board of Welltech, a domestic and
international well servicing and production servicing company, and, from
September of 1992 to October of 1995, he served as Welltech's President and
Chief Executive Officer. Mr. Thompson has also been President and sole
shareholder of Jupiter Management Company, an investment company, since 1989.
Certain additional information regarding the Committee's members and the
Committee Nominees, including stock ownership information regarding the members
of the Committee and the Committee Nominees, is set forth in Appendix I attached
to this Consent Solicitation Statement.
All information contained in this Consent Solicitation Statement (including
Appendices) concerning each member of the Committee and each Committee Nominee
has been provided to the Committee by that person.
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THE COMMITTEE'S PROPOSALS
The Committee believes that a new Board must be elected in order to further
stockholder interests. To achieve that end, the Committee is requesting
stockholders to give their written consents to the following actions:
1. BY-LAW AMENDMENTS.
The Committee is proposing amendments (the 'By-Law Amendments') to certain
provisions of the Company's By-Laws. Our first proposal concerning the By-Laws
relates to the size of the Board, the removal of directors and the filling of
vacancies on the Board. The purpose and effect of each of the Committee's
proposed By-Law Amendments is to facilitate the proposed removal and replacement
of all incumbent directors, as discussed further below.
Article II, Section 2.1 of the By-Laws, as now in effect, provides that the
number of directors who constitute the whole Board is to be determined by
resolution of the Board, but may not be less than three. The Committee believes
that the entire Board currently consists of seven directors. The Committee's
proposed amendment to Article II, Section 2.1, if adopted, will fix the number
of directors at five, while maintaining the authority of the Board to increase
or decrease the number of directors. The proposed amendment is designed to
ensure that the Committee Nominees, if elected, will maintain majority
representation on the Board in order to carry out their plan of seeking to
maximize stockholder value.
Under the General Corporation Law of the State of Delaware (the 'DGCL'),
directors of a corporation without a classified board and whose certificate of
incorporation does not otherwise provide may be removed with or without cause by
the holders of a majority of the outstanding shares entitled to vote in the
election of directors. The Company does not have a classified board, and its
Certificate of Incorporation makes no provision respecting the removal of
directors. In addition, unless a Delaware corporation's certificate of
incorporation otherwise provides, the DGCL permits stockholders to take action
without a meeting and without prior notice if a consent or consents in writing,
setting forth the action so taken, are signed by the holders of outstanding
stock having not less than the minimum number of votes that would be necessary
to take such action at a meeting at which all shares entitled to vote on that
action were present. Under the applicable provision of the DGCL, stockholder
action by written consent is effective when written consents from the holders of
record of the minimum number of shares of stock necessary to authorize the
action are executed and delivered to the corporation within 60 days of the
earliest dated consent so delivered.
Since the DGCL provides that the directors of a corporation may be removed
without cause unless otherwise provided in the certificate of incorporation, and
because the Company's Certificate of Incorporation contains no contrary
provision, we believe that one of the fundamental charter rights of the
Company's stockholders is to exercise complete and unfettered discretion in
choosing and changing the persons who manage its business and affairs. Section
2.7 of Article II of the By-Laws provides that directors may be removed (with or
without cause) at a special meeting of stockholders called for that specific
purpose. Other provisions of the By-Laws, however, state that stockholder
actions which may be taken at special meetings may be taken by written consent
in lieu of a special meeting, subject to certain requirements. The Committee
believes, therefore, that the By-Laws (as well as applicable provisions of the
DGCL) permit the removal of directors without cause through use of a written
consent solicitation like the one in which the Committee currently is engaged
and do not limit the exercise of the removal power to special meetings. In order
to achieve certainty, however, the Committee's Consent Card includes a proposal
to amend Article II, Section 2.7 of the By-Laws to provide unambiguously that
stockholders may remove any or all directors with or without cause, whether at
an annual or special meeting or by written consent. The adoption of this
amendment will facilitate the removal of all of the incumbent members of the
Board, as discussed below.
Sections 2.2 and 2.7 of Article II of the By-Laws provide that vacancies
created by the removal of a director may be filled by the majority vote of the
remaining directors. These provisions permit such vacancies to be filled without
any stockholder participation. The Committee proposes to amend Article II,
Sections 2.2 and 2.7 of the By-Laws to require that such vacancies be filled
only by stockholder action. This proposed amendment is intended to prevent the
incumbent Board of Directors from filling any of the vacancies which would be
created upon the removal of any of its members.
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The text of Sections 2.1, 2.2 and 2.7 of Article II of the By-Laws, as
believed to be currently in effect, and as proposed to be amended, is set forth
in Appendix II attached to this Consent Solicitation Statement.
On November 14, 1995, the Company filed with the Securities and Exchange
Commission (the 'Commission') its report on Form 10-Q for the quarter ended
September 30, 1995 (the '1995 Third Quarter 10-Q'). The 1995 Third Quarter 10-Q
included as an exhibit a form of By-Laws for the Company which indicated that
they reflected amendments made by the incumbent Board on September 27, 1995.
Those amendments include (i) a new requirement of 60 or 90 days' prior notice in
order for stockholders to nominate directors or place matters on the agenda at
an annual or special meeting of stockholders and (ii) new requirements for and
conditions upon actions by stockholders by written consent. In the Committee's
view, the effect of these and other By-Law changes made by the incumbent Board
is to increase the difficulty, time and expense of actions by stockholders to
exercise their rights effectively as the Company's true owners.
Additionally, the By-Law Amendments we are proposing include the repeal of
each provision of the Company's By-Laws or any amendment thereto adopted by the
incumbent Board after November 14, 1995, and prior to the Effective Time. The
reason for this proposed repeal is to address the possibility that the Board may
have taken, and not yet publicly disclosed, actions that the Committee might be
opposed to or that the Board might take during the pendency of this
solicitation. The Committee, however, is not aware of the adoption by the
incumbent Board after November 14, 1995, of any provision of the Company's
By-Laws or any amendment thereto, and the Committee has no reason to believe at
this time that the incumbent Board has adopted any such provisions or amendments
that have not been disclosed. In the event that the Committee becomes aware of
any action taken by the incumbent Board to amend the By-Laws following the date
of this Consent Solicitation Statement, the Committee will distribute as
necessary additional materials describing the By-Law provisions or amendments
that would be affected by the By-Law repeal amendment. Additionally, if the
By-Law Amendments are adopted pursuant to this consent solicitation, prompt
notice, including a description of such repealed By-Law provisions or
amendments, must be given by the Company pursuant to Section 228(d) of the DGCL
to stockholders who did not execute consents. Moreover, if the By-Law Amendments
are adopted pursuant to this consent solicitation, a description of such
repealed By-Law provisions or amendments will be included in the report on Form
10-Q for the quarter in which the Effective Time occurs.
As indicated above, the 1995 Third Quarter 10-Q includes the By-Laws as an
exhibit. Accordingly, the Committee assumes that the By-Laws, in the form filed
with the 1995 Third Quarter 10-Q, were current as of November 14, 1995, the date
of filing, and the Committee's proposed By-Law Amendments would not repeal any
provision of the By-Laws that was publicly disclosed prior to that date, other
than as specifically described herein; however, any amendment to the By-Laws
adopted by the Board since November 14, 1995 and prior to the Effective Time
would be repealed. There are no provisions in the By-Laws or in the Company's
Certificate of Incorporation restricting the ability of stockholders to amend or
repeal provisions of the By-Laws without the consent of the Board. Although, to
the Committee's knowledge, there is no Delaware precedent precisely on point,
the Committee is confident that such proposed repeal of undisclosed By-Laws or
amendments is enforceable. If it were not, By-Laws adopted by the Board would
not be automatically repealed, but would be subject to challenge in court.
THE COMMITTEE RECOMMENDS THAT YOU EXECUTE THE ACCOMPANYING WHITE CONSENT
CARD FOR THE PROPOSED BY-LAW AMENDMENTS.
2. REMOVAL OF ALL INCUMBENT DIRECTORS.
Based on the Company's filings with the Commission, the individuals who now
sit on the Board are Robert J. Caverly, Peter M. Detwiler, Steven H. Grapstein,
Raymond K. Mason, Sr., John J. McKetta, Jr., Bruce A. Smith and Murray L.
Weidenbaum. The Committee believes that the incumbent directors have failed to
maximize stockholder value and should be removed and replaced with the Committee
Nominees. ACCORDINGLY, THE COMMITTEE RECOMMENDS THAT YOU EXECUTE THE
ACCOMPANYING WHITE CONSENT CARD FOR REMOVAL OF ALL OF THE PRESENT MEMBERS OF THE
COMPANY'S BOARD AND ANY PERSON ELECTED BY THE INCUMBENT DIRECTORS (WHETHER
BEFORE OR AFTER THE DATE OF THIS CONSENT SOLICITATION STATEMENT) TO FILL ANY
VACANCY OR NEWLY CREATED DIRECTORSHIP.
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3. PROPOSED ELECTION OF THE COMMITTEE NOMINEES.
If the proposed By-Law Amendments are adopted and the Company's incumbent
directors are removed, the entire Board will consist of five directorships, all
of which will be vacant. To fill those vacancies, the Committee proposes the
election of the Committee Nominees--George F. Baker, Gale L. Galloway, Alan J.
Kaufman, M.D., James H. Stone and Douglas B. Thompson. Certain information
concerning the Committee's Nominees is set forth above under the caption 'THE
COMMITTEE AND ITS NOMINEES' and in Appendix I attached to this Consent
Solicitation Statement. Each of the Committee Nominees has agreed to serve as a
director of the Company, if elected.
THE COMMITTEE RECOMMENDS THAT YOU EXECUTE THE ACCOMPANYING WHITE CONSENT
CARD FOR THE ELECTION OF THE COMMITTEE NOMINEES TO THE BOARD. THE COMMITTEE
URGES YOU NOT TO SIGN ANY GREEN REVOCATION OF CONSENT CARDS SENT TO YOU BY THE
COMPANY. IF YOU HAVE PREVIOUSLY SIGNED A GREEN REVOCATION OF CONSENT CARD, YOU
HAVE EVERY REASON TO CHANGE YOUR MIND AND MAY DO SO BY MARKING, SIGNING, DATING
AND RETURNING A LATER-DATED WHITE CONSENT CARD.
CONSENT PROCEDURE
Section 228 of the DGCL states that, unless otherwise provided in the
certificate of incorporation of a Delaware corporation, any action that is
required to be or may be taken at any annual or special meeting of stockholders
of that corporation may be taken without a meeting, without prior notice and
without a vote, if a consent or consents in writing, setting forth the action so
taken, are signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and
voted, and those consents are delivered to the corporation by delivery to its
registered office in Delaware, its principal place of business or an officer or
agent of the corporation having custody of the books in which proceedings of
meetings of stockholders are recorded. The Company's certificate of
incorporation does not prohibit stockholder action by written consent.
Section 213(b) of the DGCL provides that if no record date has been fixed
by the board of directors, the record date for determining stockholders entitled
to consent to corporate action in writing without a meeting, when no prior
action by the board of directors is required, will be the first date on which a
signed written consent setting forth the action taken or proposed to be taken is
delivered to the corporation by delivery to its registered office in Delaware,
its principal place of business or an officer or agent of the corporation having
custody of the books in which proceedings of meetings of the stockholders are
recorded. On September 27, 1995, the Board, without stockholder involvement,
amended its By-Laws to provide that a stockholder seeking to have the
stockholders of the Company authorize or take corporate action by written
consent is required to request the Board to fix a record date. Pursuant to the
September 27, 1995 By-Law amendments, the Board shall promptly, but in all
events within 10 days after the date on which the request is received, adopt a
resolution fixing the record date for the solicitation. The By-Laws further
provide that such record date may not be before nor more than 15 days after the
date of the resolution.1 If the Board fails to set a record date on a timely
basis, a stockholder may fix the record date by the delivery of a signed consent
to the Company. On February 5, 1996, pursuant to DGCL Section 213(b) and in
accordance with the By-Laws, the Committee requested by written notice delivered
to the Secretary of the Company that the Board fix a record date for this
consent solicitation. On February 15, 1996, the Company announced that the Board
had set February 24, 1996, as the Record Date.
If the Proposals are adopted pursuant to this consent solicitation, prompt
notice must be given by the Company pursuant to Section 228(d) of the DGCL to
stockholders who have not executed consents.
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(1) The Committee believes that permitting the Board to set a record date 15
days after the date of the resolution fixing such record date may be
inconsistent with DGCL Section 213(b), which provides that the record date
'shall not be more than ten days after the date upon which the resolution
fixing the record date is adopted by the board of directors.'
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EFFECTIVENESS AND REVOCATION OF CONSENTS
The Committee's proposals will become effective when properly completed,
unrevoked consents are signed by the holders of record as of the Record Date of
a majority of the voting power of the then outstanding Common Stock and such
consents are delivered to the Company, provided that the requisite consents are
so delivered within 60 days of the date of the earliest dated consent so
delivered to the Company.
An executed Consent Card may be revoked at any time by marking, dating,
signing and delivering a written revocation before the time signed, unrevoked
consents by the holders of more than 50% of the outstanding shares of Common
Stock on the Record Date have been delivered to the Company pursuant to DGCL
Section 228. A revocation may be in any written form validly signed by the
record holder as long as it clearly states that the consent previously given is
no longer effective. The delivery of a subsequently dated Consent Card which is
properly completed will constitute a revocation of any earlier consent. The
revocation may be delivered either to the Committee, in care of Morrow & Co.,
Inc., 909 Third Avenue, New York, New York 10022, or to the Company at 8700
Tesoro Drive, San Antonio, Texas 78217 or any other address provided by the
Company. Although a revocation is effective if delivered to the Company, the
Committee requests that either the original or photostatic copies of all
revocations of consents be mailed or delivered to the Committee as set forth
above, so that the Committee will be aware of all revocations and can more
accurately determine if and when the requisite consents to the actions described
herein have been received.
