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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Act of 1934
Date of Report (Date of earliest event reported) June 25, 1998
TESORO PETROLEUM CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 1-3473 95-0862768
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
8700 Tesoro Drive, San Antonio, Texas 78217
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (210) 828-8484
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Item 5. Other Events.
On June 25, 1998, Tesoro Petroleum Corporation (the "Company") entered
into (a) an Underwriting Agreement with Lehman Brothers Inc. and Howard, Weil,
Labouisse, Friedrichs Incorporated, pursuant to which the Company issued
9,000,000 Premium Income Equity Securities ("PIES"), each of which represents
one one-hundredth of a share of Mandatorily Convertible Preferred Stock of the
Company deposited with The Bank of New York, and (ii) an Underwriting Agreement
with Lehman Brothers Inc., CIBC Oppenheimer, Credit Suisse First Boston, Merrill
Lynch & Co. and Salomon Smith Barney for 5,000,000 shares of Common Stock of the
Company. The proceeds of the issuance of the PIES and Common Stock, together
with borrowings under the Company's senior credit facility, will be used to fund
the cash purchase price of the acquisition of Shell Anacortes Refining Company,
to refinance the Company's interim credit facility (a portion of which was used
to fund the cash purchase price of the acquisition of the Company's Hawaii
operations), to pay certain fees and expenses and for general corporate purposes
(including working capital requirements and capital expenditures).
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
Exhibit 1.1 Premium Income Equity Securities Underwriting
Agreement dated June 25, 1998.
Exhibit 1.2 Common Stock Underwriting Agreement dated June 25,
1998.
Exhibit 4.1 Certificate of Designation related to the Mandatorily
Convertible Preferred Stock.
Exhibit 4.2 Deposit Agreement among the Company, The Bank of
New York and the holders from time to time of
depository receipts executed and delivered
thereunder.
Exhibit 4.3 Form of depository receipt evidencing ownership
of Premium Income Equity Securities (filed as a part
of Exhibit 4.2 hereof).
Exhibit 5.1 Opinion of Fulbright & Jaworski L.L.P.
Exhibit 23.1 Consent of Fulbright & Jaworski L.L.P. (included in
Exhibit 5.1).
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TESORO PETROLEUM CORPORATION
By: /s/ James C. Reed, Jr.
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James C. Reed, Jr.
Executive Vice President,
General Counsel and Secretary
DATE: July 1, 1998
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EXHIBIT INDEX
Exhibit 1.1 Premium Income Equity Securities Underwriting Agreement dated
June 25, 1998.
Exhibit 1.2 Common Stock Underwriting Agreement dated June 25, 1998.
Exhibit 4.1 Certificate of Designation related to the Mandatorily
Convertible Preferred Stock.
Exhibit 4.2 Deposit Agreement among the Company, The Bank of New York
and the holders from time to time of depository receipts
executed and delivered thereunder.
Exhibit 4.3 Form of depository receipt evidencing ownership of Premium
Income Equity Securities (filed as part of Exhibit 4.2
hereof).
Exhibit 5.1 Opinion of Fulbright & Jaworski L.L.P.
Exhibit 23.1 Consent of Fulbright & Jaworski L.L.P. (included in Exhibit
5.1).
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EXHIBIT 1.1
9,000,000 PREMIUM INCOME EQUITY SECURITIES(SM) ("PIES(SM)")
TESORO PETROLEUM CORPORATION
CONSISTING OF DEPOSITARY SHARES, EACH REPRESENTING ONE ONE-HUNDREDTH OF A
SHARE OF THE 7 1/4% MANDATORILY CONVERTIBLE PREFERRED STOCK
UNDERWRITING AGREEMENT
June 25, 1998
LEHMAN BROTHERS INC.
HOWARD, WEIL, LABOUISSE, FRIEDRICHS INCORPORATED
c/o Lehman Brothers Inc.
Three World Financial Center
New York, New York 10285
Ladies and Gentlemen:
Tesoro Petroleum Corporation, a Delaware corporation (the "Company"),
proposes to sell to Lehman Brothers Inc. and Howard, Weil, Labouisse, Friedrichs
Incorporated, the several underwriters (collectively, the "Underwriters"), and
the Underwriters propose, severally and not jointly, to purchase 9,000,000
Premium Income Equity Securities, or "PIES" (the "Firm Securities"), consisting
of depositary shares, each representing one one-hundredth of a share of the
Company's 7 1/4% mandatorily convertible preferred stock (the "Mandatorily
Convertible Preferred Stock"). In addition, the Company proposes to grant to the
Underwriters an option to purchase up to an additional 1,350,000 PIES on the
terms and for the purposes set forth in Section 2 (the "Option Securities"). The
Firm Securities and the Option Securities, if purchased, are hereinafter
collectively called the "Securities." This is to confirm the agreement
concerning the purchase of the Securities from the Company by the Underwriters.
The Securities are being issued and sold in connection with the
acquisition (the "Hawaii Acquisition") of BHP Petroleum Americas Refining Inc.
and BHP Petroleum South Pacific Inc. (together, "BHP Hawaii") and the proposed
acquisition (the "Washington Acquisition," and together with the Hawaii
Acquisition, the "Acquisitions") of Shell Anacortes Refining Company ("Shell
Washington") by the Company. Concurrently with the offering of the Securities
(the "PIES Offering"), the Company is offering 5,000,000 shares of the Company's
common stock, par value $0.16 2/3 per share (the "Common Stock"), with gross
proceeds of $79.7 million (excluding any proceeds from the exercise of
over-allotment options granted to the underwriters of the Common Stock). The
Company is also proposing to offer $300 million in aggregate principal amount of
its Senior Subordinated Notes (the "Notes"). The closing of the PIES Offering is
not conditioned upon the closings of the offerings of Common Stock (the "Common
Stock Offering") or the Notes (the
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"Notes Offering" and together with the Common Stock Offering and PIES Offering,
the "Offerings"), nor is the closing of any of the Offerings conditioned upon
the closing of the Washington Acquisition. The net proceeds from the Offerings,
together with borrowing under the Company's Third Amended and Restated Credit
Facility (the "Senior Credit Facility"), will be used to fund the cash purchase
price of the Washington Acquisition, to refinance the Company's Second Amended
and Restated Credit Facility (the "Interim Credit Facility") (a portion of which
was used to finance the cash purchase price of the Hawaii Acquisition), to pay
certain fees and expenses related to the Transactions (as defined below) and, to
the extent not used, for general corporate purposes (including working capital
requirements and capital expenditures).
The (i) stock purchase agreement entered into by the Company in
connection with the Washington Acquisition (the "Washington Agreement") and the
Senior Credit Facility, (ii) the underwriting agreement entered into in
connection with the Common Stock Offering and (iii) the purchase agreement,
registration rights agreement, indenture, Notes and subsidiary guarantees
thereof entered into in connection with the Notes Offering are hereinafter
sometimes collectively referred to as the "Transaction Documents." The
Offerings, the Acquisitions and the closing of the Senior Credit Facility are
hereinafter sometimes referred to collectively as the "Transactions."
SECTION 1. Representations, Warranties and Agreements of the Company.
The Company represents and warrants to, and agrees with, the
Underwriters that as of the date hereof:
(a) A registration statement on Form S-3 (file number
333-51789), and amendments thereto, with respect to the Securities, the
Mandatorily Convertible Preferred Stock and the Common Stock has (i) been
prepared by the Company in conformity in all material respects with the
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
and the rules and regulations (the "Rules and Regulations") of the Securities
and Exchange Commission (the "Commission") thereunder, (ii) been filed with the
Commission under the Securities Act and (iii) become effective under the
Securities Act. Such registration statement, as amended as of the date of this
Agreement, meets the requirements set forth in Rule 415(a)(1)(x) under the Act
and complies in all material respects with said Rule. Copies of such
registration statement and amendments thereto have been delivered by the Company
to you as the Underwriters. Upon your written request, but not without your
agreement, the Company will also file a Rule 462(b) Registration Statement in
accordance with Rule 462(b). As used in this Agreement, "Effective Time" means
the date and the time as of which such registration statement, the most recent
post-effective amendment thereto, if any, or any Rule 462(b) Registration
Statement became or becomes effective; "Effective Date" means the date of the
Effective Time; "Preliminary Prospectus" means each prospectus included in such
registration statement, or amendments thereof, including without limitation the
preliminary prospectus supplement, dated June 5, 1998 (the "Preliminary
Prospectus Supplement") relating to the Securities filed with the Commission
pursuant to Rule 424(b)(5) of the Rules and Regulations, through the date of the
Preliminary Prospectus
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Supplement; "Registration Statement" means such registration statement, as
amended at the Effective Time, including any documents incorporated by reference
therein at such time and all information contained in the final prospectus
relating to the Securities filed with the Commission pursuant to Rule 424(b) of
the Rules and Regulations in accordance with Section 5(a) hereof and deemed to
be a part of the registration statement as of the Effective Time pursuant to
paragraph (b) of Rule 430A of the Rules and Regulations and, in the event any
Rule 462(b) Registration Statement becomes effective prior to the First Delivery
Date (as hereinafter defined), also means such registration statement as so
amended, unless the context otherwise requires; "Prospectus" means the
Prospectus included in the Registration Statement at the Effective Time,
including without limitation the final prospectus supplement, dated June 26,
1998, relating to the Securities, as first filed with the Commission pursuant to
paragraph (2) or (5) of Rule 424(b) of the Rules and Regulations; and "Rule
462(b) Registration Statement" means the registration statement and any
amendments thereto filed pursuant to Rule 462(b) of the Rules and Regulations
relating to the offering covered by the initial Registration Statement.
Reference made herein to any Preliminary Prospectus or to the Prospectus shall
be deemed to refer to and include any documents incorporated by reference
therein pursuant to Item 12 of Form S-3 under the Securities Act, as of the date
of such Preliminary Prospectus or the Prospectus, as the case may be. The
Commission has not issued any order preventing or suspending the use of any
Preliminary Prospectus.
(b) The Registration Statement conforms, and the Prospectus,
any further amendments or supplements to the Registration Statement or the
Prospectus and any Rule 462(b) Registration Statement will, when they become
effective or are filed with the Commission, as the case may be, conform in all
material respects to the requirements of the Securities Act and the Rules and
Regulations and do not and will not, as of the applicable Effective Time (as to
the Registration Statement and any amendment thereto) and as of the applicable
filing date (as to the Prospectus and any amendment or supplement thereto)
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading; provided that no representation or warranty is made as to
information contained in or omitted from the Registration Statement or the
Prospectus in reliance upon and in conformity with written information furnished
to the Company through the Underwriters by or on behalf of any Underwriter
specifically for inclusion therein.
(c) The documents incorporated by reference in the Preliminary
Prospectus and the Prospectus when they became effective or were filed with the
Commission, conformed in all material respects to the requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
and regulations of the Commission thereunder, and none of such documents, when
read together with the other information in the Prospectus, contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and any further
documents so filed and incorporated by reference in the Prospectus when such
documents became effective or are filed with the Commission, as the case may be,
will conform in all material respects to requirements of the Exchange Act and
the rules and regulations of the Commission thereunder, and none of such
documents, when read together with
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the other information in the Prospectus, will contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(d) The Company is a corporation duly organized and validly
existing in good standing under the laws of the State of Delaware with full
corporate power and authority to own, lease and operate its properties and
conduct its business as described in the Prospectus, and is duly qualified and
registered as a foreign corporation for the transaction of business and is in
good standing in each jurisdiction in which the character of the business
conducted by it or the location of the properties owned or leased by it make
such qualification or registration necessary (except where the failure to so
qualify or register would not have a Material Adverse Effect (as defined
below)). The Company has an authorized capitalization as set forth under the
caption "Capitalization" in the Prospectus. On the date hereof and on the First
Delivery Date all of the issued and outstanding shares of capital stock of the
Company (including the shares of Common Stock to be issued in the Common Stock
Offering) have been duly authorized and will be validly issued and fully paid
and nonassessable and will conform to the description thereof contained in or
incorporated by reference in the Prospectus. As used herein, "Material Adverse
Effect" means a material adverse effect on the condition (financial or
otherwise), results of operations, business, earnings or prospects of the
Company and the Subsidiaries (as defined below), taken as a whole.
(e) The unissued Securities to be issued and sold by the
Company to the Underwriters have been duly and validly authorized and, when
issued and delivered against payment therefor as provided herein, will be duly
and validly issued, fully paid and nonassessable. The unissued shares of
Mandatorily Convertible Preferred Stock to be issued in exchange by the Company
to Bank of New York, as depositary with respect thereto (the "Depositary") under
the deposit agreement, dated the First Delivery Date, between the Company and
the Depositary (the "Deposit Agreement") have been duly and validly authorized
and, when issued and exchanged for depositary receipts therefor as provided in
the Deposit Agreement, will be duly and validly issued, fully paid and
nonassessable. The shares of Common Stock issuable upon the conversion of the
Mandatorily Convertible Preferred Stock, have been duly and validly authorized
and reserved for issuance, and upon such conversion, will be duly and validly
issued, fully paid and nonassessable.
(f) Schedule II hereto is a complete and accurate schedule of
the names of all corporations, partnerships and joint ventures (the
"Subsidiaries") which constitute "subsidiaries," as such term is defined in Rule
405 of the rules and regulations of the Commission under the Securities Act
(collectively with the rules and regulations of the Commission under the
Exchange Act, the "Rules and Regulations"). Other than the Subsidiaries listed
on Schedule II, no corporation, partnership or other entity in which the Company
has an equity interest constitutes a "subsidiary" as defined in Rule 405 of the
Rules and Regulations. Each Subsidiary is duly organized, validly existing and
in good standing in the jurisdiction of its incorporation or formation, as the
case may be, with full corporate or other power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus. Each Subsidiary is duly qualified and registered
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as a foreign corporation or limited partnership, as the case may be, for the
transaction of business and is in good standing in each jurisdiction in which
the character of the business conducted by it or the location of the properties
owned or leased by it make such qualification or registration unnecessary, save
where the failure to so qualify or be in good standing as a foreign corporation
or limited partnership, as the case may be, would not have a Material Adverse
Effect.
(g) All of the issued and outstanding shares of capital stock
of each of the Subsidiaries that is a corporation have been duly authorized and
validly issued, are fully paid and nonassessable, and are owned by the Company
directly or indirectly, free and clear of any lien, adverse claim, security
interest or other encumbrance (a "Lien"), except as arising from the Interim
Credit Facility and, upon its execution, the Senior Credit Facility or as
described in the Prospectus. All outstanding equity interests in each Subsidiary
that is not a corporation have been duly authorized and validly issued and are
owned by the Company directly or indirectly, free and clear of any Lien, except
as arising from the Interim Credit Facility and, upon its execution, Senior
Credit Facility or as described in the Prospectus. Except as disclosed in the
Prospectus and as outstanding under employee benefit plans of the Company, there
are no outstanding subscriptions, rights (preemptive or other), warrants, calls,
commitments of sale or options to acquire, or instruments convertible into or
exchangeable for, nor any restriction on the voting or transfer of, any capital
stock or other equity interest of the Company or any Subsidiary;
(h) The Company and each of the Subsidiaries have all
requisite power and authority to execute, deliver and perform their respective
obligations under this Agreement, the Deposit Agreement and each of the
Transaction Documents, to which they may respectively be a party, and to
consummate the transactions contemplated hereby and thereby, including, without
limitation, the power and authority to issue, sell and deliver the Securities as
provided herein and therein, to consummate the exchange of the Mandatorily
Convertible Preferred Stock for depositary receipts by the Depositary under the
terms of the Deposit Agreement and to consummate the Transactions.
(i) This Agreement has been duly and validly authorized,
executed and delivered by the Company and constitutes a valid and binding
agreement of the Company, enforceable against the Company in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of creditors'
rights generally and subject to the applicability of general principles of
equity, and except as rights to indemnity and contribution hereunder and
thereunder may be limited by Federal or state securities laws or principles of
public policy.
(j) The Deposit Agreement has been duly authorized by the
Company, and on the First Delivery Date will have been validly executed and
delivered by the Company. When the Deposit Agreement has been executed and
delivered by the Company, the Deposit Agreement will constitute a valid and
binding agreement of the Company, enforceable against the Company in accordance
with its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting the enforcement of
creditors' rights generally and to
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general equity principles. The Prospectus contains and accurate summary, in all
material respects, of the terms of the Deposit Agreement.
(k) The Washington Agreement has been duly authorized, validly
executed and delivered by the Company. The Washington Agreement constitutes a
valid and binding agreement of the Company, enforceable against the Company in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights generally and to general equity principles.
(l) The Senior Credit Facility has been duly authorized by the
Company and, upon execution thereby, will have been validly executed and
delivered by the Company and the Subsidiaries party thereto. When the Senior
Credit Facility has been duly executed and delivered by the Company and each of
such Subsidiaries, the Senior Credit Facility will constitute a valid and
binding agreement of the Company and each of such Subsidiaries, enforceable
against the Company and each of such Subsidiaries in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of creditors'
rights generally and to general equity principles. The Prospectus contains an
accurate summary, in all material respects, of the terms of the Senior Credit
Facility.
(m) The execution, delivery and performance of this Agreement
and the Deposit Agreement by the Company and the Transaction Documents by the
Company and the Subsidiaries party thereto, compliance by the Company and each
of such Subsidiaries with all the provisions hereof and thereof, the issuance
and sale of the Securities by the Company, the exchange of the Mandatorily
Convertible Preferred Stock for depositary receipts by the Depositary and the
consummation by the Company and such Subsidiaries of the transactions
contemplated hereby and thereby, including the Transactions and as described in
the Prospectus under the caption "Use of Proceeds," (i) will not conflict with
or result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company or any
Subsidiary is a party or by which the Company or any Subsidiary is bound or to
which any of the properties or assets of the Company or any Subsidiary is
subject, (ii) will not result in any violation of the provisions of the charter,
by-laws or other organizational documents of the Company or any Subsidiary or
(iii) will not result in any violation of the provisions of any law or statute
or any order, rule, regulation, judgment or decree of any court or governmental
agency or body having jurisdiction over the Company or any Subsidiary or any of
their respective properties or assets, or (iv) result in the imposition or
creation of (or the obligation to create or impose) a Lien under any agreement
or instrument to which the Company or any Subsidiary is a party or by which the
Company or any Subsidiary or their respective properties or assets is bound,
except in the case of clauses (i), (iii) and (iv) for such conflicts, breaches,
defaults, violations or Liens which individually or in the aggregate would not
result in a Material Adverse Effect. Except for such consents, approvals,
authorizations, other orders, filings, qualifications or registrations (i) as
have been obtained, (ii) as may be required under applicable state securities or
Blue Sky laws of various jurisdictions in connection with the issuance, sale and
delivery of the Securities, (iii) as may be required in connection with the
Washington Acquisition, (iv) as may
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be required in the perfection of liens in connection with the consummation of
the Transactions and (v) which the failure to obtain would not result in a
Material Adverse Effect, no consent, approval, authorization, or order of or
filing, qualification or registration with, any such court or governmental
agency or body is required for the execution, delivery and performance of this
Agreement, the Deposit Agreement or the Transaction Documents by the Company and
each of the Subsidiaries party thereto, compliance by the Company and each of
the Subsidiaries party thereto with all the provisions hereof and thereof, the
issuance and sale of the Securities by the Company, the exchange of the
Mandatorily Convertible Preferred Stock for depositary receipts by the
Depositary and the consummation of the transactions contemplated hereby and
thereby, including the Transactions and as described in the Prospectus under the
caption "Use of Proceeds."
(n) Neither the Company nor any Subsidiaries has sustained,
since the date of the latest quarterly financial statements included in the
Prospectus, any material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or from
any labor dispute or court or governmental action, order or decree, otherwise
than as set forth in the Prospectus, except losses or interferences which do
not, individually or in the aggregate, have a Material Adverse Effect; and,
since such date, there has not been any material change in the capital stock or
other equity interest or long-term debt or short-term debt of the Company or any
Subsidiaries or any change having a Material Adverse Effect, or any development
involving a prospective material adverse change, in or affecting the general
affairs, management, consolidated financial position, stockholders' equity or
results of operations of the Company and the Subsidiaries, otherwise than as set
forth or contemplated in the Prospectus; and, since such date, except as
otherwise disclosed in the Prospectus, the Company has not (i) issued or granted
any securities, other than pursuant to Company employee benefit plans or (ii)
declared or paid any dividend on its capital stock.
(o) The historical consolidated financial statements
(including the related notes and supporting schedules) of the Company, and to
the Company's knowledge, BHP Hawaii and Shell Washington, which appear in the
Preliminary Prospectus and the Prospectus comply as to form in all material
respects with the applicable accounting requirements of Securities Act, the
Exchange Act, and the Rules and Regulations, present fairly in all material
respects the consolidated financial position and results of operations of the
entities purported to be shown thereby, at the dates and for the periods
indicated, and have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved except as noted therein. The pro forma financial statements included in
the Preliminary Prospectus and the Prospectus present fairly in all material
respects the historical and proposed transactions contemplated by this Agreement
and in the Preliminary Prospectus and the Prospectus; and such pro forma
financial statements comply as to form in all material respects with the
applicable accounting requirements of the Securities Act, the Exchange Act and
the Rules and Regulations, have been prepared on a basis consistent with the
historical consolidated financial statements of the Company, and to the
Company's knowledge, BHP Hawaii and Shell Washington, give effect to assumptions
used in the preparation thereof on a reasonable basis. The other financial and
statistical information and operating data of the Company, and to the Company's
knowledge BHP Hawaii and Shell
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Washington included in the Preliminary Prospectus and the Prospectus, historical
and pro forma, is in all material respects accurately presented and prepared on
a basis consistent with the financial statements, in all material respects,
included in the Preliminary Prospectus and the Prospectus and the books and
records of the Company, and to the Company's knowledge, the books and records of
BHP Hawaii and Shell Washington.
(p) Except for the Registration Rights Agreement entered into
by the Company and the Subsidiaries party thereto in connection with the Notes
Offering, there are no contracts, agreements or understandings between the
Company and any person granting such person the right to require the Company to
file a registration statement under the Securities Act with respect to any
securities of the Company, owned or to be owned by such person or to require the
Company to include such securities with any securities being registered pursuant
to any registration statement filed by the Company under the Securities Act.
(q) Deloitte & Touche LLP, and to the Company's knowledge,
Arthur Andersen LLP and Price Waterhouse LLP, who have certified certain
financial statements of the Company and its Subsidiaries, BHP Hawaii and Shell
Washington, respectively, whose reports are included or incorporated by
reference in the Prospectus and who have delivered the initial letters referred
to in Section 7(g) hereof, are independent public accountants as required by the
Securities Act and the Rules and Regulations.
(r) Other than as set forth in the Prospectus, there are no
legal or governmental proceedings pending to which the Company or any Subsidiary
is a party or to which any of their respective properties or assets is subject
which (i) could reasonable be expected to have a Material Adverse Effect or (ii)
could materially and adversely affect the consummation by the Company of its
obligations pursuant to this Agreement, the Deposit Agreement or the Transaction
Documents; and to the Company's knowledge, no such proceedings are threatened or
contemplated by government authorities or threatened by others.
(s) The Company and each of the Subsidiaries has such permits,
licenses, franchises and authorizations of governmental or regulatory
authorities ("permits") as are necessary to own its respective properties and to
conduct its business in the manner described in the Prospectus subject in each
case to such qualifications as may be set forth in the Prospectus and except
where the failure to have such permits would not have a Material Adverse Effect;
the Company and each of the Subsidiaries has fulfilled and performed in all
material respects all of its current obligations with respect to such permits
and no event has occurred which allows, or after notice or lapse of time would
allow, revocation or termination thereof or results in any other material
impairment of the rights of the holder of any such permits, subject in each case
to such qualifications as may be set forth in the Prospectus and except where
the failure so to fulfill or perform or the occurrence of such an event would
not have a Material Adverse Effect; and, except as described in the Prospectus,
none of such permits contains any restriction that is materially burdensome to
the Company and the Subsidiaries, taken as a whole.
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(t) The Company and each of the Subsidiaries owns or possesses
adequate rights to use all material patents, patent applications, trademarks,
service marks, trade names, trademark registrations, service mark registrations,
copyrights and licenses necessary for the conduct of their respective
businesses, except where the failure to have such permits would not have a
Material Adverse Effect, and have no reason to believe that the conduct of their
respective businesses will conflict with, and have not received any notice of
any claim of conflict with, any such rights of others.
(u) With the exception of producing oil and gas properties and
gas gathering properties (the "Oil and Gas Properties"), the Company and each of
the Subsidiaries has good and indefeasible title in fee simple to all real
property and good and defensible title to all personal property owned by them,
in each case free and clear of all liens, encumbrances and defects except such
as are described in the Prospectus or such as do not materially adversely affect
the value of such property or interfere with the use made and proposed to be
made of such property by the Company and the Subsidiaries; and with the
exception of the Oil and Gas Properties, all real property, buildings and
vessels held under lease by the Company and the Subsidiaries are held by them
under valid, subsisting and enforceable leases, with such exceptions as are not
material and do not interfere with the use made and proposed to be made of such
property, buildings and vessels by the Company and the Subsidiaries.
(v) The Company and each of the Subsidiaries has good and
defensible title to its Oil and Gas Properties, free and clear of all liens,
encumbrances and defects, except (a) those described in the Preliminary
Prospectus and the Prospectus, (b) liens securing taxes and other governmental
charges, or claims of materialmen, mechanics and similar persons, not yet due
and payable, (c) liens and encumbrances under operating agreements, unitization
and pooling agreements, and gas sales contracts, securing payment of amounts not
yet due and payable and of a scope and nature customary in the oil and gas
industry and (d) liens, encumbrances and defects that do not in the aggregate
materially affect the value of such Oil and Gas Properties or materially
interfere with the use made or proposed to be made of such properties by the
Company or any of the Subsidiaries. Except to the extent described in the
Preliminary Prospectus and the Prospectus, the oil, gas and mineral leases, coal
methane leases, options to lease, drilling concessions or other property
interests therein held by the Company and each of the Subsidiaries reflects in
all material respects the right of the Company and its Subsidiaries, as the case
may be, to explore or receive production from the undeveloped properties
described in the Preliminary Prospectus and the Prospectus, and the Company and
each of the Subsidiaries have exercised reasonable diligence with respect to
acquiring or otherwise procuring such leases, options to lease, drilling
concessions and other property interests.
(w) No labor disturbance by the employees of the Company or
any of the Subsidiaries exists or, to the knowledge of the Company, is imminent
which might be expected to have a Material Adverse Effect; except as disclosed
in the Prospectus, neither the Company nor any of the Subsidiaries is party to a
collective bargaining agreement; and there are no significant unfair
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labor practice complaints pending against the Company or any of the Subsidiaries
or, to the best of the Company's knowledge, threatened against any of them.
(x) The Company and each of the Subsidiaries is in compliance
in all material respects with all presently applicable provisions of the
Employee Retirement Income Security Act of 1974, as amended, including the
regulations and published interpretations thereunder ("ERISA"); no "reportable
event" (as defined in ERISA) has occurred with respect to any "pension plan" (as
defined in ERISA) for which the Company or any of the Subsidiaries would have
any liability; neither the Company nor any of the Subsidiaries has incurred and
neither do any of them expect to incur liability under (i) title IV of ERISA
with respect to termination of, or withdrawal from, any "pension plan" or (ii)
Sections 412 or 4971 of the Internal Revenue code of 1985, as amended, including
the regulations and published interpretations thereunder (the "Code"); and each
"pension plan" for which the Company or any Subsidiary would have any liability
that is intended to be qualified under Section 401(a) of the Code is so
qualified in all material respects and nothing has occurred, whether by action
or by failure to act, which would cause the loss of such qualification.
(y) The Company and each of the Subsidiaries has filed, and as
of the First Delivery Date will have filed, all federal, state, local and
foreign income and franchise tax returns required to be filed through the date
hereof and has paid all taxes due thereon, and no tax deficiency has been
determined adversely to the Company or any of the Subsidiaries which has had
(nor does the Company have any knowledge of any tax deficiency which, if
determined adversely to the Company or any of the Subsidiaries, might have) a
Material Adverse Effect.
(z) The Company and each of the Subsidiaries (i) makes and
keeps accurate books and records and (ii) maintains internal accounting controls
which provide reasonable assurance that (A) transactions are executed in
accordance with management's authorization, (B) transactions are recorded as
necessary to permit preparation of its financial statements and to maintain
accountability for its assets, (C) access to its assets is permitted only in
accordance with management's authorization and (D) the reported accountability
for its assets is compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any difference.
(aa) Except as described in the Preliminary Prospectus and the
Prospectus and except such matters as would not, singly or in the aggregate,
result in a Material Adverse Effect, (A) neither the Company nor any of the
Subsidiaries is in violation of any federal, state, local or foreign statute,
law, rule, regulation, ordinance, code, policy or rule of common law or any
judicial or administrative order, consent, decree or judgment thereof, including
any judicial or administrative order, consent, decree or judgment relating to
pollution or protection of human health, the environment (including, without
limitation, ambient air, surface water, groundwater, land surface or subsurface
strata) or wildlife, including, without limitation, laws and regulations
relating to the release or threatened release of chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous substances, petroleum or
petroleum products (collectively, "Hazardous Materials") or to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Materials (collectively, "Environmental Laws"), (B) the
Company and each of the
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<PAGE> 11
Subsidiaries has all permits, authorizations and approvals required under any
applicable Environmental Laws and are each in compliance with their
requirements, (C) there are no pending or, to the knowledge of the Company,
threatened administrative, regulatory or judicial actions, suits, demands,
demand letters, claims, liens, notices of noncompliance or violation,
investigation or proceedings relating to any Environmental Law against the
Company or any of the Subsidiaries and (D) there are no events or circumstances
that might reasonably be expected to form the basis of an order for clean-up or
remediation, or an action, suit or proceeding by any private party or
governmental body or agency, against or affecting the Company or any of the
Subsidiaries relating to Hazardous Materials or Environmental Laws.
(bb) The Company is not, and upon the issuance and sale of the
Securities as herein contemplated, the consummation of the exchange of the
Mandatorily Convertible Preferred Stock for depositary receipts by the
Depositary and the application of the net proceeds therefrom as described under
the caption "Use of Proceeds" in the Prospectus will not be an "investment
company" or an entity "controlled" by an "investment company" as such terms are
defined in the Investment Company Act of 1940, as amended, and the rules and
regulations thereunder.
(cc) The conditions for the use of Form S-3, as set forth in
the General Instructions thereto, have been satisfied.
(dd) The statements set forth in the Prospectus under the
captions "Prospectus Summary--The Transactions--The Acquisitions,"
"Business--Government Regulation and Legislation," "Description of
Indebtedness," "Description of Capital Stock," "Description of PIES" and
"Description of Depositary Arrangements" insofar as such statements purport to
summarize the provisions of the documents or agreements referred to therein,
matters of law or legal conclusions or federal statute, laws or regulations, are
accurate and fairly present the information required to be shown.
(ee) The information supplied by the Company to the
independent petroleum engineering consultants for the Company for purposes of
preparing the reserve reports and estimates of such consultants incorporated by
reference in the Preliminary Prospectus and the Prospectus, including, without
limitation, production, costs of operation and development, current prices for
production, agreements relating to current and future operations and sales of
production, was true and correct in all material respects on the date supplied
and was prepared in accordance with customary industry practices; and
Netherland, Sewell & Associates, Inc., independent petroleum engineers, who
prepared estimates of the extent and value of proved oil and natural gas
reserves of the Company are independent with respect to the Company.
(ff) The Company and each of the Subsidiaries has complied
with, and is and will be in compliance with, the provisions of that certain
Florida act relating to disclosure of doing business with Cuba, codified as
Section 517.075 of the Florida statutes, and the rules and regulations
thereunder or is exempt therefrom.
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The Company acknowledges that the Underwriters and, for purposes of the
opinions to be delivered to the Underwriters pursuant to Section 7 hereof,
counsel to the Company and counsel to the Underwriters, will rely upon the
accuracy and truth of the foregoing representations and hereby consents to such
reliance. Each certificate signed by any officer of the Company and delivered to
the Underwriters or counsel for the Underwriters shall be deemed to be a
representation and warranty by the Company to the Underwriters as to the matters
covered thereby.
SECTION 2. Purchase of the Securities by the Underwriters.
(a) On the basis of the representations and warranties
contained in, and subject to the terms and conditions of, this Agreement, the
Company agrees to sell 9,000,000 of the Firm Securities to the several
Underwriters and each of the Underwriters, severally and not jointly, agrees to
purchase the number of Firm Securities set opposite that Underwriter's name in
Schedule I hereto.
(b) In addition, the Company grants to the Underwriters an
option to purchase up to 1,350,000 of the Option Securities. Such option is
granted solely for the purpose of covering over-allotments in the sale of Firm
Securities and is exercisable as provided in Section 4 hereof. Option Securities
shall be purchased severally and not jointly for the account of the Underwriters
in proportion to the number of Firm Securities set opposite the name of such
Underwriters in Schedule I hereto. The respective purchase obligations of each
Underwriter with respect to the Option Securities shall be adjusted by the
Underwriters so that no Underwriter shall be obligated to purchase Option
Securities other than in amounts of 100 PIES. The price of both the Firm
Securities and any Option Securities shall be $15 15/16 per PIES.
(c) The Company shall not be obligated to deliver any of the
Securities to be delivered on the First Delivery Date or the Second Delivery
Date (as hereinafter defined), as the case may be, except upon payment for all
the Securities to be purchased on such Delivery Date as provided herein.
SECTION 3. Offering of Securities by the Underwriters.
