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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1997
Commission file number 1-2918
ASHLAND INC.
(a Kentucky corporation)
I.R.S. No. 61-0122250
1000 Ashland Drive
Russell, Kentucky 41169
Telephone Number: (606) 329-3333
Indicate by check mark whether the Registrant (1) has
filed all reports required to be filed by Section 13 or 15(d)
of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes _X_ No ___
At January 31, 1998, there were 75,272,427 shares of
Registrant's Common Stock outstanding. One Right to purchase
one-thousandth of a share of Series A Participating
Cumulative Preferred Stock accompanies each outstanding share
of Registrant's Common Stock.
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<PAGE>
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION
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ASHLAND INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
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Three months ended
December 31
---------------------------
(In millions except per share data) 1997 1996
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
REVENUES
Sales and operating revenues (including excise taxes) $ 3,550 $ 3,545
Equity income (1) 3 3
Other 52 28
--------- ---------
3,605 3,576
COSTS AND EXPENSES
Cost of sales and operating expenses 2,755 2,765
Excise taxes on products and merchandise 254 250
Selling, general and administrative expenses 339 334
Depreciation, depletion and amortization 125 135
--------- ---------
3,473 3,484
--------- ---------
OPERATING INCOME 132 92
Interest expense (net of interest income) (31) (44)
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME --------- ---------
TAXES AND MINORITY INTEREST 101 48
Income taxes (39) (15)
Minority interest in earnings of subsidiaries (10) (9)
--------- ---------
INCOME FROM CONTINUING OPERATIONS 52 24
Income from discontinued operations - 12
--------- ---------
NET INCOME 52 36
Dividends on convertible preferred stock - (5)
--------- ---------
NET INCOME AVAILABLE TO COMMON SHARES $ 52 $ 31
========= =========
EARNINGS PER SHARE - Note F
Basic
Income from continuing operations $ .69 $ .30
Income from discontinued operations - .18
--------- ---------
Net Income $ .69 $ .48
========= =========
Diluted
Income from continuing operations $ .68 $ .30
Income from discontinued operations - .17
--------- ---------
Net Income $ .68 $ .47
========= =========
DIVIDENDS PAID PER COMMON SHARE $ .275 $ .275
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</TABLE>
(1) Due to the adoption of FAS 131, "Disclosures about Segments of an
Enterprise and Related Information," effective October 1, 1997, equity
income is now included in operating income, with prior periods
restated.
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
2
<PAGE>
<TABLE>
<CAPTION>
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ASHLAND INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
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December 31 September 30 December 31
(In millions) 1997 1997 1996
- -----------------------------------------------------------------------------------------------------------------------------------
ASSETS
<S> <C> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 70 $ 268 $ 79
Accounts receivable 1,702 1,754 1,790
Allowance for doubtful accounts (23) (24) (27)
Inventories - Note A 770 729 811
Other current assets 251 268 264
--------- --------- ---------
2,770 2,995 2,917
INVESTMENTS AND OTHER ASSETS
Investments in and advances to unconsolidated affiliates 75 86 84
Investments of captive insurance companies 94 189 182
Cost in excess of net assets of companies acquired 127 120 137
Coal supply agreements 185 195 125
Net assets of discontinued operations held for sale 32 18 366
Other noncurrent assets 276 283 319
--------- --------- ---------
789 891 1,213
PROPERTY, PLANT AND EQUIPMENT
Cost 7,814 7,471 7,527
Accumulated depreciation, depletion and amortization (3,652) (3,580) (3,666)
--------- --------- ---------
4,162 3,891 3,861
--------- --------- ---------
$ 7,721 $ 7,777 $ 7,991
========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Debt due within one year $ 222 $ 93 $ 170
Trade and other payables 1,915 2,045 2,103
Income taxes 58 123 38
--------- --------- ---------
2,195 2,261 2,311
NONCURRENT LIABILITIES
Long-term debt (less current portion) 1,577 1,639 2,087
Employee benefit obligations 890 854 863
Reserves of captive insurance companies 175 161 162
Other long-term liabilities and deferred credits 549 565 479
Commitments and contingencies - Note E
--------- --------- ---------
3,191 3,219 3,591
MINORITY INTEREST IN CONSOLIDATED
SUBSIDIARIES 279 273 241
STOCKHOLDERS' EQUITY
Convertible preferred stock - - 293
Common stockholders' equity 2,056 2,024 1,555
--------- --------- ---------
2,056 2,024 1,848
--------- --------- ---------
$ 7,721 $ 7,777 $ 7,991
========= ========= =========
</TABLE>
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
3
<PAGE>
<TABLE>
<CAPTION>