VALIDITY OF CONSENTS
In connection with a consent solicitation, the By-Laws of the Company
require that the Company retain nationally recognized independent inspectors of
elections for the purpose of performing a ministerial review of the validity of
consents and any revocations thereof. Upon receipt by the inspectors of election
of all of the consents and revocations delivered to the Company in connection
with this consent solicitation, the By-Laws require the inspectors of election
to issue a preliminary report to the Company stating: (i) the number of shares
represented by valid and unrevoked consents; (ii) the number of shares
represented by invalid consents; (iii) the number of shares represented by
invalid revocations; and (iv) the number of shares entitled to submit consents
as of the Record Date. Unless the Company and the Committee agree to a shorter
or longer period, the Company and the Committee will have five days thereafter
to review the consents and revocations and to advise the inspectors and the
opposing party in writing as to whether they intend to challenge the preliminary
report. If no timely written notice of an intention to challenge the preliminary
report is received, the inspectors will certify the preliminary report (as
corrected or modified by virtue of the detection by the inspectors of clerical
errors) as their final report and deliver it to the Company. If the Company or
the Committee gives timely written notice of an intention to challenge the
preliminary report, a challenge session will be scheduled by the inspectors as
promptly as practicable. Following completion of the challenge session, the
inspectors will issue and deliver to the Company as promptly as practicable
their final report. Upon receipt of a final report from the inspectors, the By-
Laws require the Company to give prompt notice to the stockholders of the
results of this consent solicitation.
CONSENTS REQUIRED
The consent of the holders of shares representing a majority of the votes
of all shares of Common Stock outstanding as of the Record Date is required to
adopt and approve each of the Committee's proposals. According to the Company,
there were 25,748,048 shares of Common Stock outstanding on the Record Date.
Each share of Common Stock entitles the Record-Date holder to one vote on the
Committee's proposals. Accordingly, written consents by Record-Date holders of
approximately 12,874,024 shares of Common Stock will be required to adopt and
approve each of the Committee's proposals.
As of the Record Date, the Committee's members, the Committee Nominees and
their respective affiliates and associates beneficially owned an aggregate of
1,463,108 shares of Common Stock, constituting approximately 5.7% of the Common
Stock believed to be outstanding as of the Record Date, and expect to execute
(or cause to be executed) consents to all of the actions for which consents are
being solicited by the Committee with respect to all such shares. As a result,
in addition to the consents of the Committee's members and the Committee
Nominees, the unrevoked consents of other Record-Date holders owning
approximately 44.3% of the outstanding shares of Common Stock on the Record Date
are required to adopt the Proposals.
7
<PAGE>
SOLICITATION OF CONSENTS
Consents will be solicited by mail, telephone, telegraph, telex, facsimile
transmission, electronic mail and in person. Solicitations of consents will be
made by all or some of the Committee's members and the Committee Nominees.
In addition, the Committee has retained Morrow & Co., Inc. to assist in the
solicitation and has executed an engagement letter with Morrow & Co., Inc.
providing for the payment of a fee of $150,000 plus reimbursement of expenses.
The engagement letter provides Morrow & Co., Inc. with indemnity from certain
liabilities, including liabilities arising under Federal securities laws. It is
anticipated that approximately 50 employees of Morrow & Co., Inc. will be
involved in soliciting the consents of stockholders in this consent
solicitation.
Brokers, custodians, nominees and fiduciaries will be requested to forward
solicitation material to beneficial owners of the Common Stock. The Committee
will reimburse brokers, custodians, nominees and fiduciaries for their
reasonable expenses for sending solicitation material to the beneficial owners
of Common Stock.
Subject to the following two paragraphs, the cost of solicitation will be
borne by the members of the Committee in equal proportions. Total expenditures
for the solicitation, including fees for attorneys, accountants, financial
advisers, solicitors, advertising, printing, transportation, litigation and
other costs incidental to the solicitation, are estimated to be approximately
$900,000. The total amount of such expenditures made to date is estimated to be
approximately $295,000, which amount includes expenditures incurred to date for
attorneys' fees and other costs incidental to the matters set forth below under
the caption 'CERTAIN LEGAL PROCEEDINGS.'
Under an agreement between Mr. Washburn and Whelan, Mr. Washburn will be
entitled to receive a portion of the net profits, if any, from the exercise and
sale of 200,000 shares of Common Stock underlying certain options held by Whelan
if Mr. Washburn is not otherwise reimbursed for expenses incurred in connection
with this consent solicitation upon its termination. The amount payable to Mr.
Washburn will be equal to the lesser of (i) 30% of such net profits, if any,
realized upon exercise (or the deemed exercise and the sale thereof based on the
trading price of the Common Stock on the NYSE on the date the consent
solicitation is terminated) or (ii) the aggregate amount of such expenses funded
by Mr. Washburn as to which no reimbursement is received.
The Committee will seek reimbursement of the costs of this solicitation
from the Company to the extent legally permissible. The Committee does not
intend that the question of the Company's reimbursement of solicitation expenses
will be submitted to a vote of stockholders unless such submission is required
by law.
SPECIAL INSTRUCTIONS
If you were a record holder as of the close of business on the Record Date,
you may elect to consent to or withhold consent to each of the Committee's
proposals by marking the 'CONSENTS' or 'CONSENT WITHHELD' box, as applicable,
underneath each such proposal on the accompanying WHITE Consent Card and
signing, dating and returning it promptly in the enclosed postage-paid envelope.
IF A STOCKHOLDER WHO HAS EXECUTED AND RETURNED THE CONSENT CARD HAS FAILED
TO CHECK A BOX MARKED 'CONSENTS' OR 'CONSENT WITHHELD' FOR ANY OR ALL OF THE
PROPOSALS, SUCH STOCKHOLDER WILL BE DEEMED TO HAVE CONSENTED TO SUCH PROPOSAL OR
PROPOSALS.
THE COMMITTEE RECOMMENDS THAT YOU CONSENT TO EACH OF THE PROPOSALS. YOUR
CONSENT IS IMPORTANT. PLEASE MARK, SIGN AND DATE THE ENCLOSED WHITE CONSENT CARD
AND RETURN IT IN THE ENCLOSED POSTAGE-PAID ENVELOPE PROMPTLY. FAILURE TO RETURN
YOUR CONSENT WILL HAVE THE SAME EFFECT AS VOTING AGAINST THE PROPOSALS.
If you have any questions about completing or signing the Consent Card or
require assistance, including assistance in assuring that any of your shares
held by brokers or other nominees are voted, please call Morrow & Co., Inc., 909
Third Avenue, New York, New York 10022, (800) 634-4458.
If your shares are held in the name of a brokerage firm, bank nominee or
other institution, only it can execute a consent with respect to your shares and
only upon receipt of specific instructions from you. Accordingly, you should
contact the person responsible for your account and give instructions for the
WHITE Consent Card to be signed representing your shares. The Committee urges
you to confirm in writing your
8
<PAGE>
instructions to the person responsible for your account and provide a copy of
those instructions to the Committee in care of Morrow & Co., Inc., 909 Third
Avenue, New York, New York 10022, so that the Committee will be aware of all
instructions given and can attempt to ensure that such instructions are
followed.
Please review this Consent Solicitation Statement carefully. YOUR RESPONSE
IS IMPORTANT. You are urged to support the Committee's solicitation efforts by
promptly completing, signing, dating and mailing the enclosed WHITE consent
card. The Committee strongly urges you not to return any green revocation of
consent cards. Please be aware that if you sign a green card but do not check
any of the boxes thereon, you will be deemed to have revoked your consent to all
of the Committee's proposals with respect to any prior-dated WHITE Consent Card.
BACKGROUND
Each of Messrs. Flannery, Stone and Washburn and Dr. Kaufman has been a
beneficial owner of Common Stock for at least four years, although the number of
shares beneficially owned by each has fluctuated. Those members of the Committee
invested in the Company because, at the time of their respective investments,
they saw fundamental values which they expected would eventually be reflected
through increases in stock prices. As already noted, however, the Committee
members have lost confidence in the ability of the incumbent Board to realize
those values.
During 1992, when the Company was experiencing particularly severe
financial difficulties, the level of concern of Mr. Flannery and Dr. Kaufman
about their investments in the Company became acute. On October 30, 1992, Mr.
Flannery and Dr. Kaufman, together with certain other stockholders of the
Company, including Fraydan Manocherian, filed a statement on Schedule 13D
reporting, among other things, that the persons signing that Schedule 13D (the
'United Partners Reporting Persons') had reached, on October 26, 1992, 'an
understanding to act together under the name 'United Partners' in order to
attempt to protect and enhance the value of their shares of Common Stock,' and
had delivered a letter to the Company requesting that there be added to the
Company's Board of Directors two directors from a list of five designees, who
included Messrs. Flannery and Stone and Dr. Kaufman. On April 2, 1993, an
amendment to the Schedule 13D was filed which stated that as a result of the
Company's failure to respond to the October 26, 1992 letter, the United Partners
Reporting Persons were reviewing the options available, including engaging in a
proxy contest. No agreement or understanding between Mr. Flannery or Dr. Kaufman
and the other United Partners Reporting Persons was subsequently reached
regarding a proxy contest or the pursuit of any other option with regard to the
Company. In February 1994, each of Mr. Flannery and Dr. Kaufman formally
notified Mr. Manocherian of their withdrawal as participants in the Schedule 13D
filing group and the United Partners Reporting Persons filed an amendment to the
Schedule 13D reporting that, as a consequence of Dr. Kaufman's withdrawal, the
other participants had ceased to be the beneficial owners of 5% or more of the
Common Stock.
In the weeks before the scheduled 1994 Annual Meeting of the Company's
stockholders, a decline in Common Stock prices resulted from several
developments affecting the Company, including a restructuring by the Company of
its outstanding debt and preferred stock on terms which Mr. Flannery, Mr.
Washburn and Dr. Kaufman independently concluded were contrary to the best
interests of stockholders. At the Company's 1994 Annual Meeting held on May 20,
1994, a representative of Messrs. Flannery and Washburn and Dr. Kaufman
nominated from the floor an alternative slate of directors consisting of Messrs.
Baker, Flannery and Washburn, Dr. Kaufman and another individual who is not a
member of the Committee or a Committee Nominee, but was unsuccessful in seating
any of those nominees.
Events affecting the Company in early 1995, including the prospective sale
of a significant part of the Company's rights in the Bob West natural gas field,
led Dr. Kaufman and Mr. Flannery to conclude that another effort to unseat the
then-incumbent Board should be attempted at the forthcoming 1995 Annual Meeting.
During the week before the scheduled date for the 1995 Annual Meeting, Mr.
Flannery succeeded in obtaining revocable proxies for the meeting from several
other stockholders.
At the Company's Annual Meeting held on May 4, 1995, a representative of
Mr. Flannery, Dr. Kaufman and the stockholders whose proxies were held by Mr.
Flannery nominated from the floor a dissident slate of six directors which
included Mr. Baker, Mr. Flannery, Dr. Kaufman, and three other individuals who
are not members of the Committee or Committee Nominees. Following the closing of
the polls, the inspectors of election
9
<PAGE>
determined that they could not make a report on the vote at that time because of
the number of ballots and proxies submitted by stockholders at the meeting. On
May 15, 1995, the inspectors of election delivered a report showing that all of
the Board-approved nominees had been elected and all of the dissident nominees
had been defeated.
As a result of what he perceived to be irregularities in the process by
which votes were taken, tallied, inspected and reported, Mr. Flannery, through
Whelan, the record holder of the shares of Common Stock then beneficially owned
by Mr. Flannery, formally challenged the reported results of the election. On
June 8, 1995, the inspectors of election denied Whelan's challenges, and on June
9, 1995 issued a second report confirming the results of the first report. That
second report indicated that with respect to three directorships, the average
difference in votes between the three Board-approved nominees receiving the
fewest votes and the three alternative nominees with the highest votes was
1,670,522 votes, or only 7.48% of the 22,303,905 shares present at the meeting,
in person or by proxy. In other words, a change in vote by holders of only
841,345 shares (or 3.7% of the shares present at the Annual Meeting) would have
elected three of the alternative nominees. In light of the advantages typically
enjoyed by incumbent management in annual elections of directors and the fact
that the dissident nominees were nominated from the floor without a formal
solicitation of proxies from stockholders generally, the Committee believes
those results are a strong indication of the breadth and depth of opposition to
the existing Board.
On June 23, 1995, Whelan filed with the Court of Chancery of the State of
Delaware (New Castle County) an application for review of the election of
directors held at the Annual Meeting held in 1995, and the Court eventually
issued a ruling upholding the results of the election as reported by the
inspectors of election.
The activities of Mr. Flannery and Dr. Kaufman relating to the 1995 Annual
Meeting were conducted with the guidance of legal counsel, and each believes
that his activities were in compliance with all applicable laws.
Following the decision of the Delaware Chancery Court upholding the results
of the 1995 election, Mr. Flannery and Dr. Kaufman continued to believe strongly
that the Company's management was seriously deficient. As a result of his role
at the Annual Meetings held in 1994 and 1995, Mr. Flannery was periodically
contacted by dissatisfied stockholders voicing their complaints against
incumbent management and, in some cases, encouraging him to take further steps
to attempt to change the direction of the Company's management; however, as a
result of the time, effort and expense which Mr. Flannery knew would be required
in order to mount another effort to challenge the Board, he was reluctant to do
so. In August 1995, however, the Texas Supreme Court rendered a decision in the
litigation between the Company and the Tennessee Gas Pipeline Company (which is
more fully described in the 1995 Company Proxy Statement) that Mr. Flannery
considered unfavorable to the Company. Furthermore, the closing prices of the
Common Stock on the NYSE had declined since the election loss by the dissidents
at the 1995 Annual Meeting, from $10 7/8 per share of Common Stock on the day
before the 1995 Annual Meeting to $9 per share on December 22, 1995, the last
trading day before this consent solicitation became publicly known, and had
reached a low for the year of $7 3/8 on October 5, 1995. As the result of these
events, as well as the continued urging of other stockholders, Mr. Flannery
began in September 1995 to consider more seriously various options for
influencing or replacing the incumbent Board. His deliberations included
discussions with Messrs. Baker, Stone and Washburn and Dr. Kaufman.
Those discussions were informal, general and exploratory, and no agreement
or understanding was reached until December 14, 1995, at which time Messrs.