(a) Upon authorization by the Underwriters of the release of
the Firm Securities, the several Underwriters propose to offer the Firm
Securities for sale upon the terms and conditions set forth in the Prospectus.
(b) Each Underwriter agrees that it will not offer or sell any
of the Securities outside of the United States and Canada.
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<PAGE> 13
SECTION 4. Delivery of and Payment for the Securities.
(a) Delivery of and payment for the Firm Securities shall be
made at the offices of Andrews & Kurth, L.L.P., 600 Travis Street, Houston,
Texas 77002, at 8:30 A.M., Houston time, on July 1, 1998, or at such other date
or place as shall be determined by agreement between the Underwriters and the
Company. This date and time are sometimes referred to herein as the "First
Delivery Date." On the First Delivery Date, the Company shall deliver or cause
to be delivered certificates representing the Firm Securities to the
Underwriters for the account of each Underwriter against payment to or upon the
order of the Company of the purchase price by wire transfer in immediately
available funds. Time shall be of the essence (except that the Company will not
be responsible for any delay resulting from any action or inaction of any
Underwriter) and delivery at the time and place specified pursuant to this
Agreement is a further condition of the obligations of each Underwriter
hereunder. Upon delivery, the Firm Securities shall be registered in such names
and in such denominations as the Underwriters shall request in writing not less
than two full business days prior to the First Delivery Date. For the purpose of
expediting the checking and packaging of the certificates for the Firm
Securities, the Company shall make the certificates representing the Firm
Securities available for inspection by the Underwriters in New York, New York,
not later than 2:00 P.M., New York City time, on the business day prior to the
First Delivery Date.
(b) At any time on or before the thirtieth day after the date
of this Agreement, the option granted in Section 2 may be exercised by written
notice being given to the Company by the Underwriters. Such notice shall set
forth the aggregate number of Option Securities as to which the option is being
exercised, the names in which the Option Securities are to be registered, the
denominations in which the Option Securities are to be issued and the date and
time, as determined by the Underwriters, when the Option Securities are to be
delivered; provided, however, that this date and time shall not be earlier than
the First Delivery Date nor earlier than the second business day after the date
on which the option shall have been exercised nor later than the third business
day after the date on which the option shall have been exercised. The date and
time the Option Securities are delivered are sometimes referred to as the
"Second Delivery Date" and the First Delivery Date and the Second Delivery Date
are sometimes each referred to as a "Delivery Date."
(c) Delivery of and payment for the Option Securities shall be
made at the place specified in the first sentence of the first paragraph of this
Section 4 (or at such other place as shall be determined by agreement between
the Underwriters and the Company) at 8:30 A.M., Houston time, on the Second
Delivery Date. On the Second Delivery Date, the Company shall deliver or cause
to be delivered the certificates representing the Option Securities to the
Underwriters for the account of each Underwriter against payment to or upon the
order of the Company of the purchase price by wire transfer in immediately
available funds. Time shall be of the essence (except that the Company will not
be responsible for any delay resulting from any action or inaction of any
Underwriter), and delivery at the time and place specified pursuant to this
Agreement is a further condition of the obligations of each Underwriter
hereunder. Upon delivery, the Option Securities shall be registered in such
names and in such denominations as the Underwriters shall request in the
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<PAGE> 14
aforesaid written notice. For the purpose of expediting the checking and
packaging of the certificates representing the Option Securities available for
inspection by the Underwriters in New York, New York, not later than 2:00 P.M.,
New York City time, on the business day prior to the Second Delivery Date.
(d) Since an affiliate of Lehman Brothers Inc. will receive in
excess of 10% of the net proceeds of the Offerings, the PIES Offering is being
made pursuant to the provisions of Rule 2710(c)(8) of the Conduct Rule of the
National Association of Securities Dealers (the "Conduct Rules"). The Company
hereby confirms its engagement of Howard, Weil, Labouisse, Friedrichs
Incorporated as, and Howard, Weil, Labouisse, Friedrichs Incorporated, hereby
confirms its agreement with the Company to render services as qualified
independent underwriter within in the meaning of Rule 2720 of the Conduct Rules
for the PIES Offering. Howard, Weil, Labouisse, Friedrichs Incorporated, solely
in its capacity as qualified independent underwriter and not otherwise, is
referred to herein as the "Independent Underwriter." It is understood and agreed
by all parties hereto that the price at which the Securities are issued and sold
is not higher than the price recommended by the Independent Underwriter. Howard,
Weil, Labouisse, Friedrichs Incorporated hereby confirms that it meets the
requirements for serving as a qualified independent underwriter within the
meaning of Rule 2720 of the Conduct Rules.
SECTION 5. Further Agreements of the Company.
The Company further agrees:
(a) To prepare the Prospectus in a form approved by the
Underwriters and to file such Prospectus pursuant to Rule 424(b) under the
Securities Act not later than Commission's close of business on the second
business day following the execution and delivery of this Agreement or, if
applicable, such earlier time as may be required by Rule 430A(a)(3) under the
Securities Act; to make no further amendment or any supplement to the
Registration Statement or to the Prospectus and to file no Rule 462(b)
Registration Statement except as permitted herein; to advise the Underwriters ,
promptly after it receives notice thereof, of the time when any amendment to the
Registration Statement has been filed or becomes effective or any supplement to
the Prospectus or any amended Prospectus has been filed and to furnish the
Underwriters with copies thereof; upon your request, to cause the Rule 462(b)
Registration Statement, properly completed, to be filed with the Commission
pursuant to Rule 462(b) and to provide evidence satisfactory to the Underwriters
of such filing; to advise the Underwriters , promptly after it receives notice
thereof, of the issuance by the Commission of any stop order or of any order
preventing or suspending the use of any Preliminary Prospectus or the
Prospectus, of the suspension of the qualification of the Securities for
offering or sale in any jurisdiction, of the initiation or threatening of any
proceeding for any such purpose, or of any request by the Commission for the
amending or supplementing of the Registration Statement or the Prospectus or for
additional information; and, in the event of the issuance of any stop order or
of any order preventing or suspending the use of any Preliminary Prospectus or
the Prospectus or suspending any such qualification, to use promptly its
reasonable best efforts to obtain its withdrawal;
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<PAGE> 15
(b) To furnish reasonably promptly to each of the Underwriters
and to counsel for the Underwriters a signed copy of the Registration Statement
as originally filed with the Commission, each amendment thereto and any Rule
462(b) Registration Statement filed with the Commission, including all consents
and exhibits filed therewith;
(c) To deliver promptly to the Underwriters such number of the
following documents as the Underwriters shall reasonably request: (i) conformed
copies of the Registration Statement as originally filed with the Commission,
each amendment thereto (in each case excluding exhibits other than this
Agreement) and any Rule 462(b) Registration Statement, (ii) each Preliminary
Prospectus, the Prospectus and any amended or supplemented Prospectus and (iii)
any document incorporated by reference in the Prospectus (excluding exhibits
thereto); and, if the delivery of a prospectus is required at any time after the
Effective Time in connection with the offering or sale of the Securities or any
other securities relating thereto and if at such time any events shall have
occurred as a result of which the Prospectus as then amended or supplemented
would include any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made when such Prospectus is delivered,
not misleading, or, if for any other reason it shall be necessary to amend or
supplement the Prospectus or to file under the Exchange Act any document
incorporated by reference in the Prospectus in order to comply with the
Securities Act or the Exchange Act, to notify the Underwriters and, upon their
request, to file such document and to prepare and furnish without charge to each
Underwriter and to any dealer in securities as many copies as the Underwriters
may from time to time reasonably request of an amended or supplemented
Prospectus which will correct such statement or omission or effect such
compliance;
(d) To file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the Prospectus
that may, in the judgment of the Company or the Underwriters, be required by
the Securities Act or requested by the Commission;
(e) Prior to filing with the Commission any amendment to the
Registration Statement or supplement to the Prospectus, any document
incorporated by reference in the Prospectus, any Prospectus pursuant to Rule 424
of the Rules and Regulations or any Rule 462(b) Registration Statement to
furnish a copy thereof to the Underwriters and counsel for the Underwriters and
obtain the consent of the Underwriters to the filing;
(f) The Company will make generally available to holders of
its securities as soon as may be practicable an earnings statement (which need
not be audited but shall be in reasonable detail) for a period of 12 months
ended commencing after the Effective Date, and satisfying the provisions of
Section 11(a) of the Act (including Rule 158 of the Rules and Regulations).
(g) For a period of five years following the Effective Date,
to furnish to the Underwriters copies of all materials furnished by the Company
to its public shareholders and all public reports and all reports and financial
statements furnished by the Company to the principal national securities
exchange upon which the PIES may be listed pursuant to requirements of or
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<PAGE> 16
agreements with such exchange or to the Commission pursuant to the Exchange Act
or any rule or regulation of the Commission thereunder;
(h) Promptly from time to time to take such action as the
Underwriters may reasonably request to qualify the Securities for offering and
sale (or obtain an exemption from registration) under the securities laws of
such jurisdictions as the Underwriters may request and to comply with such laws
so as to permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the distribution of
the Securities; provided, however, that the Company shall not be required to
qualify as a foreign corporation or a dealer in securities or to execute a
general consent to service of process in any jurisdiction in any action other
than one arising out of the offering or sale of the Securities;
(i) For a period of 90 days from the date of the Prospectus,
not to, directly or indirectly, (A) offer for sale, sell, pledge or otherwise
dispose of (or enter into any transaction or device which is designed to, or
could be expected to, result in the disposition by any person at any time in the
future of) any PIES or shares of Common Stock or any securities convertible into
or exchangeable for PIES or Common Stock (other than the Securities, the
Mandatorily Convertible Preferred Stock, the Common Stock issued in the Common
Stock Offering and upon conversion of the Mandatorily Convertible Preferred
Stock and the shares of Common Stock issued pursuant to employee benefit plans,
qualified stock option plans or other employee compensation plans existing on
the date hereof or pursuant to currently outstanding options, warrants or rights
or upon conversion of the Convertible Subordinated Debentures of Coastwide
Energy Services, Inc.) or (B) enter into any swap or other derivatives
transaction that transfers to another, in whole or in part, any of the economic
benefits or risks of ownership of such securities, whether any such transaction
described in clause (A) or (B) above is to be settled by delivery of PIES,
shares of Common Stock or other securities, in cash or otherwise, in each case
without the prior written consent of Lehman Brothers Inc.
(j) To take such steps as shall be necessary to ensure that
neither the Company nor any Subsidiary of the Company shall become an
"investment company" within the meaning of such term under the Investment
Company Act of 1940, as amended, and the rules and regulations of the Commission
thereunder.
(k) To apply the net proceeds from the sale of the Notes as
set forth under the caption "Use of Proceeds" in the Prospectus.
(l) To do all things required or necessary to be done or
performed under this Agreement prior to such Delivery Date by such date and to
satisfy the closing conditions set forth in Section 7 hereof.
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SECTION 6. Expenses.
Whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, the Company agrees to pay or cause
to be paid all reasonable expenses incident to the performance of the
obligations of the Company under this Agreement, including: (i) the costs
incident to the authorization, issuance, sale and delivery of the Securities and
any taxes payable in that connection; (ii) fees, disbursements and expenses of
counsel to the Company and accountants to Company in connection with the sale
and delivery of the Securities, and all other fees and expenses in connection
with the preparation, printing and filing under the Securities Act of the
Registration Statement and any amendments and exhibits thereto (including
financial statements), including the mailing and delivering of copies to the
Underwriters and persons designated by them in the quantities specified; (iii)
the costs of distributing the Registration Statement as originally filed and
each amendment thereto and any post-effective amendments thereof (including, in
each case, exhibits), any Preliminary Prospectus, the Prospectus and any
amendment or supplement to the Prospectus or any document incorporated by
reference therein, all as provided in this Agreement; (iv) the costs of
producing and distributing this Agreement, the Deposit Agreement and any related
documents in connection with the offering, purchase, sale and delivery of the
Securities (v) listing or other fees incident to the inclusion of the Securities
and the Common Stock issuable upon conversion of the Mandatorily Convertible
Preferred Stock for listing on the New York Stock Exchange; (vi) the fees and
expenses, if applicable, of qualifying the Securities under the securities laws
of the several jurisdictions as provided in Section 5(h) and of preparing,
printing and distributing a Blue Sky Memorandum (including reasonable related
fees and expenses of counsel to the Underwriters in connection with such
qualification and memorandum relating thereto); (vii) the fees and expenses of
the Depositary (including reasonable related fees and expenses of counsel to the
Depositary) and (viii) all other costs and expenses incident to the performance
of the obligations of the Company or any of the Subsidiaries under this
Agreement; provided that, except as provided in this Section 6 and in Section
11, the Underwriters shall pay their own costs and expenses, including the costs
and expenses of their counsel, any transfer taxes on the Securities which they
may sell and the expenses of advertising any offering of the Securities made by
the Underwriters.
SECTION 7. Conditions to the Underwriters' Obligations.
The obligations of the Underwriters hereunder are subject to the
accuracy, when made and on each Delivery Date, of the representations and
warranties of the Company contained herein, to the performance by the Company of
its obligations hereunder, and to each of the following additional terms and
conditions:
(a) The Prospectus shall have been timely filed with the
Commission in accordance with Section 5(a); no stop order suspending the
effectiveness of the Registration Statement or any part thereof shall have been
issued and no proceeding for that purpose shall have been initiated or
threatened by the Commission; and any request of the Commission for inclusion
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<PAGE> 18
of additional information in the Registration Statement or the Prospectus or
otherwise shall have been complied with.
(b) No Underwriter shall have discovered and disclosed to the
Company on or prior to such Delivery Date that the Registration Statement or the
Prospectus or any amendment or supplement thereto contains an untrue statement
of a fact which, in the opinion of Andrews & Kurth, L.L.P., counsel for the
Underwriters, is material or omits to state a fact which, in the opinion of such
counsel, is material and is required to be stated therein or is necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
(c) All corporate proceedings and other legal matters incident
to the authorization, form and validity of this Agreement and the Prospectus,
and all other legal matters relating to this Agreement and the transactions
contemplated hereby shall be reasonably satisfactory in all material respects to
counsel for the Underwriters, and the Company shall have furnished to such
counsel all documents and information that they may reasonably request to enable
them to pass upon such matters.
(d) The Prospectus shall have been printed and copies
distributed to the Underwriters not later than 10:00 a.m., New York City time,
on the day following the date of this Agreement or at such later date and time
as to which the Underwriters may agree.
(e) The Underwriters shall have received from Fulbright &
Jaworski L.L.P. their written opinion, as counsel to the Company, addressed to
the Underwriters and dated such Delivery Date, in form and substance reasonably
satisfactory to the Underwriters, to the effect set forth in Exhibit A hereto
and to such further effect as counsel to the Underwriters may reasonably
request.
(f) The Underwriters shall have received from James C. Reed,
Jr., his written opinion, as General Counsel of the Company, addressed to the
Underwriters and dated such Delivery Date, in form and substance reasonably
satisfactory to the Underwriters, to the effect set forth in Exhibit B hereto
and to such further effect as counsel to the Underwriters may reasonably
request.
(g) At the time of execution of this Agreement, the
Underwriters shall have received from each of Deloitte & Touche LLP, Arthur
Andersen LLP and Price Waterhouse LLP a letter, in form and substance
satisfactory to the Underwriters, addressed to the Underwriters and dated the
date hereof, (i) confirming that they are independent public accountants within
the meaning of the Securities Act and are in compliance with the applicable
requirements relating to the qualification of accountants under Rule 2-01 of
Regulation S-X of the Commission, (ii) stating, as of the date hereof (or, with
respect to matters involving changes or developments since the respective dates
as of which specified financial information is given in the Prospectus, as of a
date not more than five business days prior to the date hereof), the conclusions
and findings of such firm with respect to the financial information, operating
data and other matters ordinarily covered by accountants' "comfort letters" to
underwriters, including the financial information contained or incorporated by
reference in the Prospectus as identified by you.
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(h) With respect to the letters of Deloitte & Touche LLP,
Arthur Andersen LLP and Price Waterhouse LLP referred to in the preceding
paragraph and delivered to the Underwriters concurrently with the execution of
this Agreement (the "initial letters"), the Company shall have furnished to the
Underwriters letters (the "bring-down letters") of such accountants, addressed
to the Underwriters and dated such Delivery Date, (i) confirming that they are
independent public accountants within the meaning of the Securities Act and are
in compliance with the applicable requirements relating to the qualification of
accountants under Rule 2-01 of Regulation S-X of the Commission, (ii) stating,
as of the date of the bring-down letters (or, with respect to matters involving
changes or developments since the respective dates as of which specified
financial information is given in the Prospectus, as of a date not more than
five business days prior to the date of the respective bring-down letter), the
conclusions and findings of such firm with respect to the financial information,
operating data and other matters covered by the respective initial letter and
(iii) confirming in all material respects the conclusions and findings set forth
in the respective initial letter.
(i) (A) At the time of execution of this Agreement, the
Underwriters shall have received from Netherland, Sewell & Associates, Inc.,
independent petroleum engineers for the Company, a letter dated as of such date,
in form and substance satisfactory to the Underwriters; and (B) on such Delivery
Date, the Underwriters shall have received from Netherland, Sewell and
Associates, Inc., independent petroleum engineers for the Company, a letter
dated as of such Delivery Date, to the effect that they reaffirm the statements
made in the letter referred to in clause (i)(A) above.
(j) The Company shall have furnished to the Underwriters a
certificate, dated the such Delivery Date, of (i) the Chairman of the Board,
President or a Vice President of the Company and (ii) the Treasurer or Chief
Financial Officer of the Company stating that:
(i) The representations, warranties and agreements of
the Company in Section 1 are true and correct as of such Delivery Date
and the Company has complied with all its agreements contained herein;
(ii) (A) Neither the Company nor any of the
Subsidiaries has sustained since the date of the latest quarterly
financial statements included or incorporated by reference in the
Preliminary Prospectus or the Prospectus any material loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Preliminary Prospectus or the
Prospectus and (B) since such date there has not been any material
change in the capital stock, long-term debt or short-term debt of the
Company or any of the Subsidiaries or any material change, or any
development involving a prospective material adverse change, in or
affecting the general affairs, management, financial position,
stockholders' equity, results of operations or prospects of the Company
and the Subsidiaries, taken as a whole, otherwise than as set forth or
contemplated in the Preliminary Prospectus or the Prospectus; and
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(iii) They have carefully examined the Registration
Statement or the Prospectus and, in their opinion (A) the Registration
Statement or the Prospectus, as of their respective dates, did not
include any untrue statement of a material fact and did not omit to
state any material fact necessary to make the statements therein, (in
the case of the Prospectus, in the light of the circumstances under
which they were made), not misleading, and (B) since the date of the
Prospectus, no event has occurred which should have been set forth in a
supplement or amendment to the Prospectus.
(iv) The Prospectus shall have been timely filed with
the Commission in accordance with Section 5(a) of this Agreement; no
stop order suspending the effectiveness of the Registration Statement
or any part thereof shall have been issued and no proceeding for that
purpose shall have been initiated or threatened by the Commission as of
such Delivery Date; and any request of the Commission for inclusion of
additional information in the Registration Statement or the Prospectus
or otherwise shall have been complied with.
(k) (i) Neither the Company nor any of its Subsidiaries shall
have sustained since the date of the latest audited financial statements
included or incorporated by reference in the Prospectus any material loss or
interference with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus and (ii) since such date there shall not have
been any material change in the capital stock, long-term debt or short-term debt
of the Company or any of its Subsidiaries or any material change, or any
development involving a prospective material change, in or affecting the general
affairs, management, consolidated financial position, stockholders' equity or
results of operations of the Company and its Subsidiaries taken as a whole,
otherwise than as set forth or contemplated in the Prospectus, the effect of
which, in any such case described in clause (i) or (ii), is, in the judgment of
the Underwriters, so material and adverse as to make it impracticable or
inadvisable to proceed with the offering or the delivery of the Securities on
the terms and in the manner contemplated in the Prospectus.
(l) The Company shall have entered into the Deposit Agreement.
(m) Subsequent to the execution and delivery of this Agreement
(i) no downgrading shall have occurred in the rating accorded the Company or any
of the Subsidiaries or any securities of the Company or any of the Subsidiaries
by any "nationally recognized statistical rating organization," as that term is
defined by the Commission for purposes of Rule 436(g)(2) of the Rules and
Regulations and (ii) no such organization shall have publicly announced that it
has under surveillance or review, with possible negative implications, its
rating of any of the Notes.
(n) The Underwriters shall have received from Andrews & Kurth
L.L.P., counsel for the Underwriters, their opinion, dated such Delivery Date,
with respect to such matters as the Underwriters may reasonably require, and the
Company shall have furnished to such counsel such
20
<PAGE> 21
documents and information as they may reasonably request for the purpose of
enabling them to pass upon such matters.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Underwriters.
SECTION 8. Indemnification and Contribution.
(a) The Company shall indemnify and hold harmless each
Underwriter, its officers and employees and each person, if any, who controls
any Underwriter within the meaning of the Securities Act, from and against any
loss, claim, damage or liability, joint or several, or any action in respect
thereof (including, but not limited to, any loss, claim, damage, liability or
action relating to purchases and sales of the Securities), to which that
Underwriter, officer, employee or controlling person may become subject, under
the Securities Act or otherwise, insofar as such loss, claim, damage, liability
or action arises out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Prospectus,
Registration Statement or the Prospectus or in any amendment or supplement
thereto, (ii) the omission or alleged omission to state in any Preliminary
Prospectus, the Registration Statement or the Prospectus or in any amendment or
supplement thereto, any material fact required to be stated therein or necessary
to make the statements therein not misleading or (iii) any act or failure to
act, or any alleged act or failure to act, by any Underwriter in connection
with, or relating in any manner to, the Securities or the offering contemplated
hereby, and which is included as part of or referred to in any loss, claim,
damage, liability or action arising out of or based upon matters covered by
clause (i) or (ii) above (provided that the Company shall not be liable in the
case of any matter covered by this clause (iii) to the extent that it is
determined in a final judgment by a court of competent jurisdiction that such
loss, claim, damage, liability or action resulted directly from any such act or
failure to act undertaken or omitted to be taken by such Underwriter through its
gross negligence or willful misconduct), and shall reimburse each Underwriter
and each officer, employee and controlling person promptly upon demand for any
legal or other expenses reasonably incurred by that Underwriter, officer,
employee or controlling person in connection with investigating or defending or
preparing to defend against any such loss, claim, damage, liability or action as
such expenses are incurred; provided, however, that the Company shall not be
liable in any such case to the extent that any such loss, claim, damage,
liability or action arises out of, or is based upon, any untrue statement or
alleged untrue statement or omission or alleged omission made in any Preliminary
Prospectus, the Registration Statement or the Prospectus or in any such
amendment or supplement, in reliance upon and in conformity with the written
information furnished to the Company by or on behalf of any Underwriter
specifically for inclusion therein and described in Section 8(e); provided,
further, that with respect to any such untrue statement or omission made in the
Preliminary Prospectus, the indemnity agreement contained in this Section 8(a)
shall not enure to the benefit of the Underwriter from whom the person asserting
any such losses, claims, damages or liabilities purchased the Securities
concerned if, to the extent that such sale was an initial sale by such
Underwriter and any such loss claim, damage or liability of such Underwriter is
a result of the fact that both (A) a copy of the Prospectus was not sent
21
<PAGE> 22
or given to such person at or prior to the written confirmation of the sale of
such Securities to such person, and (B) the untrue statement or omission in the
Preliminary Prospectus was corrected in the Prospectus unless, in either case,
such failure to deliver the Prospectus was a result of noncompliance by the
Company with Section 5(c) hereof. The foregoing indemnity agreement is in
addition to any liability which the Company may otherwise have to any
Underwriter or to any officer, employee or controlling person of any
Underwriter.
In addition to and without limitation of the Company's
obligation to indemnify Howard, Weil, Labouisse, Friedrichs Incorporated as an
Underwriter, the Company also agrees to indemnify and hold harmless the
Independent Underwriter and each person, if any, who controls the Independent
Underwriters within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act from and against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, incurred as a result of the Independent
Underwriter's participation as a "qualified independent underwriter" in
connection with the PIES Offering.
(b) Each Underwriter, severally and not jointly, shall
indemnify and hold harmless the Company and each person, if any, who controls
the Company within the meaning of the Securities Act, from and against any loss,
claim, damage or liability, joint or several, or any action in respect thereof,
to which the Company, any such director, officer or employee, or any controlling
person may become subject, under the Securities Act or otherwise, insofar as
such loss, claim, damage, liability or action arises out of, or is based upon,
(i) any untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus, the Registration Statement or the
Prospectus or in any amendment or supplement thereto or (ii) the omission or
alleged omission to state in any Preliminary Prospectus, the Registration
Statement or the Prospectus or in any amendment or supplement thereto, any
material fact required to be stated therein or necessary to make the statements
therein not misleading, but in each case only to the extent that the untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with the written information furnished to the
Company by or on behalf of such Underwriter specifically for inclusion therein
and described in Section 8(e), and shall reimburse the Company and any such
director, officer or employee, or any such controlling person, for any legal or
other expenses reasonably incurred by the Company or any such director, officer
or employee, or any controlling person in connection with investigating or
defending or preparing to defend against any such loss, claim, damage, liability
or action as such expenses are incurred. The foregoing indemnity agreement is in
addition to any liability which any Underwriter may otherwise have to the
Company or any such director, officer or employee, or any controlling person.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 8, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 8 except to the extent it has
been materially prejudiced by such failure and, provided further, that the
failure to notify the indemnifying party shall not relieve it from any liability
which it may
22
<PAGE> 23
have to an indemnified party otherwise than under this Section 8. If any such
claim or action shall be brought against an indemnified party, and it shall
notify the indemnifying party thereof, the indemnifying party shall be entitled
to participate therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof with
counsel satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
the indemnified party shall have the right to employ counsel to represent all
indemnified parties who may be subject to liability arising out of any claim in
respect of which indemnity may be sought by the indemnified parties against the
indemnifying party under this Section 8 if, (i) the employment of such counsel
shall have been authorized by the indemnifying party in connection with the
defense of such action, (ii) the indemnifying party shall not have engaged
counsel reasonably promptly to take charge of the defense of such action or
(iii) counsel for any of the indemnified parties shall have reasonably concluded
that there may be defenses available to the indemnified parties that are in
addition to or in conflict with those available to the indemnifying party, and,
in that event, the fees and expenses of such separate counsel shall be paid by
the indemnifying party; provided, further, that in connection with any
proceedings or related proceedings in the same jurisdiction, the indemnifying
party shall not be liable for the legal fees and expenses of more than one
separate firm of attorneys (in addition to any local counsel). No indemnifying
party shall (i) without the prior written consent of the indemnified parties
(which consent shall not be unreasonably withheld), settle or compromise or
consent to the entry of any judgment with respect to any pending or threatened
claim, action, suit or proceeding in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified parties are
actual or potential parties to such claim or action) unless such settlement,
compromise or consent includes an unconditional release of each indemnified
party from all liability arising out of such claim, action, suit or proceeding,
or (ii) be liable for any settlement of any such action effected without its
written consent (which consent shall not be unreasonably withheld), but if
settled with its written consent or if there be a final judgment of the
plaintiff in any such action, the indemnifying party agrees to indemnify and
hold harmless any indemnified party from and against any loss of liability by
reason of such settlement or judgment.
(d) If the indemnification provided for in this Section 8
shall for any reason be unavailable to or insufficient to hold harmless an
indemnified party under Section 8(a) or 8(b) in respect of any loss, claim,
damage or liability, or any action in respect thereof, referred to therein, then
each indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof, (i) in
such proportion as shall be appropriate to reflect the relative benefits
received by the Company, on the one hand, and the Underwriters, on the other,
from the offering of the Securities or (ii) if the allocation provided by clause
(i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company, on the one hand, and the
Underwriters on the other with respect to the statements or omissions which
resulted in such loss,
23
<PAGE> 24
claim, damage or liability, or action in respect thereof, as well as any other
relevant equitable considerations. The relative benefits received by the
Company, on the one hand, and the Underwriters on the other, with respect to
such offering shall be deemed to be in the same proportion as the total net
proceeds from the offering of the Securities purchased under this Agreement
(before deducting expenses) received by the Company, on the one hand, and the
total underwriting discounts and commissions received by the Underwriters with
respect to the Securities purchased under this Agreement, on the other hand,
bear to the total gross proceeds from the offering of the Securities under this
Agreement, in each case as set forth in the table on the cover page of the
Prospectus. The relative fault shall be determined by reference to whether the
untrue or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied by the
Company, on the one hand, or the Underwriters, the intent of the parties and
their relative knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company and the Underwriters agree that
it would not be just and equitable if contributions pursuant to this Section
8(d) were to be determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of allocation
which does not take into account the equitable considerations referred to
herein. The amount paid or payable by an indemnified party as a result of the
loss, claim, damage or liability, or action in respect thereof, referred to
above in this Section 8(d) shall be deemed to include, for purposes of this
Section 8(d), any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Section 8(d), the Underwriters
shall not be required to contribute any amount in excess of the amount by which
the total price at which the Securities sold and distributed by it was offered
to the purchasers exceeds the amount of any damages which the Underwriters have
otherwise paid or become liable to pay by reason of any untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(e) The Underwriters severally confirm and the Company
acknowledges that the statements with respect to the offering of the Securities
set forth in the bottom paragraph on the cover page of, the legend concerning
stabilization and overallotment on the inside front cover of the Prospectus, and
the seventh, eighth, ninth and tenth paragraphs under the caption "Underwriting"
relating to stabilization and over-allotment in, the Prospectus are correct and
constitute the only information furnished in writing to the Company by or on
behalf of the Underwriters specifically for inclusion in the Prospectus.
SECTION 9. Defaulting Underwriters.
If, on either Delivery Date, any Underwriter defaults in the
performance of its obligations under this Agreement, the remaining
non-defaulting Underwriters shall be obligated to purchase the Securities which
the defaulting Underwriter agreed but failed to purchase on such Delivery Date
in the respective proportions which the number of Firm Securities set opposite
the name of each remaining non-defaulting Underwriter in Schedule I hereto bears
to the total number of Firm
24
<PAGE> 25
Securities set opposite the names of all the remaining non-defaulting
Underwriters in Schedule I hereto; provided, however, that the remaining
non-defaulting Underwriters shall not be obligated to purchase any of the
Securities on such Delivery Date if the total number of Securities which the
defaulting Underwriter or Underwriters agreed but failed to purchase on such
date exceeds 9% of the total number of Securities to be purchased on such
Delivery Date, and any remaining non-defaulting Underwriter shall not be
obligated to purchase more than 110% of the number of Securities which it agreed
to purchase on such Delivery Date pursuant to the terms of Section 2. If the
foregoing maximums are exceeded, the remaining non-defaulting Underwriters, or
those other underwriters satisfactory to the Underwriters who so agree, shall
have the right, but shall not be obligated, to purchase, in such proportion as
may be agreed upon among them, all the Securities to be purchased on such
Delivery Date. If the remaining Underwriters or other underwriters satisfactory
to the Underwriters do not elect to purchase the shares which the defaulting
Underwriter or Underwriters agreed but failed to purchase on such Delivery Date,
this Agreement (or, with respect to the Second Delivery Date, the obligation of
the Underwriters to purchase, and of the Company to sell, the Option Securities)
shall terminate without liability on the part of any non-defaulting Underwriter
or the Company, except that the Company will continue to be liable for the
payment of expenses to the extent set forth in Section 6. As used in this
Agreement, the term "Underwriter" includes, for all purposes of this Agreement
unless the context requires otherwise, any party not listed in Schedule I hereto
who, pursuant to this Section 9, purchases Securities which a defaulting
Underwriter agreed but failed to purchase.
Nothing contained herein shall relieve a defaulting Underwriter of any
liability it may have to the Company for damages caused by its default. If other
underwriters are obligated or agree to purchase the Securities of a defaulting
or withdrawing Underwriter, either the Underwriters or the Company may postpone
the Delivery Date for up to seven full business days in order to effect any
changes that in the opinion of counsel for the Company or counsel for the
Underwriters may be necessary in the Registration Statement, the Prospectus or
in any other document or arrangement.
SECTION 10. Termination.
The obligations of the Underwriters hereunder may be terminated by them
by notice given to and received by the Company prior to delivery of and payment
for the Securities if, prior to that time, (i) trading in securities generally
on the New York Stock Exchange or the American Stock Exchange or in the
over-the-counter market, or trading in any securities of the Company on any
exchange or in the over-the-counter market, shall have been suspended or minimum
prices shall have been established on any such exchange or such market by the
Commission, by such exchange or by any other regulatory body or governmental
authority having jurisdiction, (ii) a banking moratorium shall have been
declared by Federal or New York State authorities, (iii) the United States shall
have become engaged in hostilities, there shall have been an escalation in
hostilities involving the United States or there shall have been a declaration
of a national emergency or war by the United States or (iv) there shall have
occurred such a material adverse change in general economic, political or
financial conditions (or the effect of international conditions on the financial
markets in the United States shall be such; provided, however, in the case of
(iii) and (iv) above, as to make it, in the
25
<PAGE> 26
judgment of the Underwriters, impracticable or inadvisable to proceed with the
offering or delivery of the Securities on the terms and in the manner
contemplated in the Prospectus.
SECTION 11. Reimbursement of Underwriters' Expenses.
If the sale of Securities provided for herein is not consummated
because any condition to the obligations of the Underwriters set forth in
Section 7 hereof is not satisfied, because of any termination pursuant to
Section 10 hereof or because of any refusal, inability or failure on the part of
the Company to perform any agreement herein or comply with any provision hereof
other than by reason of a default by the Underwriters, the Company shall
reimburse the Underwriters for the reasonable fees and expenses of its counsel
and for such other out-of-pocket expenses as shall have been incurred by it in
connection with this Agreement and the proposed purchase of the Securities, and
upon demand the Company shall pay the full amount thereof to the Underwriters.