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ASHLAND INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED STOCKHOLDERS' EQUITY
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Preferred Common Paid-in Retained
(In millions) stock stock capital earnings Other Total
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<S> <C> <C> <C> <C> <C> <C>
BALANCE AT OCTOBER 1, 1996 $ 293 $ 64 $ 280 $ 1,185 $ (8) $ 1,814
Net income 36 36
Dividends
Preferred stock (5) (5)
Common stock (18) (18)
Issued common stock under
Stock incentive plans 1 18 19
Employee savings plan 1 1
Other changes 1 1
------ -------- ------- --------- ------- -------
BALANCE AT DECEMBER 31, 1996 $ 293 $ 65 $ 299 $ 1,198 $ (7) $ 1,848
====== ======== ======= ========= ======= =======
BALANCE AT OCTOBER 1, 1997 $ - $ 75 $ 605 $ 1,379 $ (35) $ 2,024
Net income 52 52
Dividends on common stock (21) (21)
Issued common stock under
Stock incentive plans 4 4
Acquisition of operations
of other companies 1 1 2
Other changes (1) (4) (5)
------ -------- ------- --------- ------- -------
BALANCE AT DECEMBER 31, 1997 $ - $ 75 $ 609 $ 1,411 $ (39) $ 2,056
====== ======== ======= ========= ======= =======
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
</TABLE>
4
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<TABLE>
<CAPTION>
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ASHLAND INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
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Three months ended
December 31
--------------------------------
(In millions) 1997 1996
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<S> <C> <C>
CASH FLOWS FROM CONTINUING OPERATIONS
Income from continuing operations $ 52 $ 24
Expense (income) not affecting cash
Depreciation, depletion and amortization 125 135
Deferred income taxes 16 11
Other noncash items 3 12
Change in operating assets and liabilities (1) (199) (91)
-------- --------
(3) 91
CASH FLOWS FROM FINANCING
Proceeds from issuance of long-term debt - 87
Proceeds from issuance of capital stock 2 12
Repayment of long-term debt (63) (80)
Increase in short-term debt 127 28
Dividends paid (23) (23)
-------- --------
43 24
CASH FLOWS FROM INVESTMENT
Additions to property, plant and equipment (350)(2) (94)
Purchase of operations - net of cash acquired (20) (31)
Proceeds from sale of operations 26 -
Investment purchases (3) (103) (37)
Investment sales and maturities (3) 199 37
Other - net 10 3
-------- --------
(238) (122)
-------- --------
CASH USED BY CONTINUING OPERATIONS (198) (7)
Cash used by discontinued operations - (18)
-------- --------
DECREASE IN CASH AND CASH EQUIVALENTS (198) (25)
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 268 104(4)
-------- --------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 70 $ 79
======== ========
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</TABLE>
(1) Excludes changes resulting from operations acquired or sold.
(2) Includes $228 million from purchases of leased assets associated with
the formation of Marathon Ashland Petroleum LLC.
(3) Represents primarily investment transactions of captive insurance
companies.
(4) Includes $27 million of cash and cash equivalents of Arch Mineral
Corporation that was presented on a consolidated basis effective
October 1, 1996.
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
5
<PAGE>
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ASHLAND INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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NOTE A - SIGNIFICANT ACCOUNTING POLICIES
Interim Financial Reporting
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally
accepted accounting principles for interim financial reporting and
Securities and Exchange Commission regulations, but are subject to
any year-end audit adjustments which may be necessary. In the
opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation
have been included. These financial statements should be read in
conjunction with Ashland's Annual Report on Form 10-K for the
fiscal year ended September 30, 1997. Results of operations for
the period ended December 31, 1997, are not necessarily indicative
of results to be expected for the year ending September 30, 1998.
Inventories
<TABLE>
<CAPTION>
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December 31 September 30 December 31
(In millions) 1997 1997 1996
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<S> <C> <C> <C>
Crude oil $ 262 $ 277 $ 367
Petroleum products 319 289 375
Chemicals 381 341 376
Other products 153 174 172
Materials and supplies 66 64 70
Excess of replacement costs over LIFO carrying values (411) (416) (549)
------- ------ ------
$ 770 $ 729 $ 811
======= ====== ======
</TABLE>
NOTE B - RESTATEMENT OF PRIOR PERIOD FINANCIAL STATEMENTS
In addition to the restatement for discontinued operations
described in Note C, the financial statements and information by
industry segment for the period ended December 31, 1996, have been
restated for three other items. None of these restatements had any
impact on net income or earnings per share.
