EXHIBIT 10.1
PROMISSORY NOTE
DATE: May 17, 2002
This Note is given in partial satisfaction of the Purchase Price for Payee's
sale to Tesoro Refining and Marketing Company ("Tesoro Refining"), a
wholly-owned subsidiary of Maker, of the GOLDEN EAGLE REFINING AND MARKETING
ASSETS (as defined in that certain Sale and Purchase Agreement between Payee and
Tesoro Refining dated February 4, 2002, as amended (the "Purchase Agreement")).
Capitalized terms used herein but not otherwise defined shall have the
definition provided in the Purchase Agreement.
MAKER: TESORO PETROLEUM CORPORATION
Maker's Address: 300 Concord Plaza Drive
San Antonio, Texas 78216-6999
PAYEE: ULTRAMAR INC.
PLACE FOR PAYMENT: One Valero Place
San Antonio, Bexar County, Texas 78212, or any other
place that Payee may designate in writing
PRINCIPAL AMOUNT: ONE HUNDRED MILLION AND NO/100 DOLLARS ($100,000,000.00)
ANNUAL INTEREST RATE ON UNPAID PRINCIPAL: Interest on the unpaid principal
balance which is not yet due and payable will not accrue from the Date of
this Note through May 16, 2007. Beginning on May 17, 2007 and continuing
through the Stated Maturity Date, interest on the unpaid principal
balance of this Note will accrue at a rate equal to 7.5% per annum.
ANNUAL INTEREST RATE ON OVERDUE AMOUNTS:
the lesser of (i) 10.0% per annum, or (ii) the Maximum Rate (as defined
below) that may be charged per applicable law.
STATED MATURITY DATE: July 17, 2012
SUBORDINATION. Maker agrees, and each holder of this Note by accepting it
agrees, that the payment of principal of and interest on this Note is
subordinated in right of payment, to the extent and in the manner provided in
this paragraph, to the prior payment in full, in cash, of all Senior Debt, and
that the subordination is for the benefit of the holders of Senior Debt. For
purposes of this paragraph, "Senior Debt" means (i) obligations (whether
outstanding on the date hereof or hereafter created, incurred, assumed or
guaranteed) which constitute Senior Debt as defined in the Indenture dated as of
April 9, 2002 made by Tesoro Escrow Corp. (to be merged with and into Maker) in
favor of U.S. Bank National Association, Trustee (as in effect on the date
hereof, the "TSO Indenture"; provided that the term Company shall include Maker
for the purpose of the definition of "Senior Debt" herein), (ii) the 9 5/8%
Senior Subordinated Notes due 2012 outstanding from time to time under the TSO
Indenture (whether Initial Notes or Exchange Notes, as such terms are defined in
the TSO Indenture) in a principal amount not exceeding $450,000,000, (iii) the 9
5/8% Senior Subordinated Notes due 2008 outstanding from time to time under that
certain Indenture dated November 6, 2001 between Maker and U.S. Bank National
Association in a principal amount not exceeding $215,000,000, and (iv) the 9%
Senior Subordinated
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Notes due 2008 outstanding from time to time under that certain Indenture dated
July 2, 1998 between Maker and U.S. Bank National Association in a principal
amount not exceeding $300,000,000. The subordination under this paragraph shall
be on the same terms as set forth in Article X of the TSO Indenture,
substituting the foregoing definition of Senior Debt for the definition of such
term in the TSO Indenture and with references to (a) Notes being understood to
refer to this Note, (b) the Holders of the Notes being understood to refer to
the holders of this Note, (c) the Company being understood to refer to Maker,
(d) Senior Debt being understood to refer to Senior Debt as defined herein, and
(e) Designated Senior Debt for purposes of Section 10.03(a) only being
understood to refer also to each of the Senior Subordinated Note issues
described in clauses (ii) through (iv) of the immediately preceding sentence.
The Company will promptly deliver to the holder of this Note copies of all
notices sent to or received from the Trustee under the TSO Indenture or the
Holders of Senior Debt.
TERMS OF PAYMENT:
(1) For value received, the undersigned Maker promises to pay to the
order of Payee at the Place of Payment, in lawful money of the United
States of America, the following sums: (i) the Principal Amount stated
above, and (ii) interest on the unpaid balance from time to time owing
hereunder until due (at the Stated Maturity Date or upon the earlier
maturity hereof, whether by acceleration or otherwise) at the Annual
Interest Rate on Unpaid Principal stated above (computed on the basis of
a 360-day year).