SECTION 12. Notices, etc.
All statements, requests, notices and agreements hereunder shall be in
writing, and:
(a) if to the Underwriters, shall be delivered or sent by
mail, telex or facsimile transmission to Lehman Brothers Inc., Three World
Financial Center, New York, New York 10285, Attention: Syndicate Department
(Fax: 212-528-8822);
(b) if to the Company shall be delivered or sent by mail,
telex or facsimile transmission to the address of the Company set forth in the
Prospectus, Attention: Vice President, Finance and Treasurer (Facsimile:
210-828-8600).
Any such statements, requests, notices or agreements shall take effect at the
time of receipt thereof.
SECTION 13. Persons Entitled to Benefit of Agreement.
This Agreement shall inure to the benefit of and be binding upon the
Underwriters, the Company, and their respective successors. This Agreement and
the terms and provisions hereof are for the sole benefit of only those persons,
except that (x) the representations, warranties, indemnities and agreements of
the Company contained in this Agreement shall also be deemed to be for the
benefit of the officers and employees of the Underwriters and the person or
persons, if any, who control the Underwriters within the meaning of Section 15
of the Securities Act and (y) the indemnity agreement of the Underwriters
contained in Section 8(b) of this Agreement shall be deemed to be for the
benefit of directors, officers and employees of the Company and any person
controlling the Company within the meaning of Section 15 of the Securities Act.
Nothing in this Agreement is intended or shall be construed to give any person,
other than the persons referred to in this Section 13, any legal or equitable
right, remedy or claim under or in respect of this Agreement or any provision
contained herein.
26
<PAGE> 27
SECTION 14. Survival.
The respective indemnities, representations, warranties and agreements
of the Company and the Underwriters contained in this Agreement or made by or on
behalf of them, respectively, pursuant to this Agreement, shall survive the
delivery of and payment for the Securities and shall remain in full force and
effect, regardless of any investigation made by or on behalf of any of them or
any person controlling any of them.
SECTION 15. Definition of "Business Day."
For purposes of this Agreement, "business day" means any day on which
the New York Stock Exchange, Inc. is open for trading.
SECTION 16. Governing Law.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF NEW YORK.
SECTION 17. Counterparts.
This Agreement may be executed in one or more counterparts and, if
executed in more than one counterpart, the executed counterparts shall each be
deemed to be an original but all such counterparts shall together constitute one
and the same instrument.
SECTION 18. Headings.
The headings herein are inserted for convenience of reference only and
are not intended to be part of, or to affect the meaning or interpretation of,
this Agreement.
* * * * *
27
<PAGE> 28
If the foregoing correctly sets forth the agreement between the Company
and the Underwriters, please indicate your acceptance in the space provided for
that purpose below.
Very truly yours,
TESORO PETROLEUM CORPORATION
By: /s/ BRUCE A. SMITH
------------------------------------
Bruce A. Smith
Chairman of the Board, President and
Chief Executive Officer
HOWARD, WEIL, LABOUISSE, FRIEDRICHS
INCORPORATED
(solely in its role as Qualified Independent
Underwriter)
By: HOWARD, WEIL, LABOUISSE, FRIEDRICHS
INCORPORATED
By: /s/ JAMES HANSON
------------------------------------
(Authorized Representative)
Accepted:
LEHMAN BROTHERS INC.
HOWARD, WEIL, LABOUISSE, FRIEDRICHS INCORPORATED
By: LEHMAN BROTHERS INC.
By: /s/ H.E. McGEE III
------------------------------------
(Authorized Representative)
28
<PAGE> 29
SCHEDULE I
<TABLE>
<CAPTION>
Number
Number of Firm of Option Securities to be
Securities to purchased (if over-allotment
Name of Underwriter be purchased option exercised in full)
------------------- -------------- ----------------------------
<S> <C> <C>
Lehman Brothers Inc.................................. 8,100,000 1,215,000
Howard, Weil, Labouisse, Friedrichs
Incorporated .................................. 900,000 135,000
----------- ----------
Total................................................ 9,000,000 1,350,000
=========== ==========
</TABLE>
A-1
<PAGE> 30
SCHEDULE II
1. Digicomp, Inc.
2. Interior Fuels Company
3. Kenai Pipe Line Company
4. Tesoro Alaska Petroleum Company
5. Tesoro Alaska Pipeline Company
6. Tesoro Bolivia Petroleum Company
7. Tesoro E&p Company, L.P.
8. Tesoro Exploration and Production Company
9. Tesoro Financial Services Holding Company
10. Tesoro Gas Resources Company, Inc.
11. Tesoro Hawaii Corporation
12. Tesoro Latin America Company
13. Tesoro Marine Services, Inc.
14. Tesoro Natural Gas Company
15. Tesoro Northstore Company
16. Tesoro Petroleum Companies, Inc.
17. Tesoro Petroleum South Pacific Company
18. Tesoro Pipeline Company, L.P.
19. Tesoro Refining, Marketing & Supply Company
20. Tesoro Vostok Company
21. Victory Finance Company
A-2
<PAGE> 1
EXHIBIT 1.2
5,000,000 SHARES
TESORO PETROLEUM CORPORATION
COMMON STOCK, PAR VALUE $0.16 2/3 PER SHARE
UNDERWRITING AGREEMENT
June 25, 1998
LEHMAN BROTHERS INC.
CIBC OPPENHEIMER
CREDIT SUISSE FIRST BOSTON
MERRILL LYNCH & CO.
SALOMON SMITH BARNEY
c/o Lehman Brothers Inc.
Three World Financial Center
New York, New York 10285
Ladies and Gentlemen:
Tesoro Petroleum Corporation, a Delaware corporation (the "Company"),
proposes to sell to Lehman Brothers Inc., CIBC Oppenheimer Corp., Credit Suisse
First Boston Corporation, Merrill Lynch, Pierce, Fenner & Smith Incorporated
and Smith Barney Inc., as the several underwriters (collectively, the
"Underwriters"), and the Underwriters propose, severally and not jointly, to
purchase 5,000,000 shares (the "Firm Stock") of the Company's Common Stock, par
value $0.16 2/3 per share (the "Common Stock"). In addition, the Company
proposes to grant to the Underwriters an option to purchase up to an additional
750,000 shares of the Common Stock on the terms and for the purposes set forth
in Section 2 (the "Option Stock"). The Firm Stock and the Option Stock, if
purchased, are hereinafter collectively called the "Stock." This is to confirm
the agreement concerning the purchase of the Stock from the Company by the
Underwriters.
The Stock is being issued and sold in connection with the acquisition
(the "Hawaii Acquisition") of BHP Petroleum Americas Refining Inc. and BHP
Petroleum South Pacific Inc. (together, "BHP Hawaii") and the proposed
acquisition (the "Washington Acquisition," and together with the Hawaii
Acquisition, the "Acquisitions") of Shell Anacortes Refining Company ("Shell
Washington") by the Company. Concurrently with the offering of the Stock (the
"Common Stock Offering"), the Company is offering 9,000,000 Premium Income
Equity Securities(SM) (the "PIES(SM)") representing interests in the Company's
7 1/4% Mandatorily Convertible Preferred Stock (the "Mandatorily Convertible
Preferred Stock"), with gross proceeds of $143.4 million (excluding any
proceeds from the exercise of over-allotment options granted to the
underwriters of the PIES). The Company is also proposing to offer $300 million
in aggregate principal amount of its Senior
<PAGE> 2
Subordinated Notes due 2008 (the "Notes"). The closing of the Common Stock
Offering is not conditioned upon the closings of the offerings of PIES (the
"PIES Offering") or the Notes (the "Notes Offering" and together with the
Common Stock Offering and PIES Offering, the "Offerings"), nor is the closing
of any of the Offerings conditioned upon the closing of the Washington
Acquisition. The net proceeds from the Offerings, together with borrowing
under the Company's Third Amended and Restated Credit Facility (the "Senior
Credit Facility"), will be used to fund the cash purchase price of the
Washington Acquisition, to refinance the Company's Second Amended and Restated
Credit Facility (the "Interim Credit Facility") (a portion of which was used to
finance the cash purchase price of the Hawaii Acquisition), to pay certain fees
and expenses related to the Transactions (as defined below) and, to the extent
not used, for general corporate purposes (including working capital
requirements and capital expenditures).
The (i) stock purchase agreement entered into by the Company in
connection with the Washington Acquisition (the "Washington Agreement") and the
Senior Credit Facility, (ii) the underwriting agreement entered into in
connection with the PIES Offering and the deposit agreement entered into in
connection with the PIES Offering and (iii) the purchase agreement,
registration rights agreement, indenture, Notes and subsidiary guarantees
thereof entered into in connection with the Notes Offering are hereinafter
sometimes collectively referred to as the "Transaction Documents." The
Offerings, the Acquisitions and the closing of the Senior Credit Facility are
hereinafter sometimes referred to collectively as the "Transactions."
SECTION 1. Representations, Warranties and Agreements of the Company.
The Company represents and warrants to, and agrees with, the
Underwriters that as of the date hereof:
(a) A registration statement on Form S-3 (file number
333-51789), and amendments thereto, with respect to the Stock has (i) been
prepared by the Company in conformity in all material respects with the
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
and the rules and regulations (the "Rules and Regulations") of the Securities
and Exchange Commission (the "Commission") thereunder, (ii) been filed with the
Commission under the Securities Act and (iii) become effective under the
Securities Act. Such registration statement, as amended as of the date of this
Agreement, meets the requirements set forth in Rule 415(a)(1)(x) under the Act
and complies in all material respects with said Rule. Copies of such
registration statement and amendments thereto have been delivered by the
Company to you as the Underwriters. Upon your written request, but not without
your agreement, the Company will also file a Rule 462(b) Registration Statement
in accordance with Rule 462(b). As used in this Agreement, "Effective Time"
means the date and the time as of which such registration statement, the most
recent post-effective amendment thereto, if any, or any Rule 462(b)
Registration Statement became or becomes effective; "Effective Date" means the
date of the Effective Time; "Preliminary Prospectus" means each prospectus
included in such registration statement, or amendments thereof, including
without limitation the preliminary prospectus supplement, dated June 5, 1998
(the "Preliminary
2
<PAGE> 3
Prospectus Supplement") relating to the Stock filed with the Commission
pursuant to Rule 424(b)(5) of the Rules and Regulations, through the date of
the Preliminary Prospectus Supplement; "Registration Statement" means such
registration statement, as amended at the Effective Time, including any
documents incorporated by reference therein at such time and all information
contained in the final prospectus relating to the Stock filed with the
Commission pursuant to Rule 424(b) of the Rules and Regulations in accordance
with Section 5(a) hereof and deemed to be a part of the registration statement
as of the Effective Time pursuant to paragraph (b) of Rule 430A of the Rules
and Regulations and, in the event any Rule 462(b) Registration Statement
becomes effective prior to the First Delivery Date (as hereinafter defined),
also means such registration statement as so amended, unless the context
otherwise requires; "Prospectus" means the Prospectus included in the
Registration Statement at the Effective Time, including without limitation the
final prospectus supplement, dated June 26, 1998, relating to the Stock, as
first filed with the Commission pursuant to paragraph (2) or (5) of Rule 424(b)
of the Rules and Regulations; and "Rule 462(b) Registration Statement" means
the registration statement and any amendments thereto filed pursuant to Rule
462(b) of the Rules and Regulations relating to the offering covered by the
initial Registration Statement. Reference made herein to any Preliminary
Prospectus or to the Prospectus shall be deemed to refer to and include any
documents incorporated by reference therein pursuant to Item 12 of Form S-3
under the Securities Act, as of the date of such Preliminary Prospectus or the
Prospectus, as the case may be. The Commission has not issued any order
preventing or suspending the use of any Preliminary Prospectus.
(b) The Registration Statement conforms, and the
Prospectus, any further amendments or supplements to the Registration Statement
or the Prospectus and any Rule 462(b) Registration Statement will, when they
become effective or are filed with the Commission, as the case may be, conform
in all material respects to the requirements of the Securities Act and the
Rules and Regulations and do not and will not, as of the applicable Effective
Time (as to the Registration Statement and any amendment thereto) and as of the
applicable filing date (as to the Prospectus and any amendment or supplement
thereto) contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading; provided that no representation or warranty is made as
to information contained in or omitted from the Registration Statement or the
Prospectus in reliance upon and in conformity with written information
furnished to the Company through the Underwriters by or on behalf of any
Underwriter specifically for inclusion therein.
(c) The documents incorporated by reference in the
Preliminary Prospectus and the Prospectus when they became effective or were
filed with the Commission, conformed in all material respects to the
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the rules and regulations of the Commission thereunder, and none of
such documents, when read together with the other information in the
Prospectus, contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; and any further documents so filed and incorporated by
reference in the Prospectus when such documents became effective or are filed
with the Commission, as the case
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<PAGE> 4
may be, will conform in all material respects to requirements of the Exchange
Act and the rules and regulations of the Commission thereunder, and none of
such documents, when read together with the other information in the
Prospectus, will contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(d) The Company is a corporation duly organized and
validly existing in good standing under the laws of the State of Delaware with
full corporate power and authority to own, lease and operate its properties and
conduct its business as described in the Prospectus, and is duly qualified and
registered as a foreign corporation for the transaction of business and is in
good standing in each jurisdiction in which the character of the business
conducted by it or the location of the properties owned or leased by it make
such qualification or registration necessary (except where the failure to so
qualify or register would not have a Material Adverse Effect (as defined
below)). The Company has an authorized capitalization as set forth under the
caption "Capitalization" in the Prospectus. On the date hereof and on the
First Delivery Date all of the issued and outstanding shares of capital stock
of the Company (including the shares of Common Stock to be issued in the Common
Stock Offering and upon conversion of the Mandatorily Convertible Preferred
Stock) have been duly authorized and will be validly issued and fully paid and
nonassessable and will conform to the description thereof contained in or
incorporated by reference in the Prospectus. As used herein, "Material Adverse
Effect" means a material adverse effect on the condition (financial or
otherwise), results of operations, business, earnings or prospects of the
Company and the Subsidiaries (as defined below), taken as a whole.
(e) Schedule II hereto is a complete and accurate
schedule of the names of all corporations, partnerships and joint ventures (the
"Subsidiaries") which constitute "subsidiaries," as such term is defined in
Rule 405 of the rules and regulations of the Commission under the Securities
Act (collectively with the rules and regulations of the Commission under the
Exchange Act, the "Rules and Regulations"). Other than the Subsidiaries listed
on Schedule II, no corporation, partnership or other entity in which the
Company has an equity interest constitutes a "subsidiary" as defined in Rule
405 of the Rules and Regulations. Each Subsidiary is duly organized, validly
existing and in good standing in the jurisdiction of its incorporation or
formation, as the case may be, with full corporate or other power and authority
to own, lease and operate its properties and to conduct its business as
described in the Prospectus. Each Subsidiary is duly qualified and registered
as a foreign corporation or limited partnership, as the case may be, for the
transaction of business and is in good standing in each jurisdiction in which
the character of the business conducted by it or the location of the properties
owned or leased by it make such qualification or registration unnecessary, save
where the failure to so qualify or be in good standing as a foreign corporation
or limited partnership, as the case may be, would not have a Material Adverse
Effect.
(f) All of the issued and outstanding shares of capital
stock of each of the Subsidiaries that is a corporation have been duly
authorized and validly issued, are fully paid and nonassessable, and are owned
by the Company directly or indirectly, free and clear of any lien, adverse
claim, security interest or other encumbrance (a "Lien"), except as arising
from the Interim
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<PAGE> 5
Credit Facility and, upon its execution, the Senior Credit Facility or as
described in the Prospectus. All outstanding equity interests in each
Subsidiary that is not a corporation have been duly authorized and validly
issued and are owned by the Company directly or indirectly, free and clear of
any Lien, except as arising from the Interim Credit Facility and, upon its
execution, Senior Credit Facility or as described in the Prospectus. Except as
disclosed in the Prospectus and as outstanding under employee benefit plans of
the Company, there are no outstanding subscriptions, rights (preemptive or
other), warrants, calls, commitments of sale or options to acquire, or
instruments convertible into or exchangeable for, nor any restriction on the
voting or transfer of, any capital stock or other equity interest of the
Company or any Subsidiary;
(g) The Company and each of the Subsidiaries have all
requisite power and authority to execute, deliver and perform their respective
obligations under this Agreement and each of the Transaction Documents, to
which they may respectively be a party, and to consummate the transactions
contemplated hereby and thereby, including, without limitation, the power and
authority to issue, sell and deliver the Stock as provided herein and therein
and to consummate the Transactions.
(h) This Agreement has been duly and validly authorized,
executed and delivered by the Company and constitutes a valid and binding
agreement of the Company, enforceable against the Company in accordance with
its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting the enforcement of
creditors' rights generally and subject to the applicability of general
principles of equity, and except as rights to indemnity and contribution
hereunder and thereunder may be limited by Federal or state securities laws or
principles of public policy.
(i) The Washington Agreement has been duly authorized,
validly executed and delivered by the Company. The Washington Agreement
constitutes a valid and binding agreement of the Company, enforceable against
the Company in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization or other similar laws
affecting the enforcement of creditors' rights generally and to general equity
principles.
(j) The Senior Credit Facility has been duly authorized
by the Company and, upon execution thereby, will have been validly executed and
delivered by the Company and the Subsidiaries party thereto. When the Senior
Credit Facility has been duly executed and delivered by the Company and each of
such Subsidiaries, the Senior Credit Facility will constitute a valid and
binding agreement of the Company and each of such Subsidiaries, enforceable
against the Company and each of such Subsidiaries in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of creditors'
rights generally and to general equity principles. The Prospectus contains an
accurate summary, in all material respects, of the terms of the Senior Credit
Facility.
(k) The execution, delivery and performance of this
Agreement by the Company and the Transaction Documents by the Company and the
Subsidiaries party thereto, compliance by
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<PAGE> 6
the Company and each of such Subsidiaries with all the provisions hereof and
thereof, the issuance and sale of the Stock by the Company and the consummation
by the Company and such Subsidiaries of the transactions contemplated hereby
and thereby, including the Transactions and as described in the Prospectus
under the caption "Use of Proceeds," (i) will not conflict with or result in a
breach or violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company or any Subsidiary is a party or by
which the Company or any Subsidiary is bound or to which any of the properties
or assets of the Company or any Subsidiary is subject, (ii) will not result in
any violation of the provisions of the charter, by- laws or other
organizational documents of the Company or any Subsidiary or (iii) will not
result in any violation of the provisions of any law or statute or any order,
rule, regulation, judgment or decree of any court or governmental agency or
body having jurisdiction over the Company or any Subsidiary or any of their
respective properties or assets, or (iv) result in the imposition or creation
of (or the obligation to create or impose) a Lien under any agreement or
instrument to which the Company or any Subsidiary is a party or by which the
Company or any Subsidiary or their respective properties or assets is bound,
except in the case of clauses (i), (iii) and (iv) for such conflicts, breaches,
defaults, violations or Liens which individually or in the aggregate would not
result in a Material Adverse Effect. Except for such consents, approvals,
authorizations, other orders, filings, qualifications or registrations (i) as
have been obtained, (ii) as may be required under applicable state securities
or Blue Sky laws of various jurisdictions in connection with the issuance, sale
and delivery of the Stock, (iii) as may be required in connection with the
Washington Acquisition, (iv) as may be required in the perfection of liens in
connection with the consummation of the Transactions and (v) which the failure
to obtain would not result in a Material Adverse Effect, no consent, approval,
authorization, or order of or filing, qualification or registration with, any
such court or governmental agency or body is required for the execution,
delivery and performance of this Agreement or the Transaction Documents by the
Company and each of the Subsidiaries party thereto, compliance by the Company
and each of the Subsidiaries party thereto with all the provisions hereof and
thereof, the issuance and sale of the Stock by the Company and the consummation
of the transactions contemplated hereby and thereby, including the Transactions
and as described in the Prospectus under the caption "Use of Proceeds."
(l) Neither the Company nor any Subsidiaries has
sustained, since the date of the latest quarterly financial statements included
in the Prospectus, any material loss or interference with its business from
fire, explosion, flood or other calamity, whether or not covered by insurance,
or from any labor dispute or court or governmental action, order or decree,
otherwise than as set forth in the Prospectus, except losses or interferences
which do not, individually or in the aggregate, have a Material Adverse Effect;
and, since such date, there has not been any material change in the capital
stock or other equity interest or long-term debt or short-term debt of the
Company or any Subsidiaries or any change having a Material Adverse Effect, or
any development involving a prospective material adverse change, in or
affecting the general affairs, management, consolidated financial position,
stockholders' equity or results of operations of the Company and the
Subsidiaries, otherwise than as set forth or contemplated in the Prospectus;
and, since such date, except as otherwise disclosed in the Prospectus, the
Company has not (i) issued or granted any securities, other
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<PAGE> 7
than pursuant to Company employee benefit plans or (ii) declared or paid any
dividend on its capital stock.
(m) The historical consolidated financial statements
(including the related notes and supporting schedules) of the Company, and to
the Company's knowledge, BHP Hawaii and Shell Washington, which appear in the
Preliminary Prospectus and the Prospectus comply as to form in all material
respects with the applicable accounting requirements of Securities Act, the
Exchange Act, and the Rules and Regulations, present fairly in all material
respects the consolidated financial position and results of operations of the
entities purported to be shown thereby, at the dates and for the periods
indicated, and have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved except as noted therein. The pro forma financial statements included
in the Preliminary Prospectus and the Prospectus present fairly in all material
respects the historical and proposed transactions contemplated by this
Agreement and in the Preliminary Prospectus and the Prospectus; and such pro
forma financial statements comply as to form in all material respects with the
applicable accounting requirements of the Securities Act, the Exchange Act and
the Rules and Regulations, have been prepared on a basis consistent with the
historical consolidated financial statements of the Company, and to the
Company's knowledge, BHP Hawaii and Shell Washington, give effect to
assumptions used in the preparation thereof on a reasonable basis. The other
financial and statistical information and operating data of the Company, and to
the Company's knowledge, BHP Hawaii and Shell Washington included in the
Preliminary Prospectus and the Prospectus, historical and pro forma, is, in all
material respects, accurately presented and prepared on a basis consistent
with the financial statements, in all material respects, included in the
Preliminary Prospectus and the Prospectus and the books and records of the
Company, and to the Company's knowledge, the books and records of BHP Hawaii
and Shell Washington.
(n) Except for the Registration Rights Agreement entered
into by the Company and the Subsidiaries party thereto in connection with the
Notes Offering, there are no contracts, agreements or understandings between
the Company and any person granting such person the right to require the
Company to file a registration statement under the Securities Act with respect
to any securities of the Company, owned or to be owned by such person or to
require the Company to include such securities with any securities being
registered pursuant to any registration statement filed by the Company under
the Securities Act.
(o) Deloitte & Touche LLP, and to the Company's
knowledge, Arthur Andersen LLP and Price Waterhouse LLP, who have certified
certain financial statements of the Company and its Subsidiaries, BHP Hawaii
and Shell Washington, respectively, whose reports are included or incorporated
by reference in the Prospectus and who have delivered the initial letters
referred to in Section 7(g) hereof, are independent public accountants as
required by the Securities Act and the Rules and Regulations.
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<PAGE> 8
(p) Other than as set forth in the Prospectus, there are
no legal or governmental proceedings pending to which the Company or any
Subsidiary is a party or to which any of their respective properties or assets
is subject which (i) could reasonable be expected to have a Material Adverse
Effect or (ii) could materially and adversely affect the consummation by the
Company of its obligations pursuant to this Agreement or the Transaction
Documents; and to the Company's knowledge, no such proceedings are threatened
or contemplated by government authorities or threatened by others.
(q) The Company and each of the Subsidiaries has such
permits, licenses, franchises and authorizations of governmental or regulatory
authorities ("permits") as are necessary to own its respective properties and
to conduct its business in the manner described in the Prospectus subject in
each case to such qualifications as may be set forth in the Prospectus and
except where the failure to have such permits would not have a Material Adverse
Effect; the Company and each of the Subsidiaries has fulfilled and performed in
all material respects all of its current obligations with respect to such
permits and no event has occurred which allows, or after notice or lapse of
time would allow, revocation or termination thereof or results in any other
material impairment of the rights of the holder of any such permits, subject in
each case to such qualifications as may be set forth in the Prospectus and
except where the failure so to fulfill or perform or the occurrence of such an
event would not have a Material Adverse Effect; and, except as described in the
Prospectus, none of such permits contains any restriction that is materially
burdensome to the Company and the Subsidiaries, taken as a whole.
(r) The Company and each of the Subsidiaries owns or
possesses adequate rights to use all material patents, patent applications,
trademarks, service marks, trade names, trademark registrations, service mark
registrations, copyrights and licenses necessary for the conduct of their
respective businesses, except where the failure to have such permits would not
have a Material Adverse Effect, and have no reason to believe that the conduct
of their respective businesses will conflict with, and have not received any
notice of any claim of conflict with, any such rights of others.
(s) With the exception of producing oil and gas
properties and gas gathering properties (the "Oil and Gas Properties"), the
Company and each of the Subsidiaries has good and indefeasible title in fee
simple to all real property and good and defensible title to all personal
property owned by them, in each case free and clear of all liens, encumbrances
and defects except such as are described in the Prospectus or such as do not
materially adversely affect the value of such property or interfere with the
use made and proposed to be made of such property by the Company and the
Subsidiaries; and with the exception of the Oil and Gas Properties, all real
property, buildings and vessels held under lease by the Company and the
Subsidiaries are held by them under valid, subsisting and enforceable leases,
with such exceptions as are not material and do not interfere with the use made
and proposed to be made of such property, buildings and vessels by the Company
and the Subsidiaries.
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<PAGE> 9
(t) The Company and each of the Subsidiaries has good and
defensible title to its Oil and Gas Properties, free and clear of all liens,
encumbrances and defects, except (a) those described in the Preliminary
Prospectus and the Prospectus, (b) liens securing taxes and other governmental
charges, or claims of materialmen, mechanics and similar persons, not yet due
and payable, (c) liens and encumbrances under operating agreements, unitization
and pooling agreements, and gas sales contracts, securing payment of amounts
not yet due and payable and of a scope and nature customary in the oil and gas
industry and (d) liens, encumbrances and defects that do not in the aggregate
materially affect the value of such Oil and Gas Properties or materially
interfere with the use made or proposed to be made of such properties by the
Company or any of the Subsidiaries. Except to the extent described in the
Preliminary Prospectus and the Prospectus, the oil, gas and mineral leases,
coal methane leases, options to lease, drilling concessions or other property
interests therein held by the Company and each of the Subsidiaries reflects in
all material respects the right of the Company and its Subsidiaries, as the
case may be, to explore or receive production from the undeveloped properties
described in the Preliminary Prospectus and the Prospectus, and the Company
and each of the Subsidiaries have exercised reasonable diligence with respect
to acquiring or otherwise procuring such leases, options to lease, drilling
concessions and other property interests.
(u) No labor disturbance by the employees of the Company
or any of the Subsidiaries exists or, to the knowledge of the Company, is
imminent which might be expected to have a Material Adverse Effect; except as
disclosed in the Prospectus, neither the Company nor any of the Subsidiaries is
party to a collective bargaining agreement; and there are no significant unfair
labor practice complaints pending against the Company or any of the
Subsidiaries or, to the best of the Company's knowledge, threatened against any
of them.
(v) The Company and each of the Subsidiaries is in
compliance in all material respects with all presently applicable provisions of
the Employee Retirement Income Security Act of 1974, as amended, including the
regulations and published interpretations thereunder ("ERISA"); no "reportable
event" (as defined in ERISA) has occurred with respect to any "pension plan"
(as defined in ERISA) for which the Company or any of the Subsidiaries would
have any liability; neither the Company nor any of the Subsidiaries has
incurred and neither do any of them expect to incur liability under (i) title
IV of ERISA with respect to termination of, or withdrawal from, any "pension
plan" or (ii) Sections 412 or 4971 of the Internal Revenue code of 1985, as
amended, including the regulations and published interpretations thereunder
(the "Code"); and each "pension plan" for which the Company or any Subsidiary
would have any liability that is intended to be qualified under Section 401(a)
of the Code is so qualified in all material respects and nothing has occurred,
whether by action or by failure to act, which would cause the loss of such
qualification.
(w) The Company and each of the Subsidiaries has filed,
and as of the First Delivery Date will have filed, all federal, state, local
and foreign income and franchise tax returns required to be filed through the
date hereof and has paid all taxes due thereon, and no tax deficiency has been
determined adversely to the Company or any of the Subsidiaries which has had
(nor does
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<PAGE> 10
the Company have any knowledge of any tax deficiency which, if determined
adversely to the Company or any of the Subsidiaries, might have) a Material
Adverse Effect.
(x) The Company and each of the Subsidiaries (i) makes
and keeps accurate books and records and (ii) maintains internal accounting
controls which provide reasonable assurance that (A) transactions are executed
in accordance with management's authorization, (B) transactions are recorded as
necessary to permit preparation of its financial statements and to maintain
accountability for its assets, (C) access to its assets is permitted only in
accordance with management's authorization and (D) the reported accountability
for its assets is compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any difference.
(y) Except as described in the Preliminary Prospectus and
the Prospectus and except such matters as would not, singly or in the
aggregate, result in a Material Adverse Effect, (A) neither the Company nor any
of the Subsidiaries is in violation of any federal, state, local or foreign
statute, law, rule, regulation, ordinance, code, policy or rule of common law
or any judicial or administrative order, consent, decree or judgment thereof,
including any judicial or administrative order, consent, decree or judgment
relating to pollution or protection of human health, the environment
(including, without limitation, ambient air, surface water, groundwater, land
surface or subsurface strata) or wildlife, including, without limitation, laws
and regulations relating to the release or threatened release of chemicals,
pollutants, contaminants, wastes, toxic substances, hazardous substances,
petroleum or petroleum products (collectively, "Hazardous Materials") or to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials (collectively, "Environmental
Laws"), (B) the Company and each of the Subsidiaries has all permits,
authorizations and approvals required under any applicable Environmental Laws
and are each in compliance with their requirements, (C) there are no pending
or, to the knowledge of the Company, threatened administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigation or proceedings relating to any
Environmental Law against the Company or any of the Subsidiaries and (D) there
are no events or circumstances that might reasonably be expected to form the
basis of an order for clean-up or remediation, or an action, suit or proceeding
by any private party or governmental body or agency, against or affecting the
Company or any of the Subsidiaries relating to Hazardous Materials or
Environmental Laws.
(z) The Company is not, and upon the issuance and sale of
the Stock as herein contemplated and the application of the net proceeds
therefrom as described under the caption "Use of Proceeds" in the Prospectus
will not be an "investment company" or an entity "controlled" by an "investment
company" as such terms are defined in the Investment Company Act of 1940, as
amended, and the rules and regulations thereunder.
(aa) The conditions for the use of Form S-3, as set forth
in the General Instructions thereto, have been satisfied.
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<PAGE> 11
(bb) The statements set forth in the Prospectus under the
captions "Prospectus Summary--The Transactions--The Acquisitions,"
"Business--Government Regulation and Legislation," "Description of
Indebtedness" and "Description of Capital Stock" insofar as such statements
purport to summarize the provisions of the documents or agreements referred to
therein, matters of law or legal conclusions or federal statute, laws or
regulations, are accurate and fairly present the information required to be
shown.
(cc) The information supplied by the Company to the
independent petroleum engineering consultants for the Company for purposes of
preparing the reserve reports and estimates of such consultants incorporated by
reference in the Preliminary Prospectus and the Prospectus, including, without
limitation, production, costs of operation and development, current prices for
production, agreements relating to current and future operations and sales of
production, was true and correct in all material respects on the date supplied
and was prepared in accordance with customary industry practices; and
Netherland, Sewell & Associates, Inc., independent petroleum engineers, who
prepared estimates of the extent and value of proved oil and natural gas
reserves of the Company are independent with respect to the Company.
(dd) The Company and each of the Subsidiaries has complied
with, and is and will be in compliance with, the provisions of that certain
Florida act relating to disclosure of doing business with Cuba, codified as
Section 517.075 of the Florida statutes, and the rules and regulations
thereunder or is exempt therefrom.
The Company acknowledges that the Underwriters and, for purposes of
the opinions to be delivered to the Underwriters pursuant to Section 7 hereof,
counsel to the Company and counsel to the Underwriters, will rely upon the
accuracy and truth of the foregoing representations and hereby consents to such
reliance. Each certificate signed by any officer of the Company and delivered
to the Underwriters or counsel for the Underwriters shall be deemed to be a
representation and warranty by the Company to the Underwriters as to the
matters covered thereby.
SECTION 2. Purchase of the Stock by the Underwriters.
(a) On the basis of the representations and warranties
contained in, and subject to the terms and conditions of, this Agreement, the
Company agrees to sell 5,000,000 shares of the Firm Stock to the several
Underwriters and each of the Underwriters, severally and not jointly, agrees to
purchase the number of shares of the Firm Stock set opposite that Underwriter's
name in Schedule I hereto.
(b) In addition, the Company grants to the Underwriters
an option to purchase up to 750,000 shares of Option Stock. Such option is
granted solely for the purpose of covering over-allotments in the sale of Firm
Stock and is exercisable as provided in Section 4 hereof. Shares of Option
Stock shall be purchased severally and not jointly for the account of the
Underwriters in proportion to the number of shares of Firm Stock set opposite
the name of such Underwriters in Schedule I hereto. The respective purchase
obligations of each Underwriter with respect to the
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<PAGE> 12
Option Stock shall be adjusted by the Underwriters so that no Underwriter shall
be obligated to purchase Option Stock other than in 100 share amounts. The
price of both the Firm Stock and any Option Stock shall be $15 15/16 per share.
