CANCELLATION/SUBSTITUTION AGREEMENT
TESORO PETROLEUM CORPORATION
OPTION SUBSTITUTION
COASTWIDE ENERGY SERVICES, INC.
1993 LONG-TERM INCENTIVE PLAN
OPTION CANCALLATION
THIS CANCELLATION/SUBSTITUTION AGREEMENT, made and entered into as of this
20th day of February, 1996, by and between Tesoro Petroleum Corporation
("Tesoro"), Coastwide Energy Services, Inc. ("Coastwide") and the undersigned
("Optionee"), amends the Nonqualified Stock Option Agreement(s) (the "Option
Agreement") to which the undersigned is a party under the Coastwide 1993
Long-term Incentive Plan ("Plan"), as follows:
Notwithstanding the terms of the Option Agreement, the Option granted to
Optionee under the Plan (the terms, definitions, and provisions of which are
incorporated herein and made a part hereof) is cancelled as of the Effective
Time. For purposes of this agreement, the "Effective Time" means the date and
time on which the Agreement of Merger dated as of November 20, 1995, by and
among Coastwide, CNRG Acquisition Corp., and Tesoro (the "Merger Agreement")
shall be effected, as provided in the Merger Agreement.
In consideration of the foregoing, the Optionee hereby is granted an option
(the "Substitute Option") upon the same terms and conditions as the Option to
purchase shares of Tesoro Common Stock, $.16 2/3 par value per share ("Tesoro
Common Stock"), in an amount and at an exercise price as set forth in Section
2.2(g) of the Merger Agreement, as follows:
(1) the number of shares of Tesoro Common Stock to be subject to the
Substitute Option shall be equal to the product of the number of shares of
Coastwide Common Stock subject to the Option and .41, provided that any
fractional shares of Tesoro Common Stock resulting from such multiplication
shall be rounded to the nearest whole share, and
(2) the exercise price per share of the Tesoro Common Stock to be subject
to the Substitute Option shall be equal to (i) the exercise price of the number
of shares of Coastwide Common Stock under the Option divided by .41 minus (ii)
$6.2195 (rounded to the nearest cent), provided, that if such amount is less
than $0, the holder of the Substitute Option shall, upon exercise, receive in
cash the amount by which such amount is less than $0.
The Substitute Option shall have the same terms as set forth in the Option
Agreement (including those set forth in the Plan) except that Tesoro shall be
the "Company" for purposes of the Substitute Option. Following the Effective
Time, all stock options granted to the Optionee under the Agreement or the Plan
are cancelled, and the Optionee shall have no rights under either the Agreement
or the Plan except as provided herein.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed the date first written above.
COASTWIDE ENERGY SERVICES, INC. OPTIONEE
________________________
By _______________________
With regard to the following
Option Agreements:
TESORO PETROLEUM CORPORATION
________________________
By
DATE:
