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EXHIBIT 3
OPTION AGREEMENT
This Option Agreement (the "Agreement") is made and entered
into as of December 14, 1995, by and between Xxxxxx Management Corp. ("Xxxxxx")
and Xxxxxx X. Xxxxx ("Buyer").
WITNESSETH
WHEREAS, Xxxxxx owns options to purchase 400,000 shares of the
common stock, par value $.16 2/3 per share (the "Common Stock"), of Tesoro
Petroleum Corporation (the "Company") expiring on May 16, 1996 described in
Exhibit 1 hereto (the "Xxxxxx Options");
WHEREAS, the options described on Exhibit 1 are exercisable in
part or in full and are freely transferable;
WHEREAS, Xxxxxx wishes to sell to Buyer and Buyer wishes to
buy from Xxxxxx pursuant to the terms contained in this Agreement, options to
purchase 100,000 shares of Common Stock at $8.25 per share which at Xxxxxx'x
sole discretion shall consist of options from one or more of the Xxxxxx Options
listed on Exhibit 1 (the "Buyer Options"); and
WHEREAS, Buyer wishes for Xxxxxx to continue to hold the Buyer
Options for the benefit of Buyer;
NOW, THEREFORE, in consideration of the mutual covenants
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. Purchase of Buyer Options. Buyer hereby purchases
from Xxxxxx and Xxxxxx hereby sells to Buyer the Buyer Options for a purchase
price of $9,000 (the "Purchase Price").
2. Terms of Buyer Options. Buyer and Xxxxxx agree that
the provisions of the Buyer Options shall be identical to the provisions of the
Xxxxxx Options, and that nothing contained in this Agreement shall be
interpreted to alter, in any respect, the provision of the Xxxxxx Options or to
grant Buyer any additional or greater rights under the Buyer Options than
Xxxxxx currently enjoys under the Xxxxxx Options. A copy of one of the Xxxxxx
Options is attached hereto as Exhibit 2.
3. Possession of Buyer Options. Buyer and Xxxxxx agree
that the Buyer Options shall remain in the possession and in the name of Xxxxxx
for the benefit of Buyer unless Buyer otherwise indicates in writing, in which
case Xxxxxx shall promptly comply with the terms
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of such written instructions. During the period in which the Buyer Options
remain in Xxxxxx'x possession and name, Xxxxxx agrees to promptly exercise all
or part of the Buyer Options for the benefit of Buyer only upon (i) Buyer's
written request and (ii) receipt of Buyer's payment to Xxxxxx of the exercise
price relating to that portion of the Buyer Options to be exercised. Xxxxxx
further agrees to promptly transfer to Buyer the shares of Common Stock issued
upon the full or partial exercise of the Buyer Options pursuant to the previous
sentence.
4. Representations of Xxxxxx. Xxxxxx hereby represents
and warrants to Buyer that Xxxxxx is the owner of all the legal right, title
and interest in and to the Buyer Options, free and clear of any lien,
encumbrance or other adverse claim of any nature.
5. Covenants of Xxxxxx. From and after the date hereof,
Xxxxxx agrees not to dispose of or exercise the Buyer Options except pursuant
to this Agreement. For purposes hereof, the expiration of the Xxxxxx Option by
its terms shall not be deemed to be a disposition.
6. Transfer to Buyer of Buyer Options. At any time,
Xxxxxx shall have the right to transfer the Buyer Options to Buyer, at which
time this Agreement shall terminate.
7. Scope of Buyer Options. The Buyer Options are
options only with respect to 100,000 shares of Common Stock covered by the
Xxxxxx Options, and if the Xxxxxx Options are for any reason invalid or not
honored, Xxxxxx shall have no liability as a result thereof.
IN WITNESS WHEREOF, the undersigned have duly executed this
Agreement as of the date first written above.
XXXXXX MANAGEMENT CORP.
By: /s/ Xxxxx X. Xxxxxxxx
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Name: Xxxxx X. Xxxxxxxx
Title: President
/s/ Xxxxxx X. Xxxxx
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Xxxxxx X. Xxxxx, Buyer