(c) The Company shall not be obligated to deliver any of
the Stock to be delivered on the First Delivery Date or the Second Delivery
Date (as hereinafter defined), as the case may be, except upon payment for all
the Stock to be purchased on such Delivery Date as provided herein.
SECTION 3. Offering of Stock by the Underwriters.
(a) Upon authorization by the Underwriters of the release
of the Firm Stock, the several Underwriters propose to offer the Firm Stock for
sale upon the terms and conditions set forth in the Prospectus.
(b) Each Underwriter agrees that it will not offer or
sell any of the Stock outside of the United States and Canada.
SECTION 4. Delivery of and Payment for the Stock.
(a) Delivery of and payment for the Firm Stock shall be
made at the offices of Andrews & Kurth, L.L.P., 600 Travis Street, Houston,
Texas 77002, at 8:30 A.M., Houston time, on July 1, 1998, or at such other
date or place as shall be determined by agreement between the Underwriters and
the Company. This date and time are sometimes referred to herein as the "First
Delivery Date." On the First Delivery Date, the Company shall deliver or cause
to be delivered certificates representing the Firm Stock to the Underwriters
for the account of each Underwriter against payment to or upon the order of the
Company of the purchase price by wire transfer in immediately available funds.
Time shall be of the essence (except that the Company will not be responsible
for any delay resulting from any action or inaction of any Underwriter) and
delivery at the time and place specified pursuant to this Agreement is a
further condition of the obligations of each Underwriter hereunder. Upon
delivery, the Firm Stock shall be registered in such names and in such
denominations as the Underwriters shall request in writing not less than two
full business days prior to the First Delivery Date. For the purpose of
expediting the checking and packaging of the certificates for the Firm Stock,
the Company shall make the certificates representing the Firm Stock available
for inspection by the Underwriters in New York, New York, not later than 2:00
P.M., New York City time, on the business day prior to the First Delivery Date.
(b) At any time on or before the thirtieth day after the
date of this Agreement, the option granted in Section 2 may be exercised by
written notice being given to the Company by the Underwriters. Such notice
shall set forth the aggregate number of shares of Option Stock as to which the
option is being exercised, the names in which the shares of Option Stock are to
be registered, the denominations in which the shares of Option Stock are to be
issued and the date and time, as determined by the Underwriters, when the
shares of Option Stock are to be delivered; provided, however, that this date
and time shall not be earlier than the First Delivery Date nor earlier
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<PAGE> 13
than the second business day after the date on which the option shall have been
exercised nor later than the third business day after the date on which the
option shall have been exercised. The date and time the shares of Option Stock
are delivered are sometimes referred to as the "Second Delivery Date" and the
First Delivery Date and the Second Delivery Date are sometimes each referred to
as a "Delivery Date."
(c) Delivery of and payment for the Option Stock shall be
made at the place specified in the first sentence of the first paragraph of
this Section 4 (or at such other place as shall be determined by agreement
between the Underwriters and the Company) at 8:30 A.M., Houston time, on the
Second Delivery Date. On the Second Delivery Date, the Company shall deliver
or cause to be delivered the certificates representing the Option Stock to the
Underwriters for the account of each Underwriter against payment to or upon the
order of the Company of the purchase price by wire transfer in immediately
available funds. Time shall be of the essence (except that the Company will
not be responsible for any delay resulting from any action or inaction of any
Underwriter), and delivery at the time and place specified pursuant to this
Agreement is a further condition of the obligations of each Underwriter
hereunder. Upon delivery, the Option Stock shall be registered in such names
and in such denominations as the Underwriters shall request in the aforesaid
written notice. For the purpose of expediting the checking and packaging of
the certificates representing the Option Stock available for inspection by the
Underwriters in New York, New York, not later than 2:00 P.M., New York City
time, on the business day prior to the Second Delivery Date.
SECTION 5. Further Agreements of the Company.
The Company further agrees:
(a) To prepare the Prospectus in a form approved by the
Underwriters and to file such Prospectus pursuant to Rule 424(b) under the
Securities Act not later than Commission's close of business on the second
business day following the execution and delivery of this Agreement or, if
applicable, such earlier time as may be required by Rule 430A(a)(3) under the
Securities Act; to make no further amendment or any supplement to the
Registration Statement or to the Prospectus and to file no Rule 462(b)
Registration Statement except as permitted herein; to advise the Underwriters,
promptly after it receives notice thereof, of the time when any amendment to
the Registration Statement has been filed or becomes effective or any
supplement to the Prospectus or any amended Prospectus has been filed and to
furnish the Underwriters with copies thereof; upon your request, to cause the
Rule 462(b) Registration Statement, properly completed, to be filed with the
Commission pursuant to Rule 462(b) and to provide evidence satisfactory to the
Underwriters of such filing; to advise the Underwriters, promptly after it
receives notice thereof, of the issuance by the Commission of any stop order or
of any order preventing or suspending the use of any Preliminary Prospectus or
the Prospectus, of the suspension of the qualification of the Stock for
offering or sale in any jurisdiction, of the initiation or threatening of any
proceeding for any such purpose, or of any request by the Commission for the
amending or supplementing of the Registration Statement or the Prospectus or
for additional information; and, in the event of the issuance of any stop order
or of any order preventing or suspending the use of any Preliminary Prospectus
or the
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Prospectus or suspending any such qualification, to use promptly its reasonable
best efforts to obtain its withdrawal;
(b) To furnish reasonably promptly to each of the
Underwriters and to counsel for the Underwriters a signed copy of the
Registration Statement as originally filed with the Commission, each amendment
thereto and any Rule 462(b) Registration Statement filed with the Commission,
including all consents and exhibits filed therewith;
(c) To deliver promptly to the Underwriters such number
of the following documents as the Underwriters shall reasonably request: (i)
conformed copies of the Registration Statement as originally filed with the
Commission, each amendment thereto (in each case excluding exhibits other than
this Agreement) and any Rule 462(b) Registration Statement, (ii) each
Preliminary Prospectus, the Prospectus and any amended or supplemented
Prospectus and (iii) any document incorporated by reference in the Prospectus
(excluding exhibits thereto); and, if the delivery of a prospectus is required
at any time after the Effective Time in connection with the offering or sale of
the Stock or any other securities relating thereto and if at such time any
events shall have occurred as a result of which the Prospectus as then amended
or supplemented would include any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made when such
Prospectus is delivered, not misleading, or, if for any other reason it shall
be necessary to amend or supplement the Prospectus or to file under the
Exchange Act any document incorporated by reference in the Prospectus in order
to comply with the Securities Act or the Exchange Act, to notify the
Underwriters and, upon their request, to file such document and to prepare and
furnish without charge to each Underwriter and to any dealer in securities as
many copies as the Underwriters may from time to time reasonably request of an
amended or supplemented Prospectus which will correct such statement or
omission or effect such compliance;
(d) To file promptly with the Commission any amendment to
the Registration Statement or the Prospectus or any supplement to the
Prospectus that may, in the judgment of the Company or the Underwriters, be
required by the Securities Act or requested by the Commission;
(e) Prior to filing with the Commission any amendment to
the Registration Statement or supplement to the Prospectus, any document
incorporated by reference in the Prospectus, any Prospectus pursuant to Rule
424 of the Rules and Regulations or any Rule 462(b) Registration Statement to
furnish a copy thereof to the Underwriters and counsel for the Underwriters and
obtain the consent of the Underwriters to the filing;
(f) The Company will make generally available to holders
of its securities as soon as may be practicable an earnings statement (which
need not be audited but shall be in reasonable detail) for a period of 12
months ended commencing after the Effective Date, and satisfying the provisions
of Section 11(a) of the Act (including Rule 158 of the Rules and Regulations).
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<PAGE> 15
(g) For a period of five years following the Effective
Date, to furnish to the Underwriters copies of all materials furnished by the
Company to its public shareholders and all public reports and all reports and
financial statements furnished by the Company to the principal national
securities exchange upon which the Common Stock may be listed pursuant to
requirements of or agreements with such exchange or to the Commission pursuant
to the Exchange Act or any rule or regulation of the Commission thereunder;
(h) Promptly from time to time to take such action as the
Underwriters may reasonably request to qualify the Stock for offering and sale
(or obtain an exemption from registration) under the securities laws of such
jurisdictions as the Underwriters may request and to comply with such laws so
as to permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the distribution of
the Stock; provided, however, that the Company shall not be required to qualify
as a foreign corporation or a dealer in securities or to execute a general
consent to service of process in any jurisdiction in any action other than one
arising out of the offering or sale of the Stock;
(i) For a period of 90 days from the date of the
Prospectus, not to, directly or indirectly, (A) offer for sale, sell, pledge or
otherwise dispose of (or enter into any transaction or device which is designed
to, or could be expected to, result in the disposition by any person at any
time in the future of) any shares of Common Stock or any securities convertible
into or exchangeable for Common Stock (other than the Stock, the PIES, the
Mandatorily Convertible Preferred Stock, shares of Common Stock issued pursuant
to employee benefit plans, qualified stock option plans or other employee
compensation plans existing on the date hereof or pursuant to currently
outstanding options, warrants or rights or upon the conversion of the
Mandatorily Convertible Preferred Stock or upon the conversion of Convertible
Subordinated Debentures of Coastwide Energy Services, Inc.) or (B) enter into
any swap or other derivatives transaction that transfers to another, in whole
or in part, any of the economic benefits or risks of ownership of such
securities, whether any such transaction described in clause (A) or (B) above
is to be settled by delivery of shares of Common Stock or other securities, in
cash or otherwise, in each case without the prior written consent of Lehman
Brothers Inc.; and to cause each executive officer and director of the company
to furnish to Lehman Brothers, prior to the First Delivery Date, a letter (a
"Lock-Up Letter") in form and substance satisfactory to Andrews & Kurth L.L.P.,
pursuant to which each such person shall agree, not to, directly or indirectly,
(x) offer for sale, sell, pledge or otherwise dispose of (or enter into any
transaction or device which is designed to, or could be expected to, result in
the disposition by any person at any time in the future of) any shares of
Common Stock or any securities convertible into or exchangeable for Common
Stock or (y) enter into any swap or other derivatives transaction that
transfers to another, in whole or in part, any of the economic benefits or
risks of ownership of such shares of Common Stock, whether any such transaction
described in clause (x) or (y) above is to be settled by delivery of Common
Stock or other securities, in cash or otherwise, in each case for a period of
90 days from the date of the Prospectus, without the prior written consent of
Lehman Brothers Inc.
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<PAGE> 16
(j) To take such steps as shall be necessary to ensure
that neither the Company nor any Subsidiary of the Company shall become an
"investment company" within the meaning of such term under the Investment
Company Act of 1940, as amended, and the rules and regulations of the
Commission thereunder.
(k) To apply the net proceeds from the sale of the Notes
as set forth under the caption "Use of Proceeds" in the Prospectus.
(l) To do all things required or necessary to be done or
performed under this Agreement prior to such Delivery Date by such date and to
satisfy the closing conditions set forth in Section 7 hereof.
SECTION 6. Expenses.
Whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, the Company agrees to pay or cause
to be paid all reasonable expenses incident to the performance of the
obligations of the Company under this Agreement, including: (i) the costs
incident to the authorization, issuance, sale and delivery of the Stock and any
taxes payable in that connection; (ii) fees, disbursements and expenses of
counsel to the Company and accountants to Company in connection with the sale
and delivery of the Stock, and all other fees and expenses in connection with
the preparation, printing and filing under the Securities Act of the
Registration Statement and any amendments and exhibits thereto (including
financial statements), including the mailing and delivering of copies to the
Underwriters and persons designated by them in the quantities specified; (iii)
the costs of distributing the Registration Statement as originally filed and
each amendment thereto and any post-effective amendments thereof (including, in
each case, exhibits), any Preliminary Prospectus, the Prospectus and any
amendment or supplement to the Prospectus or any document incorporated by
reference therein, all as provided in this Agreement; (iv) the costs of
producing and distributing this Agreement, and any related documents in
connection with the offering, purchase, sale and delivery of the Stock; (v)
listing or other fees incident to the inclusion of the Stock for listing on the
New York Stock Exchange; (vi) the fees and expenses, if applicable, of
qualifying the Stock under the securities laws of the several jurisdictions as
provided in Section 5(h) and of preparing, printing and distributing a Blue Sky
Memorandum (including reasonable related fees and expenses of counsel to the
Underwriters in connection with such qualification and memorandum relating
thereto); and (vii) all other costs and expenses incident to the performance of
the obligations of the Company or any of the Subsidiaries under this Agreement;
provided that, except as provided in this Section 6 and in Section 11, the
Underwriters shall pay their own costs and expenses, including the costs and
expenses of their counsel, any transfer taxes on the Stock which they may sell
and the expenses of advertising any offering of the Stock made by the
Underwriters.
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<PAGE> 17
SECTION 7. Conditions to the Underwriters' Obligations.
The obligations of the Underwriters hereunder are subject to the
accuracy, when made and on each Delivery Date, of the representations and
warranties of the Company contained herein, to the performance by the Company
of its obligations hereunder, and to each of the following additional terms and
conditions:
(a) The Prospectus shall have been timely filed with the
Commission in accordance with Section 5(a); no stop order suspending the
effectiveness of the Registration Statement or any part thereof shall have been
issued and no proceeding for that purpose shall have been initiated or
threatened by the Commission; and any request of the Commission for inclusion
of additional information in the Registration Statement or the Prospectus or
otherwise shall have been complied with.
(b) No Underwriter shall have discovered and disclosed to
the Company on or prior to such Delivery Date that the Registration Statement
or the Prospectus or any amendment or supplement thereto contains an untrue
statement of a fact which, in the opinion of Andrews & Kurth, L.L.P., counsel
for the Underwriters, is material or omits to state a fact which, in the
opinion of such counsel, is material and is required to be stated therein or is
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(c) All corporate proceedings and other legal matters
incident to the authorization, form and validity of this Agreement and the
Prospectus, and all other legal matters relating to this Agreement and the
transactions contemplated hereby shall be reasonably satisfactory in all
material respects to counsel for the Underwriters, and the Company shall have
furnished to such counsel all documents and information that they may
reasonably request to enable them to pass upon such matters.
(d) The Prospectus shall have been printed and copies
distributed to the Underwriters not later than 10:00 a.m., New York City time,
on the day following the date of this Agreement or at such later date and time
as to which the Underwriters may agree.
(e) The Underwriters shall have received from Fulbright &
Jaworski L.L.P. their written opinion, as counsel to the Company, addressed to
the Underwriters and dated such Delivery Date, in form and substance reasonably
satisfactory to the Underwriters, to the effect set forth in Exhibit A hereto
and to such further effect as counsel to the Underwriters may reasonably
request.
(f) The Underwriters shall have received from James C.
Reed, Jr., his written opinion, as General Counsel of the Company, addressed to
the Underwriters and dated such Delivery Date, in form and substance reasonably
satisfactory to the Underwriters, to the effect set forth in Exhibit B hereto
and to such further effect as counsel to the Underwriters may reasonably
request.
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<PAGE> 18
(g) At the time of execution of this Agreement, the
Underwriters shall have received from each of Deloitte & Touche LLP, Arthur
Andersen LLP and Price Waterhouse LLP a letter, in form and substance
satisfactory to the Underwriters, addressed to the Underwriters and dated the
date hereof, (i) confirming that they are independent public accountants within
the meaning of the Securities Act and are in compliance with the applicable
requirements relating to the qualification of accountants under Rule 2-01 of
Regulation S-X of the Commission, (ii) stating, as of the date hereof (or, with
respect to matters involving changes or developments since the respective dates
as of which specified financial information is given in the Prospectus, as of a
date not more than five business days prior to the date hereof), the
conclusions and findings of such firm with respect to the financial
information, operating data and other matters ordinarily covered by
accountants' "comfort letters" to underwriters, including the financial
information contained or incorporated by reference in the Prospectus as
identified by you.
(h) With respect to the letters of Deloitte & Touche LLP,
Arthur Andersen LLP and Price Waterhouse LLP referred to in the preceding
paragraph and delivered to the Underwriters concurrently with the execution of
this Agreement (the "initial letters"), the Company shall have furnished to the
Underwriters letters (the "bring-down letters") of such accountants, addressed
to the Underwriters and dated such Delivery Date, (i) confirming that they are
independent public accountants within the meaning of the Securities Act and are
in compliance with the applicable requirements relating to the qualification of
accountants under Rule 2-01 of Regulation S-X of the Commission, (ii) stating,
as of the date of the bring-down letters (or, with respect to matters involving
changes or developments since the respective dates as of which specified
financial information is given in the Prospectus, as of a date not more than
five business days prior to the date of the respective bring-down letter), the
conclusions and findings of such firm with respect to the financial
information, operating data and other matters covered by the respective initial
letter and (iii) confirming in all material respects the conclusions and
findings set forth in the respective initial letter.
(i) (A) At the time of execution of this Agreement, the
Underwriters shall have received from Netherland, Sewell & Associates, Inc.,
independent petroleum engineers for the Company, a letter dated as of such
date, in form and substance satisfactory to the Underwriters; and (B) on such
Delivery Date, the Underwriters shall have received from Netherland, Sewell and
Associates, Inc., independent petroleum engineers for the Company, a letter
dated as of such Delivery Date, to the effect that they reaffirm the statements
made in the letter referred to in clause (i)(A) above.
(j) The Company shall have furnished to the Underwriters
a certificate, dated the such Delivery Date, of (i) the Chairman of the Board,
President or a Vice President of the Company and (ii) the Treasurer or Chief
Financial Officer of the Company stating that:
(i) The representations, warranties and
agreements of the Company in Section 1 are true and correct as of such
Delivery Date and the Company has complied with all its agreements
contained herein;
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(ii) (A) Neither the Company nor any of the
Subsidiaries has sustained since the date of the latest quarterly
financial statements included or incorporated by reference in the
Preliminary Prospectus or the Prospectus any material loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Preliminary Prospectus or the
Prospectus and (B) since such date there has not been any material
change in the capital stock, long-term debt or short-term debt of the
Company or any of the Subsidiaries or any material change, or any
development involving a prospective material adverse change, in or
affecting the general affairs, management, financial position,
stockholders' equity, results of operations or prospects of the
Company and the Subsidiaries, taken as a whole, otherwise than as set
forth or contemplated in the Preliminary Prospectus or the Prospectus;
and
(iii) They have carefully examined the Registration
Statement or the Prospectus and, in their opinion (A) the Registration
Statement or the Prospectus, as of their respective dates, did not
include any untrue statement of a material fact and did not omit to
state any material fact necessary to make the statements therein, (in
the case of the Prospectus, in the light of the circumstances under
which they were made), not misleading, and (B) since the date of the
Prospectus, no event has occurred which should have been set forth in
a supplement or amendment to the Prospectus.
(iv) The Prospectus shall have been timely filed
with the Commission in accordance with Section 5(a) of this Agreement;
no stop order suspending the effectiveness of the Registration
Statement or any part thereof shall have been issued and no proceeding
for that purpose shall have been initiated or threatened by the
Commission as of such Delivery Date; and any request of the Commission
for inclusion of additional information in the Registration Statement
or the Prospectus or otherwise shall have been complied with.
(k) (i) Neither the Company nor any of its
Subsidiaries shall have sustained since the date of the latest audited
financial statements included or incorporated by reference in the Prospectus
any material loss or interference with its business from fire, explosion, flood
or other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise than as set
forth or contemplated in the Prospectus and (ii) since such date there shall
not have been any material change in the capital stock, long-term debt or
short-term debt of the Company or any of its Subsidiaries or any material
change, or any development involving a prospective material change, in or
affecting the general affairs, management, consolidated financial position,
stockholders' equity or results of operations of the Company and its
Subsidiaries taken as a whole, otherwise than as set forth or contemplated in
the Prospectus, the effect of which, in any such case described in clause (i)
or (ii), is, in the judgment of the Underwriters, so material and adverse as to
make it impracticable or inadvisable to proceed with the offering or the
delivery of the Stock on the terms and in the manner contemplated in the
Prospectus.
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<PAGE> 20
(l) The Underwriters have received Lock-Up Letters
referred to in Section 5(i) hereof from each of the Company's executive
officers and directors.
(m) Subsequent to the execution and delivery of this
Agreement (i) no downgrading shall have occurred in the rating accorded the
Company or any of the Subsidiaries or any securities of the Company or any of
the Subsidiaries by any "nationally recognized statistical rating
organization," as that term is defined by the Commission for purposes of Rule
436(g)(2) of the Rules and Regulations and (ii) no such organization shall have
publicly announced that it has under surveillance or review, with possible
negative implications, its rating of any of the Notes.
(n) The Underwriters shall have received from Andrews &
Kurth L.L.P., counsel for the Underwriters, their opinion, dated such Delivery
Date, with respect to such matters as the Underwriters may reasonably require,
and the Company shall have furnished to such counsel such documents and
information as they may reasonably request for the purpose of enabling them to
pass upon such matters.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably
satisfactory to counsel for the Underwriters.
SECTION 8. Indemnification and Contribution.
(a) The Company shall indemnify and hold harmless each
Underwriter, its officers and employees and each person, if any, who controls
any Underwriter within the meaning of the Securities Act, from and against any
loss, claim, damage or liability, joint or several, or any action in respect
thereof (including, but not limited to, any loss, claim, damage, liability or
action relating to purchases and sales of the Stock), to which that
Underwriter, officer, employee or controlling person may become subject, under
the Securities Act or otherwise, insofar as such loss, claim, damage, liability
or action arises out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Prospectus,
Registration Statement or the Prospectus or in any amendment or supplement
thereto, (ii) the omission or alleged omission to state in any Preliminary
Prospectus, the Registration Statement or the Prospectus or in any amendment or
supplement thereto, any material fact required to be stated therein or
necessary to make the statements therein not misleading or (iii) any act or
failure to act, or any alleged act or failure to act, by any Underwriter in
connection with, or relating in any manner to, the Stock or the offering
contemplated hereby, and which is included as part of or referred to in any
loss, claim, damage, liability or action arising out of or based upon matters
covered by clause (i) or (ii) above (provided that the Company shall not be
liable in the case of any matter covered by this clause (iii) to the extent
that it is determined in a final judgment by a court of competent jurisdiction
that such loss, claim, damage, liability or action resulted directly from any
such act or failure to act undertaken or omitted to be taken by such
Underwriter through its gross negligence or willful misconduct), and shall
reimburse each Underwriter and each officer, employee and controlling person
promptly upon demand for any legal or other expenses reasonably incurred by
that Underwriter, officer, employee
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<PAGE> 21
or controlling person in connection with investigating or defending or
preparing to defend against any such loss, claim, damage, liability or action
as such expenses are incurred; provided, however, that the Company shall not be
liable in any such case to the extent that any such loss, claim, damage,
liability or action arises out of, or is based upon, any untrue statement or
alleged untrue statement or omission or alleged omission made in any
Preliminary Prospectus, the Registration Statement or the Prospectus or in any
such amendment or supplement in reliance upon and in conformity with the
written information furnished to the Company by or on behalf of any Underwriter
specifically for inclusion therein and described in Section 8(e); provided,
further, that with respect to any such untrue statement or omission made in the
Preliminary Prospectus, the indemnity agreement contained in this Section 8(a)
shall not enure to the benefit of the Underwriter from whom the person
asserting any such losses, claims, damages or liabilities purchased the Stock
concerned if, to the extent that such sale was an initial sale by such
Underwriter and any such loss claim, damage or liability of such Underwriter is
a result of the fact that both (A) a copy of the Prospectus was not sent or
given to such person at or prior to the written confirmation of the sale of
such Stock to such person, and (B) the untrue statement or omission in the
Preliminary Prospectus was corrected in the Prospectus unless, in either case,
such failure to deliver the Prospectus was a result of noncompliance by the
Company with Section 5(c) hereof. The foregoing indemnity agreement is in
addition to any liability which the Company may otherwise have to any
Underwriter or to any officer, employee or controlling person of any
Underwriter.
(b) Each Underwriter, severally and not jointly, shall
indemnify and hold harmless the Company and each person, if any, who controls
the Company within the meaning of the Securities Act, from and against any
loss, claim, damage or liability, joint or several, or any action in respect
thereof, to which the Company, any such director, officer or employee, or any
controlling person may become subject, under the Securities Act or otherwise,
insofar as such loss, claim, damage, liability or action arises out of, or is
based upon, (i) any untrue statement or alleged untrue statement of a material
fact contained in any Preliminary Prospectus, the Registration Statement or the
Prospectus or in any amendment or supplement thereto or (ii) the omission or
alleged omission to state in any Preliminary Prospectus, the Registration
Statement or the Prospectus or in any amendment or supplement thereto any
material fact required to be stated therein or necessary to make the statements
therein not misleading, but in each case only to the extent that the untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with the written information furnished to
the Company by or on behalf of such Underwriter specifically for inclusion
therein and described in Section 8(e), and shall reimburse the Company and any
such director, officer or employee, or any such controlling person, for any
legal or other expenses reasonably incurred by the Company or any such
director, officer or employee, or any controlling person in connection with
investigating or defending or preparing to defend against any such loss, claim,
damage, liability or action as such expenses are incurred. The foregoing
indemnity agreement is in addition to any liability which any Underwriter may
otherwise have to the Company or any such director, officer or employee, or any
controlling person.
(c) Promptly after receipt by an indemnified party under
this Section 8 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect
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thereof is to be made against the indemnifying party under this Section 8,
notify the indemnifying party in writing of the claim or the commencement of
that action; provided, however, that the failure to notify the indemnifying
party shall not relieve it from any liability which it may have under this
Section 8 except to the extent it has been materially prejudiced by such
failure and, provided further, that the failure to notify the indemnifying
party shall not relieve it from any liability which it may have to an
indemnified party otherwise than under this Section 8. If any such claim or
action shall be brought against an indemnified party, and it shall notify the
indemnifying party thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof with
counsel satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
the indemnified party shall have the right to employ counsel to represent all
indemnified parties who may be subject to liability arising out of any claim in
respect of which indemnity may be sought by the indemnified parties against the
indemnifying party under this Section 8 if, (i) the employment of such counsel
shall have been authorized by the indemnifying party in connection with the
defense of such action, (ii) the indemnifying party shall not have engaged
counsel reasonably promptly to take charge of the defense of such action or
(iii) counsel for any of the indemnified parties shall have reasonably
concluded that there may be defenses available to the indemnified parties that
are in addition to or in conflict with those available to the indemnifying
party, and, in that event, the fees and expenses of such separate counsel shall
be paid by the indemnifying party; provided, further, that in connection with
any proceedings or related proceedings in the same jurisdiction, the
indemnifying party shall not be liable for the legal fees and expenses of more
than one separate firm of attorneys (in addition to any local counsel). No
indemnifying party shall (i) without the prior written consent of the
indemnified parties (which consent shall not be unreasonably withheld), settle
or compromise or consent to the entry of any judgment with respect to any
pending or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of each indemnified party from all liability arising out of such claim, action,
suit or proceeding, or (ii) be liable for any settlement of any such action
effected without its written consent (which consent shall not be unreasonably
withheld), but if settled with its written consent or if there be a final
judgment of the plaintiff in any such action, the indemnifying party agrees to
indemnify and hold harmless any indemnified party from and against any loss of
liability by reason of such settlement or judgment.
(d) If the indemnification provided for in this Section 8
shall for any reason be unavailable to or insufficient to hold harmless an
indemnified party under Section 8(a) or 8(b) in respect of any loss, claim,
damage or liability, or any action in respect thereof, referred to therein,
then each indemnifying party shall, in lieu of indemnifying such indemnified
party, contribute to the amount paid or payable by such indemnified party as a
result of such loss, claim, damage or liability, or action in respect thereof,
(i) in such proportion as shall be appropriate to reflect the relative
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<PAGE> 23
benefits received by the Company, on the one hand, and the Underwriters, on the
other, from the offering of the Stock or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company, on the one hand, and the
Underwriters on the other with respect to the statements or omissions which
resulted in such loss, claim, damage or liability, or action in respect
thereof, as well as any other relevant equitable considerations. The relative
benefits received by the Company, on the one hand, and the Underwriters on the
other, with respect to such offering shall be deemed to be in the same
proportion as the total net proceeds from the offering of the Stock purchased
under this Agreement (before deducting expenses) received by the Company, on
the one hand, and the total underwriting discounts and commissions received by
the Underwriters with respect to the Stock purchased under this Agreement, on
the other hand, bear to the total gross proceeds from the offering of the Stock
under this Agreement, in each case as set forth in the table on the cover page
of the Prospectus. The relative fault shall be determined by reference to
whether the untrue or alleged untrue statement of a material fact or omission
or alleged omission to state a material fact relates to information supplied by
the Company, on the one hand, or the Underwriters, the intent of the parties
and their relative knowledge, access to information and opportunity to correct
or prevent such statement or omission. The Company and the Underwriters agree
that it would not be just and equitable if contributions pursuant to this
Section 8(d) were to be determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other
method of allocation which does not take into account the equitable
considerations referred to herein. The amount paid or payable by an
indemnified party as a result of the loss, claim, damage or liability, or
action in respect thereof, referred to above in this Section 8(d) shall be
deemed to include, for purposes of this Section 8(d), any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 8(d), the Underwriters shall not be required to
contribute any amount in excess of the amount by which the total price at which
the Stock sold and distributed by it was offered to the purchasers exceeds the
amount of any damages which the Underwriters have otherwise paid or become
liable to pay by reason of any untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
(e) The Underwriters severally confirm and the Company
acknowledges that the statements with respect to the offering of the Stock set
forth in the bottom paragraph on the cover page of, the legend concerning
stabilization and overallotment on the inside front cover of the Prospectus,
and the seventh, eighth, ninth and tenth paragraphs under the caption
"Underwriting" relating to stabilization and over-allotment in, the Prospectus
are correct and constitute the only information furnished in writing to the
Company by or on behalf of the Underwriters specifically for inclusion in the
Prospectus.
23
<PAGE> 24
SECTION 9. Defaulting Underwriters.
If, on either Delivery Date, any Underwriter defaults in the
performance of its obligations under this Agreement, the remaining
non-defaulting Underwriters shall be obligated to purchase the Stock which the
defaulting Underwriter agreed but failed to purchase on such Delivery Date in
the respective proportions which the number of shares of the Firm Stock set
opposite the name of each remaining non-defaulting Underwriter in Schedule I
hereto bears to the total number of shares of the Firm Stock set opposite the
names of all the remaining non-defaulting Underwriters in Schedule I hereto;
provided, however, that the remaining non-defaulting Underwriters shall not be
obligated to purchase any of the Stock on such Delivery Date if the total
number of shares of the Stock which the defaulting Underwriter or Underwriters
agreed but failed to purchase on such date exceeds 9% of the total number of
shares of the Stock to be purchased on such Delivery Date, and any remaining
non-defaulting Underwriter shall not be obligated to purchase more than 110% of
the number of shares of the Stock which it agreed to purchase on such Delivery
Date pursuant to the terms of Section 2. If the foregoing maximums are
exceeded, the remaining non-defaulting Underwriters, or those other
underwriters satisfactory to the Underwriters who so agree, shall have the
right, but shall not be obligated, to purchase, in such proportion as may be
agreed upon among them, all the Stock to be purchased on such Delivery Date.
If the remaining Underwriters or other underwriters satisfactory to the
Underwriters do not elect to purchase the shares which the defaulting
Underwriter or Underwriters agreed but failed to purchase on such Delivery
Date, this Agreement (or, with respect to the Second Delivery Date, the
obligation of the Underwriters to purchase, and of the Company to sell, the
Option Stock) shall terminate without liability on the part of any
non-defaulting Underwriter or the Company, except that the Company will
continue to be liable for the payment of expenses to the extent set forth in
Section 6. As used in this Agreement, the term "Underwriter" includes, for all
purposes of this Agreement unless the context requires otherwise, any party not
listed in Schedule I hereto who, pursuant to this Section 9, purchases Stock
which a defaulting Underwriter agreed but failed to purchase.
Nothing contained herein shall relieve a defaulting Underwriter of any
liability it may have to the Company for damages caused by its default. If
other underwriters are obligated or agree to purchase the Stock of a defaulting
or withdrawing Underwriter, either the Underwriters or the Company may postpone
the Delivery Date for up to seven full business days in order to effect any
changes that in the opinion of counsel for the Company or counsel for the
Underwriters may be necessary in the Registration Statement, the Prospectus or
in any other document or arrangement.
SECTION 10. Termination.
The obligations of the Underwriters hereunder may be terminated by
them by notice given to and received by the Company prior to delivery of and
payment for the Stock if, prior to that time, (i) trading in securities
generally on the New York Stock Exchange or the American Stock Exchange or in
the over-the-counter market, or trading in any securities of the Company on any
exchange or in the over-the-counter market, shall have been suspended or
minimum prices shall have been established on any such exchange or such market
by the Commission, by such exchange or by any
24
<PAGE> 25
other regulatory body or governmental authority having jurisdiction, (ii) a
banking moratorium shall have been declared by Federal or New York State
authorities, (iii) the United States shall have become engaged in hostilities,
there shall have been an escalation in hostilities involving the United States
or there shall have been a declaration of a national emergency or war by the
United States or (iv) there shall have occurred such a material adverse change
in general economic, political or financial conditions (or the effect of
international conditions on the financial markets in the United States shall be
such); provided, however, in the case of (iii) and (iv) above, as to make it,
in the judgment of the Underwriters, impracticable or inadvisable to proceed
with the offering or delivery of the Stock on the terms and in the manner
contemplated in the Prospectus.