Baker, Flannery, Stone and Washburn and Dr. Kaufman orally agreed to form the
Committee in order to pursue removal and replacement of the Company's entire
Board of Directors. In view of the expense and intense effort associated with a
consent solicitation in opposition to incumbent management, each Committee
member's decision was made after lengthy deliberation and with reluctance. In
the final analysis, the Committee concluded that there was no other choice.
After discussions with Committee members, Mr. Galloway and Mr. Thompson agreed
to become Committee Nominees. In certain pleadings filed by the Company in
connection with the litigation described below under the caption 'CERTAIN LEGAL
PROCEEDINGS,' the Company alleges 'upon information and belief, [that] the
members of the [Committee] have had an understanding and an agreement since
1994, and perhaps sooner, to attempt to effect a change in the control of the
[Board].'
On December 26, 1995, the Committee filed with the Commission, within the
period provided by law, a Statement on Schedule 13D disclosing formation of the
Committee and its intention to commence this consent solicitation.
10
<PAGE>
During several conversations that occurred between mid-September and early
November in 1995, Mr. Baker and Mr. Flannery have each at various times
discussed with Ardsley Advisory Partners ('Ardsley'), the Company's largest
stockholder, the possibility that Ardsley might sell options to purchase some of
the shares of Common Stock held by Ardsley. On November 16, 1995, Whelan
purchased from Ardsley options to acquire up to 400,000 of the shares of Common
Stock held by Ardsley. As part of the oral agreement reached on December 14,
1995, Whelan sold to each of Messrs. Baker and Stone corresponding options
written by Whelan to acquire 100,000 of the shares of Common Stock covered by
the options written by Ardsley. In certain pleadings filed by the Company in
connection with the litigation described below under the caption 'CERTAIN LEGAL
PROCEEDINGS,' the Company alleges that 'the terms of these extraordinary option
grants leave no doubt as to their true purpose--to provide financial assistance
to the Whelan Group in order to help defray the anticipated costs of a consent
solicitation to unseat the incumbent Board. Thus, for a purchase price of $.09
per share (or $36,000 in the aggregate), Ardsley purported to grant Whelan
options to purchase for $8.25 per share (or $.625 lower than the closing market
price on January 5, 1996) up to 400,000 shares (enough to push the Whelan
Group's holdings over the 5% threshold for Schedule 13D filing purposes), which
if exercised today would yield in excess of $250,000 in profits. The options are
only exercisable, however, until May 16, 1996 (shortly after the anticipated
date of the 1996 Annual Meeting). The options are intended to provide plaintiffs
with the best of both worlds: in the event the Whelan Group is unsuccessful in
its consent solicitation, it will be able to use the profits realized upon the
exercise and the subsequent sale of shares to defray the costs of their
unsuccessful solicitation. However, if the consent solicitation succeeds, the
Whelan Group has stated that it intends to seek reimbursement for such expenses
directly from the Company (without stockholder approval unless mandated by law),
in which case there will be no need to exercise the Ardsley options to defray
plaintiffs' costs. Any profits realized upon exercise and sale in such case
would present a windfall to Whelan. In light of Ardsley's enthusiastic financial
and other support of the Whelan Group's efforts, as well as the extraordinary
terms of the option grant to Whelan, it is obvious that an arrangement or
understanding beyond the mere grant of the options themselves exists between
Ardsley and the other members of the Whelan Group, and that Ardsley's role
extends far beyond the normal role played by a passive institutional investor.'
By letter dated February 7, 1996, Mr. Flannery, as a record holder of
shares of Common Stock, requested that the Company provide a list of
stockholders and other stockholder information to enable the Committee to
undertake this Consent Solicitation and for other valid purposes. Pursuant to an
agreement between Mr. Flannery and the Company, the Company has provided Mr.
Flannery with the requested information.
CERTAIN LEGAL PROCEEDINGS
On December 26, 1995, the Committee commenced a lawsuit in the United
States District Court for the Western District of Texas, San Antonio Division,
against the Company and its Chief Executive, Bruce A. Smith (collectively,
'Defendants'). The action seeks, among other relief, a judgment (i) declaring
that the Company's 'poison pill' plan does not apply to the efforts of the
Committee to solicit consents from other stockholders of the Company; (ii)
declaring that the Company's By-Laws permit removal of directors through
stockholder action by written consent; (iii) enjoining the Company from delaying
or otherwise unlawfully interfering with the efforts of the Committee to solicit
consents from other stockholders; and (iv) declaring that the actions and
disclosures of the Committee with regard to their effort to solicit consents are
and have been in compliance with the Securities Exchange Act of 1934, as amended
(the 'Exchange Act').
On January 8, 1996, Defendants filed their Answer and Counterclaim to the
Committee's Complaint. Defendants' counterclaim alleges, inter alia, that the
Committee's Schedule 13D, filed on December 26, 1995, violated Section 13(d) of
the Exchange Act by (i) not including Ardsley as part of the 13D group and not
including in the 13D group certain of the wives and children of the Committee
members who held shares of Tesoro directly or in trust, (ii) not filing a
Schedule 13D earlier disclosing that a 13D group had already been formed
purportedly in 1994 and (iii) making purported false and misleading statements
in preliminary consent materials filed with the SEC. Defendants' counterclaim
also alleges that the preliminary consent materials filed with the SEC on
December 26, 1995 by the Committee contained purported false and misleading
statements in violation of Section 14(a) of the Exchange Act. On that same day,
Defendants filed a motion seeking a temporary restraining order and preliminary
injunction and then sought and obtained an ex parte temporary restraining order
enjoining the Committee from (i) soliciting or attempting to solicit written
consents of the Company's
11
<PAGE>
stockholders, (ii) filing or disseminating to stockholders or the public any
Schedule 13D or 14A Statements regarding the Company and (iii) taking any
temporary further steps in furtherance of their consent solicitation effort.
Defendants based their application for an ex parte temporary restraining
order and for a preliminary injunction upon their allegations (1) that the draft
Consent Solicitation Statement, which had not been disseminated to the Company's
stockholders, was in violation of Section 14(a) of the Exchange Act in that it
contained various false and misleading statements and omissions that would
likely result in 'confusion' and misunderstanding on the part of the Company's
stockholders and (2) that the proposed solicitation was a 'midnight raid' which
could force the removal of the Company's present Board of Directors without any
opportunity either to rebut the disclosures in the Consent Statement or seek
relief from the Courts. A number of the Company's specific allegations are
discussed in detail in this Consent Solicitation Statement.
On January 16, 1996, the Committee moved to dissolve the ex parte temporary
restraining order because, inter alia, it was in violation of Rule 65 of the
Federal Rules of Civil Procedure, was unprecedented in scope and was contrary to
the purposes of the Williams Act. On the next day, January 17, 1996, the Court
denied the Committee's motion to dissolve the ex parte temporary restraining
order.
On January 19, 1996, Defendants moved for an order extending the temporary
restraining order, which order was granted on that same day. On January 24,
1996, the Court scheduled a hearing on Defendants' preliminary injunction motion
for January 31, 1996. On January 31, 1996, a hearing was held on Defendants'
preliminary injunction motion. On February 1, 1996, the Court signed an order
which was entered on February 2, 1996, and which vacated the temporary
restraining order and denied Defendants' motion for preliminary injunction.
ADDITIONAL INFORMATION
The Company's principal executive offices are at 8700 Tesoro Drive, San
Antonio, Texas 78217, and its telephone number at that address is (210)
828-8484.
Certain information regarding ownership of voting securities of the Company
by certain members of the Company's management and principal stockholders other
than the Committee is contained in Appendix III attached to this Consent
Solicitation Statement.
The information concerning the Company contained in this Consent
Solicitation Statement has been taken from or based upon publicly available
reports, proxy statements and other documents on file with the Commission and
other public sources. Such reports, proxy statements and other documents on file
with the Commission may be inspected without charge at public reference
facilities maintained by the Commission office at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and also should be available for inspection at the
regional offices of the Commission located at 500 West Madison Street, Suite
1400, Chicago, Illinois 60661 and 7 World Trade Center, Suite 1300, New York,
New York 10048. Copies may be obtained from the Commission on payment of the
Commission's prescribed rates through the Commission's Public Reference Section
by writing to its principal office at 450 Fifth Street, N.W., Washington, D.C.
20549. Such material should also be available for inspection at the New York
Stock Exchange Inc., 20 Broad Street, New York, New York 10005. Although the
Committee does not have any knowledge that would indicate that any statement
contained herein based upon such reports, proxy statements and other documents
is untrue, the Committee does not take any responsibility for the accuracy or
completeness of the information contained in such reports, proxy statements and
other documents, or for any failure by the Company or any of its subsidiaries to
disclose events that may affect the significance or accuracy of any such
information.
YOUR VOTE IS IMPORTANT. PLEASE SIGN, DATE AND MAIL THE ENCLOSED WHITE
CONSENT CARD PROMPTLY IN THE POSTAGE-PAID ENVELOPE PROVIDED.
Dated: February 29, 1996
THE STOCKHOLDERS' COMMITTEE FOR
NEW MANAGEMENT OF TESORO
PETROLEUM CORPORATION
12
<PAGE>
APPENDIX I
This Appendix I sets forth certain information regarding each Committee
member and each Committee Nominee.
A. The following table sets forth with respect to each such person such
person's (i) name and business address, (ii) present principal occupation or
employment and (iii) the name, principal business and address of any corporation
or other organization in which such employment is carried on.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
NAME AND BUSINESS ADDRESS OR EMPLOYMENT
- --------------------------------------- ------------------------------------------------------------
<S> <C>
Kevin S. Flannery .................... President and director of Whelan Management Corp., which is
P.O. Box 1970 engaged in investment advisory services, and of Whelan
8 Holley Street Securities Inc., which is engaged in broker-dealer
Lakeville, CT 06039 services
George F. Baker ...................... Partner of Baker Nye, L.P., which is engaged in money
767 Fifth Avenue, Suite 2800 management and investment advisory services
New York, NY 10153
Gale L. Galloway ..................... Independent oil and gas operator
400 West 15th Street, Suite 808
Austin, TX 78701
Alan J. Kaufman, M.D. ................ Neurosurgeon
5500 Hohman Avenue, Suite 210
Hammond, IN 46320
James H. Stone ....................... Chairman of the Board of Stone Energy Corporation, which is
909 Poydras Street, Suite 2650 engaged in oil and gas production
New Orleans, LA 70112
Robert S. Washburn ................... Private investor
455 Santa Rita Avenue
Palo Alto, CA 94301
Douglas B. Thompson .................. Chairman of Digicon, Inc., which is engaged in worldwide
3701 Kirby Drive geophysical services
Houston, TX 77098
</TABLE>
I-1
<PAGE>
B. The following table and the notes thereto set forth the aggregate number
of shares of Common Stock beneficially owned, directly or indirectly, as of the
date of this Consent Solicitation Statement by each of the Committee's members
and their respective 'associates,' individually and as a group. As of such date,
neither Mr. Galloway nor Mr. Thompson beneficially owned any shares of Common
Stock. Unless otherwise indicated, each person has sole voting and investment
power with respect to the shares of Common Stock listed.
<TABLE>
<CAPTION>
PERCENTAGE OF
ISSUED AND
SHARES OF OUTSTANDING
NAME COMMON STOCK(1) COMMON STOCK(1)
- ----------------------------------------------------------------------------- --------------- ---------------
<S> <C> <C>
Kevin S. Flannery............................................................ 361,772(2) 1.4%
George F. Baker.............................................................. 110,000(3) 0.4%
Alan J. Kaufman, M.D......................................................... 612,000(4) 2.4%
James H. Stone............................................................... 146,000(5) 0.6%
Robert S. Washburn........................................................... 233,336(6) 0.9%
--------------- ---
868,000(1,
All Committee Nominees as a Group............................................ 3-5) 3.4%
All Committee Members as a Group............................................. 1,463,108(1-6) 5.7%
</TABLE>
- ------------------
(1) For purposes of this table, the number of shares which a person or group of
persons is deemed to 'beneficially own' includes any shares that such person
has the right to acquire within 60 days. For purposes of computing the
percentage of outstanding shares held by each person or group of persons
named above on a given date, any security that such person or persons has
the right to acquire within 60 days is deemed to be outstanding, but is not
deemed to be outstanding for the purpose of computing the percentage
ownership of any other person. Such computations are based on information
concerning the number of shares of Common Stock issued and outstanding as of
October 31, 1995, as reported by the Company in the 1995 Third Quarter 10-Q.
(2) The shares shown include (i)(A) 140,615 shares held by Whelan Management,
Inc. ('Whelan'), of which Mr. Flannery is the principal executive officer
and a 75% common stockholder and (B) 200,000 shares which Whelan has the
right to acquire through the exercise of stock options which were
exercisable on February 29, 1996, or within 60 days thereafter, (ii) 18,357
shares held by the Sean Kenrick Flannery Trust of which Mr. Flannery is the
investment officer and (iii) 2,600 shares of Common Stock owned by Mr.
Flannery's wife. Mr. Flannery disclaims beneficial ownership of the shares
owned by his wife. The shares shown do not include shares that Whelan
Securities Inc., in the ordinary course of its business as a broker-dealer,
has purchased and sold for the accounts of its customers, as to which Mr.
Flannery disclaims beneficial ownership. Mr. Flannery has advised the
Committee that all such customer accounts are non-discretionary and that
neither Whelan nor Whelan Securities Inc. has any control over buying,
selling or voting shares of Common Stock in such accounts. As a result,
Whelan Securities Inc. or its clearing agent may be the record owner of
certain of such shares of Common Stock over which it does not exercise
beneficial ownership.
(3) The shares shown include 100,000 shares which Mr. Baker has the right to
acquire through the exercise of stock options which were exercisable on
February 29, 1996, or within 60 days thereafter.
(4) The shares shown include (i) 581,500 shares owned by Dr. Kaufman either
directly or through an individual retirement account, (ii) 20,000 shares
held by the Kaufman Children's Trust, of which Dr. Kaufman is the sole
trustee and (iii) 10,500 shares owned by Dr. Kaufman's wife. Dr. Kaufman
disclaims beneficial ownership of the shares in the Kaufman Children's Trust
and the shares owned by his wife.