(2) Accrued interest on the unpaid Principal Amount shall be due and
payable semi-annually beginning on November 17, 2007, and continuing
thereafter on each May 17 and November 17 until the Stated Maturity Date,
or upon the earlier maturity hereof.
(3) The Principal Amount and any accrued but unpaid interest thereon
shall be payable in whole on the Stated Maturity Date, or upon the
earlier maturity hereof, whether by acceleration or otherwise, at which
time the whole of said unpaid Principal Amount with accrued and unpaid
interest is due and payable in full and shall bear interest at the Annual
Interest Rate on Overdue Amounts stated above (computed on the basis of a
360-day year) until paid.
(4) Any installment paid by Maker will be applied first to payment of
accrued interest on the unpaid Principal Amount, if any, and the
remainder will be applied to reduction of the unpaid Principal Amount.
(5) Maker's obligations under this Promissory Note are absolute and
unconditional and are not subject to any set-off, counterclaim or defense
of any kind, including but not limited to any arising under or relating
to the Purchase Agreement.
CHANGE IN CONTROL. In the event of a Change of Control (as such term is defined
in the TSO Indenture) to which Payee has provided its prior written consent
(which consent may not be unreasonably withheld or delayed), the annual interest
rates set forth in this Note applicable to unpaid Principal Amounts and matured,
unpaid amounts shall be adjusted, effective on the effective date of such Change
of Control, to reflect then-current financial market rates for the type, amount,
and maturity of debt represented by this Note and the then-current credit
quality of Maker.
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DEFAULT AND REMEDIES. An "EVENT OF DEFAULT" shall exist hereunder upon the
happening of any of the following events:
a. A Change of Control is completed without obtaining the prior
written consent of Payee (such consent not to be unreasonably
withheld or delayed);
b. Maker's failure to pay when due any principal of, or interest
upon, this Note or the other Promissory Note delivered by
Maker in connection with the Purchase Agreement in the
principal amount of $50,000,000;
c. any failure by Maker to make payment when due (including any
grace period) under any obligation of Maker (as issuer,
assuming party, guarantor or otherwise) with respect to
borrowed money, debt securities (including the Senior Debt) or
the deferred purchase price of goods or services over an
original period of one year or more, the outstanding amount of
which is $20,000,000 or more, and the due date of any required
payment of principal of or interest on any such obligation
shall be accelerated;
d. a judgment lien is entered against Maker (or Tesoro Refining
with respect to obligations under the Purchase Agreement) in
the amount of $20,000,000 or more and is not released within
30 days; or
e. Maker applies for or consents to the appointment of a
receiver, trustee, custodian or liquidator of itself or of all
or a substantial part of its assets, (ii) becomes the subject
of an order for relief in bankruptcy or admits in writing that
it is unable to pay its debts as they become due, (iii) makes
a general assignment of the benefit of creditors, (iv) files a
petition or answer seeking reorganization or an arrangement
with creditors or to take advantage of any bankruptcy or
insolvency laws, or (v) files an answer admitting the material
allegations of, or consents to, or defaults in answering, a
petition filed against it in any bankruptcy, reorganization or
insolvency proceeding.
Upon the occurrence and during the continuance of an Event of Default,
the Payee may, at its option, declare the entire unpaid balance of
principal of and accrued unpaid interest upon this Note to be
immediately due and payable and pursue all available remedies hereunder
and at law and in equity.
ADDITIONAL TERMS AND CONDITIONS
1. WAIVERS. MAKER AND EACH SURETY, GUARANTOR, AND ENDORSER JOINTLY AND
SEVERALLY WAIVE ALL DEMANDS FOR PAYMENT, PRESENTMENT FOR PAYMENT, NOTICES OF
INTENTION TO ACCELERATE MATURITY, NOTICES OF ACCELERATION OF MATURITY, PROTESTS,
AND NOTICES OF PROTEST, TO THE EXTENT PERMITTED BY LAW. IN ADDITION, MAKER AND
EACH SURETY, ENDORSER, GUARANTOR, AND OTHER PARTY LIABLE FOR PAYMENTS OF ANY
SUMS PAYABLE UNDER THIS NOTE (i) JOINTLY AND SEVERALLY AGREE THAT THEIR
LIABILITY ON THIS NOTE SHALL NOT BE AFFECTED BY ANY RENEWAL OR EXTENSION IN TIME
OF PAYMENT HEREOF, OR BY ANY INDULGENCES, AND (ii) JOINTLY AND SEVERALLY CONSENT
TO ANY AND ALL RENEWALS, EXTENSIONS, INDULGENCES, RELEASES OR CHANGES,
REGARDLESS OF THE NUMBER OF SUCH RENEWALS, EXTENSIONS INDULGENCES, RELEASES OR
CHANGES.