SECTION 11. Reimbursement of Underwriters' Expenses.
If the sale of Stock provided for herein is not consummated because
any condition to the obligations of the Underwriters set forth in Section 7
hereof is not satisfied, because of any termination pursuant to Section 10
hereof or because of any refusal, inability or failure on the part of the
Company to perform any agreement herein or comply with any provision hereof
other than by reason of a default by the Underwriters, the Company shall
reimburse the Underwriters for the reasonable fees and expenses of its counsel
and for such other out-of-pocket expenses as shall have been incurred by it in
connection with this Agreement and the proposed purchase of the Stock, and upon
demand the Company shall pay the full amount thereof to the Underwriters.
SECTION 12. Notices, etc.
All statements, requests, notices and agreements hereunder shall be in
writing, and:
(a) if to the Underwriters, shall be delivered or sent by
mail, telex or facsimile transmission to Lehman Brothers Inc., Three World
Financial Center, New York, New York 10285, Attention: Syndicate Department
(Fax: 212- 528-8822);
(b) if to the Company shall be delivered or sent by mail,
telex or facsimile transmission to the address of the Company set forth in the
Prospectus, Attention: Vice President, Finance and Treasurer (Facsimile: 210-
828-8600).
Any such statements, requests, notices or agreements shall take effect at the
time of receipt thereof.
SECTION 13. Persons Entitled to Benefit of Agreement.
This Agreement shall inure to the benefit of and be binding upon the
Underwriters, the Company, and their respective successors. This Agreement and
the terms and provisions hereof are for the sole benefit of only those persons,
except that (x) the representations, warranties, indemnities and agreements of
the Company contained in this Agreement shall also be deemed to be for the
benefit of the officers and employees of the Underwriters and the person or
persons, if any, who control the Underwriters within the meaning of Section 15
of the Securities Act and (y) the
25
<PAGE> 26
indemnity agreement of the Underwriters contained in Section 8(b) of this
Agreement shall be deemed to be for the benefit of directors, officers and
employees of the Company and any person controlling the Company within the
meaning of Section 15 of the Securities Act. Nothing in this Agreement is
intended or shall be construed to give any person, other than the persons
referred to in this Section 13, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision contained herein.
SECTION 14. Survival.
The respective indemnities, representations, warranties and agreements
of the Company and the Underwriters contained in this Agreement or made by or
on behalf of them, respectively, pursuant to this Agreement, shall survive the
delivery of and payment for the Stock and shall remain in full force and
effect, regardless of any investigation made by or on behalf of any of them or
any person controlling any of them.
SECTION 15. Definition of "Business Day."
For purposes of this Agreement, "business day" means any day on which
the New York Stock Exchange, Inc. is open for trading.
SECTION 16. Governing Law.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF NEW YORK.
SECTION 17. Counterparts.
This Agreement may be executed in one or more counterparts and, if
executed in more than one counterpart, the executed counterparts shall each be
deemed to be an original but all such counterparts shall together constitute
one and the same instrument.
SECTION 18. Headings.
The headings herein are inserted for convenience of reference only and
are not intended to be part of, or to affect the meaning or interpretation of,
this Agreement.
* * * * *
26
<PAGE> 27
If the foregoing correctly sets forth the agreement between the
Company and the Underwriters, please indicate your acceptance in the space
provided for that purpose below.
Very truly yours,
TESORO PETROLEUM CORPORATION
By: /s/ BRUCE A. SMITH
----------------------------------
Bruce A. Smith
Chairman of the Board, President
and Chief Executive Officer
Accepted:
LEHMAN BROTHERS INC.
CIBC OPPENHEIMER
CREDIT SUISSE FIRST BOSTON
MERRILL LYNCH & CO.
SALOMON SMITH BARNEY
By: LEHMAN BROTHERS INC.
By: /s/ H.E. McGEE III
---------------------------
(Authorized Representative)
<PAGE> 28
SCHEDULE I
<TABLE>
<CAPTION>
Number of shares of Number of shares of Option Stock
Firm Stock to be to be purchased (if over-allotment
Name of Underwriter purchased option exercised in full)
------------------- --------- ------------------------
<S> <C> <C>
Lehman Brothers Inc. . . . . . . . . . . . . . . 1,000,000 $ 150,000
CIBC Oppenheimer Corp. . . . . . . . . . . . . . 1,000,000 150,000
Credit Suisse First Boston Corporation . . . . . 1,000,000 150,000
Merrill Lynch, Pierce Fenner & Smith
Incorporated . . . . . . . . . . . . . . . . . 1,000,000 150,000
Smith Barney Inc. . . . . . . . . . . . . . . . . 1,000,000 150,000
-------------- --------------------
Total . . . . . . . . . . . . . . . . . . . . . . 5,000,000 750,000
============== ====================
</TABLE>
A-2
<PAGE> 29
SCHEDULE II
1. Digicomp, Inc.
2. Interior Fuels Company
3. Kenai Pipe Line Company
4. Tesoro Alaska Petroleum Company
5. Tesoro Alaska Pipeline Company
6. Tesoro Bolivia Petroleum Company
7. Tesoro E&p Company, L.P.
8. Tesoro Exploration and Production Company
9. Tesoro Financial Services Holding Company
10. Tesoro Gas Resources Company, Inc.
11. Tesoro Hawaii Corporation
12. Tesoro Latin America Company
13. Tesoro Marine Services, Inc.
14. Tesoro Natural Gas Company
15. Tesoro Northstore Company
16. Tesoro Petroleum Companies, Inc.
17. Tesoro Petroleum South Pacific Company
18. Tesoro Pipeline Company, L.P.
19. Tesoro Refining, Marketing & Supply Company
20. Tesoro Vostok Company
21. Victory Finance Company
A-3
<PAGE> 1
EXHIBIT 4.1
CERTIFICATE OF DESIGNATION
OF
7.25% MANDATORILY CONVERTIBLE PREFERRED STOCK
OF
TESORO PETROLEUM CORPORATION
-------------
Pursuant to Section 151 of the General Corporation
Law of the State of Delaware
-------------
TESORO PETROLEUM CORPORATION, a corporation organized and
existing under the General Corporation Law of the State of Delaware (the
"Company"), does hereby certify that the following resolution was duly adopted
by the Board of Directors of the Company (the "Board") at a special meeting of
the Board of Directors held on June 23, 1998:
RESOLVED, that pursuant to the authority conferred upon the
Board by the provisions of the Company's Restated Certificate of Incorporation
(the "Certificate") and in accordance with Section 151 of the General
Corporation Law of the State of Delaware, the Board hereby creates, from the
5,000,000 shares of preferred stock, no par value per share (the "Preferred
Stock"), of the Company, authorized to be issued pursuant to the Certificate, a
series of Preferred Stock consisting of 103,500 shares of 7.25% Mandatorily
Convertible Preferred Stock and hereby fixes the voting powers, designations,
preferences and relative, participating, optional or other special rights, and
qualifications, limitations or restrictions of such preferences and/or rights,
of the shares of that series as follows:
Section 1. Designation. (a) The shares of the series will be
designated as the 7.25% Mandatorily Convertible Preferred Stock (the
"Mandatorily Convertible Preferred Stock"). The total number of authorized
shares of the Mandatorily Convertible Preferred Stock will be 103,500.
(b) Any shares of the Mandatorily Convertible Preferred Stock
that at any time have been acquired upon conversion or otherwise acquired by the
Company shall, after such conversion or other acquisition, resume the status of
authorized and unissued shares of Preferred Stock without designation as to
series until such shares are once more designated as part of a particular series
by the Board.
Section 2. Rank.
The shares of Mandatorily Convertible Preferred Stock will
rank on parity, both as to payment of dividends and distribution of assets upon
liquidation, with any Preferred Stock issued by the Company in the future that
by its terms ranks pari passu with the shares of Mandatorily Convertible
Preferred Stock.
Section 3. Dividends. (a) The holders of record of the shares
of Mandatorily Convertible Preferred Stock shall be entitled to receive, when,
as and if declared by the Board out of funds legally available therefor, cash
dividends ("Preferred
<PAGE> 2
2
Dividends") from the date of the initial issuance of the shares of Mandatorily
Convertible Preferred Stock at the rate of 7.25% per annum or 1.8125% per
quarter per share of Mandatorily Convertible Preferred Stock, payable quarterly
in arrears on January 1, April 1, July 1 and October 1 or, if any such date is
not a business day (as defined in Section 7 hereof), the Preferred Dividend due
on such date shall be payable on the next succeeding business day (each such
payment date being a "Regular Dividend Payment Date"), subject to upward
adjustment pursuant to Section 3(c) hereof. The first dividend period will be
from the date of initial issuance of the shares of Mandatorily Convertible
Preferred Stock to but excluding October 1, 1998 and will be payable on October
1, 1998. Preferred Dividends shall cease to accrue on shares of Mandatorily
Convertible Preferred Stock on the Mandatory Conversion Date (as defined in
Section 4 hereof) or on the date of their earlier conversion. Preferred
Dividends shall be payable to holders of record of shares of Mandatorily
Convertible Preferred Stock as they appear on the stock register of the Company
on record dates not less than 15 nor more than 60 days preceding the payment
date thereof, as shall be fixed by the Board. Preferred Dividends payable on
shares of Mandatorily Convertible Preferred Stock for any period less than a
full quarterly dividend period (or, in the case of the first Preferred Dividend,
from the date of initial issuance of the shares of Mandatorily Convertible
Preferred Stock to the first Regular Dividend Payment Date) will be computed on
the basis of a 360-day year of twelve 30-day months and the actual number of
days elapsed in any period less than one month. Preferred Dividends shall accrue
on a daily basis (computed as set forth in the immediately preceding sentence)
whether or not there are funds of the Company legally available for the payment
of such Preferred Dividends and whether or not such Preferred Dividends are
declared. Accrued but unpaid Preferred Dividends shall cumulate as of the
Regular Dividend Payment Date on which they first become payable, but no
interest shall accrue on accumulated but unpaid Preferred Dividends.
(b) Whether or not the Mandatory Conversion Date has
occurred,
(i) no dividends (other than dividends payable in shares of,
or warrants, rights or options exercisable for or convertible into
shares of, any capital stock, including without limitation, the Common
Stock, of the Company ranking junior to the Mandatorily Convertible
Preferred Stock as to the payment of dividends and the distribution of
assets upon liquidation (collectively "Junior Stock") and cash in lieu
of fractional shares in connection with any such dividend) may be paid
or declared in cash or otherwise, nor may any other distribution by
made (other than a distribution payable in Junior Stock and cash in
lieu of fractional shares in connection with any such distribution), on
any Junior Stock;
(ii) no shares of any Junior Stock may be purchased, redeemed
or otherwise acquired by the Company or any of its subsidiaries (except
in connection with a reclassification or exchange of any Junior Stock
through the issuance of other Junior Stock (and cash in lieu of
fractional shares in connection therewith) or the purchase, redemption
or other acquisition of any Junior Stock with any Junior Stock (and
cash in lieu of fractional shares in connection therewith)) nor may any
funds be set aside or made available for any sinking funds for the
purchase, redemption or acquisition of any Junior Stock; and
(iii) no dividends or other distributions may be declared or
paid on any Preferred Stock (including the Mandatorily Convertible
Preferred Stock) that does not constitute Junior Stock ("Parity
Preferred Stock") (other than dividends
<PAGE> 3
3
or other distributions payable in Junior Stock and cash in lieu of
fractional shares in connection therewith), and the Company may not
purchase, redeem or otherwise acquire any Parity Preferred Stock
(except with any Junior Stock and cash in lieu of fractional shares in
connection therewith and except with the right, subject to the
requirement set out following clause (D) of this paragraph and any
similar requirement of any other Preferred Stock, to receive accrued
and unpaid dividends)
unless, in the case of either (i) or (ii) or (iii):
(A) full dividends on Parity Preferred Stock have been paid,
or declared and set aside for payment, for all dividend periods
terminating on or prior to the date of such dividend, distribution,
purchase, redemption, acquisition, setting aside or making available,
as applicable, to the extent such dividends are cumulative,
(B) dividends in full for the current quarterly dividend
period have been paid, or declared and set aside for payment, on all
Parity Preferred Stock to the extent such dividends are cumulative,
(C) the Company has paid or set aside all amounts, if any,
then or theretofore required to be paid or set aside for all purchase,
retirement and sinking funds, if any, for any Parity Preferred Stock,
and
(D) the Company is not in default on any of its obligations to
redeem any Parity Preferred Stock,
or, in the case of (iii) only, with respect to the declaration and payment of
dividends on Parity Preferred Stock, any such dividends are declared and paid
pro rata so that the amounts of any dividends declared and paid per share of
Mandatorily Convertible Preferred Stock and each other share of Parity Preferred
Stock will in all cases bear to each other the same ratio that accrued and
unpaid dividends (including any accumulation with respect to unpaid dividends
for prior dividend periods, if such dividends are cumulative) per share of
Mandatorily Convertible Preferred Stock and such other share of Parity Preferred
Stock bear to each other.
(c) If a Reset Transaction (as defined below) has occurred,
the dividend rate on the Mandatorily Convertible Preferred Stock shall be
increased (but not decreased) to the rate per annum that is the arithmetic
average of the rates quoted by two Reference Dealers (as defined in Section 7
hereof) selected by the Company or its successor as the dividend rate that the
Mandatorily Convertible Preferred Stock should bear so that the fair market
value, expressed in dollars, of a share of Mandatorily Convertible Preferred
Stock immediately after the later of (i) the public announcement of such Reset
Transaction and (ii) the public announcement of a change in dividend policy in
connection with such Reset Transaction but without giving effect to any
adjustments pursuant to Sections 4(e)(i) through 4(e)(iv) hereof, shall equal
the average Closing Price of a share of Mandatorily Convertible Preferred Stock
(it being understood that, in the event any shares of Mandatorily Convertible
Preferred Stock are represented by depositary shares, the average Closing Price
of the Mandatorily Convertible Preferred Stock shall be determined by reference
to the average Closing Price of such depositary shares) for the twenty Trading
Days immediately preceding the date of public
<PAGE> 4
4
announcement of such Reset Transaction. A "Reset Transaction" is any
consolidation, merger, sale, transfer or statutory exchange to which the
provisions of Section 4(f) apply or any dividend or distribution to which the
provisions of Section 4(e)(iv) apply, as a result of which the Mandatorily
Convertible Preferred Stock is convertible on and after the effective date of
such transaction into shares (including those of the Company) which either (i)
had a Dividend Yield (as defined in Section 7 hereof) for the four fiscal
quarters immediately preceding the public announcement of such transaction which
was, or (ii) are issued by an entity (including the Company) that has publicly
announced a dividend policy prior to the effective date of such transaction
which policy, if implemented, would result in a Dividend Yield on such shares
for the next four fiscal quarters which would be, more than 250 basis points
higher than the Dividend Yield on the Common Stock for the four fiscal quarters
immediately preceding the public announcement of such transaction.
(d) Whenever the dividend rate on the Mandatorily Convertible
Preferred Stock is increased as provided in Section 3(c), the Company or its
successor shall:
(i) forthwith compute the increased dividend rate in
accordance with Section 3(c) and prepare a certificate signed by the
Chief Financial Officer, any Vice President, the Treasurer or the
Controller of the Company or its successor setting forth the increased
dividend rate, the applicable rates quoted by the two Reference Dealers
selected by the Company or its successor for such rate quotes and the
arithmetic average of those rate quotes, and the facts requiring such
increase and upon which such increase is based, which certificate shall
be conclusive, final and binding evidence of the correctness of the
increase, and shall file such certificate forthwith with the transfer
agent or agents for the shares of Mandatorily Convertible Preferred
Stock and any depositary for any shares of Mandatorily Convertible
Preferred Stock represented by depositary shares;
(ii) make a prompt public announcement stating that the
dividend rate on the Mandatorily Convertible Preferred Stock has been
increased and setting forth the increased dividend rate; and
(iii) mail a notice stating that the dividend rate on the
Mandatorily Convertible Preferred Stock has been increased, the facts
requiring such increase and upon which such increase is based and
setting forth the increased dividend rate to the holders of record of
the outstanding shares of the Mandatorily Convertible Preferred Stock,
and, in the event any shares of Mandatorily Convertible Preferred Stock
are represented by depositary shares, to the holders of record of the
depositary receipts evidencing such depositary shares, no later than 45
days after the end of the Company's fiscal quarter period during which
the Reset Transaction resulting in such increase occurred.
Section 4. Conversion Rights. (a) Unless previously converted
at the option of the holder into Common Stock in accordance with the provisions
of Section 4(c), on July 1, 2001 (the "Mandatory Conversion Date") each
outstanding share of Mandatorily Convertible Preferred Stock will convert
automatically (the "Mandatory Conversion") into a number of shares of Common
Stock at the Conversion Rate (as defined below) in effect on the Mandatory
Conversion Date and the holder thereof shall have the right to receive an amount
in cash equal to all accrued and unpaid Preferred Dividends on such share of
Mandatorily Convertible Preferred Stock (other than
<PAGE> 5
5
previously declared Preferred Dividends payable to a holder of record as of a
prior date) to the Mandatory Conversion Date, whether or not declared, out of
funds legally available for the payment of Preferred Dividends, subject to the
requirement set forth following clause (D) of Section 3(b) above and any similar
requirement of any other Certificate of Designations for Preferred Stock. The
"Conversion Rate" is initially equal to (i) if the Conversion Price (as defined
in Section 7 hereof) is greater than or equal to $18.85 (the "Threshold
Appreciation Price"), 84.55 shares of Common Stock per share of Mandatorily
Convertible Preferred Stock, (ii) if the Conversion Price is less than the
Threshold Appreciation Price but is greater than $15.9375 (the "Initial Price"),
(A) a fraction equal to the Initial Price divided by the Conversion Price of (B)
100 shares of Common Stock per share of Mandatorily Convertible Preferred Stock
and (iii) if the Conversion Price is less than or equal to the Initial Price,
100 shares of Common Stock per share of Mandatorily Convertible Preferred Stock.
The ratios of shares of Common Stock per share of Mandatorily Convertible
Preferred Stock specified in clauses (i), (ii) and (iii) of the immediately
preceding sentence are hereinafter referred to as the "Share Components". The
Share Components are subject to adjustment as set forth in Section 4(e) and the
Threshold Appreciation Price and the Initial Price are subject to adjustment as
set forth in Section 4(g).
(b) Preferred Dividends on the shares of Mandatorily
Convertible Preferred Stock shall cease to accrue and such shares of Mandatorily
Convertible Preferred Stock shall cease to be outstanding on the Mandatory
Conversion Date. The Company shall make such arrangements as it deems
appropriate for the issuance of certificates representing shares of Common Stock
and for the payment of cash in respect of accrued and unpaid dividends on the
Mandatorily Convertible Preferred Stock, if any, or cash in lieu of fractional
shares, if any, without interest, in exchange for and contingent upon surrender
of certificates representing the shares of Mandatorily Convertible Preferred
Stock, and the Company may defer the payment of dividends on such shares of
Common Stock until, and make such payment contingent upon, the surrender of
certificates representing the shares of Mandatorily Convertible Preferred Stock,
provided that the Company shall give the holders of the shares of Mandatorily
Convertible Preferred Stock such notice of any such actions as the Company deems
appropriate and upon such surrender such holders shall be entitled to receive
such dividends declared and paid, if any, without interest, on such shares of
Common Stock subsequent to the Mandatory Conversion Date.
(c) Shares of Mandatorily Convertible Preferred Stock are
convertible, in whole or in part, at the option of the holders thereof
("Optional Conversion"), at any time after July 26, 1998 and prior to the
Mandatory Conversion Date, into shares of Common Stock at a rate of 84.55 shares
of Common Stock for each share of Mandatorily Convertible Preferred Stock (the
"Optional Conversion Rate"), subject to adjustment as set forth in Sections 4(e)
and 4(f). Optional Conversion of shares of Mandatorily Convertible Preferred
Stock may be effected by delivering certificates evidencing such shares,
together with written notice of conversion and proper assignment of such
certificates to the Company or in blank (and, if Optional Conversion is to occur
after the close of business on a record date for any payment of declared
Preferred Dividends and before the opening of business on the next succeeding
dividend payment date, payment in cash of an amount equal to the Preferred
Dividend payable on such date on such shares), to the office of any transfer
agent for the shares of Mandatorily Convertible Preferred Stock or to any other
office or agency maintained by the Company for that purpose and otherwise in
accordance with Optional Conversion procedures established
<PAGE> 6
6
by the Company. Each Optional Conversion shall be deemed to have been effected
immediately prior to the close of business on the date on which the foregoing
requirements shall have been satisfied. The Optional Conversion shall be at the
Optional Conversion Rate in effect at such time on such date.
(d) Holders of shares of Mandatorily Convertible Preferred
Stock at the close of business on a record date for any payment of declared
Preferred Dividends shall be entitled to receive the Preferred Dividend so
declared on such shares of Mandatorily Convertible Preferred Stock on the
corresponding dividend payment date notwithstanding the Optional Conversion of
such shares of Mandatorily Convertible Preferred Stock following such record
date and prior to such dividend payment date. However, shares of Mandatorily
Convertible Preferred Stock surrendered for Optional Conversion after the close
of business on a record date for any payment of declared Preferred Dividends and
before the opening of business on the next succeeding dividend payment date must
be accompanied by payment in cash of an amount equal to the Preferred Dividend
payable on such date on such shares. Except as provided above, upon any Optional
Conversion of shares of Mandatorily Convertible Preferred Stock, the Company
shall make no payment of or allowance for unpaid Preferred Dividends, whether or
not in arrears, on such shares of Mandatorily Convertible Preferred Stock as to
which Optional Conversion has been effected or previously declared dividends or
distributions on the shares of Common Stock issued upon such Optional
Conversion.
(e) The Conversion Rate and the Optional Conversion Rate are
each subject to adjustment from time to time as provided below in this Section
4(e).
(i) If the Company shall pay or make a dividend or other
distribution with respect to its Common Stock in shares of Common Stock
(including by way of reclassification of any shares of its Common Stock
(other than pursuant to any of the transactions set forth in Section
4(f)), each of the Share Components and the Optional Conversion Rate in
effect at the opening of business on the day following the date fixed
for the determination of stockholders entitled to receive such dividend
or other distribution shall be increased by multiplying each Share
Component and the Optional Conversion Rate by a fraction of which the
numerator shall be the sum of the number of shares of Common Stock
outstanding at the close of business on the date fixed for such
determination, excluding the effect of such dividend or distribution,
plus the total number of shares of Common Stock constituting such
dividend or other distribution, and of which the denominator shall be
the number of shares of Common Stock outstanding at the close of
business on the date fixed for such determination, excluding the effect
of such dividend or distribution, such increase to become effective at
the opening of business on the day following the date fixed for such
determination. For the purposes of this Section 4(e)(i), the number of
shares of Common Stock at any time outstanding shall not include shares
held in the treasury of the Company and the number of shares
constituting such dividend or other distribution shall include shares
represented by cash issued in lieu of fractional shares of Common
Stock.
(ii) In case shares of Common Stock outstanding shall be
subdivided or split into a greater number of shares of Common Stock,
each of the Share Components and the Optional Conversion Rate in effect
at the opening of business on the day following the day upon which such
subdivision or split
<PAGE> 7
7
becomes effective shall be proportionately increased, and, conversely,
in case outstanding shares of Common Stock shall be combined into a
lesser number of shares of Common Stock, each of the Share Components
and the Optional Conversion Rate in effect at the opening of business
on the day following the day upon which such combination becomes
effective shall be proportionately reduced, such increases or
reductions, as the case may be, to become effective at the opening of
business on the day following the day upon which such subdivision or
split or combination becomes effective.
(iii) If the Company shall, after the date hereof, issue
rights or warrants to all holders of its Common Stock entitling them to
subscribe for or purchase shares of Common Stock at a price per share
less than the Current Market Price (as defined in Section 7 hereof) of
the Common Stock on the record date for the determination of
stockholders entitled to receive such rights or warrants, then in each
case each of the Share Components and the Optional Conversion Rate
shall be adjusted by multiplying such Share Components and the Optional
Conversion Rate in effect on such record date by a fraction of which
the numerator shall be the number of shares of Common Stock outstanding
at the close of business on the record date for issuance of such rights
or warrants, excluding the effect of such issuance, plus the number of
additional shares of Common Stock offered for subscription or purchase
pursuant to such rights or warrants, and of which the denominator shall
be the number of shares of Common Stock outstanding at the close of
business on the record date for issuance of such rights or warrants,
excluding the effect of such issuance, plus the number of shares of
Common Stock which the aggregate offering price of the total number of
shares of Common Stock so offered for subscription or purchase pursuant
to such rights or warrants would purchase at such Current Market Price
(determined by multiplying such total number of offered shares by the
exercise price of such rights or warrants and dividing the product so
obtained by such Current Market Price). Such adjustment shall become
effective at the opening of business on the business day next following
the record date for the determination of stockholders entitled to
receive such rights or warrants. Shares of Common Stock held by the
Company or by another company of which a majority of the shares
entitled to vote in the election of directors are held, directly or
indirectly, by the Company shall not be deemed to be outstanding for
purposes of such computation. Any shares of Common Stock issuable in
payment of a dividend shall be deemed to have been issued immediately
prior to the close of business on the record date for such dividend for
purposes of calculating the number of outstanding shares of Common
Stock under this Section 4(e)(iii). To the extent that shares of Common
Stock are not delivered by reason of the expiration of such rights or
warrants, each of the Share Components and the Optional Conversion Rate
shall be readjusted to the Share Components and the Optional Conversion
Rate which would then be in effect had the adjustments made by reason
of the issuance of such rights or warrants been made upon the basis of
the issuance of rights or warrants in respect of only the number of
shares of Common Stock actually delivered.
(iv) If the Company shall pay a dividend or make a
distribution to all holders of Common Stock consisting of evidences of
its indebtedness, cash or other assets (including shares of capital
stock of the Company other than dividends or distributions of Common
Stock (or other common stock of the
<PAGE> 8
8
Company issued by way of reclassification) referred to in Section
4(e)(i) above but excluding any cash dividends or distributions, other
than Extraordinary Cash Distributions (as defined below)), or shall
issue to all holders of Common Stock rights or warrants to subscribe
for or purchase any of its securities (other than those referred to in
Section 4(e)(iii) above), then in each such case each of the Share
Components and the Optional Conversion Rate shall be adjusted by
multiplying such Share Components and the Optional Conversion Rate in
effect on the record date for such dividend or distribution or for the
determination of stockholders entitled to receive such rights or
warrants, as the case may be, by a fraction of which the numerator
shall be the Current Market Price per share of the Common Stock on such
record date, and of which the denominator shall be such Current Market
Price per share of Common Stock less either (A) the fair market value
(as determined by the Board, whose determination shall be conclusive)
on such record date of the portion of the assets or evidences of
indebtedness so distributed, or of such rights or warrants, applicable
to one share of Common Stock or (B) if applicable, the amount of the
Extraordinary Cash Distribution applicable to one share of Common
Stock. Such adjustment shall become effective at the opening of
business on the business day next following the record date for such
dividend or distribution or for the determination of holders entitled
to receive such rights or warrants, as the case may be. "Extraordinary
Cash Distribution" means, with respect to any cash dividend or
distribution paid on any date, the amount, if any, by which all cash
dividends or distributions on the Common Stock paid during the
consecutive 12-month period ending on and including such date (other
than cash dividends and cash distributions for which a prior adjustment
to each of the Share Components and the Optional Conversion Rate was
previously made), exceeds, on a per share of Common Stock basis, ten
percent (10%) of the average daily Closing Price of the Common Stock
over such consecutive 12-month period.
(v) Anything in this Section 4 notwithstanding, the Company
shall be entitled (but shall not be required) to make such upward
adjustments in each of the Share Components and the Optional Conversion
Rate in addition to those set forth by this Section 4, as the Company,
in its sole discretion, shall determine to be advisable, in order that
any stock dividend, subdivision or split of stock, distribution of
rights to purchase stock or securities, or distribution of securities
convertible into or exchangeable for stock (or any transaction that
could be treated as any of the foregoing transactions pursuant to
Section 305 of the Internal Revenue Code of 1986, as amended, or any
successor provision) hereafter made by the Company to its stockholders
will not be taxable in whole or in part.
(vi) All adjustments to each of the Share Components and the
Optional Conversion Rate shall be calculated to the nearest 1/100th of
a share of Common Stock. No adjustment in the Share Components or the
Optional Conversion Rate shall be required unless such adjustment would
require an increase or decrease of at least one percent (1%) therein;
provided, however, that any adjustments which are not made by reason of
this subsection shall be carried forward and taken into account in any
subsequent adjustment. All adjustments to the Share Components and the
Optional Conversion Rate shall be made successively.
(vii) Prior to taking any action that could result in
adjustment affecting the Conversion Rate or the Optional Conversion
Rate such that the imputed
<PAGE> 9
9
conversion price for shares of Common Stock issued upon Mandatory
Conversion or upon Optional Conversion would be below the then par
value of the Common Stock, the Company shall take any corporate action
which may, in the opinion of its Board, be necessary in order that the
Company may validly and legally issue fully paid and nonassessable
shares of Common Stock at the Conversion Rate or the Optional
Conversion Rate as so adjusted.
(f) In case of any consolidation or merger to which the
Company is a party (other than a merger or consolidation in which the Company is
the surviving or continuing corporation and in which each share of Common Stock
outstanding immediately prior to the merger or consolidation remains unchanged
in all material respects), or in case of any sale or transfer to another
corporation of the property of the Company as an entirety or substantially as an
entirety, or in the case of any statutory exchange of securities with another
corporation (other than in connection with a merger or acquisition), each share
of Mandatorily Convertible Preferred Stock shall, after consummation of such
transaction, be subject to (i) conversion at the option of the holder into the
kind and amount of securities, cash or other property receivable upon
consummation of such transaction by a holder of the number of shares of Common
Stock (including fractional shares for this purpose) into which such share of
Mandatorily Convertible Preferred Stock might have been converted immediately
prior to consummation of such transaction (or, if such transaction is
consummated prior to July 26, 1998, into which such share of Mandatorily
Convertible Preferred Stock might have been converted immediately prior to
consummation of such transaction if such conversion had occurred immediately
after such date) and (ii) conversion on the Mandatory Conversion Date into the
kind and amount of securities, cash or other property receivable upon
consummation of such transaction by a holder of the number of shares of Common
Stock (including fractional shares for this purpose) into which such share of
Mandatorily Convertible Preferred Stock would have been converted if the
conversion on the Mandatory Conversion Date had occurred immediately prior to
the date of consummation of such transaction, plus, in the case of (ii), the
right, subject to the requirement set forth following clause (D) of Section 3(b)
and any similar requirement of any other Certificate of Designations for
Preferred Stock, to receive cash in an amount equal to all accrued and unpaid
dividends on such share of Mandatorily Convertible Preferred Stock (other than
previously declared dividends payable to a holder of record as of a prior date);
and assuming in each case that such holder of shares of Common Stock failed to
exercise rights of election, if any, as to the kind or amount of securities,
cash or other property receivable upon consummation of such transaction
(provided that, if the kind or amount of securities, cash or other property
receivable upon consummation of such transaction is not the same for each
non-electing share, then the kind and amount of securities, cash or other
property receivable upon consummation of such transaction for each non-electing
share shall be deemed to be the kind and amount so receivable per share by a
plurality of the non-electing shares). The kind and amount of securities into or
for which the shares of Mandatorily Convertible Preferred Stock shall be
convertible after consummation of such transaction shall be subject to
adjustment as described in Section 4(e) following the date of consummation of
such transaction. The Company may not become a party to any such transaction
unless the terms thereof are consistent with the foregoing and with the
provisions of Section 3(c).
(g) If an adjustment is made to the Share Components pursuant
to any of Sections 4(e)(i) through 4(e)(iv), an adjustment shall also be made to
the Threshold Appreciation Price and the Initial Price as such terms are used to
determine which of
<PAGE> 10
10
clauses (i), (ii) or (iii) of the definition of "Conversion Rate" will apply at
the Mandatory Conversion Date and for purposes of calculating the fraction in
sub-clause (ii)(A) of the definition of Conversion Rate. The required
adjustments to the Threshold Appreciation Price and the Initial Price shall be
made at the Mandatory Conversion Date by multiplying each of the Threshold
Appreciation Price and the Initial Price by the inverse of the cumulative number
or fraction determined pursuant to the Share Component adjustment procedures
described in Section 4(e). In the case of the reclassification of any shares of
Common Stock into any common stock other than Common Stock, such common stock
shall be deemed Common Stock solely to determine the Threshold Appreciation
Price and the Initial Price and to apply the Conversion Rate at the Mandatory
Conversion Date. Each such adjustment to the Threshold Appreciation Price or the
Initial Price shall be made successively.