(5) The shares shown include 100,000 shares which Mr. Stone has the right to
acquire through the exercise of stock options which were exercisable on
February 29, 1996, or within 60 days thereafter.
(6) The shares shown include 39,545 shares held by the Robert S. and Suzanne P.
Washburn Revocable Trust of which Mr. Washburn is a co-trustee, and 193,791
shares held by the Robert S. Washburn Money Purchase Pension and Profit
Sharing Keogh Plan Trust, of which Mr. Washburn is the sole trustee. Mr.
Washburn exercises shared voting and investment power with respect to the
Common Stock held by the Robert S. and Suzanne P. Washburn Revocable Trust.
I-2
<PAGE>
C. Except as otherwise described herein, no member of the Committee,
Committee Nominee or 'associate' of any of the foregoing owns securities of the
Company of record but not beneficially.
D. The following table sets forth shares of Common Stock, Preferred Stock
and Exchange Notes of the Company purchased or sold within the past two years by
each of the members of the Committee, the Committee Nominees, Whelan, the Sean
Kenrick Flannery Trust referred to in note (2) to the table under paragraph B
above or either of the two trusts of which Mr. Washburn is a trustee referred to
in note (6) to the table under paragraph B above, the dates on which they were
purchased or sold and the amount purchased or sold on each such date. In the
tables below, the term 'Preferred Stock' shall mean the Company's $2.16
Cumulative Convertible Preferred Stock, which is no longer outstanding, and
'Exchange Notes' shall mean the Company's 13% Exchange Notes due December 1,
2000. Transaction dates listed are trade dates except for those marked with a
'+', which denotes a settlement date. The tables do not reflect the purchase on
November 16, 1995, by Whelan from Ardsley of options to acquire up to 400,000 of
the shares of Common Stock held by Ardsley or the sale on December 22, 1995, by
Whelan to each of Mr. Baker and Mr. Stone of corresponding options written by
Whelan to acquire 100,000 of the shares of Common Stock covered by the options
written by Ardsley. See 'BACKGROUND' in the Consent Solicitation Statement to
which this Appendix is attached.
KEVIN S. FLANNERY
<TABLE>
<CAPTION>
PURCHASE, SALE NUMBER OF SHARES NUMBER OF SHARES PRINCIPAL AMOUNT
DATE OR EXCHANGE OF COMMON STOCK OF PREFERRED STOCK OF EXCHANGE NOTES
- ------------------ -------------- ---------------- ------------------ -----------------
<S> <C> <C> <C> <C>
03/16/94 Sale 10,000
08/30/94 Distribution 215
08/30/94 Distribution 375
08/30/94 Distribution 44
09/07/94 Purchase 10,000
05/01/95 Sale 10,000
08/29/95 Sale 7,644
09/05/95 Sale 14,515
10/06/95 Sale 25,000
10/09/95 Sale 10,000
10/11/95 Sale 8,000
12/28/95 Purchase 100
</TABLE>
WHELAN
<TABLE>
<CAPTION>
PURCHASE, SALE NUMBER OF SHARES NUMBER OF SHARES PRINCIPAL AMOUNT
DATE OR EXCHANGE OF COMMON STOCK OF PREFERRED STOCK OF EXCHANGE NOTES
- ------------------ -------------- ---------------- ------------------ -----------------
<S> <C> <C> <C> <C>
03/16/94 Sale 50
03/16/94 Sale 38,000
03/17/94 Sale 6,700
03/24/94 Purchase 2,000
03/29/94 Purchase 8,000
03/30/94 Purchase 10,000
03/30/94 Purchase 20,000
04/11/94 Purchase 9,000
04/12/94 Purchase 7,500
04/13/94 Purchase 1,200
04/20/94 Purchase 2,900
04/21/94 Purchase 10,000
04/28/94 Purchase 10,000
05/31/94 Purchase 20,000
06/21/94 Purchase 2,500
08/05/94 Sale 1,500
08/05/94 Sale 5,000
</TABLE>
I-3
<PAGE>
<TABLE>
<CAPTION>
PURCHASE, SALE NUMBER OF SHARES NUMBER OF SHARES PRINCIPAL AMOUNT
DATE OR EXCHANGE OF COMMON STOCK OF PREFERRED STOCK OF EXCHANGE NOTES
- ------------------ -------------- ---------------- ------------------ -----------------
<S> <C> <C> <C> <C>
08/05/94 Sale 8,500
08/30/94 Distribution 1,178
09/07/94 Purchase 135,000
09/22/94 Sale 50,000
09/28/94 Sale 50,000
11/08/94 Sale 10,000
11/08/94 Sale 25,000
11/10/94 Sale 6,118
11/23/94 Purchase 1,500
11/30/94 Sale 3,500
12/15/94 Sale 10,000
03/22/95 Sale 13,000
05/02/95 Sale 10,000
05/15/95 Sale 10,000
06/30/95 Sale 1,800
07/28/95 Sale 2,500
09/01/95 Sale 10,000
09/05/95 Sale 2,985
09/06/95 Sale 10,000
09/07/95 Sale 10,000
09/08/95 Sale 5,000
09/12/95 Sale 10,000
09/14/95 Sale 10,000
10/04/95 Sale 7,500
10/06/95 Purchase 20,000
10/06/95 Purchase 26,000
10/09/95 Purchase 15,000
10/10/95 Purchase 3,500
10/11/95 Purchase 7,500
10/11/95 Purchase 8,000
10/13/95 Sale 3,000
10/13/95 Sale 7,000
10/20/95 Sale 8,000
10/20/95 Sale 42,000
10/24/95 Purchase 900
10/24/95 Purchase 2,000
10/25/95 Purchase 45,000
11/10/95 Purchase 500
11/17/95 Purchase 12,000(1)
11/28/95 Purchase 1,000
12/04/95 Sale 7,500
12/05/95 Sale 10,500
12/06/95 Sale 13,000
12/14/95 Sale 10,000
01/24/96 Purchase 4,000
01/24/96 Sale 4,000
</TABLE>
- ------------------
(1) Through the exercise of expiring options.
In addition to the foregoing transactions by Whelan, the following table
sets forth transactions effected by Whelan in call option contracts covering
shares of Common Stock during the past two years. All such transactions were
effected on a national securities or option exchange through a broker and
reflect the trade date
I-4
<PAGE>
of each such transaction. Each call option contract represents the right to buy
100 shares of Common Stock at a price and until the date specified in the option
contract.
<TABLE>
<CAPTION>
TYPE OF NUMBER OF PRICE PER
TRANSACTION DATE CALL OPTIONS OPTION CONTRACT
- ------------------ -------- ------------ ---------------
<S> <C> <C> <C>
Purchase 06/21/94 100 $187.50
Purchase 06/23/94 100 $237.50
Purchase 08/05/94 100 $125.00
Purchase 01/25/95 25 $ 37.25
Purchase 01/25/95 100 $ 31.25
Purchase 01/30/95 200 $ 31.50
Purchase 02/09/95 150 $ 87.50
Sale 02/09/95 150 $ 12.50
Sale 05/15/95 50 $ 50.00
Sale 05/15/95 100 $181.25
Purchase 05/16/95 90 $104.17
Sale 06/15/95 90 $ 81.25
Purchase 06/15/95 90 $118.75
Purchase 07/13/95 100 $ 25.00
Purchase 10/13/95 54 $ 87.50
Purchase 10/16/95 46 $ 87.50
Sale 10/18/95 50 $125.00
Sale 10/20/95 50 $106.25
Purchase 10/24/95 120 $112.50
</TABLE>
In addition to the foregoing transactions by Whelan, on November 16, 1995,
Whelan purchased, in a private transaction, options exercisable for 400,000
shares of Common Stock having an exercise price of $8.25 per share. The total
purchase price for these options was $36,000. On December 14, 1995, Whelan sold,
in a private transaction, a portion of the foregoing options exercisable for
200,000 shares of Common Stock; options exercisable for 100,000 shares of Common
Stock were sold to George F. Baker for $9,000 and options exercisable for
100,000 shares of Common Stock were sold to James H. Stone for $9,000.
SEAN KENRICK FLANNERY TRUST
<TABLE>
<CAPTION>
PURCHASE, SALE NUMBER OF SHARES NUMBER OF SHARES PRINCIPAL AMOUNT
DATE OR EXCHANGE OF COMMON STOCK OF PREFERRED STOCK OF EXCHANGE NOTES
- ------------------ -------------- ---------------- ------------------ -----------------
<S> <C> <C> <C> <C>
08/30/94 Distribution 73
08/30/94 Distribution 34
09/07/94 Purchase 60,000
11/23/94 Purchase 4,000
11/23/94 Sale 5,000
11/23/94 Sale 30,000
01/31/95 Purchase 1,500
04/24/95 Sale 18,000
04/26/95 Sale 2,000
04/27/95 Sale 5,000
06/26/95 Purchase 4,000
10/06/95 Sale 1,000
10/10/95 Sale 3,500
11/09/95 Purchase 500
11/10/95 Purchase 500
01/19/96 Purchase 4,000(1)
01/19/96 Sale 4,000
</TABLE>
- ------------------
(1) Through the exercise of expiring options.
I-5
<PAGE>
In addition to the foregoing transactions by the Sean Kenrick Flannery
Trust, the following table sets forth transactions effected by such Trust in
call option contracts covering shares of the Common Stock during the past two
years. All such transactions were effected on a national securities or option
exchange through a broker and reflect the trade date of each such transaction.
Each call option contract represents the right to buy 100 shares of Common Stock
at a price and until the date specified in the option contract, and the exercise
price of each such option was $7.50 per share. Price per Option Contract
excludes brokerage commissions.
<TABLE>
<CAPTION>
TYPE OF NUMBER OF PRICE PER
TRANSACTION DATE CALL OPTIONS OPTION CONTRACT
- ------------------ -------- ------------ ---------------
<S> <C> <C> <C>
Purchase 01/26/95 100 $ 87.50
Sale 05/15/95 50 $181.25
Sale 05/15/95 50 $ 50.00
Purchase 07/13/95 100 $ 25.00
Purchase 10/24/95 80 $112.50
Sale 11/17/95 80 $ 50.00
Purchase 11/17/95 80 $100.00
Sale 12/14/95 80 $ 81.25
Purchase 12/14/95 80 $118.25
Sale 01/19/96 40 $ 93.75
</TABLE>
GEORGE F. BAKER
<TABLE>
<CAPTION>
PURCHASE, SALE NUMBER OF SHARES NUMBER OF SHARES PRINCIPAL AMOUNT
DATE OR EXCHANGE OF COMMON STOCK OF PREFERRED STOCK OF EXCHANGE NOTES
- ------------------ --------------- ---------------- ------------------ -----------------
<S> <C> <C> <C> <C>
05/10/94 Purchase 1,000
02/24/95 Purchase 9,000
</TABLE>
CAMBRIDGE CAPITAL FUND
<TABLE>
<CAPTION>
PURCHASE, SALE NUMBER OF SHARES NUMBER OF SHARES PRINCIPAL AMOUNT
DATE OR EXCHANGE OF COMMON STOCK OF PREFERRED STOCK OF EXCHANGE NOTES
- ------------------ -------------- ---------------- ------------------ -----------------
<S> <C> <C> <C> <C>
08/14/95 Purchase 33,000
08/15/95 Purchase 176,000
08/15/95 Purchase 40,400
08/15/95 Purchase 45,000
08/15/95 Purchase 500
08/16/95 Purchase 11,200
08/17/95 Purchase 28,300
08/17/95 Purchase 3,000
08/18/95 Purchase 1,000
08/23/95 Purchase 11,000
09/06/95 Sale 33,000
09/06/95 Sale 176,000
09/07/95 Sale 40,400
09/14/95 Sale 45,000
09/25/95 Sale 500
09/25/95 Sale 11,200
09/25/95 Sale 28,300
09/26/95 Sale 3,000
09/26/95 Sale 1,000
09/26/95 Sale 11,000
</TABLE>
I-6
<PAGE>
ALAN J. KAUFMAN, M.D.
<TABLE>
<CAPTION>
PURCHASE, SALE NUMBER OF SHARES NUMBER OF SHARES PRINCIPAL AMOUNT
DATE OR EXCHANGE OF COMMON STOCK OF PREFERRED STOCK OF EXCHANGE NOTES
- ------------------ -------------- ---------------- ------------------ -----------------
<S> <C> <C> <C> <C>
03/30/94 Purchase 6,200
04/07/94 Purchase 3,000
04/18/94 Purchase 4,200
04/19/94 Purchase 5,000
04/19/94+ Purchase 5,000
04/20/94 Purchase 5,000
04/20/94+ Purchase 5,000
04/21/94 Purchase 20,000
04/21/94+ Purchase 11,000
04/28/94 Sale 10,000
05/03/94+ Purchase 5,000
05/09/94 Purchase 11,000
05/09/94 Purchase 3,000
05/09/94 Purchase 2,000
05/09/94+ Purchase 2,000
05/09/94+ Purchase 3,000
06/16/94 Purchase 5,000
06/16/94+ Purchase 5,000
06/21/94 Purchase 5,000
06/22/94 Purchase 15,000
06/22/94 Purchase 3,000
06/22/94 Sale 5,000
06/22/94+ Purchase 10,000
06/22/94+ Purchase 5,000
06/23/94+ Sale 10,000
06/24/94 Sale 3,000
07/12/94+ Sale 5,000
07/13/94+ Sale 10,000
07/14/94 Sale 10,000
08/12/94 Sale 10,000
08/26/94+ Purchase 2,500
08/29/94+ Sale 5,000
08/29/94+ Sale 5,000
08/31/94 Sale 5,000
09/01/94 Sale 2,000
09/01/94+ Sale 1,000
09/02/94 Sale 3,000
09/06/94+ Sale 4,830
11/18/94 Purchase 5,000
12/03/94 Purchase 2,800
12/10/94 Purchase 3,500
01/23/95 Purchase 5,000
01/25/95 Purchase 3,000
01/25/95 Purchase 5,000
02/01/95 Purchase 10,000
02/03/95 Purchase 3,000
02/13/95 Purchase 2,000
02/17/95 Purchase 5,900
02/21/95 Purchase 1,100
02/22/95 Purchase 12,000
02/24/95+ Purchase 2,500
04/07/95 Purchase 10,000
04/26/95 Purchase 800
05/03/95 Sale 10,000
05/10/95+ Sale 10,000
</TABLE>
I-7
<PAGE>
<TABLE>
<CAPTION>
PURCHASE, SALE NUMBER OF SHARES NUMBER OF SHARES PRINCIPAL AMOUNT
DATE OR EXCHANGE OF COMMON STOCK OF PREFERRED STOCK OF EXCHANGE NOTES
- ------------------ -------------- ---------------- ------------------ -----------------
<S> <C> <C> <C> <C>
05/12/95 Sale 5,000
05/15/95 Transfer 15,000
05/15/95 Sale 10,000
05/16/95 Purchase 5,000
05/17/95 Purchase 5,000
05/17/95 Purchase 11,700
05/19/95 Purchase 3,000
05/19/95 Purchase 3,000
05/19/95 Purchase 14,000
05/19/95 Purchase 5,000
05/19/95 Sale 4,700
05/23/95 Sale 5,000
05/23/95 Sale 3,000
05/23/95 Sale 2,000
05/24/95 Purchase 10,000
05/25/95 Purchase 3,200
05/26/95 Purchase 10,000
05/31/95 Sale 20,000
06/02/95 Purchase 10,000
06/09/95 Purchase 10,000
06/09/95 Sale 5,000
06/09/95 Sale 5,000
06/12/95 Purchase 5,000
06/12/95 Purchase 5,000
06/13/95 Purchase 8,000
06/14/95 Purchase 5,000
06/15/95+ Sale 2,000
06/15/95 Purchase 5,000
06/16/95 Sale 1,000
06/16/95 Sale 10,000
06/19/95 Sale 5,000
06/23/95 Purchase 5,000
06/23/95 Purchase 2,000
06/23/95 Purchase 5,000
06/23/95 Purchase 10,000
06/29/95 Purchase 2,000
07/03/95+ Purchase 2,000
07/05/95+ Purchase 1,000
07/10/95 Purchase 6,000
07/10/95+ Purchase 1,000
07/18/95 Purchase 4,000
07/18/95+ Purchase 10,000
07/19/95+ Purchase 2,000
07/31/95 Purchase 1,400
08/01/95 Purchase 9,900
08/03/95 Purchase 10,000
08/15/95+ Purchase 4,000
09/20/95 Purchase 3,902
09/25/95+ Purchase 5,000
09/27/95+ Purchase 5,000
10/03/95+ Purchase 3,000
10/06/95+ Purchase 8,000
10/10/95+ Purchase 7,000
10/10/95+ Purchase 12,500
10/11/95+ Purchase 10,000
10/12/95+ Purchase 7,500
10/16/95+ Purchase 20,000
</TABLE>
I-8
<PAGE>
<TABLE>
<CAPTION>
PURCHASE, SALE NUMBER OF SHARES NUMBER OF SHARES PRINCIPAL AMOUNT
DATE OR EXCHANGE OF COMMON STOCK OF PREFERRED STOCK OF EXCHANGE NOTES
- ------------------ -------------- ---------------- ------------------ -----------------
<S> <C> <C> <C> <C>
10/16/95+ Purchase 10,000
10/20/95 Sale 5,000
10/20/95 Sale 12,500
10/23/95+ Sale 20,000
10/31/95 Purchase 2,000
11/01/95+ Purchase 5,000
11/01/95+ Purchase 3,000
11/06/95+ Purchase 2,700
11/15/95+ Purchase 5,000
11/16/95 Purchase 4,500
12/04/95+ Purchase 2,000
12/06/95 Purchase 5,000
</TABLE>
ROBERT S. WASHBURN (REVOCABLE TRUST ACCOUNT)
<TABLE>
<CAPTION>
PURCHASE, SALE NUMBER OF SHARES NUMBER OF SHARES PRINCIPAL AMOUNT
DATE OR EXCHANGE OF COMMON STOCK OF PREFERRED STOCK OF EXCHANGE NOTES
- ------------------ -------------- ---------------- ------------------ -----------------
<S> <C> <C> <C> <C>
03/29/94 Purchase 5,000
03/30/94 Purchase 4,400
08/16/94 Distribution 3,045
07/10/95 Sale 9,000
07/14/95 Sale 4,900
07/17/95 Sale 10,000
07/17/95 Sale 1,000
07/17/95 Sale 6,000
07/18/95 Sale 10,000
08/07/95 Sale 9,700
08/07/95 Sale 4,400
08/07/95 Sale 1,500
</TABLE>
In addition to the foregoing transactions by the Robert Washburn Revocable
Trust, the following table sets forth transactions effected by the Robert
Washburn Revocable Trust in call option contracts covering shares of Common
Stock during the past two years. All such transactions were effected on a
national securities or option exchange through a broker and reflect the
settlement date of each such transaction. Each call option contract represents
the right to buy 100 shares of Common Stock at a price and until the date
specified in the option contract.
<TABLE>
<CAPTION>
TYPE OF NUMBER OF PRICE PER
TRANSACTION DATE CALL OPTIONS OPTION CONTRACT
- ------------------ -------- ------------ ---------------
<S> <C> <C> <C>
Purchase 06/03/94 180 $100.00
Purchase 08/08/94 50 $112.50
Sale 09/09/94 520 $ 25.00
Purchase 12/27/94 10 $ 50.00
Purchase 01/31/95 200 $ 35.62
Sale 02/14/95 260 $ 6.25
</TABLE>
I-9
<PAGE>
ROBERT S. WASHBURN (PROFIT SHARING PLAN ACCOUNT)
<TABLE>
<CAPTION>
PURCHASE, SALE NUMBER OF SHARES NUMBER OF SHARES PRINCIPAL AMOUNT
DATE OR EXCHANGE OF COMMON STOCK OF PREFERRED STOCK OF EXCHANGE NOTES
- ------------------ -------------- ---------------- ------------------ -----------------
<S> <C> <C> <C> <C>
03/29/94 Purchase 6,000
03/30/94 Purchase 21,500
03/30/94 Purchase 5,000
08/07/95 Sale 15,700
08/08/95 Sale 500
08/16/94 Distribution 1,141
10/05/95 Purchase 10,000
10/06/95 Purchase 5,000
10/18/95 Sale 15,000
10/27/95 Sale 4,000
12/04/95 Purchase 3,100
12/07/95 Purchase 1,900
</TABLE>
JAMES H. STONE
<TABLE>
<CAPTION>
PURCHASE, SALE NUMBER OF SHARES NUMBER OF SHARES PRINCIPAL AMOUNT
DATE OR EXCHANGE OF COMMON STOCK OF PREFERRED STOCK OF EXCHANGE NOTES
- ------------------ -------------- ---------------- ------------------ -----------------
<S> <C> <C> <C> <C>
05/26/94 Purchase 5,000
05/27/94 Purchase 2,500
05/27/94 Purchase 2,500
05/31/94 Purchase 2,500
05/31/94 Purchase 2,500
06/21/94 Purchase 10,000
08/01/95 Purchase 5,000
10/05/95 Purchase 5,000
12/16/95 Purchase 11,000(1)
</TABLE>
- ------------------
(1) Through the exercise of expiring options.
In addition to the foregoing transactions by Mr. Stone, the following table
sets forth transactions effected by call or put option contracts covering shares
of the Common Stock during the past two years. All such transactions were
effected on a national securities or option exchange through a broker and
reflect the trade date of each such transaction. Each call or put option
contract respectively represents the right to buy or sell 100 shares of Common
Stock at a price and until the date specified in the option contract, and the
exercise price of each such option was $7.50 per share. Price per Option
Contract excludes brokerage commissions.
<TABLE>
<CAPTION>
TYPE OF NUMBER OF PRICE PER
TRANSACTION DATE CALL OPTIONS OPTION CONTRACT
- ------------------ -------- ------------ ---------------
<S> <C> <C> <C>
Sale 04/25/95 100 puts $ 87.50
Sale 07/31/95 100 puts $106.25
Sale 08/02/95 100 puts $156.25
Sale 09/21/95 300 puts $181.25
Purchase 09/21/95 300 puts $162.50
Purchase 12/01/95 100 call $127.50
Sale 01/18/96 100 call $ 97.50
</TABLE>
E. All of the shares described above in paragraph D were purchased with
personal funds, working capital or margin borrowings extended by broker-dealers
in the regular course of business. As of February 22, 1996, Dr. Kaufman, the
Sean Kenrick Flannery Trust and Whelan had outstanding margin indebtedness with
respect to securities of the Company of $83,772.73, $125,945.20 and $729,934.62,
respectively. As of the date of this Consent Solicitation Statement, except as
set forth in the preceding sentence, none of the persons named in such paragraph
has any outstanding margin indebtedness with respect to any securities of the
Company.
I-10
<PAGE>
F. No participant owns beneficially, directly or indirectly, any
securities of any parent or subsidiary of the Company.
G. Except as described in this Appendix or elsewhere in the Consent
Solicitation Statement,
(1) none of the members of the Committee or the Committee Nominees is, or
was within the past year, a party to any contract, arrangement or understanding
with any person with respect to any securities of the registrant, including, but
not limited to, joint ventures, loan or option arrangements, puts or calls,
guarantees against loss or guarantees of profit, division of losses or profits,
or the giving or withholding of proxies;
(2) none of the members of the Committee, the Committee Nominees or any of
their respective associates has had any transaction, or series of similar
transactions, since January 1, 1995, or any currently proposed transaction, or
series of similar transactions, to which the Company or any of its subsidiaries
was or is to be a party, in which the amount involved exceeds $60,000 and in
which any such participant had, or will have, a direct or indirect material
interest;
(3) none of the members of the Committee, the Committee Nominees or any of
their respective associates has any arrangement or understanding with any person
(i) with respect to any future employment by the Company or its affiliates; or
(ii) with respect to any future transactions to which the Company or any of its
affiliates will or may be a party;
(4) no person who is a party to an arrangement or understanding pursuant to
which a Committee Nominee is proposed to be elected has any substantial
interest, direct or indirect, by security holdings or otherwise, in any matter
to be acted upon by the stockholders of the Company;
(5) there are no material proceedings to which any Committee Nominee or any
associate of any such Committee Nominee is a party adverse to the Company or any
of its subsidiaries or has a material interest adverse to the Company or any of
its subsidiaries; and
(6) no Committee Nominee has been party to any of the following events that
occurred during the past five years and that are material to an evaluation of
the ability or integrity of any person nominated to become a director of the
Company:
(a) A petition under the Federal bankruptcy laws or any state
insolvency law was filed by or against, or a receiver, fiscal agent or
similar officer was appointed by a court for the business or property of,
such person or any partnership in which he was a general partner at or
within two years before the time of such filing, or any corporation or
business association of which he was an executive officer at or within two
years before the time of such filing;
(b) Such person was convicted in a criminal proceeding or is a named
subject of a pending criminal proceeding (excluding traffic violations and
other minor offenses);
(c) Such person was the subject of any order, judgment, or decree, not
subsequently reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining him from, or otherwise
limiting, the following activities:
(i) Acting as a futures commission merchant, introducing broker,
commodity trading advisor, commodity pool operator, floor broker,
leverage transaction merchant, any other person regulated by the
Commodity Futures Trading Commission, or an associated person of any of
the foregoing, or as an investment advisor, underwriter, broker or
dealer in securities, or as an affiliated person, director or employee
of any investment company, bank, savings and loan association or
insurance company, or engaging in or continuing any conduct or practice
in connection with such activity;
(ii) Engaging in any type of business practice; or
(iii) Engaging in any activity in connection with the purchase or
sale of any security or commodity or in connection with any violation of
Federal or state securities laws or Federal commodities laws;
(d) Such person was the subject of any order, judgment or decree, not
subsequently reversed, suspended or vacated, of any Federal or state
authority barring, suspending or otherwise limiting for more
I-11
<PAGE>
than 60 days the right of such person to engage in any activity described
in paragraph G.(6)(c)(i) of this Appendix, or to be associated with persons
engaged in any such activity;
(e) Such person was found by a court of competent jurisdiction in a
civil action or by the Commission to have violated any Federal or state
securities law, and the judgment in such civil action or finding by the
Commission has not been subsequently reversed, suspended, or vacated; or
(f) Such person was found by a court of competent jurisdiction in a
civil action or by the Commodity Futures Trading Commission to have
violated any Federal commodities law, and the judgment in such civil action
or finding by the Commodity Futures Trading Commission has not been
subsequently reversed, suspended or vacated.
For purposes of the foregoing, the term 'associate' has the meaning set
forth in Rule 14a-1 under the Exchange Act.
I-12
<PAGE>
APPENDIX II
This Appendix sets forth the text, in relevant part, of the By-Laws which
are proposed by the Committee to be amended, as the Company's public filings
indicate such By-Laws were in effect on November 14, 1995 and as they will
appear after adoption of the Committee's proposed By-Law Amendments. Language
proposed to be deleted is marked in brackets. Language proposed to be added is
underlined. The Committee is not aware of any amendments to the By-Laws since
November 14, 1995. To the extent any such By-Law amendments have been adopted
subsequently, such intervening amendments shall be repealed by the adoption of
the following amendments if inconsistent therewith.
Section 2.1 Number, Election and Term of Office. The number of directors
which shall constitute the whole Board of Directors shall be five, unless and
until changed by resolution of the Board of Directors [fixed from time to time
by resolution of the Board of Directors but shall not be less than three]. The
directors shall be elected at the annual meeting of stockholders, except as
provided in Section 2.2, and each director elected at an annual meeting of
stockholders, and directors elected or appointed in the interim to fill
vacancies and newly created directorships shall hold office until the next
annual meeting of stockholders and [or] until their successors are duly elected
and qualified or until their earlier resignation or removal. A director need not
be a stockholder.
Section 2.2 Vacancies and Additional Directorships. Any vacancy or
vacancies created by the death or resignation of a director may be filled only
by the majority vote of the remaining directors, though less than a quorum, or
by the sole remaining director. Any vacancy or vacancies created by the removal
of one or more directors may be filled only by action of the holders of shares
representing a majority of the shares of Common Stock outstanding and entitled
to vote and such action may be taken at the same annual or special meeting, or
by means of the same written consent or consents, of stockholders at or by which
such director or directors were removed, or may be taken at a different meeting
or by a separate written consent or consents. Newly created directorships
resulting from any increase in the authorized number of directors shall be
filled only by a majority of the directors then in office, though less than a
quorum, or by the sole remaining director, and such newly created directorships
may not be filled by the stockholders unless otherwise required by law. [Unless
otherwise provided in the Certificate of Incorporation or these By-Laws: (1)
vacancies and newly created directorships resulting from any increase in the
authorized number of directors elected by all of the stockholders having the
right to vote as a single class may be filled by a majority of the directors
then in office, although less than a quorum; and (2) whenever the holders of any
class or classes of stock or series thereof are entitled to elect one or more
directors by the Certificate of Incorporation, vacancies and newly created
directorships of such class or classes or series may be filled by a majority of
the directors elected by such class or classes or series thereof then in
office.]
Section 2.7 Removal of Directors. At any annual meeting of stockholders,
at any special meeting of the stockholders duly called for the purpose of
removing a director or directors as provided in these By-Laws, or by action of
the stockholders by written consent in accordance with the laws of the State of
Delaware and the Certificate of Incorporation, any director or directors may, by
the affirmative vote or written consent, as the case may be, of the holders of
shares representing a majority of [the votes of all] the shares of Common Stock
[stock] outstanding and entitled to vote [for the election of directors], be
removed from office, either for or without cause. Such vacancy [shall] may only
be filled by the stockholders [directors] as provided in Section 2.2.
II-1
<PAGE>
[This page is intentionally left blank]
<PAGE>
APPENDIX III
PRINCIPAL STOCKHOLDERS OF THE COMPANY AND
STOCK HOLDINGS OF THE COMPANY'S MANAGEMENT
Schedule 14A adopted by the Commission under the Exchange Act requires the
Committee to disclose, to the extent known to the Committee, certain information
regarding ownership of voting securities of the Company. The information set
forth in this Appendix is provided in response to that requirement. Except with
respect to information concerning the Committee and its members, all information
contained in the following tables (including the footnotes) has been taken from
or is based upon the Joint Proxy Statement/Prospectus of Coastwide Energy
Services, Inc. and Tesoro Petroleum Corporation, dated January 20, 1996 (the
'Coastwide Proxy Statement'), and other information contained in other filings
by the Company with the Commission.
The following table shows the beneficial ownership of the Company's Common
Stock as reported to the Company as of December 31, 1995, including shares as to
which a right to acquire ownership exists (for example, through the exercise of
stock options or stock awards) within the meaning of Rule 13d-3(d)(1) under the
Exchange Act for each director of the Company, the Company's Chief Executive
Officer, the other four most highly compensated officers of the Company during
1995 and, as a group, such persons and other executive officers. The calculation
of the percentage of outstanding shares of Common Stock is based on the number
of outstanding shares of Common Stock as of the Record Date. Unless otherwise
indicated, each person or member of the group listed has sole voting and
investment power with respect to the shares of Common Stock listed.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP OF COMMON STOCK
ON DECEMBER 31, 1995(1)
------------------------------------
SHARES PERCENT OF CLASS
--------- ----------------
<S> <C> <C>
Robert J. Caverly................................................ 9,000(2) 0.035%
Peter M. Detwiler................................................ 14,715(2) 0.057%
Steven H. Grapstein.............................................. 1,528,900(2)(3) 5.938%
Raymond K. Mason, Sr............................................. 23,428(2) 0.091%
John J. McKetta, Jr.............................................. 7,565(2) 0.029%
Bruce A. Smith................................................... 94,018(4) 0.365%
Murray L. Weidenbaum............................................. 7,000(2) 0.027%
Gaylon H. Simmons................................................ 128,540(5) 0.499%
James C. Reed, Jr................................................ 30,980(6) 0.120%
William T. Van Kleef............................................. 22,645(7) 0.088%
Thomas E. Reardon................................................ 14,163(8) 0.055%
All directors and executive officers as a group
(14 individuals)............................................... 1,934,196(9) 7.512%
</TABLE>
- ------------------
(1) The shares shown do not include 430,367 shares of the Company's Common Stock
beneficially owned by Michael D. Burke, who resigned as a director on
January 12, 1996.
(2) The shares shown for Mr. Caverly, Mr. Grapstein, Mr. Detwiler, Mr. Mason,
Dr. McKetta and Dr. Weidenbaum include 6,000 shares each which such
directors had the right to acquire through the exercise of stock options on
December 31, 1995, or within 60 days thereafter.
(3) The shares shown include 1,522,900 shares of the Company's Common Stock
owned by Oakville N.V., a Netherland Antilles corporation ('Oakville'). Mr.
Grapstein is an officer of Oakville. As an officer, Mr. Grapstein shares
voting and investment power with respect to such shares.
(4) The shares shown include 1,304 shares credited to Mr. Smith's account under
the Company's Thrift Plan and 80,866 shares which Mr. Smith had the right to
acquire through the exercise of stock options on December 31, 1995, or
within 60 days thereafter.
(5) The shares shown include 114,200 shares which Mr. Simmons had the right to
acquire through the exercise of stock options on December 31, 1995, or
within 60 days thereafter.
(Footnotes continued on next page)
III-1
<PAGE>
(Footnotes continued from previous page)
(6) The shares shown include 733 shares and 88 shares credited to Mr. Reed's
account under the Company's Thrift Plan and Employee Stock Ownership Plan,
respectively, and 23,200 shares which Mr. Reed had the right to acquire
through the exercise of stock options or stock awards on December 31, 1995,
or within 60 days thereafter.
(7) The shares shown include 728 shares credited to Mr. Van Kleef's account
under the Company's Thrift Plan and 14,660 shares which Mr. Van Kleef had
the right to acquire through the exercise of stock options or stock awards
on December 31, 1995, or within 60 days thereafter.
(8) The shares shown include 88 shares credited to Mr. Reardon's account under
the Company's Employee Stock Ownership Plan and 12,741 shares which Mr.
Reardon had the right to acquire through the exercise of stock options on
December 31, 1995 or within 60 days thereafter.
(9) The shares shown include 3,912 shares and 352 shares credited to the
accounts of executive officers and directors under the Company's Thrift Plan
and Employee Stock Ownership Plan, respectively, and 311,384 shares which
directors and executive officers had the right to acquire through the
exercise of stock options or stock awards on December 31, 1995, or within 60
days thereafter. The shares shown also include 3,000 shares acquired in the
name of an executive officer's mother with respect to which such executive
officer has voting and investment power.
------------------------------------------
The following table sets forth information as to each person or group,
other than members of the Committee and the Committee Nominees, who, according
to the Coastwide Proxy Statement, beneficially owned more than five percent of
the outstanding shares of Common Stock of the Company as of December 31, 1995.
The calculation of the percentage of outstanding shares of Common Stock is based
on the number of outstanding shares of Common Stock as of the Record Date. For
information concerning ownership of Common Stock by members of the Committee and
the Committee Nominees, see Appendix I attached to this Consent Solicitation
Statement.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP
-----------------------
NAME AND ADDRESS NUMBER OF PERCENT OF
TITLE OF CLASS OF BENEFICIAL OWNER SHARES CLASS
- ---------------------------------------------- ------------------------------ --------- ----------
<S> <C> <C> <C>
Common Stock.................................. Ardsley Advisory Partners(1) 2,560,000 9.943%
646 Steamboat Road
Greenwich, CT 06838
Common Stock.................................. Oakville N.V.(2) 1,522,900 5.915%
c/o Kuo Investment Company
33rd Floor
767 Third Avenue
New York, NY 10017
</TABLE>
- ------------------
(1) According to a Schedule 13G, as amended, filed with the Commission, Ardsley
beneficially owns 2,560,000 shares of Common Stock and is a general
partnership organized under the laws of the State of Connecticut and an
investment adviser registered under Section 203 of the Investment Advisers
Act of 1940, as amended (the 'Act'). In its Schedule 13G, Ardsley claims
that, with respect to the shares of the Company's Common Stock held by
Ardsley, it acts as investment advisor for the discretionary accounts of
certain clients, including (i) investment partnerships for which Ardsley
serves as the management company and (ii) a general partnership comprised of
the same partners as Ardsley serves as general partner. By reason of the
provisions of Rule 13d-3 under the Exchange Act, Ardsley is deemed to own
beneficially the shares owned by the managed accounts. Each client for whose
account Ardsley had purchased the Company's Common Stock has the right to
receive or the power to direct the receipt of dividends from, or the
proceeds from the sale of, such shares purchased for his account. No such
client has any of the foregoing rights with respect to more than 5
(Footnotes continued on next page)
III-2
<PAGE>
(Footnotes continued from previous page)
percent of the Company's Common Stock. According to its Schedule 13G,
Ardsley states that there is no agreement or understanding among such
persons to act together for the purpose of acquiring, holding, voting or
disposing of any such securities. Philip J. Hempleman, a managing partner of
Ardsley, is a citizen of the United States. By virtue of Mr. Hempleman's
position as managing partner of Ardsley, he may be deemed to have the shared
power to vote, or direct the voting of, and the shared power to dispose, or
direct the disposition of, shares of the Company's Common Stock held by the
discretionary accounts managed by Ardsley, and, therefore, Mr. Hempleman may
be deemed to be the beneficial owner of such shares.
(2) According to Schedule 13Ds on file with the Commission, Oakville is a wholly
owned subsidiary of Kuo Investment Limited, a Cayman Islands corporation
('Kuo'). According to information provided to the Company by Oakville, the
following persons are Oakville's directors and executive officers: (a) Peter
Yun Siak Fu, President and Director of Oakville; Director and officer of
Kuo; (b) Peter Chong Cheng Fu, Director and Secretary of Oakville; Director
and officer of Kuo; (c) Ong Beng Seng, Vice President and Director of
Oakville; Director and officer of Kuo; (d) David Song Long Ban, Treasurer
and Director of Oakville; Director and officer of Kuo; (e) Steven H.
Grapstein, Vice President and Director of Oakville; and (f) Holland
Intertrust (Curacao) N.V., a Netherlands Antilles corporation, a Director of
Oakville. Oakville reports that it has sole voting and dispositive power
over its voting securities of the Company.
As stated under the caption 'BACKGROUND' in the Consent Solicitation
Statement to which this Appendix is attached, on November 16, 1995, Whelan
purchased from Ardsley options to acquire up to 400,000 shares of Common Stock
from Ardsley, and the foregoing table does not reflect that transaction, nor any
other changes to beneficial ownership of Common Stock which may have occurred
since December 31, 1995.
III-3
<PAGE>
NOTES
<PAGE>
NOTES
<PAGE>
IMPORTANT
1. If your shares are held in your own name, please sign, date and mail the
enclosed WHITE Consent Card to our solicitation agent, Morrow & Co., Inc., in
the postage-paid envelope provided.
2. If your shares are held in the name of a brokerage firm, bank nominee or
other institution, only it can execute a consent with respect to your shares and
only upon receipt of your specific instructions. Accordingly, you should contact
the person responsible for your account and give instructions for a WHITE
Consent Card to be signed representing your shares. The Committee urges you to
confirm in writing your instructions to the person responsible for your account
and to provide a copy of those instructions to The Stockholders' Committee for
New Management of Tesoro Petroleum Corporation in care of Morrow & Co., Inc. at
the address set forth below so that the Committee will be aware of all
instructions given and can attempt to ensure that such instructions are
followed.
3. If you have previously signed a green revocation of consent card, you
have every reason to change your mind and may do so by marking, signing, dating
and returning a later-dated WHITE Consent Card.
If you have any questions or require any assistance in executing your
consent, please call:
MORROW & CO., INC.
909 THIRD AVENUE
NEW YORK, NEW YORK 10022
TOLL FREE: (800) 634-4458
Banks and brokerage firms, please call collect:
(212) 754-8000
<PAGE>
WRITTEN CONSENT BY STOCKHOLDERS OF
TESORO PETROLEUM CORPORATION
TO ACTION WITHOUT A MEETING
SOLICITED BY
THE STOCKHOLDERS' COMMITTEE FOR NEW MANAGEMENT
OF TESORO PETROLEUM CORPORATION IN
OPPOSITION TO THE BOARD OF DIRECTORS
OF TESORO PETROLEUM CORPORATION
Unless otherwise indicated below, the undersigned, a stockholder of record
of Tesoro Petroleum Corporation, a Delaware corporation (the 'Company'), on
February 24, 1996 (the 'Record Date'), hereby consents pursuant to Section
228(a) of the Delaware General Corporation Law with respect to all shares of
common stock, par value $0.16-2/3 per share (the 'Common Stock'), of the Company
held by the undersigned to the taking of each of the following actions without a
meeting, without prior notice and without a vote:
THE STOCKHOLDERS' COMMITTEE FOR NEW MANAGEMENT OF TESORO PETROLEUM
CORPORATION STRONGLY RECOMMENDS THAT THE STOCKHOLDERS OF THE COMPANY CONSENT TO
ALL OF THE FOLLOWING RESOLUTIONS. EACH OF THE RESOLUTIONS REQUIRES THE APPROVAL
OF A MAJORITY OF THE COMMON STOCK OUTSTANDING ON THE RECORD DATE.
THIS CONSENT CARD IS CONTINUED ON THE REVERSE SIDE. PLEASE MARK, SIGN AND
DATE THIS CONSENT CARD ON THE REVERSE SIDE BEFORE RETURNING THIS CONSENT CARD IN
THE ENCLOSED ENVELOPE.
1.A. FIX THE NUMBER OF DIRECTORS AT FIVE (5).
RESOLVED, that Section 2.1 of Article II of the By-Laws be amended to read
as follows:
Section 2.1 Number, Election and Term of Office. The number of
directors which shall constitute the whole Board of Directors shall be five,
unless and until changed by resolution of the Board of Directors. The
directors shall be elected at the annual meeting of stockholders, except as
provided in Section 2.2, and each director elected at an annual meeting of
stockholders, and directors elected or appointed in the interim to fill
vacancies and newly created directorships, shall hold office until the next
annual meeting of stockholders and until their successors are duly elected
and qualified or until their earlier resignation or removal. A director need
not be a stockholder.