2. ATTORNEYS' FEES. If this Note or any instrument securing or
collateral to it is given to an attorney for collection or enforcement, or if
suit is brought for collection or enforcement, or if it is collected or
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enforced through probate, bankruptcy, or other judicial proceeding, then Maker
shall pay to Payee all costs of collection and enforcement, including reasonable
attorneys' fees and court costs, in addition to other amounts due.
3. GOVERNING LAW. This Note shall be governed by the State of Texas and
federal law as applicable. The parties agree that any dispute regarding the
interpretation or validity of, or otherwise arising out of this Agreement, shall
be subject to the exclusive jurisdiction of the Texas State Courts in and for
Bexar County, Texas or, in the event of federal jurisdiction, the United States
District Court sitting in Bexar County, Texas, and each party hereby agrees to
submit to the personal and exclusive jurisdiction and venue of such courts and
not to seek the transfer of any case or proceeding out of such courts.
4. NO USURY. Notwithstanding any provision of this Note or any other
agreement or commitment between Payee and Maker, whether written or oral,
express or implied, Payee shall never be entitled to charge, receive, or
collect, nor shall amounts received hereunder be credited so that Payee shall be
paid, as interest, a sum greater than interest at the Maximum Rate. It is the
intention of the Parties that the Note, and all instruments securing the payment
of the Note or executed or delivered in connection therewith, shall comply with
applicable law. If Payee ever contracts for, charges, receives or collects
anything of value which is deemed to be interest under applicable law, and if
the occurrence of any circumstance or contingency, whether acceleration of
maturity of the Note, prepayment of the Note, delay in advancing proceeds of the
Note, or any other event, should cause such interest to exceed the maximum
lawful amount, any amount which exceeds interest at the Maximum Rate shall be
applied to the reduction of the unpaid principal balance of the Note or any
other indebtedness owed to Payee by Maker, and if the Note and such other
indebtedness are paid in full, any remaining excess shall be paid to Maker. In
determining whether the interest exceeds interest at the Maximum Rate, the total
amount of interest shall be spread, prorated and amortized throughout the entire
term of the Note until its payment in full. The term "MAXIMUM RATE" as used in
this Note means the maximum nonusurious rate of interest per annum permitted by
whichever of applicable United States federal law or Texas law permits the
higher interest rate, including to the extent permitted by applicable law, any
amendments thereof hereafter or any new law hereafter coming into effect to the
extent a higher Maximum Rate is permitted thereby. To the extent, if any, that
Chapter 303 of the Texas Finance Code, as amended (the "Act") is relevant to the
Payee for purposes of determining the Maximum Rate, the parties elect to
determine the Maximum Rate under the Act pursuant to the "weekly ceiling" from
time to time in effect, as referred to and defined in Section 303.001-303.016 of
the Act; subject, however, to any right the Payee subsequently may have under
applicable law to change the method of determining the Maximum Rate. The parties
elect not to be governed by Chapter 346 of the Texas Credit Title.
5. NO WAIVER OF RIGHTS. No delay on the part of the holder of this Note
in the exercise of any power or right under this Note or under any other
instrument executed in connection with this Note shall operate as a waiver
thereof, nor shall a single or partial release of any other power or right
preclude other or further exercises thereof or of the exercise of any other
power or right. Enforcement by the holder of this Note of any security for
payment hereof shall not constitute any election by it of remedies so as to
preclude the exercise of any other remedy available to it.
6. ASSIGNMENT. Maker may not assign this Note or any obligations of
Maker hereunder, whether by operation of law or otherwise.
7. SEVERABILITY. If any provision of this Note or the application
thereof to any person or circumstance shall, for any reason and to any extent,
be invalid or unenforceable, then neither the remainder of this Note nor the
application of such provision to other persons or circumstances nor the other
instruments referred to herein shall be affected thereby, but rather shall be
enforced to the greatest extent permitted by applicable law.
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8. NOTICES. All notices relating to this Note shall be in writing and
shall be deemed to have been given when personally served or when deposited in
the United States mails, registered or certified, return receipt requested,
addressed to the party to be notified at the address indicated on the first page
of this Note (or at another address designated by written notice).
[SIGNATURES ON FOLLOWING PAGE]
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MAKER:
TESORO PETROLEUM CORPORATION
By: /s/ William T. Van Kleef
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William T. Van Kleef
Executive Vice President and Chief
Operating Officer
Attest:
By: /s/ James C. Reed, Jr.
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James C. Reed, Jr.
Secretary
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