(h) Whenever the Share Components and the Optional Conversion
Rate are adjusted as provided in Section 4(e) and 4(g), the Company shall:
(i) forthwith compute the adjusted Share Components,
Optional Conversion Rate, Threshold Appreciation Price and Initial
Price in accordance with this Section 4 and prepare a certificate
signed by the Chief Financial Officer, any Vice President, the
Treasurer or the Controller of the Company setting forth the adjusted
Share Components, Optional Conversion Rate, Threshold Appreciation
Price and Initial Price, the method of calculation thereof in
reasonable detail and the facts requiring such adjustment and upon
which such adjustment is based, which certificate shall be conclusive,
final and binding evidence of the correctness of the adjustment, and
shall file such certificate forthwith with the transfer agent or agents
for the shares of Mandatorily Convertible Preferred Stock and any
depositary for any shares of Mandatorily Convertible Preferred Stock
represented by depositary shares;
(ii) make a prompt public announcement stating that the Share
Components, Optional Conversion Rate, Threshold Appreciation Price and
Initial Price have been adjusted and setting forth the adjusted Share
Components, Optional Conversion Rate, Threshold Appreciation Price and
Initial Price, including, in the event any shares of Mandatorily
Convertible Preferred Stock are represented by depositary shares, the
adjusted Share Components or Optional Conversion Rate on a per
depositary share basis; and
(iii) mail a notice stating that the Share Components,
Optional Conversion Rate, Threshold Appreciation Price and Initial
Price have been adjusted, the facts requiring such adjustment and upon
which such adjustment is based and setting forth the adjusted Share
Components, Optional Conversion Rate, Threshold Appreciation Price and
Initial Price to the holders of record of the outstanding shares of the
Mandatorily Convertible Preferred Stock, and, in the event any shares
of Mandatorily Convertible Preferred Stock are represented by
depositary shares, to the holders of record of the depositary receipts
evidencing such depositary shares, no later than 45 days after the end
of the Company's fiscal quarter period during which the facts requiring
such adjustment occurred.
(i) In case, at any time while any of the shares of
Mandatorily Convertible Preferred Stock are outstanding,
<PAGE> 11
11
(i) the Company shall declare a dividend (or any other
distribution) on the Common Stock, excluding any cash dividends other
than Extraordinary Cash Distributions, or
(ii) the Company shall authorize the issuance to all holders
of the Common Stock of rights or warrants to subscribe for or purchase
shares of the Common Stock or of any other subscription rights or
warrants, or
(iii) the Company shall authorize any reclassification of the
Common Stock (other than a subdivision, split or combination thereof)
or of any consolidation or merger to which the Company is a party and
for which approval of any stockholders of the Company is required
(except for a merger of the Company into one of its subsidiaries solely
for the purpose of changing the corporate domicile of the Company to
another state of the United States and in connection with which there
is no substantive change in the rights or privileges of any securities
of the Company other than changes resulting from differences in the
corporate statutes of the state the Company was then domiciled in and
the new state of domicile), or of the sale or transfer of all or
substantially all the assets of the Company (except to one or more
wholly owned subsidiaries),
then the Company shall cause to be filed at each office or agency maintained for
the purpose of conversion of the shares of Mandatorily Convertible Preferred
Stock, and shall cause to be mailed to the holders of shares of Mandatorily
Convertible Preferred Stock at their last addresses as they shall appear on the
stock register, and, in the event any shares of Mandatorily Convertible
Preferred Stock are represented by depositary shares, to the holders of record
of the depositary receipts evidencing such depositary shares, at least 10
business days before the date specified in clause (A) or (B) below (or the
earlier of such specified dates, in the event that more than one date is
specified), a notice stating (A) the date on which a record is to be taken for
the purpose of such dividend, distribution, or issuance of rights or warrants,
or, if a record is not to be taken, the date as of which the holders of Common
Stock of record to be entitled to such dividend, distribution, or issuance of
rights or warrants are to be determined, or (B) the date on which any such
reclassification, consolidation, merger, sale or transfer is expected to become
effective, and the date as of which it is expected that holders of Common Stock
of record shall be entitled to exchange their Common Stock for securities or
other property (including cash), if any, deliverable upon such reclassification,
consolidation, merger, sale or transfer. The failure to give or receive the
notice required by this subsection (i) or any defect therein shall not affect
the legality or validity of any such dividend, distribution, issuance of any
right or warrant or other action.
5. No Fractional Shares. (a) No fractional shares of Common
Stock shall be issued upon the conversion of any shares of the Mandatorily
Convertible Preferred Stock. In lieu of any fractional share otherwise issuable
in respect of shares of Mandatorily Convertible Preferred Stock of any holder
that are converted upon Mandatory Conversion or any Optional Conversion, such
holder shall be entitled to receive an amount in cash (computed to the nearest
cent) equal to the same fraction of the Closing Price of the Common Stock
determined (a) as of the fifth Trading Day immediately preceding the Mandatory
Conversion Date, in the case of Mandatory Conversion, or (b) as of the second
Trading Day immediately preceding the effective date of conversion, in the case
of an Optional Conversion by a holder. At any time that any shares of
Mandatorily Convertible Preferred Stock are represented by depositary
<PAGE> 12
12
shares pursuant to a depositary agreement with the Company, the Company may
treat each holder of such depositary shares as a holder of the number (including
fractions) of shares of Mandatorily Convertible Preferred Stock represented by
the depositary shares of such holder for the purposes of computing the
fractional shares of Common Stock otherwise issuable in respect of the
conversion of any shares of Mandatorily Convertible Preferred Stock or the
payment of any dividend.
(b) If payment in cash in lieu of fractional shares of Common
Stock in accordance with the preceding paragraph would result in the Company's
failure to be in compliance with any debt instrument to which it is a party, the
Company shall be entitled to deliver a whole share of Common Stock in lieu of
cash to holders of shares of Mandatorily Convertible Preferred Stock (or
depositary shares representing shares of Mandatorily Convertible Preferred
Stock) entitled to fractional shares of Common Stock (beginning with the holders
entitled to the largest fractional shares) until delivery of cash in lieu of
fractional shares of Common Stock to the remaining holders would no longer
result in the Company's failure to be in compliance with such debt instrument.
6. Reservation of Common Stock. The Company shall at all times
reserve and keep available out of its authorized and unissued Common Stock,
solely for issuance upon the conversion of shares of Mandatorily Convertible
Preferred Stock as herein provided, free from any preemptive rights, such
maximum number of shares of Common Stock as shall from time to time be issuable
upon the Mandatory Conversion or Optional Conversion of all the shares of
Mandatorily Convertible Preferred Stock then outstanding.
7. Certain Definitions. As used in this Certificate of
Designations:
(i) the term "business day" shall mean any day other than a
Saturday, a Sunday or a day on which the NYSE, banking institutions or
trust companies in New York, New York, are authorized or obligated by
law or executive order to close;
(ii) the term "Closing Price" of any security shall mean on
any date of determination (i) the closing sale price (or, if no closing
sale price is reported, the last reported sale price) of such security
(regular way) on the New York Stock Exchange (the "NYSE") on such date,
(ii) if such security is not listed for trading on the NYSE on any such
date, as reported in the composite transactions for the principal
United States securities exchange on which such security is so listed,
(iii) if such security is not so listed on a United States securities
exchange, as reported by the NASDAQ Stock Market, (iv) if such security
is not so reported, the last quoted bid price for such security in the
over-the-counter market as reported by the National Quotation Bureau or
similar organization, or (v) if such security is not so quoted, the
average of the mid-point of the last bid and ask prices for such
security from each of at least three nationally recognized investment
banking firms selected by the Company for such purpose;
(iii) the term "Conversion Price" shall mean the average
Closing Price per share of Common Stock for the 20 Trading Days
immediately prior to (but not including) the Mandatory Conversion Date;
provided, however, that, if there are not 20 Trading Days for the
Common Stock occurring later than the 60th calendar day immediately
prior to, but not including, the Mandatory Conversion Date, the
<PAGE> 13
13
"Conversion Price" shall be the market value per share of Common Stock
as of the Mandatory Conversion Date as determined by a nationally
recognized investment banking firm retained for such purpose by the
Company;
(iv) the term "Current Market Price" means, as of any date
of determination, the average Closing Price per share of Common Stock
for the 20 Trading Days immediately prior to the date of determination;
provided, however, that if there are not 20 Trading Days for the Common
Stock occurring later than the 60th calendar day immediately prior to,
but not including, such date, the Current Market Price shall be
determined as the market value per share of Common Stock as of such
date as determined by a nationally recognized investment banking firm
retained for such purpose by the Company;
(v) the term "Dividend Yield" shall mean, with respect to
any security for any period, the dividends paid or proposed to be paid
pursuant to an announced dividend policy on such security for such
period divided by, if with respect to dividends paid on such security,
the average Closing Price of such security during such period and, if
with respect to dividends so proposed to be paid on such security, the
Closing Price of such security on the effective date of the related
Reset Transaction;
(vi) the term "record date" shall be such date as is from
time to time fixed by the Board with respect to the receipt of
dividends or the taking of any action or exercise of any voting rights
permitted hereby; and
(vii) the term "Reference Dealer" shall mean a dealer engaged
in the trading of convertible securities;
(viii) the term "Trading Day" shall mean a business day on
which the security, the Closing Price of which is being determined, (A)
is not suspended from trading on any national or regional securities
exchange or association or over-the-counter market at the close of
business and (B) has traded at least once on the national or regional
securities exchange or association or over-the-counter market that is
the primary market for the trading of such security.
8. Payment of Taxes. The Company shall pay any and all
documentary, stamp or similar issue or transfer taxes payable in respect of the
issue or delivery of shares of Common Stock on the conversion of shares of
Mandatorily Convertible Preferred Stock pursuant to Section 4; provided,
however, that the Company shall not be required to pay any tax which may be
payable in respect of any registration or transfer involved in the issue or
delivery of shares of Common Stock in a name other than that of the registered
holder of shares of Mandatorily Convertible Preferred Stock converted or to be
converted, and no such issue or delivery shall be made unless and until the
person requesting such issue or delivery has paid to the Company the amount of
any such tax or has established, to the satisfaction of the Company, that such
tax has been paid.
9. Liquidation Rights. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Company, and subject
to the rights of the holders of any other series of Preferred Stock, the holders
of outstanding shares of Mandatorily Convertible Preferred Stock are entitled to
receive the sum of $1,593.75 per share, plus an amount equal to any accrued and
unpaid dividends thereon, out of the
<PAGE> 14
14
assets of the Company available for distribution to stockholders, before any
distribution of assets is made to holders of Junior Stock upon liquidation,
dissolution or winding up. If upon any voluntary or involuntary liquidation,
dissolution, or winding up of the Company, the assets of the Company are
insufficient to permit the payment of the full preferential amounts payable with
respect to shares of Mandatorily Convertible Preferred Stock and all other
series of Parity Preferred Stock, the holders of shares of Mandatorily
Convertible Preferred Stock and of all other series of Parity Preferred Stock
shall share ratably in any distribution of assets of the Company in proportion
to the full respective preferential amounts to which they are entitled. After
payment of the full amount of the liquidating distribution to which they are
entitled, the holders of shares of Mandatorily Convertible Preferred Stock will
not be entitled to any further participation in any distribution of assets by
the Company. A consolidation or merger of the Company with one or more
corporations or a sale or transfer of substantially all the assets of the
Company shall not be deemed to be a liquidation, dissolution, or winding up of
the Company.
10. Voting Rights. The holders of shares of Mandatorily
Convertible Preferred Stock shall not be entitled to any voting rights, except
as required by applicable state law or as described below.
(a) In the event that dividends on the shares of Mandatorily
Convertible Preferred Stock or any other series of Preferred Stock shall be in
arrears and unpaid for six quarterly dividend periods, or if any other series of
Preferred Stock shall be entitled for any other reason to exercise voting
rights, separate from the Common Stock, to elect any Directors of the Company
("Preferred Stock Directors"), the holders of the shares of Mandatorily
Convertible Preferred Stock (voting separately as a class with holders of all
other series of Preferred Stock which does not have a separate class vote and
upon which like voting rights have been conferred and are exercisable), with
each share of Mandatorily Convertible Preferred Stock entitled to 100 votes on
this and other matters in which Preferred Stock votes as a group, shall be
entitled to vote for the election of two Preferred Stock Directors, such
Directors to be in addition to the number of Directors constituting the Board
immediately prior to the accrual of such right. Such right, when vested, shall
continue until all dividends in arrears on the shares of Mandatorily Convertible
Preferred Stock and such other series of Preferred Stock shall have been paid in
full and the right of any other series of Preferred Stock to exercise voting
rights, separate from the Common Stock, to elect any Preferred Stock Directors
shall terminate or have terminated, and, when so paid and such termination
occurs or has occurred, such right of the holders of the shares of Mandatorily
Convertible Preferred Stock shall cease. Upon any termination of the aforesaid
voting right, subject to the requirements of the General Corporation Law of the
State of Delaware and the Certificate, such Preferred Stock Directors shall
cease to be Directors of the Company and shall be required to resign.
(b) The Company will not, without the approval of the holders
of at least 66-2/3% of all the shares of Mandatorily Convertible Preferred Stock
then outstanding: (i) amend, alter, or repeal any of the provisions of the
Certificate or the By-laws of the Company so as to affect adversely the powers,
preferences or rights of the holders of the shares of Mandatorily Convertible
Preferred Stock then outstanding or reduce the minimum time required for any
notice to which only the holders of the shares of Mandatorily Convertible
Preferred Stock then outstanding may be entitled (an amendment of the
Certificate to authorize or create, or to increase the authorized amount
<PAGE> 15
15
of or to issue, Junior Stock, Preferred Stock ranking on parity with the shares
of Mandatorily Convertible Preferred Stock or any stock of any class ranking on
parity with the shares of Mandatorily Convertible Preferred Stock shall be
deemed not to affect adversely the powers, preferences or rights of the holders
of the shares of Mandatorily Convertible Preferred Stock); (ii) create any
series of Preferred Stock ranking prior to the shares of Mandatorily Convertible
Preferred Stock as to payment of dividends or the distribution of assets upon
liquidation; or (iii) authorize or create, or increase the authorized amount of,
any capital stock, or any security convertible into capital stock, of any class
ranking prior to the shares of Mandatorily Convertible Preferred Stock as to
payment of dividends or the distribution of assets upon liquidation.
<PAGE> 16
16
11. Severability of Provisions. Whenever possible, each
provision hereof shall be interpreted in a manner as to be effective and valid
under applicable law, but if any provision hereof is held to be prohibited by or
invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating or otherwise
adversely affecting the remaining provisions hereof. If a court of competent
jurisdiction should determine that a provision hereof would be valid or
enforceable if a period of time were extended or shortened or a particular
percentage were increased or decreased, then such court may make such change as
shall be necessary to render the provision in question effective and valid under
applicable law.
IN WITNESS WHEREOF, Tesoro Petroleum Corporation has caused
this Certificate of Designation to be signed by James C. Reed, Jr., its
Executive Vice President, General Counsel and Secretary, and attested by , its
Assistant Secretary, as of this 25th day of June, 1998.
TESORO PETROLEUM CORPORATION,
By /s/ BRUCE A. SMITH
-------------------------------------
Name: Bruce A. Smith
Title: Chairman, President, and Chief
Executive Officer
Attest:
By /s/ JAMES C. REED, JR.
--------------------------
Name: James C. Reed, Jr.
Title: Secretary
<PAGE> 1
EXHIBIT 4.2
================================================================================
TESORO PETROLEUM CORPORATION
AS ISSUER
AND
THE BANK OF NEW YORK
AS DEPOSITARY
AND
OWNERS AND HOLDERS OF DEPOSITARY RECEIPTS
DEPOSIT AGREEMENT
DATED AS OF JULY 1, 1998
================================================================================
<PAGE> 2
DEPOSIT AGREEMENT
DEPOSIT AGREEMENT dated as of July 1, 1998 among TESORO PETROLEUM
CORPORATION, incorporated under the laws of Delaware (herein called the Issuer),
THE BANK OF NEW YORK, a New York banking corporation (herein called the
Depositary), and all Owners and holders from time to time of Depositary Receipts
issued hereunder.
W I T N E S S E T H :
WHEREAS, the Issuer desires to provide, as hereinafter set forth in
this Deposit Agreement, for the deposit of Shares (as hereinafter defined) of
the Issuer with the Depositary for the purposes set forth in this Deposit
Agreement, for the creation of Depositary Shares representing the Shares so
deposited and for the execution and delivery of Depositary Receipts evidencing
the Depositary Shares; and
WHEREAS, the Depositary Receipts are to be substantially in the form of
Exhibit A annexed hereto, with appropriate insertions, modifications and
omissions, as hereinafter provided in this Deposit Agreement;
NOW, THEREFORE, in consideration of the premises, it is agreed by and
among the parties hereto as follows:
ARTICLE I
DEFINITIONS
The following definitions shall for all purposes, unless otherwise
clearly indicated, apply to the respective terms used in this Deposit Agreement:
SECTION 1.1 Depositary Shares.
The term "Depositary Shares" shall mean the securities
representing the interests in the Deposited Securities and evidenced by the
Receipts issued hereunder. Each Depositary Share shall represent 1/100 of a
Share and the same proportional interest in any and all other securities,
property and cash received by the Depositary in respect thereof and held
hereunder, until there shall occur a change in Deposited Securities covered by
Section 4.7 with respect to which additional Receipts are not executed and
delivered, and thereafter Depositary Shares shall evidence the amount of Shares
or Deposited Securities specified in such Section.
<PAGE> 3
SECTION 1.2 Article; Section.
Wherever references are made in this Deposit Agreement to an
"Article" or "Articles" or to a "Section" or "Sections", such references shall
mean an article or articles or a section or sections of this Deposit Agreement,
unless otherwise required by the context.
SECTION 1.3 Certificate of Designation.
The term "Certificate of Designation" shall mean the Certificate
of Designation adopted by the Board of Directors of the Issuer establishing and
setting forth the rights, preferences, privileges and limitations of the Shares.
SECTION 1.4 Closing Price.
The term "Closing Price" of any security shall mean on any date of
determination (i) the closing sale price (or, if no closing sale price is
reported, the last reported sale price) of such security (regular way) on the
New York Stock Exchange (the "NYSE") on such date, (ii) if such security is not
listed for trading on the NYSE on any such date, as reported in the composite
transactions for the principal United States securities exchange on which such
security is so listed, (iii) if such security is not so listed on a United
States securities exchange, as reported by the NASDAQ Stock Market, (iv) if such
security is not so reported, the last quoted bid price for such security in the
over-the-counter market as reported by the National Quotation Bureau or similar
organization, or (v) if such security is not so quoted, the average of the
mid-point of the last bid and ask prices for such security from each of at least
three nationally recognized investment banking firms selected by the Issuer for
such purpose.
SECTION 1.5 Commission.
The term "Commission" shall mean the Securities and Exchange
Commission of the United States or any successor governmental agency in the
United States.
SECTION 1.6 Deposit Agreement.
The term "Deposit Agreement" shall mean this Agreement, as the
same may be amended from time to time in accordance with the provisions hereof.
SECTION 1.7 Depositary; Corporate Trust Office.
The term "Depositary" shall mean The Bank of New York, a New York
banking corporation and any successor as depositary hereunder. The term
"Corporate Trust Office", when used with respect to the Depositary, shall mean
the office of the Depositary which at the date of this Agreement is 101 Barclay
Street, New York, New York, 10286.
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SECTION 1.8 Deposited Securities.
The term "Deposited Securities" as of any time shall mean Shares
at such time deposited under this Deposit Agreement and any and all other
securities, property and cash received by the Depositary in respect thereof and
at such time held hereunder.
SECTION 1.9 Issuer.
The term "Issuer" shall mean Tesoro Petroleum Corporation,
incorporated under the laws of Delaware, and its successors.
SECTION 1.10 Owner.
The term "Owner" shall mean the person in whose name a Receipt is
registered on the books of the Depositary maintained for such purpose.
SECTION 1.11 Receipts.
The term "Receipts" shall mean the Depositary Receipts issued
hereunder evidencing Depositary Shares.
SECTION 1.12 Registrar.
The term "Registrar" shall mean any bank or trust company having
an office in the Borough of Manhattan, The City of New York, which shall be
appointed to register Receipts and transfers of Receipts as herein provided.
SECTION 1.13 Securities Act of 1933.
The term "Securities Act of 1933" shall mean the United States
Securities Act of 1933, as from time to time amended.
SECTION 1.14 Shares.
The term "Shares" shall mean the Issuer's 7.25% Mandatorily
Convertible Preferred Stock, no par value per share, heretofore validly issued
and outstanding and fully paid, nonassessable and free of any pre-emptive rights
of the holders of outstanding capital stock of the Issuer or hereafter validly
issued and outstanding and fully paid, nonassessable and free of any pre-emptive
rights of the holders of outstanding capital stock of the Issuer or interim
certificates representing such Shares.
SECTION 1.15 Trading Day; Business Day.
The term "Trading Day" shall mean a business day on which the
security, the Closing Price of which is being determined, (i) is not suspended
from trading on any national or regional securities exchange or association or
over-the-counter market at the close of business and (ii) has traded at least
once on the national or regional securities exchange or association or
over-the-counter
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market that is the primary market for the trading of such security. The term
"Business Day" shall mean any day that is not a Saturday, a Sunday or a day on
which the NYSE, banking institutions or trust companies in The City of New York
are authorized or obligated by law or executive order to close.
ARTICLE II
FORM OF RECEIPTS, DEPOSIT OF SHARES,
EXECUTION AND DELIVERY, TRANSFER
AND SURRENDER OF RECEIPTS
SECTION 2.1 Form and Transferability of Receipts.
Definitive Receipts shall be substantially in the form set forth
in Exhibit A annexed to this Deposit Agreement, with appropriate insertions,
modifications and omissions, as hereinafter provided. No Receipt shall be
entitled to any benefits under this Deposit Agreement or be valid or obligatory
for any purpose, unless such Receipt shall have been executed by the Depositary
by the manual or facsimile signature of a duly authorized signatory of the
Depositary and, if a Registrar for the Receipts shall have been appointed,
countersigned by the manual or facsimile signature of a duly authorized officer
of the Registrar. The Depositary shall maintain books on which each Receipt so
executed and delivered as hereinafter provided and the transfer of each such
Receipt shall be registered. Receipts bearing the manual or facsimile signature
of a duly authorized signatory of the Depositary who was at any time a proper
signatory of the Depositary shall bind the Depositary, notwithstanding that such
signatory has ceased to hold such office prior to the execution and delivery of
such Receipts by the Registrar or did not hold such office on the date of
issuance of such Receipts.
The Receipts may be endorsed with or have incorporated in the text
thereof such legends or recitals or modifications not inconsistent with the
provisions of this Deposit Agreement as may be required by the Depositary or
required to comply with any applicable law or regulations thereunder or with the
rules and regulations of any securities exchange upon which Depositary Shares
may be listed or to indicate any special limitations or restrictions to which
any particular Receipts are subject by reason of the date of issuance of the
underlying Deposited Securities or otherwise.
Title to a Receipt (and to the Depositary Shares evidenced
thereby), when properly endorsed or accompanied by
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proper instruments of transfer, shall be transferable by delivery with the same
effect as in the case of a negotiable instrument; provided, however, that the
Depositary, notwithstanding any notice to the contrary, may treat the Owner
thereof as the absolute owner thereof for the purpose of determining the person
entitled to distribution of dividends or other distributions or to any notice
provided for in this Deposit Agreement and for all other purposes.
SECTION 2.2 Deposit of Shares.
Subject to the terms and conditions of this Deposit Agreement,
Shares may be deposited by delivery thereof by the Issuer to the Depositary on
any closing date for the sale of the Depositary Shares representing such Shares
to underwriters in connection with the public offering of such Depositary
Shares, accompanied by any appropriate instrument or instruments of transfer, or
endorsement, in form satisfactory to the Depositary, together with all such
certifications as may be required by the Depositary in accordance with the
provisions of this Deposit Agreement, and, if the Depositary requires, together
with a written order directing the Depositary to execute and deliver to, or upon
the written order of, the Issuer, a Receipt or Receipts for the number of
Depositary Shares representing such deposit. All Shares so deposited shall be
recorded in the name of the Depositary on the books of the Issuer.
Deposited Securities shall be held by the Depositary for the
account and to the order of the Depositary at its Corporate Trust Office or at
such other place or places as the Depositary shall determine.
SECTION 2.3 Execution and Delivery of Receipts.
Upon receipt by the Depositary of any deposit pursuant to Section
2.2 hereunder (and in addition, if the transfer books of the Issuer are open,
the Depositary may in its sole discretion require a proper acknowledgment or
other evidence from the Issuer that any Deposited Securities have been recorded
upon the books of the Issuer in the name of the Depositary or its nominee),
together with the other documents required as above specified, the Depositary,
subject to the terms and conditions of this Deposit Agreement, shall execute and
deliver at its Corporate Trust Office, to or upon the written order of the
Issuer, a Receipt or Receipts, registered in the name or names and evidencing
any authorized number of Depositary Shares deliverable in respect of such
deposit requested by the Issuer, but only upon payment to the Depositary of all
taxes and governmental charges and stock transfer and registration
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fees payable in connection with such deposit and the transfer of the Deposited
Securities.
SECTION 2.4 Transfer of Receipts; Combination and Split-up of Receipts.
The Depositary, subject to the terms and conditions of this
Deposit Agreement, shall register transfers of Receipts on its transfer books
from time to time, upon any surrender of a Receipt, by the Owner in person or by
a duly authorized attorney, properly endorsed or accompanied by proper
instruments of transfer, and duly stamped as may be required by the laws of the
State of New York and of the United States of America. Thereupon the Depositary
shall execute a new Receipt or Receipts and deliver the same to or upon the
order of the person entitled thereto.
The Depositary, subject to the terms and conditions of this
Deposit Agreement, shall upon surrender of a Receipt or Receipts for the purpose
of effecting a split-up or combination of such Receipt or Receipts, execute and
deliver a new Receipt or Receipts for any authorized number of Depositary Shares
requested, evidencing the same aggregate number of Depositary Shares as the
Receipt or Receipts surrendered.
The Depositary may appoint one or more co-transfer agents for the
purpose of effecting transfers, combinations and split-ups of Receipts at
designated transfer offices on behalf of the Depositary. In carrying out its
functions, a co-transfer agent may require evidence of authority and compliance
with applicable laws and other requirements by Owners or persons entitled to
Receipts and will be entitled to protection and indemnity to the same extent as
the Depositary.
SECTION 2.5 Surrender of Receipts and Withdrawal of Shares.
Upon surrender at the Corporate Trust Office of the Depositary of
a Receipt for the purpose of withdrawal of the Deposited Securities (it being
understood that, with respect to any withdrawal of Shares, only whole Shares may
be withdrawn) represented by the Depositary Shares evidenced by such Receipt,
and upon payment of all taxes and governmental charges payable in connection
with such surrender and withdrawal of the Deposited Securities, and subject to
the terms and conditions of this Deposit Agreement, the Owner of such Receipt
shall be entitled to delivery, to him or upon his order, of the amount of
Deposited Securities at the time represented by the Depositary Shares evidenced
by such Receipt. Delivery of
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<PAGE> 8
such Deposited Securities may be made by the delivery of (i) certificates for
Shares being withdrawn in the name of such Owner or as ordered by him or by
certificates for Shares being withdrawn properly endorsed or accompanied by
proper instruments of transfer to such Owner or as ordered by him and (ii) any
other securities, property and cash to which such Owner is then entitled in
respect of such Receipt to such Owner or as ordered by him. Such delivery shall
be made, as hereinafter provided, without unreasonable delay.
A Receipt surrendered for such purposes may be required by the
Depositary to be properly endorsed in blank or accompanied by proper instruments
of transfer in blank, and if the Depositary so requires, the Owner thereof shall
execute and deliver to the Depositary a written order directing the Depositary
to cause the Deposited Securities being withdrawn to be delivered to or upon the
written order of a person or persons designated in such order. Thereupon the
Depositary shall, subject to Sections 2.6, 3.1 and 3.2 and to the other terms
and conditions of this Deposit Agreement, deliver at the Corporate Trust Office
to or upon the written order of the person or persons designated in the order
delivered to the Depositary as above provided, the amount of Deposited
Securities represented by the Depositary Shares evidenced by such Receipt.
SECTION 2.6 Limitations on Execution and Delivery, Transfer and
Surrender of Receipts.
As a condition precedent to the execution and delivery,
registration of transfer, split-up, combination or surrender of any Receipt or
withdrawal of any Deposited Securities or the exercise of any conversion right
referred to in Section 2.10, the Depositary, any of the Depositary's agents or
the Registrar may require any or all of the following: (i) payment to it of a
sum sufficient to reimburse it for any tax or other governmental charge and any
stock transfer or registration fee with respect thereto (including any such tax
or charge and fee with respect to Shares being deposited or withdrawn or with
respect to the Common Stock (as defined in Section 2.9) of the Issuer being
delivered upon conversion); (ii) the production of proof satisfactory to it as
to the identity and genuineness of any signature and (iii) compliance with any
regulations the Depositary may establish consistent with the provisions of this
Deposit Agreement, including, without limitation, this Section 2.6.
The transfer of Receipts in particular instances may be refused or
the registration of transfer of outstanding Receipts generally may be suspended,
during any period when the transfer books of the Depositary are closed,
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or if any such action is deemed necessary or advisable by the Depositary or the
Issuer at any time or from time to time because of any requirement of law or of
any government or governmental body or commission, or under any provision of
this Deposit Agreement, or, with the approval of the Issuer, for any other
reason. Notwithstanding any other provision of this Deposit Agreement or the
Receipts, the surrender of outstanding Receipts and withdrawal of Deposited
Securities may not be suspended subject only to (i) temporary delays caused by
closing the transfer books of the Depositary or the Issuer or the payment of
dividends, (ii) the payment of taxes, stock transfer or registration fees and
similar charges, and (iii) compliance with any U.S. laws or governmental
regulations relating to the Receipts or to the withdrawal of the Deposited
Securities.
SECTION 2.7 Lost Receipts, etc.
In case any Receipt shall be mutilated, destroyed, lost or stolen,
the Depositary shall execute and deliver a new Receipt of like tenor in exchange
and substitution for such mutilated Receipt upon cancelation thereof, or in lieu
of and in substitution for such destroyed, lost or stolen Receipt. Before the
Depositary shall execute and deliver a new Receipt in substitution for a
destroyed, lost or stolen Receipt, the Owner thereof shall have (i) filed with
the Depositary (a) a request for such execution and delivery before the
Depositary has notice that the Receipt has been acquired by a bona fide
purchaser and (b) a sufficient indemnity bond and (ii) satisfied any other
reasonable requirements imposed by the Depositary.
SECTION 2.8 Cancelation and Destruction of Surrendered Receipts.
All Receipts surrendered to the Depositary shall be canceled by
the Depositary. The Depositary is authorized to destroy Receipts so canceled.
SECTION 2.9 Mandatory Conversion of Shares into Common Stock.
On the date fixed for mandatory conversion of the Shares by the
Certificate of Designation (the "Mandatory Conversion Date"), Shares represented
by Depositary Shares shall be mandatorily converted, and such Depositary Shares
shall be deemed no longer outstanding and all rights of the Owners of the
Receipts evidencing such Depositary Shares (except the right to receive (i) the
shares of common stock, par value $0.162/3 per share (the "Common Stock") of the
Issuer to which such Owner is entitled upon conversion, (ii) any cash payable
with respect to any fractional shares of Common Stock otherwise deliverable by
the Depositary upon conversion, (iii) any cash for accrued and unpaid dividends
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<PAGE> 10
on such Shares (other than previously declared dividends payable to an Owner as
of a prior date) and (iv) any other securities, property or cash to which such
Owner is entitled hereunder) shall cease and terminate. Upon surrender of the
Receipts evidencing such Depositary Shares at the Corporate Trust Office or at
such office or to such agent of the Depositary as the Depositary may designate
for such purpose (properly endorsed or assigned for transfer, as the Depositary
or such agent shall so require), such Depositary Shares shall be converted into,
subject to adjustment as provided in the Certificate of Designation and this
Deposit Agreement, (i) a number of shares of Common Stock per Depositary Share
equal to one-one hundredth of the number (including fractional shares) of shares
of Common Stock which each Share converted into at the applicable rate specified
in the Certificate of Designation, (ii) cash in lieu of fractional shares of
Common Stock otherwise deliverable by the Depositary upon such conversion,
calculated in accordance with Section 4.11 hereof, (iii) the right to receive
cash for any accrued and unpaid dividends on the Shares represented by such
Depositary Shares (other than previously declared dividends payable to an Owner
as of a prior date) and (iv) the right to receive any other securities, property
or cash to which Owners are entitled hereunder.
On the Mandatory Conversion Date, for each Owner of a Receipt or
Receipts, the Issuer shall deposit with the Depositary (i) certificates for the
number of shares of Common Stock and (ii) the amount of cash in lieu of
fractional shares determined as set forth in the preceding paragraph into which
the Depositary Shares evidenced by such Receipt or Receipts shall convert on the
Mandatory Conversion Date (assuming proper surrender of such Receipt or Receipts
to the Depositary or any of its agents) and (iii) subject to the Certificate of
Designation, an amount in cash equal to all accrued and unpaid dividends on the
Shares represented by such Depositary Shares to the Mandatory Conversion Date
(other than previously declared dividends payable to an Owner as of a prior
date). With respect to Owners which hold a Receipt or Receipts evidencing more
than one Depositary Share on the Mandatory Conversion Day, the number of shares
of Common Stock and the amount of cash in lieu of fractional shares to be
deposited by the Issuer with the Depositary on that date shall be computed on
the basis of the aggregate number of Depositary Shares evidenced by such Receipt
or Receipts. The Depositary shall as promptly as practicable deliver to each
Owner of a Receipt or Receipts which properly delivers such Receipt or Receipts
to the Depositary or any of its agents certificates for the number of shares of
Common Stock and
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the amount of cash, without interest, to which such Owner is entitled pursuant
to the preceding provisions.
No fractional shares of Common Stock will be delivered by the
Depositary in connection with mandatory conversion of Shares represented by
Depositary Shares on the Mandatory Conversion Date.
SECTION 2.10 Optional Conversion of Shares into Common Stock.