Ashland Coal, Inc. and Arch Mineral Corporation merged on July 1,
1997, into a new corporation known as Arch Coal, Inc., in which
Ashland has a 54% ownership interest. Beginning in the September
1997 quarter, Arch Coal was consolidated in Ashland's financial
statements. Prior interim quarters in fiscal 1997 were restated to
reflect Arch Mineral on a consolidated basis for comparison
purposes. Arch Mineral was previously accounted for on the equity
method.
Effective October 1, 1997, Ashland adopted FAS 131, "Disclosures
about Segments of an Enterprise and Related Information." As a
result of the adoption of FAS 131, Ashland redefined operating
income to now include equity income and restated prior periods for
comparison purposes.
Effective October 1, 1997, responsibility for marketing of the
petrochemicals and lube base stocks manufactured by Ashland
Petroleum was transferred from Chemical and Valvoline,
respectively, to Refining and Marketing. Information by industry
segment for prior periods was restated to reflect the transfer.
6
<PAGE>
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ASHLAND INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
NOTE C - DISCONTINUED OPERATIONS
On July 1, 1997, Ashland sold the domestic exploration and
production operations of Blazer Energy Corporation. Ashland
continues to pursue the sale of its exploration and production
operations in Nigeria. Accordingly, results from the Exploration
segment are shown as discontinued operations with prior periods
restated. Components of amounts reflected in the income
statements, balance sheets and cash flow statements are presented
in the following table.
<TABLE>
<CAPTION>
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Three months ended
December 31
----------------------------
(In millions) 1997 1996
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCOME STATEMENT DATA
Revenues $ - $ 80
Costs and expenses - (68)
--------- ---------
Operating income - 12
Income tax benefit (expense) - -
--------- ---------
Net income $ - $ 12
========= ==========
BALANCE SHEET DATA
Current assets $ 87 $ 74
Investments and other assets 1 2
Property, plant and equipment - net 55 434
Current liabilities (47) (53)
Noncurrent liabilities (64) (91)
--------- ---------
Net assets held for sale $ 32 $ 366
========= =========
CASH FLOW DATA
Cash flows from operations $ - $ (6)
Cash flows from investment - (12)
--------- ---------
Cash used by discontinued operations $ - $ (18)
========= =========
</TABLE>
NOTE D - ACQUISITIONS
During the three months ended December 31, 1997, Ashland Chemical
made two acquisitions to expand its distribution businesses and
APAC acquired three construction businesses. One of the APAC
acquisitions was accounted for as a pooling, but prior periods
were not restated since the effects would have been insignificant.
The other acquisitions were accounted for as purchases and did not
have a significant effect on Ashland's consolidated financial
statements.
NOTE E - LITIGATION, CLAIMS AND CONTINGENCIES
Ashland is subject to various federal, state and local
environmental laws and regulations that require remediation
efforts at multiple locations, including operating facilities,
previously owned or operated facilities, and Superfund or other
waste sites. For information regarding environmental expenditures
and reserves, see the "Miscellaneous - Governmental Regulation and
Action - Environmental Protection" section of Ashland's Form 10-K.
Environmental reserves are subject to considerable uncertainties
that affect Ashland's ability to estimate its share of the
ultimate costs of required remediation efforts. Such uncertainties
involve the nature and extent of contamination at each site, the
extent of required cleanup efforts under existing environmental
regulations, widely varying costs of alternate cleanup methods,
changes in environmental regulations, the potential effect of
continuing improvements in remediation technology, and the number
and financial strength of other potentially responsible parties at
multiparty sites.
7
<PAGE>
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ASHLAND INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
NOTE E - LITIGATION, CLAIMS AND CONTINGENCIES
During 1997, the U.S. Environmental Protection Agency (EPA)
completed comprehensive inspections of three refineries owned by
Ashland prior to the formation of Marathon Ashland Petroleum LLC
(MAP), which evaluated Ashland's compliance with federal
environmental laws and regulations at those facilities. Under the
terms of the agreements pursuant to which the refineries were
conveyed to MAP, Ashland agreed to retain responsibility for
matters arising out of these inspections, including commencement
of work as soon as practical on certain enumerated projects.