/ / CONSENTS / / CONSENT WITHHELD
<PAGE>
1.B. REQUIRE THAT ANY VACANCIES AND NEWLY CREATED DIRECTORSHIPS MAY BE FILLED
ONLY BY STOCKHOLDER ACTION.
RESOLVED, that Section 2.2 of Article II of the By-Laws be amended to read
as follows:
Section 2.2 Vacancies and Additional Directorships. Any vacancy or
vacancies created by the death or resignation of a director may be filled
only by the majority vote of the remaining directors, though less than a
quorum, or by the sole remaining director. Any vacancy or vacancies created
by the removal of one or more directors may be filled only by action of the
holders of shares representing a majority of the shares of Common Stock
outstanding and entitled to vote and such action may be taken at the same
annual or special meeting, or by means of the same written consent or
consents, of stockholders at or by which such director or directors were
removed, or may be taken at a different meeting or by a separate written
consent or consents. Newly created directorships resulting from any increase
in the authorized number of directors shall be filled only by a majority of
the directors then in office, though less than a quorum, or by the sole
remaining director, and such newly created directorships may not be filled
by the stockholders unless otherwise required by law.
/ / CONSENTS / / CONSENT WITHHELD
1.C. AUTHORIZE THE STOCKHOLDERS TO REMOVE ANY OR ALL DIRECTORS AT ANY MEETING
OR BY WRITTEN CONSENT OF A MAJORITY OF THE STOCKHOLDERS.
RESOLVED, that Section 2.7 of Article II of the By-Laws be amended to read
as follows:
Section 2.7 Removal of Directors. At any annual meeting of
stockholders, at any special meeting of the stockholders duly called for the
purpose of removing a director or directors as provided in these By-Laws, or
by action of the stockholders by written consent in accordance with the laws
of the State of Delaware and the Certificate of Incorporation, any director
or directors may, by the affirmative vote or written consent, as the case
may be, of the holders of shares representing a majority of the shares of
Common Stock outstanding and entitled to vote, be removed from office,
either for or without cause. Such vacancy may be filled only by the
stockholders as provided in Section 2.2.
/ / CONSENTS / / CONSENT WITHHELD
1.D. DELETE ANY PROVISION OF THE COMPANY'S BY-LAWS, AND DELETE ANY AMENDMENT TO
THE COMPANY'S BY-LAWS, IN EACH CASE ADOPTED ON OR AFTER NOVEMBER 14, 1995, AND
PRIOR TO THE EFFECTIVE TIME.
RESOLVED, that any provision of the Company's By-Laws, and any amendment to
the Company's By-Laws, in each case adopted on or after November 14, 1995 and on
or prior to the date that written unrevoked consents of the holders of a
majority of the shares of Common Stock outstanding at the close of business on
the Record Date are delivered to the Company, be deleted.
/ / CONSENTS / / CONSENT WITHHELD
<PAGE>
2. REMOVAL OF THE INCUMBENT DIRECTORS OF THE COMPANY.
RESOLVED, that the following incumbent directors of the Company are hereby
removed from such directorships without cause: Robert J. Caverly, Peter M.
Detwiler, Steven H. Grapstein, Raymond K. Mason, Sr., John J. McKetta, Jr.,
Bruce A. Smith, Murray L. Weidenbaum and any other person elected by the
incumbent directors to fill any vacancy or newly created directorship.
/ / CONSENTS / / CONSENT WITHHELD
INSTRUCTION:
To consent or withhold consent to the removal of all the above-named directors
and any other person who is a director of the Company at the time the action
taken by this written consent becomes effective, check the appropriate box
above. IF YOU WISH TO CONSENT TO THE REMOVAL OF CERTAIN OF THE ABOVE-NAMED
DIRECTORS AND/OR CERTAIN OF THE DIRECTORS NOT NAMED ABOVE WHO ARE DIRECTORS OF
THE COMPANY AT THE TIME THE ACTION TAKEN BY THIS WRITTEN CONSENT BECOMES
EFFECTIVE, BUT NOT ALL OF THEM, CHECK THE 'CONSENTS' BOX ABOVE AND WRITE THE
NAME OF EACH PERSON YOU DO NOT WISH REMOVED IN THE FOLLOWING SPACE:
- --------------------------------------------------------------------------------
IF NO BOX IS MARKED ABOVE WITH RESPECT TO THIS PROPOSAL, THE UNDERSIGNED
WILL BE DEEMED TO CONSENT TO SUCH PROPOSAL, EXCEPT THAT THE UNDERSIGNED WILL NOT
BE DEEMED TO CONSENT TO THE REMOVAL OF ANY INCUMBENT DIRECTOR WHOSE NAME IS
WRITTEN IN THE SPACE PROVIDED ABOVE.
3. ELECTION OF NEW DIRECTORS TO THE BOARD.
RESOLVED, that the following persons are hereby elected as directors of the
Company to hold office until their successors are elected and qualified: George
F. Baker, Gale L. Galloway, Alan J. Kaufman, M.D., James H. Stone, and Douglas
B. Thompson (the 'Nominees').
/ / CONSENTS / / CONSENT WITHHELD
INSTRUCTION:
To consent or withhold consent to the election of all the above-named persons,
check the appropriate box above. IF YOU WISH TO CONSENT TO THE ELECTION OF
CERTAIN OF THE ABOVE-NAMED PERSONS, BUT NOT ALL OF THEM, CHECK THE 'CONSENTS'
BOX ABOVE AND WRITE THE NAME OF EACH SUCH PERSON YOU DO NOT WISH ELECTED IN THE
FOLLOWING SPACE:
- --------------------------------------------------------------------------------
IF NO BOX IS MARKED ABOVE WITH RESPECT TO THIS PROPOSAL, THE UNDERSIGNED
WILL BE DEEMED TO CONSENT TO SUCH PROPOSAL, EXCEPT THAT THE UNDERSIGNED WILL NOT
BE DEEMED TO CONSENT TO THE ELECTION OF ANY NOMINEE WHOSE NAME IS WRITTEN IN THE
SPACE PROVIDED ABOVE.
<PAGE>
The invalidity, illegality or unenforceability of any particular provision
of this Consent shall be construed in all respects as if such invalid, illegal
or unenforceable provision were omitted without affecting the validity, legality
or enforceability of the remaining provisions hereof.
IN THE ABSENCE OF DISSENT BEING INDICATED ABOVE, THE UNDERSIGNED HEREBY
CONSENTS TO EACH ACTION LISTED ABOVE.
Please sign exactly as name
appears on stock certificates or
on label affixed hereto. When
shares are registered in more than
one name, all such persons should
sign. When signing as attorney,
executor, administrator, trustee,
guardian, corporate officer,
partner, etc., sign in official
capacity, giving full title as
such. If a corporation, please
sign in the full corporate name by
president or other authorized
officer. If a partnership, please
sign in the partnership name by
authorized person.
DATED: ___________________________
__________________________________
Signature
__________________________________
Signature, if held jointly
__________________________________
Title or Authority (if applicable)
IN ORDER FOR YOUR CONSENT TO
BE VALID, IT MUST BE DATED. PLEASE
SIGN, DATE AND MAIL YOUR CONSENT
PROMPTLY IN THE POSTAGE-PAID
ENVELOPE ENCLOSED. FAILURE TO
EXECUTE A CONSENT WILL HAVE THE
SAME EFFECT AS WITHHOLDING A
CONSENT.
THE COMMITTEE URGES YOU NOT TO
SIGN ANY GREEN REVOCATION OF
CONSENT CARDS SENT TO YOU BY THE
COMPANY. IF YOU HAVE PREVIOUSLY
SIGNED AND RETURNED A GREEN
REVOCATION OF CONSENT CARD, YOU
HAVE EVERY REASON TO CHANGE YOUR
MIND AND MAY DO SO BY MARKING,
SIGNING, DATING AND RETURNING A
LATER-DATED WHITE CONSENT CARD.
<PAGE>
THE STOCKHOLDERS' COMMITTEE FOR NEW MANAGEMENT OF
TESORO PETROLEUM CORPORATION
C/O WHELAN MANAGEMENT CORP.
8 HOLLEY STREET
LAKEVILLE, CT 06039
February 29, 1996
Dear Fellow Tesoro Petroleum Stockholder:
The Stockholders' Committee for New Management of Tesoro Petroleum
Corporation (the 'Committee') beneficially owns approximately 5.7% of the
outstanding Common Stock of Tesoro Petroleum Corporation (the 'Company'). We
believe that many of the Company's stockholders share the Committee's profound
disappointment with the performance of the Company's stock and the Company's
Board of Directors (the 'Board'). As described in the accompanying Consent
Solicitation Statement, we are seeking your consent to remove all seven of the
present members of the Board, and to elect George F. Baker, Gale L. Galloway,
Alan J. Kaufman, M.D., James H. Stone and Douglas B. Thompson as directors of
the Company (collectively, the 'Committee Nominees').
THE ALASKAN REFINING BUSINESS SHOULD BE DIVESTED
The Committee believes that current and recent trading prices of the Common
Stock do not adequately reflect the value of the Company's underlying businesses
and assets. In the Committee's opinion, the principal reason for that
discrepancy is the fact that the Company is primarily engaged in two businesses,
(i) petroleum refining and marketing in Alaska (the 'Refining Business') and
(ii) natural gas exploration and production in Texas and Bolivia (the 'E & P
Business'), which have distinctly separate financial, operating and investment
characteristics. Unfortunately, they also have quite different financial
performance records, as made clear by the following table which shows the
operating profit (loss) and capital expenditures in respect of the Refining
Business and the E & P Business for each of the years 1992 through 1995:
<TABLE>
<CAPTION>
OPERATING PROFIT (LOSS) CAPITAL EXPENDITURES
----------------------------------- -----------------------------------
REFINING BUSINESS E & P BUSINESS REFINING BUSINESS E & P BUSINESS
----------------- -------------- ----------------- --------------
(DOLLARS IN MILLIONS) (DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
1992.................... $ (14.9) $ 29.1(1) $ 3.7 $ 9.3
1993.................... 15.2 40.7 7.1 29.3
1994.................... 2.4(2) 64.3 32.0 65.6
1995.................... 0.7 109.6(3) 9.3 53.4
</TABLE>
- ------------------
(1) Includes gain on sale of assets of $5.8 million.
(2) Includes (i) a refund of $8.5 million received in settlement of a tariff
dispute, (ii) a gain of $2.4 million from the sale of assets, (iii)
favorable feedstock cost adjustments of $1.5 million and (iv) charges of
$6.6 million for environmental contingencies and other matters.
(3) Includes $33 million gain from sale of certain interests in the Bob West
Field.
Obviously, the E & P Business is a strong financial performer, and the
Company's overall operating results have been dragged down by the erratic
Refining Business which, after excluding gains on the sale of assets and other
non-recurring gains and losses, lost an aggregate of $2.4 million during the
past four years.
As noted in the above chart, during 1994 and 1995, the Company made $32
million and $9.3 million, respectively, in capital expenditures for the Refining
Business. Moreover, the Company has budgeted an additional $9 million in capital
expenditures related to the Refining Business for 1996. Also, according to the
1995 Third Quarter 10-Q, another $10 million will be required in 1997 to comply
with environmental laws. We think that all of that money would be better spent
if used to reduce the Company's high-cost debt or to develop the Company's E & P
Business.
We think that a divestiture of the Refining Business would have several
benefits for stockholders. The stock market would be able to value the Common
Stock based on the strong positive operating profits of the
<PAGE>
Company's continuing E & P Business. If the divestiture took the form of a sale,
the proceeds could be used to reduce the Company's high-cost debt, directly and
immediately increasing the value of stockholders' investments. Money which
otherwise would be needed for capital expenditures for the Refining Business
could be used to reduce debt or take other actions to enhance stockholder value
immediately. We also think that the Company's management has been distracted by
the many problems experienced by the Refining Business during the past several
years. There can be no assurance, however, that, if elected, the Committee
Nominees will be able to effectuate a divestiture of the Refining Business under
terms that would be beneficial to the Company and its stockholders. The ability
of the Committee Nominees to effectuate a divestiture of the Refining Business
under terms that would be beneficial to the Company and its stockholders is
subject to a number of significant uncertainties, including the then prevailing
and prospective levels of the Refining Business earnings and cash flow as well
as general business and economic conditions in the petroleum refining and
marketing industry. Because the Committee Nominees have not had access to the
Company's books, records, property or personnel, they have not been able to
fully assess the difficulties that may be encountered in attempting to
consummate the proposed transaction. It is the Company's position, as stated in
certain of its pleadings in the litigation described in the Consent Solicitation
Statement under the caption 'CERTAIN LEGAL PROCEEDINGS,' that 'market conditions
on the West Coast are such that the refinery cannot 'promptly' be sold; numerous
other refineries are known to be on the market at this time for which there are
no buyers. Nor is it likely at the present time that the refinery could be sold
at a commercially reasonable price let alone anywhere near the price fantasized
by the [Committee]. It is unlikely that a sale of the refinery could cover the
approximately $90 million in debt associated with the refinery, let alone cover
the additional environmental costs or have excess funds available for
refinancing or repayment of other debt.'
The Committee believes there is an opportunity to increase value for
stockholders by divesting the Refining Business and focusing on the core
business of exploiting the Company's valuable interests in the Bob West and
Bolivian fields. The Committee Nominees, if elected, intend to seek stockholder
approval of any proposed divestiture of the Refining Business.
CONSENT CONSIDERATIONS
The following factors, taken together with the information provided
elsewhere in this letter and the accompanying Consent Solicitation Statement,
should be considered carefully in determining whether to consent to the removal
of the Board and the election of the Committee Nominees:
The Committee Nominees have not reached a conclusion regarding the method
or process pursuant to which the Refining Business would be sold. Additionally,
Messrs. Thompson and Galloway, who are not members of the Committee but who are
Committee Nominees, have not reached a conclusion as to whether to sell the
Refining Business. Also, there can be no assurance that, if elected, the
Committee Nominees will be able to effectuate a divestiture of the Refining
Business under terms that would be beneficial to the Company and its
stockholders. The ability of the Committee Nominees to effectuate a divestiture
of the Refining Business under terms that would be beneficial to the Company and
its stockholders is subject to a number of significant uncertainties, including
the then prevailing and prospective levels of the Refining Business earnings and
cash flow as well as general business and economic conditions in the petroleum
refining and marketing industry.