Subject to the terms and conditions of this Deposit Agreement, at
any time after July 26, 1998 and prior to the Mandatory Conversion Date, an
Owner of a Receipt or Receipts evidencing Depositary Shares representing whole
or fractional Shares may surrender such Receipt or Receipts at the Corporate
Trust Office or at such office or to such agents of the Depositary as the
Depositary may designate for such purpose, together with a notice of conversion
duly completed and executed, thereby directing the Depositary or any such agent
to instruct the Issuer to cause the conversion (which may include partial
conversions) of the number of Shares (which instruction may be given by
reference to the number of Depositary Shares representing such Shares) specified
in such notice of conversion into shares of Common Stock at the rate specified
in the Certificate of Designation, and an assignment of such Receipt or Receipts
to the Issuer or in blank, duly completed and executed (and, if such conversion
is to occur after the close of business on a record date for any payment of
declared dividends on the Shares and before the opening of business on the next
succeeding dividend payment date, payment in cash of an amount equal to the
dividend payable on such date on the Shares so converted). To the extent that an
Owner delivers to the Depositary for conversion a Receipt or Receipts evidencing
Depositary Shares representing Shares which in the aggregate (including
fractional Shares) would result in a fractional share of Common Stock being
deliverable by the Issuer upon such Shares' conversion at the rate specified in
the Certificate of Designation, the Issuer shall deliver to such Owner payment
in cash in lieu of such fractional share of Common Stock, calculated in
accordance with Section 4.11 hereof. If a Receipt or Receipts evidencing more
than one Depositary Share shall be surrendered for conversion of the Shares
represented thereby at one time by the same Owner, the number of shares of
Common Stock and the amount of cash in lieu of fractional shares deliverable by
the Issuer upon such conversion shall be computed on the basis of the aggregate
number of Shares (including fractional Shares) represented by Depositary Shares
evidenced by the Receipt or Receipts so surrendered.
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Upon receipt at any time after July 26, 1998 and prior to the
Mandatory Conversion Date by the Depositary or an agent of the Depositary of a
Receipt or Receipts, together with a notice of conversion, duly completed and
executed, directing the Depositary or such agent to instruct the Issuer to cause
the conversion (which may be a partial conversion) of a specified number of
Shares (which instruction may be by reference to the number of Depositary Shares
representing such Shares) at the rate specified in the Certificate of
Designation, and an assignment of such Receipt or Receipts to the Issuer or in
blank, duly completed and executed, the Depositary or such agent shall instruct
the Issuer, subject to adjustment as provided in the Certificate of Designation
and this Deposit Agreement, (i) to cause the conversion (which may be a partial
conversion) at the rate specified in the Certificate of Designation of the
number of Shares represented by the Depositary Shares evidenced by the Receipt
or Receipts so surrendered for conversion as specified in the written notice to
the Depositary or such agent and (ii) to cause the delivery to the Owner of such
Receipt or Receipts of (a) a certificate or certificates evidencing the number
of whole shares of Common Stock into which the Shares (including fractional
Shares) represented by the Depositary Shares evidenced by such Receipt or
Receipts have been converted, and (b) the amount of cash to which such Owner is
entitled in lieu of fractional shares of Common Stock otherwise deliverable by
the Issuer upon such conversion, calculated in accordance with Section 4.11
hereof. The Issuer shall as promptly as practicable after receipt thereof cause
the delivery of the certificate or certificates and cash referred to in (a) and
(b) above, and such conversion shall be deemed to have been effected immediately
prior to the close of business on the date of such receipt and shall occur at
the rate specified in the Certificate of Designation in effect at such time and
on such date. Upon such conversion, the Depositary or such agent (i) shall
deliver to the Owner a Receipt evidencing the number of Depositary Shares
evidenced by the surrendered Receipt or Receipts in excess of the number of
Depositary Shares evidenced by such Receipt or Receipts that have been so
converted, (ii) shall cancel the Depositary Shares evidenced by Receipts
surrendered for conversion and (iii) shall deliver to the Issuer or its transfer
agent for the Shares for cancelation the number of Shares (including fractional
Shares) represented by the Depositary Shares evidenced by the Receipts so
surrendered and so converted. Upon the delivery of the Shares to be canceled due
to such conversion by the Depositary or such agent to the Issuer or its transfer
agent, the Issuer or its transfer agent shall deliver to the Depositary or such
agent, as applicable, a
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certificate or certificates evidencing the number of Shares, if any, that equals
the excess of the number of Shares evidenced by the surrendered certificate over
the number of Shares evidenced by that certificate that have been so converted.
Depositary Shares converted in connection with conversion of the Shares
represented thereby shall only be converted in whole, and not in part.
The Owner of a Receipt or Receipts on any dividend payment record
date established by the Depositary as provided in Section 4.5 hereof shall be
entitled to receive the dividend payable with respect to the Depositary Shares
evidenced by such Receipt or Receipts on the dividend payment date
notwithstanding the conversion (which may be a partial conversion) subsequent to
such record date of the Shares represented by such Depositary Shares. However,
if a Receipt or Receipts are surrendered for conversion after the close of
business on a dividend payment record date established by the Depositary and
before the opening of business on the next succeeding dividend payment date, the
Owner of such Receipt or Receipts shall pay to the Depositary an amount equal to
the dividend payable on such dividend payment date on the Depositary Shares
evidenced by the Receipt or Receipts being surrendered for conversion. Any Owner
of a Receipt or Receipts on a dividend payment record date established by the
Depositary who (or whose transferee) surrenders such Receipt or Receipts with
instructions to the Depositary for conversion of the underlying Shares on the
next succeeding dividend payment date shall receive the dividend payable with
respect to the Depositary Shares evidenced by such Receipt or such Receipts and
shall not be required to include payment of the amount of such dividend on such
Depositary Shares upon surrender of such Receipt or Receipts for conversion.
Upon the conversion of any Share for which a notice of conversion
has been provided to the Depositary or an agent of the Depositary by the Owner
of the Receipt or Receipts evidencing the Depositary Shares representing such
Share, dividends shall cease to become payable on such Depositary Shares, such
Depositary Shares shall be deemed no longer outstanding, all rights of the Owner
of the Receipt or Receipts evidencing such Depositary Shares (except the right
to receive (i) the Common Stock to which such Owner is entitled upon conversion,
(ii) any cash payable with respect to any fractional shares of Common Stock
otherwise deliverable by the Issuer upon conversion, (iii) any Receipts
evidencing Depositary Shares representing Shares which were not so converted and
(iv) any other securities, property or cash to which such Owner is entitled
hereunder)
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shall cease and terminate, and the Receipt or Receipts evidencing such
Depositary Shares shall be cancelled.
No fractional shares of Common Stock shall be deliverable by the
Issuer upon conversion of the Shares represented by the Depositary Shares.
ARTICLE III
CERTAIN OBLIGATIONS OF OWNERS OF RECEIPTS
SECTION 3.1 Filing Proofs, Certificates and Other
Information.
Any Owner of a Receipt may be required from time to time to file
with the Depositary such proof of citizenship or residence, to execute such
certificates and to make such representations and warranties, as the Depositary
may deem necessary or proper. The Depositary may withhold the registration of
transfer of any Receipt or the distribution of any dividend or sale or
distribution of rights or of the proceeds thereof or the delivery of any
Deposited Securities or the exercise of any conversion right referred to in
Section 2.9 and 2.10 or the delivery of any Common Stock upon such conversion
until such proof or other information is filed or such certificates are executed
or such representations and warranties made.
SECTION 3.2 Liability of Owner for Taxes.
If any tax or other governmental charge shall become payable with
respect to any Receipt or any Deposited Securities represented by Depositary
Shares evidenced by any Receipt or with respect to any conversion right referred
to in Section 2.10, such tax or other governmental charge shall be payable by
the Owner of such Receipt to the Depositary. The Depositary may refuse to effect
any transfer of such Receipt or any withdrawal of Deposited Securities
represented by Depositary Shares evidenced by such Receipt or any such
conversion until such payment is made, and may withhold any dividends or other
distributions, or may sell for the account of the Owner thereof any part or all
of the Deposited Securities represented by the Depositary Shares evidenced by
such Receipt, and may apply such dividends or other distributions or the
proceeds of any such sale in payment of such tax or other governmental charge
and the Owner of such Receipt shall remain liable for any deficiency.
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SECTION 3.3 Warranties on Deposit of Shares.
The Issuer, upon depositing Shares under this Deposit Agreement,
shall be deemed thereby to represent and warrant that such Shares and each
certificate therefor are validly issued, fully paid, nonassessable and free of
any pre-emptive rights of the holders of outstanding capital stock of the Issuer
and that the person making such deposit is duly authorized so to do. The Issuer
shall also be deemed to represent that the deposit of such Shares and the sale
of Receipts evidencing Depositary Shares representing Shares by the Issuer are
not restricted under the Securities Act of 1933. Such representations and
warranties shall survive the deposit of Shares and issuance of Receipts.
ARTICLE IV
THE DEPOSITED SECURITIES
SECTION 4.1 Cash Distributions.
Whenever the Depositary shall receive any cash dividend or other
cash distribution on any Deposited Securities (other than cash dividends or cash
distributions paid by the Issuer to the Depositary in lieu of fractional shares
of Common Stock otherwise deliverable by the Issuer upon conversion of the
Depositary Shares), the Depositary shall distribute the dividend or distribution
thus received to the Owners entitled thereto, in proportion, insofar as
practicable, to the number of Depositary Shares representing such Deposited
Securities held by them respectively. In the event that the Issuer or the
Depositary shall be required to withhold and does withhold from any such cash
dividend or such other cash distribution an amount on account of taxes, the
amount distributed to the Owner of the Receipts evidencing Depositary Shares
representing such Deposited Securities shall be reduced accordingly. The
Depositary shall distribute only such amount, however, as can be distributed
without attributing to any Owner a fraction of one cent. Any such fractional
amounts shall be rounded to the nearest whole cent and so distributed to Owners
entitled thereto. The Depositary will forward to the Issuer or its agent such
information from its records as the Issuer may reasonably request to enable the
Issuer or its agent to file necessary reports with governmental agencies.
SECTION 4.2 Distributions Other Than Cash, Shares or
Rights.
Subject to the provisions of Section 4.7, whenever the Depositary
shall receive any distribution other than a distribution described in Sections
4.1, 4.3 or 4.4, the Depositary shall cause the securities or property received
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by it to be distributed to the Owners entitled thereto, in proportion to the
number of Depositary Shares representing Deposited Securities held by them
respectively, in any manner that the Depositary may deem equitable and
practicable for accomplishing such distribution; provided, however, that if in
the opinion of the Depositary such distribution cannot be made proportionately
among the Owners entitled thereto, or if for any other reason (including, but
not limited to, any requirement that the Issuer or the Depositary withhold an
amount on account of taxes or other governmental charges or that such securities
must be registered under the Securities Act of 1933 in order to be distributed
to Owners or holders) the Depositary deems such distribution not to be feasible,
the Depositary may adopt such method as it may deem equitable and practicable
for the purpose of effecting such distribution, including, but not limited to,
the public or private sale of the securities or property thus received, or any
part thereof, and the net proceeds of any such sale shall be distributed by the
Depositary to the Owners entitled thereto as in the case of a distribution
received in cash pursuant to Section 4.1.
SECTION 4.3 Distributions in Shares.
If any distribution upon any Deposited Securities consists of a
dividend in, or free distribution of, Shares, the Depositary may, and shall if
the Issuer shall so request, distribute to the Owners of outstanding Receipts
entitled thereto, in proportion to the number of Depositary Shares representing
such Deposited Securities held by them respectively, additional Receipts
evidencing an aggregate number of Depositary Shares representing the amount of
Shares received as such dividend or free distribution, subject to the terms and
conditions of the Deposit Agreement with respect to the deposit of Shares and
the issuance of Depositary Shares evidenced by Receipts, including the
withholding of any tax or other governmental charge as provided in Section 4.10.
In lieu of delivering Receipts for fractional Depositary Shares in any such
case, the Depositary shall sell the amount of Shares represented by the
aggregate of such fractions and distribute the net proceeds, all in the manner
and subject to the conditions described in Section 4.1, or, if the Depositary
deems such sale and distribution not feasible, the Depositary may adopt such
method as it shall deem equitable and practicable in substitution for delivering
Receipts for fractional Depositary Shares.
SECTION 4.4 Rights.
In the event that the Issuer shall offer or cause to be offered to
the holders of any Deposited Securities any rights to subscribe for additional
Shares or any rights of
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any other nature, the Depositary shall have discretion as to the procedure to be
followed in making such rights available to any Owners or in disposing of such
rights on behalf of any Owners and making the net proceeds available to such
Owners or, if by the terms of such rights offering or for any other reason, the
Depositary may not either make such rights available to any Owners or dispose of
such rights and make the net proceeds available to such Owners, then the
Depositary shall allow the rights to lapse. If at the time of the offering of
any rights the Depositary determines in its discretion that it is lawful and
feasible to make such rights available to all Owners or to certain Owners but
not to other Owners, the Depositary may distribute to any Owner to whom it
determines the distribution to be lawful and feasible, in proportion to the
number of Depositary Shares held by such Owner, warrants or other instruments
therefor in such form as it deems appropriate.
In circumstances in which rights would otherwise not be
distributed, if an Owner of Receipts requests the distribution of warrants or
other instruments in order to exercise the rights allocable to the Depositary
Shares of such Owner hereunder, the Depositary will make such rights available
to such Owner upon written notice from the Issuer to the Depositary that (i) the
Issuer has elected in its sole discretion to permit such rights to be exercised
and (ii) such Owner has executed such documents as the Issuer has determined in
its sole discretion are reasonably required under applicable law.
If the Depositary has distributed warrants or other instruments
for rights to all or certain Owners, then upon instruction from such an Owner
pursuant to such warrants or other instruments to the Depositary from such Owner
to exercise such rights, upon payment by such Owner to the Depositary for the
account of such Owner of an amount equal to the purchase price of the Shares to
be received upon the exercise of the rights, and upon payment of any other
charges as set forth in such warrants or other instruments, the Depositary
shall, on behalf of such Owner, exercise the rights and purchase the Shares, and
the Issuer shall cause the Shares so purchased to be delivered to the Depositary
on behalf of such Owner. As agent for such Owner, the Depositary shall cause the
Shares so purchased to be deposited pursuant to Section 2.2 of this Deposit
Agreement, and shall, pursuant to Section 2.3 of this Deposit Agreement, execute
and deliver Receipts to such Owner. In the case of a distribution pursuant to
the second paragraph of this section, such Receipts shall be legended in
accordance with applicable U.S. laws, and shall be
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subject to the appropriate restrictions on sale, deposit, cancelation, and
transfer under such laws.
If the Depositary determines in its discretion that it is not
lawful and feasible to make such rights available to all or certain Owners, it
may sell the rights, warrants or other instruments in proportion to the number
of Depositary Shares held by the Owners to whom it has determined it may not
lawfully or feasibly make such rights available, and allocate the net proceeds
of such sales (net of all taxes and governmental charges payable in connection
with such rights and subject to the terms and conditions of this Deposit
Agreement) for the account of such Owners otherwise entitled to such rights,
warrants or other instruments, upon an averaged or other practical basis without
regard to any distinctions among such Owners because of exchange restrictions or
the date of delivery of any Receipt or otherwise.
The Depositary will not offer rights to Owners unless both the
rights and the securities to which such rights relate are either exempt from
registration under the Securities Act of 1933 with respect to a distribution to
Owners or are registered under the provisions of such Act. If an Owner of
Receipts requests distribution of warrants or other instruments, notwithstanding
that there has been no such registration under such Act, the Depositary shall
not effect such distribution unless it has received an opinion from recognized
counsel in the United States for the Issuer upon which the Depositary may rely
that such distribution to such Owner is exempt from such registration.
The Depositary shall not be responsible for any failure to
determine that it may be lawful or feasible to make such rights available to
Owners in general or any Owner in particular.
SECTION 4.5 Fixing of Record Date.
Whenever any cash dividend or other cash distribution shall become
payable or any distribution other than cash shall be made, or whenever rights,
preferences or privileges shall be offered or issued with respect to the
Deposited Securities, or whenever for any reason the Depositary causes a change
in the number of Shares that are represented by each Depositary Share, or
whenever the Depositary shall receive notice of any meeting at which holders of
Shares are entitled to vote or of which holders of Shares are entitled to
notice, the Depositary shall fix a record date (which shall be the same date as
the record date fixed by the Issuer in respect of the Shares) (i) for the
determination of the Owners who shall be (a) entitled to
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receive such dividend, distribution, rights, preferences or privileges or the
net proceeds of the sale thereof or (b) entitled to give instructions for the
exercise of voting rights at any such meeting, or (ii) on or after which each
Depositary Share will represent the changed number of Shares.
SECTION 4.6 Voting of Deposited Securities.
Upon receipt of notice of any meeting at which the holders of
Shares are entitled to vote, the Depositary shall, as soon as practicable
thereafter, mail to the Owners a notice, which shall be provided by the Issuer
and which shall contain (i) such information as is contained in such notice of
meeting, and (ii) a statement that the Owners as of the close of business on a
specified record date fixed pursuant to Section 4.5 shall be entitled, subject
to any applicable provision of law, the Restated Certificate of Incorporation or
the by-laws of the Issuer, to instruct the Depositary as to the exercise of the
voting rights pertaining to the amount of Shares or other Deposited Securities
represented by their respective Depositary Shares and (iii) a statement as to
the manner in which such instructions may be given. Upon the written request of
an Owner on such record date, the Depositary shall endeavor, in so far as
practicable, to vote or cause to be voted the amount of Shares or other
Deposited Securities represented by the Depositary Shares evidenced by such
Receipt in accordance with the instructions set forth in such request. The
Issuer hereby agrees to take all reasonable action that may be deemed necessary
by the Depositary in order to enable the Depositary to vote such Shares or cause
such Shares to be voted. In the absence of specific instructions from the Owner
of a Receipt, the Depositary will abstain from voting to the extent of the
Shares represented by the Depositary Shares evidenced by such Receipt.
SECTION 4.7 Changes Affecting Deposited Securities.
In circumstances where the provisions of Section 4.2 do not apply,
upon any change in nominal value, change in par value, split-up, consolidation
or any other reclassification of Deposited Securities, or upon any
recapitalization, reorganization, merger or consolidation or sale of assets
affecting the Issuer or to which it is a party, any securities which shall be
received by the Depositary in exchange for or in conversion of or in respect of
Deposited Securities, shall be treated as new Deposited Securities under this
Deposit Agreement, and Depositary Shares evidenced by Receipts then outstanding
shall thenceforth represent the proportionate interest of Owners thereof in the
new Deposited Securities so received in exchange or conversion, unless
additional Receipts are
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delivered pursuant to the following sentence. In any such case the Depositary
may, and shall if the Issuer shall so request, execute and deliver additional
Receipts as in the case of a dividend in Shares, or call for the surrender of
outstanding Receipts to be exchanged for new Receipts specifically describing
such new Deposited Securities.
SECTION 4.8 Reports.
The Depositary shall make available for inspection by Owners at
its Corporate Trust Office any reports and communications, including any proxy
soliciting material, received from the Issuer which are both (i) received by the
Depositary as the holder of the Deposited Securities and (ii) made generally
available to the holders of such Deposited Securities by the Issuer. The Issuer
agrees that it shall deliver to the Depositary, and the Depositary shall,
promptly after receipt thereof, transmit to the Owners of the Receipts, in each
case at the address recorded in the Depositary's books, copies of all notices
and reports (including financial statements) required by law, by the rules of
any national securities exchange upon which the Depositary Shares are listed or
by the Restated Certificate of Incorporation or the Certificate of Designation
to be furnished by the Issuer to holders of Shares. Such transmission shall be
at the Issuer's expense and the Issuer shall provide the Depositary with such
number of copies of such documents as the Depositary may reasonably request. In
addition, the Depositary will transmit to the Owners of Receipts at the Issuer's
expense such other documents as may be requested by the Issuer.
SECTION 4.9 Lists of Owners.
Promptly upon request by the Issuer, the Depositary shall, at the
expense of the Issuer, furnish to it a list, as of a recent date, of the names,
addresses and holdings of Depositary Shares by all persons in whose names
Receipts are registered on the books of the Depositary.
SECTION 4.10 Withholding.
In the event that the Depositary determines that any distribution
in property (including Shares and rights to subscribe therefor) is subject to
any tax or other governmental charge which the Depositary is obligated to
withhold, the Depositary may by public or private sale dispose of all or a
portion of such property (including Shares and rights to subscribe therefor) in
such amounts and in such manner as the Depositary deems necessary and
practicable to pay any such taxes or charges and the Depositary shall distribute
the net proceeds of any such sale after deduction of such taxes or charges to
the Owners entitled thereto.
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SECTION 4.11 Fractional Shares.
No fractional shares of Common Stock will be delivered by the
Issuer or the Depositary, as applicable, to the Owners of Receipts upon
mandatory or optional conversion into shares of Common Stock.
In lieu of any fractional share otherwise deliverable in respect
of the aggregate number of Depositary Shares evidenced by a Receipt or Receipts
of any Owner that are converted upon mandatory conversion, such Owner shall be
entitled to receive an amount in cash equal to the same fraction of the Closing
Price (as defined in Section 1.1 hereof) of the Common Stock as of the fifth
Trading Day (as defined in Section 1.1 hereof) immediately preceding the
Mandatory Conversion Date.
In lieu of any fractional share otherwise deliverable in respect
of the aggregate number of Shares represented by Depositary Shares evidenced by
a Receipt or Receipts of any Owner that are converted upon any optional
conversion, such Owner shall be entitled to receive an amount in cash equal to
the same fraction of the Closing Price of the Common Stock as of the second
Trading Day immediately preceding the effective date of conversion.
If a Receipt or Receipts evidencing more than one Depositary Share
are surrendered for conversion at one time by or for the same Owner, the number
of shares of Common Stock and the amount of cash in lieu of fractional shares
deliverable upon conversion shall be computed on the basis of the aggregate
number of Depositary Shares evidenced by the Receipt or Receipts so surrendered.
In the event that (i) mandatory conversion of the Depositary
Shares or (ii) voluntary conversions of the Shares represented by the Depositary
Shares result in any Owner of Receipts evidencing Depositary Shares being
entitled to cash in lieu of a fractional share on the related date of
conversion, the Issuer will deliver (either directly or through the Depositary,
as applicable) to all such Owners cash in an amount equal to the total amount of
cash to which all such Owners of Receipts are entitled in lieu of fractional
shares on such date.
If payment in cash in lieu of fractional shares of Common Stock in
accordance with the preceding five paragraphs would result in the Issuer's
failure to be in compliance with any debt instrument to which it is a party, the
Issuer shall be entitled to deliver (either directly or through the Depositary,
as applicable) a whole share of Common Stock in lieu of cash to Owners entitled
to
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fractional shares of Common Stock (beginning with the Owners entitled to the
largest fractional shares) until delivery of cash in lieu of fractional shares
of Common Stock to the remaining Owners would no longer result in the Issuer's
failure to be in compliance with such debt instrument.
ARTICLE V
THE DEPOSITARY AND THE ISSUER
SECTION 5.1 Maintenance of Office and Transfer Books by the
Depositary.
Until termination of this Deposit Agreement in accordance with its
terms, the Depositary shall maintain in the Borough of Manhattan, The City of
New York, facilities for the execution and delivery, registration, registration
of transfers and surrender of Receipts in accordance with the provisions of this
Deposit Agreement.
The Depositary shall keep books for the registration of Receipts
and transfers of Receipts which at all reasonable times shall be open for
inspection by the Owners, provided that such inspection shall not be for the
purpose of communicating with Owners in the interest of a business or object
other than the business of the Issuer or a matter related to this Deposit
Agreement or the Receipts.
The Depositary may close the transfer books, at any time or from
time to time, when deemed expedient by it in connection with the performance of
its duties hereunder.
If any Receipts or the Depositary Shares evidenced thereby are
listed on one or more stock exchanges in the United States, the Depositary shall
act as Registrar or appoint a Registrar or one or more co-registrars for
registry of such Receipts in accordance with any requirements of such exchange
or exchanges.
SECTION 5.2 Prevention or Delay in Performance by the Depositary or
the Issuer.
Neither the Depositary nor the Issuer shall incur any liability to
any Owner or holder of any Receipt, if by reason of any provision of any present
or future law or regulation of the United States or of any governmental or
regulatory authority or stock exchange, or by reason of any provision, present
or future, of the Restated Certificate of Incorporation or by-laws of the
Issuer, or by reason of any act of God or war or other circumstances beyond its
control, the Depositary or the Issuer shall be prevented or forbidden from, or
be subject to any civil or criminal penalty on
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account of, doing or performing any act or thing which by the terms of this
Deposit Agreement it is provided shall be done or performed; nor shall the
Depositary or the Issuer incur any liability to any Owner or holder of any
Receipt by reason of any non-performance or delay, caused as aforesaid, in the
performance of any act or thing which by the terms of this Deposit Agreement it
is provided shall or may be done or performed, or by reason of any exercise of,
or failure to exercise, any discretion provided for in this Deposit Agreement.
Where, by the terms of a distribution pursuant to Sections 4.1, 4.2, or 4.3 of
the Deposit Agreement, or an offering or distribution pursuant to Section 4.4 of
the Deposit Agreement, or for any other reason, such distribution or offering
may not be made available to Owners, and the Depositary may not dispose of such
distribution or offering on behalf of such Owners and make the net proceeds
available to such Owners, then the Depositary shall not make such distribution
or offering, and shall allow any rights, if applicable, to lapse.
SECTION 5.3 Obligations of the Depositary and the Issuer.
The Issuer assumes no obligation nor shall it be subject to any
liability under this Deposit Agreement to Owners or holders of Receipts, except
that it agrees to perform its obligations specifically set forth in this Deposit
Agreement without negligence or bad faith.
The Depositary assumes no obligation nor shall it be subject to
any liability under this Deposit Agreement to any Owner or holder of any Receipt
(including, without limitation, liability with respect to the validity or worth
of the Deposited Securities), except that it agrees to perform its obligations
specifically set forth in this Deposit Agreement without negligence or bad
faith.
Neither the Depositary nor the Issuer shall be under any
obligation to appear in, prosecute or defend any action, suit or other
proceeding in respect of any Deposited Securities or in respect of the Receipts,
which in its opinion may involve it in expense or liability, unless indemnity
satisfactory to it against all expense and liability shall be furnished as often
as may be required.
Neither the Depositary nor the Issuer shall be liable for any
action or nonaction by it in reliance upon the advice of or information from
legal counsel, accountants, any person presenting Shares for deposit, any Owner
or any other person believed by it in good faith to be competent to give such
advice or information.
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The Depositary shall not be liable for any acts or omissions made
by a successor depositary whether in connection with a previous act or omission
of the Depositary or in connection with any matter arising wholly after the
removal or resignation of the Depositary, provided that in connection with the
issue out of which such potential liability arises the Depositary performed its
obligations without negligence or bad faith while it acted as Depositary.
The Depositary shall not be responsible for any failure to carry
out any instructions to vote any of the Deposited Securities, or for the manner
in which any such vote is cast or the effect of any such vote, provided that any
such action or nonaction is in good faith.
No disclaimer of liability under the Securities Act of 1933 is
intended by any provision of this Deposit Agreement.
SECTION 5.4 Resignation and Removal of the Depositary.
The Depositary may at any time resign as Depositary hereunder by
written notice of its election so to do delivered to the Issuer, such
resignation to take effect upon the appointment of a successor depositary and
its acceptance of such appointment as hereinafter provided.
The Depositary may at any time be removed by the Issuer by written
notice of such removal effective upon the appointment of a successor depositary
and its acceptance of such appointment as hereinafter provided.
In case at any time the Depositary acting hereunder shall resign
or be removed, the Issuer shall use its best efforts to appoint a successor
depositary, which shall be a bank or trust company having an office in the
Borough of Manhattan, The City of New York and having a combined capital and
surplus of at least $50,000,000. Every successor depositary shall execute and
deliver to its predecessor and to the Issuer an instrument in writing accepting
its appointment hereunder, and thereupon such successor depositary, without any
further act or deed, shall become fully vested with all the rights, powers,
duties and obligations of its predecessor; but such predecessor, nevertheless,
upon payment of all sums due it and on the written request of the Issuer shall
execute and deliver an instrument transferring to such successor all rights and
powers of such predecessor hereunder, shall duly assign, transfer and deliver
all right, title and interest in the Deposited Securities to such successor, and
shall deliver to such successor a list of the Owners of all outstanding
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Receipts. Any such successor depositary shall promptly mail notice of its
appointment to the Owners.
Any corporation into or with which the Depositary may be merged or
consolidated shall be the successor of the Depositary without the execution or
filing of any document or any further act.
SECTION 5.5 Distribution of Additional Shares, Rights, etc.
The Issuer agrees that in the event of any issuance or
distribution of (1) additional Shares, (2) rights to subscribe for Shares, (3)
securities convertible into Shares, or (4) rights to subscribe for such
securities, (each a "Distribution"), the Issuer will promptly furnish to the
Depositary a written opinion from U.S. counsel for the Issuer, which counsel
shall be reasonably satisfactory to the Depositary, stating whether or not the
Distribution requires a Registration Statement under the Securities Act of 1933
to be in effect prior to making such Distribution available to Owners entitled
thereto. If in the opinion of such counsel a Registration Statement is required,
such counsel shall furnish to the Depositary a written opinion as to whether or
not there is a Registration Statement in effect which will cover such
Distribution.
SECTION 5.6 Indemnification.
The Issuer agrees to indemnify the Depositary, its directors,
employees, agents and affiliates, and hold each of them harmless from, any
liability or expense (including, but not limited to, the reasonable fees and
expenses of counsel) which may arise out of acts performed or omitted, in
accordance with the provisions of this Deposit Agreement and of the Receipts, as
the same may be amended, modified or supplemented from time to time, (i) by the
Depositary or its directors, employees, agents and affiliates, except for any
liability or expense arising out of the negligence or bad faith of either of
them, or (ii) by the Issuer or any of its directors, employees, agents and
affiliates.
SECTION 5.7 Charges of Depositary.
No fees, charges and expenses of the Depositary or any agent of
the Depositary hereunder or of any Registrar shall be payable by any person
other than the Issuer, except for any taxes (including transfer taxes, if any)
and other governmental charges and except as provided in this Deposit Agreement.
All other fees, charges and expenses of the Depositary and any agent of the
Depositary hereunder and of any Registrar incident to the performance of their
respective obligations hereunder shall be paid upon
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consultation and agreement between the Depositary and the Issuer as to the
amount and nature of such fees, charges and expenses. The Depositary shall
present its statement for fees, charges and expenses to the Issuer once every
month or at such other intervals as the Issuer and the Depositary may agree.
The Depositary may own and deal in any class of securities of the
Issuer and its affiliates and in Receipts.
SECTION 5.8 Retention of Depositary Documents.
The Depositary is authorized to destroy those documents, records,
bills and other data compiled during the term of this Deposit Agreement at the
times permitted by the laws or regulations governing the Depositary unless the
Issuer requests that such papers be retained for a longer period or turned over
to the Issuer or to a successor depositary.
SECTION 5.9 Exclusivity.
Subject to the Issuer's right to remove the Depositary pursuant to
Section 5.4, the Issuer agrees not to appoint any other depositary for issuance
of Depositary Receipts so long as The Bank of New York is acting as Depositary
hereunder.
ARTICLE VI
AMENDMENT AND TERMINATION
SECTION 6.1 Amendment.
The form of the Receipts and any provision of this Deposit
Agreement may at any time and from time to time be amended by agreement between
the Issuer and the Depositary in any respect that they may deem necessary or
desirable. Any amendment that shall impose any fees, taxes or charges (other
than taxes and other governmental charges, fees and expenses provided for herein
or in the Receipts), or that shall otherwise prejudice any substantial existing
right of Owners of Receipts, shall not become effective as to outstanding
Receipts until the expiration of 90 days after notice of such amendment shall
have been given to the Owners of outstanding Receipts. Every Owner of an
outstanding Receipt at the time any such amendment becomes effective shall be
deemed, by continuing to hold such Receipt, to consent and agree to such
amendment and to be bound by this Deposit Agreement as amended thereby. In no
event shall any amendment impair the right, subject to the provisions of this
Deposit Agreement, of any Owner to surrender any Receipt or Receipts evidencing
Depositary Shares representing Shares with instructions to the Depositary or
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an applicable agent of the Depositary to deliver to the Owner such Shares or to
cause the conversion of such Shares into Common Stock and cash for fractional
shares of Common Stock and, in each case, all securities and other property, if
any, represented thereby, except in order to comply with mandatory provisions of
applicable law.
SECTION 6.2 Termination.