Ashland continues to cooperate and participate in discussions with
the EPA concerning the results of these inspections, including
discussions about the nature and extent of any additional
remediation actions or equipment modifications or upgrades that
may be required to respond to the findings of the inspections.
In addition to environmental matters, Ashland and its subsidiaries
are parties to numerous claims and lawsuits, some of which are for
substantial amounts. While these actions are being contested, the
outcome of individual matters is not predictable with assurance.
Ashland does not believe that any liability resulting from these
matters, after taking into consideration its insurance coverages
and amounts already provided for, will have a material adverse
effect on its consolidated financial position.
NOTE F - COMPUTATION OF EARNINGS PER SHARE
In 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128 (FAS 128), "Earnings per
Share." FAS 128 replaced the previously reported primary and fully
diluted earnings per share (EPS) with basic and diluted EPS.
Unlike primary EPS, basic EPS excludes any dilutive effects of
options and convertible securities. Diluted EPS is very similar to
the previously reported fully diluted EPS. EPS amounts for all
periods have been presented, and where necessary, restated to
conform to the FAS 128 requirements.
The following table sets forth the computation of basic and
diluted EPS from continuing operations. Common shares issuable
upon conversion of convertible preferred stock and convertible
debentures which were outstanding during the quarter ended
December 31, 1996, were not included in the computation of diluted
EPS because the effect would be antidilutive.
<TABLE>
<CAPTION>
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Three months ended
December 31
-----------------------
(In millions except per share data) 1997 1996
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
NUMERATOR
Income from continuing operations $ 52 $ 24
Preferred stock dividends - (5)
-------- --------
Numerator for basic and diluted EPS -
Income available to common shares $ 52 $ 19
======== ========
DENOMINATOR
Denominator for basic EPS - Weighted-average
common shares outstanding 75 65
Common shares issuable upon exercise of stock options 1 1
-------- --------
Denominator for diluted EPS - Adjusted weighted-average
shares and assumed conversions 76 66
======== ========
BASIC EPS FROM CONTINUING OPERATIONS $ .69 $ .30
======== ========
DILUTED EPS FROM CONTINUING OPERATIONS $ .68 $ .30
======== ========
8
</TABLE>
<PAGE>
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ASHLAND INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
NOTE G - REFINING AND MARKETING JOINT VENTURE
Effective January 1, 1998, Ashland and Marathon Oil Company
completed a transaction to form Marathon Ashland Petroleum LLC
(MAP), which combines the refining, marketing and transportation
operations of the two companies. Marathon has a 62 percent
interest in the new company and Ashland holds a 38 percent
interest. Ashland will account for its investment in the new
company using the equity method of accounting. However, since the
transaction did not close until January 1, 1998, Ashland continued
to report its 100 percent ownership interest in the Ashland
Petroleum and SuperAmerica divisions (Ashland's Refining and
Marketing segment) on a consolidated basis in its financial
statements for the quarter ended December 31, 1997.
Ashland's condensed financial statements included in its Quarterly
Report on Form 10-Q for the quarter ending March 31, 1998, will
reflect the change in accounting method for its businesses
contributed to MAP, retroactive to October 1, 1997, the beginning
of Ashland's current fiscal year. Although the change to the
equity method of accounting would have no effect on net income or
stockholders' equity through December 31, 1997, it would reduce
Ashland's consolidated assets, liabilities, revenues and costs and
change certain components of cash flow. The following tables
summarize the estimated impact on Ashland's financial statements
for the three months ended December 31, 1997.
<TABLE>
<CAPTION>
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Three months ended
December 31, 1997
-----------------------------------
(In millions) As Reported Equity Method
------------------------------------------------------------------------------------------------------------------
(estimated)
<S> <C> <C>
INCOME STATEMENT DATA
Revenues $ 3,605 $ 2,005
Costs and expenses (3,473) (1,873)
------------- ---------------
Operating income 132 132
Interest, taxes and minority interest (80) (80)
------------- ---------------
Net Income $ 52 $ 52
============= ===============
BALANCE SHEET DATA
Current assets $ 2,770 $ 1,901
Investments and other assets 789 2,657
Property, plant and equipment 4,162 2,230
------------- ---------------
Total assets $ 7,721 $ 6,788
============= ===============
Current liabilities $ 2,195 $ 1,424
Noncurrent liabilities 3,191 3,029
Minority interest in consolidated subsidiaries 279 279
Stockholders' equity 2,056 2,056
------------- ---------------
Total liabilities and stockholders' equity $ 7,721 $ 6,788
============= ===============
CASH FLOW DATA
Cash flows from continuing operations $ (3) $ (46)
Cash flows from financing 43 43
Cash flows from investment (238) (195)
------------- ---------------
Decrease in cash and cash equivalents $ (198) $ (198)
============= ===============
</TABLE>
Ashland filed a Form 8-K on January 16, 1998, describing the
formation of MAP. Financial statements required with such filing
were not available at that time, but will be included with a Form
8-K/A to be filed by March 17, 1998.