While the Committee thinks that a disposition of the Refining Business and
the use of all or part of any sale proceeds to reduce debt or the other steps to
be considered will have a favorable impact on stockholder value, the trading
price of the Common Stock is, of course, influenced by many factors and,
therefore, it is impossible to say with certainty that its price will increase
or to predict the amount of any such increase that might occur. Additionally,
because the Committee Nominees have not had access to the Company's books,
records, property or personnel, they have not been able to fully assess the
difficulties that may be encountered in attempting to consummate the proposed
transaction and are not in a position at this time to prepare and present herein
pro forma financial information, nor have they prepared written analyses, that
would demonstrate the impact that the sale of the Refining Business would have
on the financial statements of the Company.
As discussed below, the Committee believes that, if the Committee Nominees
conclude, after their election to the Board, to pursue a sale of the Refining
Business or other assets, a reduction of the Company's high-cost debt would be a
profitable use of all or part of the proceeds. The Company has stated, however,
that it does not believe it would be prudent to attempt to refinance the
Company's outstanding debt at this time.
2
<PAGE>
THE COMMITTEE'S PROGRAM
The Committee Nominees are experienced businessmen who have no prior
relationship with or allegiance to any members of the Company's senior
management. Each of the Committee Nominees has a substantial background in
business, finance or investing. Messrs. Galloway, Stone and Thompson are, we
think, very knowledgeable about the oil and gas industry, and Mr. Galloway has a
proven track record in turning around underperforming companies within that
industry. The Committee Nominees are committed to taking appropriate steps to
maximize values for all stockholders as promptly as possible after their
election.
The knowledge of the Committee Nominees concerning the Company is not as
complete as it would be if they were already Board members. Accordingly, if
elected, the Committee Nominees will conduct a detailed review of the Company
and its assets, corporate structure, capitalization, operations, properties,
policies and personnel in order to develop strategies to enhance stockholder
value.
While we cannot now know the specifics of those strategies, based on our
current knowledge of the Company and its businesses, assets and operations, we
expect that a majority of the Committee Nominees, once elected, will (subject to
their fiduciary obligations and based upon the information then available):1
o DEVELOP A PLAN FOR THE DISPOSITION OF THE COMPANY'S REFINING
BUSINESS THROUGH A SALE TO ONE OR MORE BUYERS, A SPIN-OFF OR
SOME OTHER MEANS. The Committee Nominees have not reached a
conclusion regarding the method or process pursuant to which
the Refining Business would be sold. Additionally, the
Committee Nominees have no intention of selling the Refining
Business, or any other assets or businesses of the Company, to
the Committee, any of its members or any of their affiliates.
Further, the Committee Nominees do not presently intend or
contemplate that, if elected, they would enter into any
agreements or transactions with members of the Committee or any
of their affiliates, although such agreements or transactions
are possible. The Committee Nominees are aware, as described
below, that, to the extent Mr. Flannery were asked to and were
instrumental in assisting the Company in arranging for the sale
of some or all of the Company, he may expect to receive a
commercially reasonable fee. Although the Committee Nominees
have not considered whether, if elected, they would cause the
Company to enter into any agreement with Mr. Flannery to engage
his services in connection with the sale of the Refining
Business, or any other assets or businesses of the Company, it
is possible that such an agreement may be entered into.
o FULLY EVALUATE ALL ALTERNATIVES. We anticipate that the
Committee Nominees will also proceed to dispose of other
non-productive assets that are unrelated to the core E & P
Business. They will engage in an in-depth analysis of the
Company's operations in an effort to identify opportunities for
reducing corporate overhead and general administrative expenses
and strengthening and improving the core E & P Business. Our
nominees will thoroughly review the Company's management and
make such changes as they conclude are in the best interests of
stockholders.
o THE COMMITTEE IS COMMITTED TO STOCKHOLDER
DEMOCRACY. Stockholders, as the true owners of the Company,
should be able to freely elect and change the individuals
serving on the Board and should also be able to decide for
themselves whether to accept or reject third-party bids for the
entire Company. If elected, the Committee Nominees intend to
abolish devices such as the Company's 'poison pill' and the
amendments to the By-Laws adopted by the incumbent Board which,
in the opinion of the Committee, limit the ability of
stockholders to participate in or control important corporate
decisions. Additionally, if elected, the Committee Nominees
have agreed to forgo and not receive in their respective
capacities as directors any cash director
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1. Messrs. Thompson and Galloway, who are Committee Nominees but who are not
members of the Committee, have not reached any determination with respect to
the Committee's program, but will, if elected, review and consider all facets
of the proposed program.
3
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fees or any retirement benefits currently enjoyed by the Board. They intend,
however, to structure director compensation in the form of stock and/or stock
options.
o REDUCE OR REFINANCE DEBT. The Committee believes that the
Company is burdened by long-term debt, including the Company's
12 3/4% Subordinated Debentures and 13% Exchange Notes. At the
end of 1995, the Company had approximately $153 million in
outstanding long-term indebtedness, of which approximately $30
million represented the outstanding aggregate principal amount
of the 12 3/4% Subordinated Debentures and approximately $44
million represented the outstanding aggregate principal amount
of the 13% Exchange Notes. If the Committee Nominees conclude,
after their election to the Board, to pursue a sale of the
Refining Business or other assets, we believe that in the
existing interest rate and investment environment and given
other currently prevailing conditions, reduction of the
high-cost debt, particularly the Company's 12 3/4% Subordinated
Debentures and 13% Exchange Notes, would be a profitable use of
all or part of the proceeds. For example, for each $10 million
aggregate reduction in outstanding principal amount of the
Company's 12 3/4% Subordinated Debentures and 13% Exchange
Notes, the Committee believes that, assuming a blended interest
rate of 12 7/8%, the Company would reduce its annual interest
expense by approximately $1,287,500, which would result in an
after-tax increase in annual operating profit of at least
$836,875, assuming the maximum corporate tax rate of 35%. Of
course, the Committee's Nominees also will consider the
feasibility of refinancing all or part of the Company's
outstanding debt in order to reduce debt service costs. As
discussed in footnote 2 below, the Company has stated that it
does not believe it would be prudent to attempt to refinance
its debt at this time.2
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2. In fact, the Company has stated in certain of its pleadings in the litigation
described in the Consent Solicitation Statement under the caption 'CERTAIN
LEGAL PROCEEDINGS' that 'Tesoro has taken steps to reduce debt service by
redeeming $34.6 million of 12 3/4% Subordinated Debentures effected December
1, 1995, thus satisfying the balance of Tesoro's sinking fund requirements.
Tesoro management has considered other possible restructuring scenarios, but
believes, as it has advised the public in its March 31, 1995 First Quarter
report [on Form 10-Q], that it would not be prudent to undertake refinancing
prior to resolution of the Tennessee Gas litigation, since it would not
result in any short-term savings given the significant cost of any
refinancing, additional restrictions that would be required and the Company's
credit rating, which continues to be adversely affected by the Tennessee Gas
litigation.' Additionally, the Company also stated that the Committee has not
disclosed how it proposes to effect such refinancing or on what terms.
'Although the [Committee] states that a divestiture of the refining business,
if it took the form of a sale, would produce proceeds that 'could be used to
reduce the Company's high-cost debt,' this statement lacks any credible basis
. . . . [A] 'fire sale' of Tesoro's refinery business, which is what the
Committee says it expects to attempt, would at current market prices actually
destroy shareholder value, by wiping out any value gained by strategic
improvements in refinery operations--improvements that will become readily
apparent to all (including potential buyers) when the Company's initiatives
are fully implemented and industry conditions improve. The Committee also
fails to disclose that opportunities exist in today's depressed industry
environment, such as by consolidating the Company's refining and marketing
assets with other existing operations, thereby creating operating synergies
and enhancing the attractiveness of that segment of the Company's business to
(and the price that could be realized from) a prospective purchaser. As far
as paying down high-cost debt with sales proceeds is concerned, what the
Committee fails to disclose is that, as discussed above, the proceeds from a
sale in today's market, net of environmental costs and other liabilities
related to the refinery, would be virtually non-existent, and that Tesoro's
current credit agreement would, in all likelihood, preclude such a sale.'
4
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THE COMMITTEE NOMINEES ARE COMMITTED TO
REORGANIZING AND REVITALIZING THE COMPANY
The Committee Nominees will be flexible in pursuing the goal of maximizing
stockholder value. They are prepared to tailor the steps outlined above to the
extent they believe desirable to better suit the Company's situation, and will
fully evaluate alternatives to those steps, such as a sale of the entire
Company. They will, of course, be open to the views and suggestions of
stockholders.
The Committee has not had discussions with potential acquirors of the
Refining Business, any of the Company's other assets or the Company as a whole.
However, in May of 1995, Kevin S. Flannery, a member of the Committee, acting on
his own and without any authority from the Company, attempted to sell all of the
Company and/or part of its E & P Business. Although he approached as many
potential acquirors as he could identify, he had no success. Mr. Flannery,
however, did not attempt to sell the Refinery Business by itself. In May of
1995, it was Mr. Flannery's expectation that, to the extent he was instrumental
in arranging for the sale of some or all of the Company, he would seek a fee for
those services. At the present time, Mr. Flannery has no agreement, arrangement
or understanding concerning his role in any sale of the Company or some or all
of its assets. Additionally, the Committee Nominees have not considered whether,
if elected, to cause the Company to enter into any agreement with Mr. Flannery
to engage his services in connection with the sale of the Refining Business, or
any other assets or businesses of the Company. To the extent that Mr. Flannery
were asked to play such a role and perform services in connection therewith, he
would expect to be compensated in a commercially reasonable manner. To the
extent Mr. Flannery were to receive a fee for such services, he might be deemed
to have a conflict of interest with all other stockholders who would not share
in such a fee. There can be no assurance that, if elected, the Committee
Nominees will be able to accomplish the disposition of the Refining Business or
other assets, or as to the timing of or amount of proceeds from any such
disposition which may be arranged. Moreover, while we think that a disposition
of the Refining Business and the use of all or part of any sale proceeds to
reduce debt or the other steps to be considered will have a favorable impact on
stockholder value, the trading price of the Common Stock is, of course,
influenced by many factors and, therefore, it is impossible to say with
certainty that its price will increase or to predict the amount of any such
increase that might occur. We think, though, that vigorous and concentrated
efforts to enhance the value of your investments in the Company should be made.
Except as described above, the Committee and the Committee Nominees have no
present plans or proposals which relate to or would result in an extraordinary
corporate transaction, such as a merger, reorganization, liquidation, relocation
of operations or sale or transfer of assets involving the Company or any of its
subsidiaries, or any material changes in the Company's business, corporate
structure or policies; however, as stated above, the Committee Nominees, if
elected, intend to consider all of these alternatives. In the event such a
transaction materializes, stockholders will have the opportunity to vote thereon
to the extent required by law and the Company's Amended and Restated Certificate
of Incorporation.
5
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HELP US MAXIMIZE STOCKHOLDER VALUE
THE BASIC ISSUE WE ARE RAISING THROUGH THIS CONSENT SOLICITATION IS WHETHER
THE INCUMBENT DIRECTORS' RECORD JUSTIFIES THEIR CONTINUATION IN OFFICE OR
WHETHER A NEW BOARD OF DIRECTORS SHOULD BE GIVEN THE OPPORTUNITY TO SEEK NEW
DIRECTIONS FOR THE BENEFIT OF ALL STOCKHOLDERS OF THE COMPANY.
We believe that many of you share our discontent and concerns. In order to
address those concerns, the Committee seeks your help to remove the directors
now in office and elect five new directors who, we believe, will be responsive
to stockholders and firmly committed to the goal of increasing stockholder
value.
Your consent is important. No matter how many or how few shares you own,
please help us to improve stockholder value by completing, signing, dating and
mailing the enclosed WHITE Consent Card promptly.
YOU ARE URGED TO CONSENT TO THE REMOVAL OF THE BOARD AND THE ELECTION OF
THE COMMITTEE NOMINEES BY MARKING, SIGNING, DATING, AND RETURNING PROMPTLY THE
ENCLOSED WHITE CONSENT CARD IN THE POSTAGE-PAID ENVELOPE PROVIDED. FAILURE TO
EXECUTE A CONSENT WILL HAVE THE SAME EFFECT AS WITHHOLDING A CONSENT.
THE COMMITTEE URGES YOU NOT TO SIGN ANY GREEN REVOCATION OF CONSENT CARDS
SENT TO YOU BY THE COMPANY. IF YOU HAVE PREVIOUSLY SIGNED A GREEN REVOCATION OF
CONSENT CARD, YOU HAVE EVERY REASON TO CHANGE YOUR MIND AND MAY DO SO BY
MARKING, SIGNING, DATING AND RETURNING A LATER-DATED WHITE CONSENT CARD.
If your shares of Common Stock are held in the name of a brokerage firm,
bank nominee or other institution, only it can execute a Consent Card with
respect to your shares. Accordingly, please contact the person responsible for
your account and give instructions for a WHITE Consent Card to be signed
representing your shares. The Committee requests that you confirm your
instructions to the person responsible for your account in writing and provide a
copy of such instructions to the Committee c/o Morrow & Co., Inc., 909 Third
Avenue, New York, New York 10022 so that the Committee will be aware of all
instructions given and can attempt to ensure that such instructions are
followed.
If you have any questions about completing or signing the Consent Card or
require assistance, including assistance in assuring that any of your shares
held by brokers or other nominees are voted, please call Morrow & Co., Inc. at
(800) 634-4458.
Very truly yours,
/s/ Kevin S. Flannery
Kevin S. Flannery, on behalf of
The Stockholders' Committee for
New Management of Tesoro Petroleum
Corporation
6
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NOTES
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NOTES