This Deposit Agreement shall terminate at the close of business on
the Mandatory Conversion Date upon distribution by the Depositary to each Owner
entitled thereto of (i) shares of Common Stock and cash (whether in lieu of
fractional shares or otherwise) received by the Depositary from the Issuer for
mandatory conversion of, and/or dividend payments on, the Depositary Shares
evidenced by the Receipt or Receipts held by such Owner and (ii) all other
securities, property and cash then held by the Depositary hereunder. On and
after the date of termination, the Owner of a Receipt will, upon surrender of
such Receipt at the Corporate Trust Office of the Depositary and payment of any
applicable taxes or governmental charges, be entitled to delivery, to him or
upon his order, of the amount of Deposited Securities represented by the
Depositary Shares evidenced by such Receipt. If any Receipts shall remain
outstanding after the date of termination, the Depositary thereafter shall
discontinue the registration of transfers of Receipts, shall suspend the
distribution of dividends to the Owners thereof, and shall not give any further
notices or perform any further acts under this Deposit Agreement, except that
the Depositary shall continue to collect dividends and other distributions
pertaining to Deposited Securities, shall sell rights as provided in this
Deposit Agreement, and shall continue to deliver Deposited Securities, together
with any dividends or other distributions received with respect thereto and the
net proceeds of the sale of any rights or other property, in exchange for
Receipts surrendered to the Depositary (after deducting, in each case, any
applicable taxes or governmental charges). At any time after the expiration of
one year from the date of termination, the Depositary may sell the Deposited
Securities then held hereunder and may thereafter hold uninvested the net
proceeds of any such sale, together with any other cash then held by it
hereunder, unsegregated and without liability for interest, for the pro rata
benefit of the Owners of Receipts which have not theretofore been surrendered,
such Owners thereupon becoming general creditors of the Depositary with respect
to such net proceeds. After making such sale, the Depositary shall be discharged
from all obligations under this Deposit Agreement, except to account for such
net proceeds and other cash (after deducting, in each case, any applicable taxes
or
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governmental charges). Upon the termination of this Deposit Agreement, the
Issuer shall be discharged from all obligations under this Deposit Agreement
except for its obligations to the Depositary under Sections 5.6 and 5.7 hereof.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1 Counterparts.
This Deposit Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and all of such
counterparts shall constitute one and the same instrument. Copies of this
Deposit Agreement shall be filed with the Depositary and shall be open to
inspection by any holder or Owner of a Receipt during business hours.
SECTION 7.2 No Third Party Beneficiaries.
This Deposit Agreement is for the exclusive benefit of the parties
hereto and shall not be deemed to give any legal or equitable right, remedy or
claim whatsoever to any other person.
SECTION 7.3 Severability.
In case any one or more of the provisions contained in this
Deposit Agreement or in the Receipts should be or become invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein or therein shall in no way be affected,
prejudiced or disturbed thereby.
SECTION 7.4 Holders and Owners as Parties; Binding Effect.
The holders and Owners of Receipts from time to time shall be
parties to this Deposit Agreement and shall be bound by all of the terms and
conditions hereof and of the Receipts by acceptance thereof.
SECTION 7.5 Notices.
Any and all notices to be given to the Issuer shall be deemed to
have been duly given if in English and personally delivered or sent by mail or
cable, telex or facsimile transmission confirmed by letter, addressed to Mr.
Bruce A. Smith, Tesoro Petroleum Corporation, 8700 Tesoro Drive, San Antonio,
Texas 78217 (facsimile: (210) 828-8600) or any other place to which the Issuer
may have transferred its principal office.
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Any and all notices to be given to the Depositary shall be deemed
to have been duly given if in English and personally delivered or sent by mail
or cable, telex or facsimile transmission confirmed by letter, addressed to The
Bank of New York, 101 Barclay Street, New York, New York 10286, Attention:
American Depositary Receipt Administration, or any other place to which the
Depositary may have transferred its Corporate Trust Office.
Any and all notices to be given to any Owner shall be deemed to
have been duly given if personally delivered or sent by mail or cable, telex or
facsimile transmission confirmed by letter, addressed to such Owner at the
address of such Owner as it appears on the transfer books for Receipts of the
Depositary, or, if such Owner shall have filed with the Depositary a written
request that notices intended for such Owner be mailed to some other address, at
the address designated in such request.
Delivery of a notice sent by mail or cable, telex or facsimile
transmission shall be deemed to be effected at the time when a duly addressed
letter containing the same (or a confirmation thereof in the case of a cable,
telex or facsimile transmission) is deposited, postage prepaid, in a post-office
letter box. The Depositary or the Issuer may, however, act upon any cable, telex
or facsimile transmission received by it, notwithstanding that such cable, telex
or facsimile transmission shall not subsequently be confirmed by letter as
aforesaid.
SECTION 7.6 Governing Law.
This Deposit Agreement and the Receipts shall be interpreted and
all rights hereunder and thereunder and provisions hereof and thereof shall be
governed by the laws of the State of New York without giving effect to
applicable principles of conflicts of law to the extent that the application of
the laws of another jurisdiction would be required thereby.
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IN WITNESS WHEREOF, TESORO PETROLEUM CORPORATION and THE BANK OF NEW
YORK have duly executed this agreement as of the day and year first set forth
above and all Owners shall become parties hereto upon acceptance by them of
Receipts issued in accordance with the terms hereof.
TESORO PETROLEUM CORPORATION, as
Issuer
By: /s/ GREGORY A. WRIGHT
--------------------------------
Name:
Title:
THE BANK OF NEW YORK, as Depositary
By: /s/ STEVE MYERS
--------------------------------
Name:
Title:
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Exhibit A to Deposit Agreement
NO.
------------------------
DEPOSITARY SHARES
(EACH DEPOSITARY SHARE
REPRESENTS 1/100 OF A
DEPOSITED SHARE)
DEPOSITARY RECEIPT FOR _____
SHARES OF THE 7.25% MANDATORILY
CONVERTIBLE PREFERRED STOCK,
NO PAR VALUE PER SHARE, OF
TESORO PETROLEUM CORPORATION
(INCORPORATED UNDER THE LAWS
OF THE STATE OF DELAWARE)
The undersigned, as depositary (hereinafter called the "Depositary"),
hereby certifies that ______________, or registered assigns IS THE OWNER OF
________________________
DEPOSITARY SHARES
representing interests in deposited shares of 7.25% Mandatorily Convertible
Preferred Stock, no par value per share (herein called "Shares"), of Tesoro
Petroleum Corporation, incorporated under the laws of the State of Delaware
(herein called the "Issuer"). At the date hereof, each Depositary Share
represents 1/100 of a Share which is deposited under the deposit agreement at
the Corporate Trust Office of the Depositary. The Depositary's Corporate Trust
Office is located at a different address than its principal executive office.
Its Corporate Trust Office is located at 101 Barclay Street, New York, N.Y.
10286, and its principal executive office is located at 48 Wall Street, New
York, N.Y. 10286.
THE DEPOSITARY'S CORPORATE TRUST OFFICE ADDRESS IS
101 BARCLAY STREET, NEW YORK, N.Y. 10286
<PAGE> 32
1. THE DEPOSIT AGREEMENT.
This Depositary Receipt is one of an issue (herein called "Receipts"),
all issued and to be issued upon the terms and conditions set forth in the
deposit agreement, dated as of July 1, 1998 (herein called the "Deposit
Agreement"), by and among the Issuer, the Depositary, and all Owners and holders
from time to time of Receipts issued thereunder, each of whom by accepting a
Receipt agrees to become a party thereto and become bound by all the terms and
conditions thereof. The Deposit Agreement sets forth the rights of Owners and
holders of the Receipts and the rights and duties of the Depositary in respect
of the Shares deposited thereunder and any and all other securities, property
and cash from time to time received in respect of such Shares and held
thereunder (such Shares, securities, property, and cash are herein called
"Deposited Securities"). Copies of the Deposit Agreement are on file at the
Depositary's Corporate Trust Office in New York City.
The statements made on the face and reverse of this Receipt are
summaries of certain provisions of the Deposit Agreement and are qualified by
and subject to the detailed provisions of the Deposit Agreement, to which
reference is hereby made. Capitalized terms not defined herein shall have the
meanings set forth in the Deposit Agreement.
2. SURRENDER OF RECEIPTS AND WITHDRAWAL OF SHARES.
Upon surrender at the Corporate Trust Office of the Depositary of this
Receipt, and subject to the terms and conditions of the Deposit Agreement, the
Owner hereof is entitled to delivery, to him or upon his order, of the amount of
Deposited Securities (it being understood that, with respect to any withdrawal
of Shares, only whole Shares may be withdrawn) at the time represented by the
Depositary Shares for which this Receipt is issued. Delivery of such Deposited
Securities may be made by the delivery of (i) certificates for Shares being
withdrawn in the name of the Owner hereof or as ordered by him or by
certificates for the Shares being withdrawn properly endorsed or accompanied by
proper instruments of transfer to such Owner or as ordered by him and (ii) any
other securities, property and cash to which such Owner is then entitled in
respect of this Receipt to such Owner or as ordered by him. Such delivery will
be made at the Corporate Trust Office of the Depositary.
3. MANDATORY CONVERSION OF SHARES INTO COMMON STOCK.
On the date fixed for mandatory conversion of the
Shares by the Certificate of Designation (the "Mandatory Conversion Date"),
Shares represented by Depositary Shares shall be mandatorily converted, and such
Depositary Shares
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shall be deemed no longer outstanding and all rights of the Owners of the
Receipts evidencing such Depositary Shares (except the right to receive (i) the
Common Stock to which such Owner is entitled upon conversion, (ii) any cash
payable with respect to any fractional shares of Common Stock otherwise
deliverable by the Depositary upon conversion, (iii) any cash for accrued and
unpaid dividends on such Shares (other than previously declared dividends
payable to an Owner as of a prior date) and (iv) any other securities, property
or cash to which such Owner is entitled under the Deposit Agreement) shall cease
and terminate. Upon surrender of the Receipts evidencing such Depositary Shares
at the Corporate Trust Office or at such office or to such agent of the
Depositary as the Depositary may designate for such purpose (properly endorsed
or assigned for transfer, as the Depositary or such agent shall so require),
such Depositary Shares shall be converted into, subject to adjustment as
provided in the Certificate of Designation and the Deposit Agreement, (i) a
number of shares of Common Stock per Depositary Share equal to one-one hundredth
of the number (including fractional shares) of shares of Common Stock which each
Share converted into at the applicable rate specified in the Certificate of
Designation, (ii) cash in lieu of fractional shares of Common Stock otherwise
deliverable by the Depositary upon such conversion, calculated in accordance
with Section 4.11 of the Deposit Agreement, (iii) the right to receive cash for
any accrued and unpaid dividends on the Shares represented by such Depositary
Shares (other than previously declared dividends payable to an Owner as of a
prior date) and (iv) the right to receive any other securities, property or cash
to which Owners are entitled under the Deposit Agreement.
On the Mandatory Conversion Date, for each Owner of a Receipt or
Receipts, the Issuer shall deposit with the Depositary (i) certificates for the
number of shares of Common Stock and (ii) the amount of cash in lieu of
fractional shares determined as set forth in the preceding paragraph into which
the Depositary Shares evidenced by such Receipt or Receipts shall convert on the
Mandatory Conversion Date (assuming proper surrender of such Receipt or Receipts
to the Depositary or any of its agents) and (iii) subject to the Certificate of
Designation, an amount in cash equal to all accrued and unpaid dividends on the
Shares represented by such Depositary Shares to the Mandatory Conversion Date
(other than previously declared dividends payable to an Owner as of a prior
date). With respect to Owners which hold a Receipt or Receipts evidencing more
than one Depositary Share on the Mandatory Conversion Day, the number of shares
of Common Stock and the amount of cash in lieu of fractional shares to be
deposited
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<PAGE> 34
by the Issuer with the Depositary on that date shall be computed on the basis of
the aggregate number of Depositary Shares evidenced by such Receipt or Receipts.
The Depositary shall as promptly as practicable deliver to each Owner of a
Receipt or Receipts which properly delivers such Receipt or Receipts to the
Depositary or any of its agents certificates for the number of shares of Common
Stock and the amount of cash, without interest, to which such Owner is entitled
pursuant to the preceding provisions.
4. OPTIONAL CONVERSION OF SHARES INTO COMMON STOCK.
Subject to the terms and conditions of the Deposit
Agreement, at any time after July 26, 1998 and prior to the Mandatory Conversion
Date, an Owner of a Receipt or Receipts evidencing Depositary Shares
representing whole or fractional Shares may surrender such Receipt or Receipts
at the Corporate Trust Office or at such office or to such agents of the
Depositary as the Depositary may designate for such purpose, together with a
notice of conversion duly completed and executed, thereby directing the
Depositary or any such agent to instruct the Issuer to cause the conversion
(which may include partial conversions) of the number of Shares (which
instruction may be given by reference to the number of Depositary Shares
representing such Shares) specified in such notice of conversion into shares of
Common Stock at the rate specified in the Certificate of Designation, and an
assignment of such Receipt or Receipts to the Issuer or in blank, duly completed
and executed (and, if such conversion is to occur after the close of business on
a record date for any payment of declared dividends on the Shares and before the
opening of business on the next succeeding dividend payment date, payment in
cash of an amount equal to the dividend payable on such date on the Shares so
converted). To the extent that an Owner delivers to the Depositary for
conversion a Receipt or Receipts evidencing Depositary Shares representing
Shares which in the aggregate (including fractional Shares) would result in a
fractional share of Common Stock being deliverable by the Issuer upon such
Shares' conversion at the rate specified in the Certificate of Designation, the
Issuer shall deliver to such Owner payment of cash in lieu of such fractional
share of Common Stock, calculated in accordance with Section 4.11 of the Deposit
Agreement. If a Receipt or Receipts evidencing more than one Depositary Share
shall be surrendered for conversion of the Shares represented thereby at one
time by the same Owner, the number of shares of Common Stock and the amount of
cash in lieu of fractional shares deliverable by the Issuer upon such conversion
shall be computed on the basis of the aggregate number of Shares (including
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fractional Shares) represented by Depositary Shares evidenced by the Receipt or
Receipts so surrendered.
Upon receipt at any time after July 26, 1998 and prior to the Mandatory
Conversion Date by the Depositary or an agent of the Depositary of the materials
specified in the first sentence of the preceding paragraph, the Depositary or
such agent shall instruct the Issuer, subject to adjustment as provided in the
Certificate of Designation and the Deposit Agreement, (i) to cause the
conversion (which may be a partial conversion) at the rate specified in the
Certificate of Designation of the number of Shares represented by the Depositary
Shares evidenced by the Receipt or Receipts surrendered for conversion as
specified in the written notice to the Depositary or such agent and (ii) to
cause the delivery to the Owner of such Receipt or Receipts of (a) a certificate
or certificates evidencing the number of whole shares of Common Stock into which
the Shares (including fractional Shares) represented by the Depositary Shares
evidenced by such Receipt or Receipts have been converted, and (b) the amount of
cash to which such Owner is entitled in lieu of fractional shares of Common
Stock otherwise deliverable by the Issuer upon such conversion, calculated in
accordance with Section 4.11 of the Deposit Agreement. The Issuer shall as
promptly as practicable after receipt thereof cause the delivery of the
certificate or certificates and cash referred to in (a) and (b) above, and such
conversion shall be deemed to have been effected immediately prior to the close
of business on the date of such receipt and shall occur at the rate specified in
the Certificate of Designation in effect at such time and on such date. Upon
such conversion, the Depositary or such agent shall deliver to the Owner a
Receipt evidencing the number of Depositary Shares evidenced by the surrendered
Receipt or Receipts in excess of the number of Depositary Shares evidenced by
such Receipt or Receipts that have been so converted. Depositary Shares
converted in connection with conversion of the Shares represented thereby shall
only be converted in whole, and not in part.
The Owner of a Receipt or Receipts on any dividend payment record date
established by the Depositary as provided in the Deposit Agreement shall be
entitled to receive the dividend payable with respect to the Depositary Shares
evidenced by such Receipt or Receipts on the dividend payment date
notwithstanding the conversion (which may be a partial conversion) subsequent to
such record date of the Shares represented by such Depositary Shares. However,
if a Receipt or Receipts are surrendered for conversion after the close of
business on a dividend payment record date established by the Depositary and
before the opening of
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<PAGE> 36
business on the next succeeding dividend payment date, the Owner of such Receipt
or Receipts shall pay to the Depositary an amount equal to the dividend payable
on such dividend payment date on the Depositary Shares evidenced by the Receipt
or Receipts being surrendered for conversion. Any Owner of a Receipt or Receipts
on a dividend payment record date established by the Depositary who (or whose
transferee) surrenders such Receipt or Receipts with instructions to the
Depositary for conversion of the underlying Shares on the next succeeding
dividend payment date shall receive the dividend payable with respect to the
Depositary Shares evidenced by such Receipt or such Receipts and shall not be
required to include payment of the amount of such dividend on such Depositary
Shares upon surrender of such Receipt or Receipts for conversion.
Upon the conversion of any Share for which a notice of conversion has
been provided to the Depositary or an agent of the Depositary by the Owner of
the Receipt or Receipts evidencing the Depositary Shares representing such
Share, dividends shall cease to become payable on such Depositary Shares, such
Depositary Shares shall be deemed no longer outstanding, all rights of the Owner
of the Receipt or Receipts evidencing such Depositary Shares (except the right
to receive (i) the Common Stock to which such Owner is entitled upon conversion,
(ii) any cash payable with respect to any fractional shares of Common Stock
otherwise deliverable by the Issuer upon conversion, (iii) any Receipts
evidencing Depositary Shares representing Shares which were not so converted and
(iv) any other securities, property or cash to which such Owner is entitled
under the Deposit Agreement) shall cease and terminate, and the Receipt or
Receipts evidencing such Depositary Shares shall be cancelled.
5. TRANSFERS, SPLIT-UPS, AND COMBINATIONS OF RECEIPTS.
The transfer of this Receipt is registrable on the books of the
Depositary at its Corporate Trust Office by the Owner hereof in person or by a
duly authorized attorney, upon surrender of this Receipt properly endorsed for
transfer or accompanied by proper instruments of transfer and funds sufficient
to pay any applicable transfer taxes and upon compliance with such regulations,
if any, as the Depositary may establish for such purpose. With the approval of
the Issuer, the transfer of Receipts in particular instances may be refused, or
the registration of transfer of outstanding Receipts generally may be suspended,
for any reason, and such transfer and registration may also be refused or
suspended in certain circumstances described in the Deposit Agreement. This
Receipt may be split into other such Receipts, or may be combined with other
such
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<PAGE> 37
Receipts into one Receipt, evidencing the same aggregate number of Depositary
Shares as the Receipt or Receipts surrendered.
6. LIABILITY OF OWNER FOR TAXES.
If any tax or other governmental charge shall become payable with
respect to any Receipt or any Deposited Securities represented by Depositary
Shares evidenced hereby or with respect to any optional conversion right with
respect to any Depositary Shares, such tax or other governmental charge shall be
payable by the Owner hereof to the Depositary. The Depositary may refuse to
effect any transfer, split-up, combination or surrender of this Receipt or any
withdrawal of Deposited Securities represented by Depositary Shares evidenced by
such Receipt or any such conversion until such payment is made, and may withhold
any dividends or other distributions, or may sell for the account of the Owner
hereof any part or all of the Deposited Securities represented by the Depositary
Shares evidenced by this Receipt, and may apply such dividends or other
distributions or the proceeds of any such sale in payment of such tax or other
governmental charge and the Owner hereof shall remain liable for any deficiency.
7. FILING PROOFS, CERTIFICATES, AND OTHER INFORMATION.
Any Owner of a Receipt may be required from time to time to file with
the Depositary such proof of citizenship or residence, to execute such
certificates and to make such representations and warranties, as the Depositary
may deem necessary or proper. The Depositary may withhold the registration of
transfer of any Receipt or the distribution of any dividend or sale or
distribution of rights or of the proceeds thereof or the delivery of any
Deposited Securities or the exercise of any conversion right until such proof or
other information is filed or such certificates are executed or such
representations and warranties made.
8. CHARGES OF DEPOSITARY.
The Issuer will pay all fees, charges and expenses of the Depositary,
except for taxes (including transfer taxes, if any) and other governmental
charges and such charges as are expressly provided in the Deposit Agreement.
The Depositary may own and deal in any class of securities of Issuer
and its affiliates and in Receipts.
9. TITLE TO RECEIPTS.
It is a condition of this Receipt and every successive holder and Owner
of this Receipt by accepting or holding the same consents and agrees, that title
to this Receipt when properly endorsed or accompanied by proper instruments of
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<PAGE> 38
transfer, is transferable by delivery with the same effect as in the case of a
negotiable instrument; provided, however, that the Depositary, notwithstanding
any notice to the contrary, may treat the person in whose name this Receipt is
registered on the books of the Depositary as the absolute owner hereof for the
purpose of determining the person entitled to distribution of dividends or other
distributions or to any notice provided for in the Deposit Agreement and for all
other purposes.
10. VALIDITY OF RECEIPT.
This Receipt shall not be entitled to any benefits under the Deposit
Agreement or be valid or obligatory for any purpose, unless this Receipt shall
have been executed by the Depositary by the manual or facsimile signature of a
duly authorized signatory of the Depositary and, if a Registrar for the Receipts
shall have been appointed, countersigned by the manual or facsimile signature of
a duly authorized officer of the Registrar.
11. REPORTS.
The Depositary will make available for inspection by Owners of Receipts
at its Corporate Trust Office any reports and communications, including any
proxy soliciting material, received from Issuer which are both (i) received by
the Depositary as the holder of the Deposited Securities and (ii) made generally
available to the holders of such Deposited Securities by the Issuer. The Issuer
will deliver to the Depositary, and the Depositary will, promptly after receipt
thereof, transmit to the Owners of the Receipts, in each case at the address
recorded in the Depositary's books, copies of all notices and reports (including
financial statements) required by law, by the rules of any national securities
exchange upon which the Depositary Shares are listed or by the Restated
Certificate of Incorporation or the Certificate of Designation to be furnished
by the Issuer to holders of Shares.
12. DIVIDENDS AND DISTRIBUTIONS.
Whenever the Depositary shall receive any cash dividend or other cash
distribution on any Deposited Securities (other than cash dividends or cash
distributions paid by the Issuer to the Depositary in lieu of fractional shares
of Common Stock otherwise deliverable by the Issuer upon conversion of the
Depositary Shares), the Depositary shall distribute the dividend or distribution
thus received to the Owners entitled thereto, in proportion, insofar as
practicable, to the number of Depositary Shares representing such Deposited
Securities held by them respectively. In the event that the Issuer or the
Depositary shall be required to withhold and does withhold from any such cash
dividend or
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such other cash distribution an amount on account of taxes, the amount
distributed to the Owner of the Receipts evidencing Depositary Shares
representing such Deposited Securities shall be reduced accordingly.
The Depositary shall distribute any distribution other than a
distribution described in the preceding paragraph (including distributions of
securities, property, Shares and rights to subscribe for additional Shares) in
accordance with the Deposit Agreement.
13. RECORD DATES.
Whenever any cash dividend or other cash distribution shall become
payable or any distribution other than cash shall be made, or whenever rights,
preferences or privileges shall be offered or issued with respect to the
Deposited Securities, or whenever for any reason the Depositary causes a change
in the number of Shares that are represented by each Depositary Share, or
whenever the Depositary shall receive notice of any meeting at which holders of
Shares are entitled to vote or of which holders of Shares are entitled to
notice, the Depositary shall fix a record date (which shall be the same date as
the record date fixed by the Issuer in respect of the Shares) (i) for the
determination of the Owners who shall be (a) entitled to receive such dividend,
distribution, rights, preferences or privileges or the net proceeds of the sale
thereof or (b) entitled to give instructions for the exercise of voting rights
at any such meeting, or (ii) on or after which each Depositary Share will
represent the changed number of Shares.
14. VOTING OF DEPOSITED SECURITIES.
Upon receipt of notice of any meeting at which the holders of Shares
are entitled to vote, the Depositary shall, as soon as practicable thereafter,
mail to the Owners a notice, which shall be provided by the Issuer and which
shall contain (i) such information as is contained in such notice of meeting,
and (ii) a statement that the Owners as of the close of business on a specified
record date fixed by the Depositary pursuant to the Deposit Agreement shall be
entitled, subject to any applicable provision of law, the Restated Certificate
of Incorporation or the by-laws of the Issuer, to instruct the Depositary as to
the exercise of the voting rights pertaining to the amount of Shares or other
Deposited Securities represented by their respective Depositary Shares and (iii)
a statement as to the manner in which such instructions may be given. Upon the
written request of an Owner on such record date, the Depositary shall endeavor,
in so far as practicable, to vote or cause to be voted the amount of Shares or
other Deposited Securities represented by the Depositary Shares evidenced by
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such Receipt in accordance with the instructions set forth in such request. In
the absence of specific instructions from the Owner of a Receipt, the Depositary
will abstain from voting to the extent of the Shares represented by the
Depositary Shares evidenced by such Receipt.
15. FRACTIONAL SHARES.
No fractional shares of Common Stock will be delivered by the Issuer or
the Depositary, as applicable, to the Owners of Receipts upon mandatory or
optional conversion into shares of Common Stock.
In lieu of any fractional share otherwise deliverable in respect of the
aggregate number of Depositary Shares evidenced by a Receipt or Receipts of any
Owner that are converted upon mandatory conversion, such Owner shall be entitled
to receive an amount in cash equal to the same fraction of the Closing Price of
the Common Stock as of the fifth Trading Day immediately preceding the Mandatory
Conversion Date.
In lieu of any fractional share otherwise deliverable in respect of the
aggregate number of Shares represented by Depositary Shares evidenced by a
Receipt or Receipts of any Owner that are converted upon any optional
conversion, such Owner shall be entitled to receive an amount in cash equal to
the same fraction of the Closing Price of the Common Stock as of the second
Trading Day immediately preceding the effective date of conversion.
If a Receipt or Receipts evidencing more than one Depositary Share are
surrendered for conversion at one time by or for the same Owner, the number of
shares of Common Stock and the amount of cash in lieu of fractional shares
deliverable upon conversion shall be computed on the basis of the aggregate
number of Depositary Shares evidenced by the Receipt or Receipts so surrendered.
In the event that (i) mandatory conversion of the Depositary Shares or
(ii) voluntary conversions of the Shares represented by the Depositary Shares
result in any Owner of Receipts evidencing Depositary Shares being entitled to
cash in lieu of a fractional share on the related date of conversion, the Issuer
will deliver (either directly or through the Depositary, as applicable) to all
such Owners cash in an amount equal to the total amount of cash to which all
such Owners of Receipts are entitled in lieu of fractional shares on such date.
If payment in cash in lieu of fractional shares of Common Stock in
accordance with the preceding five
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<PAGE> 41
paragraphs would result in the Issuer's failure to be in compliance with any
debt instrument to which it is a party, the Issuer shall be entitled to deliver
(either directly or through the Depositary, as applicable) a whole share of
Common Stock in lieu of cash to Owners entitled to fractional shares of Common
Stock (beginning with the Owners entitled to the largest fractional shares)
until delivery of cash in lieu of fractional shares of Common Stock to the
remaining Owners would no longer result in the Issuer's failure to be in
compliance with such debt instrument.
16. LIABILITY OF ISSUER AND DEPOSITARY.
In general, neither the Issuer nor the Depositary assumes any
obligation or shall be subject to any liability under the Deposit Agreement to
Owners or holders of Receipts, except that they agree to perform their
obligations specifically set forth in the Deposit Agreement without negligence
or bad faith. In addition, neither the Issuer nor the Depositary shall be
subject to any liability under the Deposit Agreement to Owners or holders of
Receipts in certain circumstances described in the Deposit Agreement.
17. RESIGNATION AND REMOVAL OF THE DEPOSITARY.
The Depositary may at any time resign as Depositary under the Deposit
Agreement by written notice of its election so to do delivered to the Issuer,
such resignation to take effect upon the appointment of a successor depositary
and its acceptance of such appointment as provided in the Deposit Agreement. The
Depositary may at any time be removed by Issuer by written notice of such
removal, effective upon the appointment of a successor depositary and its
acceptance of such appointment as provided in the Deposit Agreement.
18. AMENDMENT.
The form of the Receipts and any provision of the Deposit Agreement may
at any time and from time to time be amended by agreement between the Issuer and
the Depositary in any respect that they may deem necessary or desirable. Any
amendment that shall impose any fees, taxes or charges (other than taxes and
other governmental charges, fees and expenses provided for in the Deposit
Agreement or in the Receipts), or that shall otherwise prejudice any substantial
existing right of Owners of Receipts, shall not become effective as to
outstanding Receipts until the expiration of 90 days after notice of such
amendment shall have been given to the Owners of outstanding Receipts. Every
Owner of an outstanding Receipt at the time any such amendment becomes effective
shall be deemed, by continuing to hold such Receipt, to consent and agree to
such amendment and to be bound by the Deposit Agreement as amended thereby. In
no
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<PAGE> 42
event shall any amendment impair the right, subject to the provisions of the
Deposit Agreement, of any Owner to surrender any Receipt or Receipts evidencing
Depositary Shares representing Shares with instructions to the Depositary or an
applicable agent of the Depositary to deliver to the Owner such Shares or to
cause the conversion of such Shares into Common Stock and cash for fractional
shares of Common Stock and, in each case, all securities and other property, if
any, represented thereby, except in order to comply with mandatory provisions of
applicable law.
19. TERMINATION OF DEPOSIT AGREEMENT.
The Deposit Agreement shall terminate at the close of business on the
Mandatory Conversion Date upon distribution by the Depositary to each Owner
entitled thereto of (i) shares of Common Stock and cash (whether in lieu of
fractional shares or otherwise) received by the Depositary from the Issuer for
mandatory conversion of, and/or dividend payments on, the Depositary Shares
evidenced by the Receipt or Receipts held by such Owner, and (ii) all other
securities, property and cash then held by the Depositary under the Deposit
Agreement. On and after the date of termination, the Owner of a Receipt will,
upon surrender of such Receipt at the Corporate Trust Office of the Depositary
and payment of any applicable taxes or governmental charges, be entitled to
delivery, to him or upon his order, of the amount of Deposited Securities
represented by the Depositary Shares evidenced by such Receipt. If any Receipts
shall remain outstanding after the date of termination, the Depositary
thereafter shall discontinue the registration of transfers of Receipts, shall
suspend the distribution of dividends to the Owners thereof, and shall not give
any further notices or perform any further acts under the Deposit Agreement,
except that the Depositary shall continue to collect dividends and other
distributions pertaining to Deposited Securities, shall sell rights as provided
in the Deposit Agreement, and shall continue to deliver Deposited Securities,
together with any dividends or other distributions received with respect thereto
and the net proceeds of the sale of any rights or other property, in exchange
for Receipts surrendered to the Depositary (after deducting, in each case, any
applicable taxes or governmental charges). At any time after the expiration of
one year from the date of termination, the Depositary may sell the Deposited
Securities then held under the Deposit Agreement and may thereafter hold
uninvested the net proceeds of any such sale, together with any other cash then
held by it under the Deposit Agreement, unsegregated and without liability for
interest, for the pro rata benefit of the Owners of Receipts which have not
theretofore been surrendered, such Owners thereupon becoming general creditors
of the Depositary with respect to such net proceeds.
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<PAGE> 1
EXHIBIT 5.1
[FULBRIGHT & JAWORSKI L.L.P. LETTERHEAD]
July 1, 1998
Tesoro Petroleum Corporation
8700 Tesoro Drive
San Antonio, Texas 78217
Gentlemen:
We have acted as counsel to Tesoro Petroleum Corporation, a Delaware
corporation (the "Company"), in connection with (i) the preparation of a shelf
Registration Statement on Form S-3 (Registration No. 333-51789) filed by the
Company with the Securities and Exchange Commission (the "SEC") (such
Registration Statement, as amended, the "Registration Statement") for the
purpose of registering under the Securities Act of 1933, as amended, among other
securities, common stock of the Company (the "Common Stock") and depositary
shares; and (ii) the preparation of prospectus supplements in connection with
(x) the issuance of 5,000,000 shares of Common Stock (including 750,000 shares
of Common Stock subject to the underwriters' over-allotment option), and (y)
9,000,000 Premium Income Equity Securities ("PIES") (including 1,350,000 PIES
subject to the underwriters' over-allotment option) consisting of depositary
shares, each representing one one-hundredth of a share of Mandatorily
Convertible Preferred Stock (the "Prospectus Supplements"). Capitalized terms
used herein but not otherwise defined shall have the respective meanings set
forth in the Prospectus Supplements.
In connection therewith, we have examined originals or copies certified
or otherwise identified to our satisfaction of the certificate of incorporation
of the Company, the by-laws of the Company, the corporate proceedings with
respect to the offering of shares of Common Stock and PIES and such other
documents and instruments as we have deemed necessary or appropriate for the
expression of the opinions contained herein.
We have assumed the authenticity and completeness of all records,
certificates and other instruments submitted to us as originals, the conformity
to original documents of all records, certificates and other instruments
submitted to us as copies, the authenticity and completeness of the originals of
those records, certificates and
<PAGE> 2
Tesoro Petroleum Corporation
July 1, 1998
Page 2
other instruments submitted to us as copies and the correctness of all
statements of fact contained in all records, certificates and other instruments
that we have examined.
Based on the foregoing, and having regard for such legal considerations
as we have deemed relevant, we are of the opinion that (i) the shares of Common
Stock, the PIES and the Mandatorily Convertible Preferred Stock represented by
such PIES, proposed to be issued have been duly and validly authorized for
issuance and, when issued, delivered, sold and paid for in accordance with the
terms of the Registration Statement and Prospectus Supplements, will be duly and
validly issued, fully paid and nonassessable, and (ii) that the shares of Common
Stock issuable upon conversion of the PIES have been duly authorized and
reserved for issuance upon conversion and, when issued upon such conversion in
accordance with the terms of the Certificate of Designation of the Mandatorily
Convertible Preferred Stock, will be validly issued, fully paid and
nonassessable.
The opinions expressed herein relate solely to, are based solely upon
and are limited exclusively to the laws of the States of New York and Texas, the
General Corporation Law of the State of Delaware and the federal laws of the
United States of America.
We hereby consent to the use of our name under the caption "Legal
Matters" in the Prospectus dated May 14, 1998, and in the supplements which form
a part of the Registration Statement. In giving this consent, we do not thereby
admit that we come within the category of persons whose consent is required
under Section 7 of the Securities Act of 1933, as amended, or the rules and
regulations of the Securities and Exchange Commission promulgated thereunder.
Very truly yours,
/s/ FULBRIGHT & JAWORSKI L.L.P.