9
<PAGE>
<TABLE>
<CAPTION>
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ASHLAND INC. AND SUBSIDIARIES
INFORMATION BY INDUSTRY SEGMENT
- ------------------------------------------------------------------------------------------------------------------------------
Three months ended
December 31
-----------------------------
(Dollars in millions except as noted) 1997 1996 (1)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
SALES AND OPERATING REVENUES
Refining and Marketing $ 1,667 $ 1,777
Valvoline 254 250
Chemical 1,014 928
APAC 337 305
Coal 329 345
Intersegment sales
Refining and Marketing (44) (52)
Other (7) (8)
---------- ----------
$ 3,550 $ 3,545
========== ==========
OPERATING INCOME (2)
Refining and Marketing $ 36 $ 16
Valvoline 11 13
Chemical 53 35
APAC 19 18
Coal 29 25
General corporate expenses (16) (15)
---------- ----------
$ 132 $ 92
========== ==========
OPERATING INFORMATION
Refining and Marketing
Refining inputs (thousand barrels per day) (3) 367.2 372.8
Value of products manufactured per barrel $ 23.96 $ 28.82
Input cost per barrel 19.47 24.76
---------- ----------
Refining margin per barrel $ 4.49 $ 4.06
Refined product sales (thousand barrels per day)
Wholesale sales to
Ashland brand retail jobbers 22.3 24.2
Other wholesale customers (4) 300.4 301.9
SuperAmerica retail system 78.6 76.5
---------- ----------
Total refined product sales 401.3 402.6
SuperAmerica merchandise sales $ 152 $ 144
Valvoline lubricant sales (thousand barrels per day) (4) 15.6 14.5
APAC construction backlog
At end of period $ 651 $ 564
Decrease during period $ (42) $ (83)
Coal (5)
Tons sold (millions) 12.8 13.6
Sales price per ton $ 25.68 $ 25.33
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Effective October 1, 1997, responsibility for marketing of the
petrochemicals and lube base stocks manufactured by Ashland Petroleum
was transferred from Chemical and Valvoline, respectively, to Refining
and Marketing. Information by industry segment for prior periods has
been restated to reflect the transfer.
(2) Due to the adoption of FAS 131, "Disclosures about Segments of an
Enterprise and Related Information," effective October 1, 1997, equity
income is now included in operating income, with prior periods
restated.
(3) Includes crude oil and other feedstocks.
(4) Includes intersegment sales.
(5) Amounts are reported on a 100% basis. Ashland's ownership
interest is 54% in Arch Coal.
10
<PAGE>
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ASHLAND INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
- -----------------------------------------------------------------------------
RESULTS OF OPERATIONS
Ashland recorded net income of $52 million for the quarter ended
December 31, 1997, the first quarter of its 1997 fiscal year,
which included an after-tax gain of $6 million on the sale of
Ashland's 23% interest in Melamine Chemicals. Net income excluding
the unusual gain totaled $46 million, compared to $36 million for
the same period last year. Although last year's first quarter also
included net income of $12 million from discontinued operations of
the former Exploration segment, results for this year's first
quarter were enhanced by lower net interest costs resulting from
the use of the sales proceeds to reduce debt and invest in
short-term securities. The improvement in earnings can be
attributed to a rebound from Refining and Marketing operations and
a solid performance by all business units.
Results for the three months ended December 31, 1996, have been
restated for a variety of reasons as described in Notes B and C to
the condensed consolidated financial statements on Pages 6 and 7.
These restatements present the results for the prior year's period
on a basis consistent with the current year's presentation and all
comparisons within this discussion reflect these restatements.
Refining and Marketing
Operating income from Refining and Marketing more than doubled to
$36 million for the quarter ended December 31, 1997, compared to
$16 million for the quarter ended December 31, 1996. This increase
was achieved despite extremely volatile crude oil markets. Early
in the quarter, crude oil prices rose rapidly as the market
reacted to uncertainty over Iraqi oil exports. By quarter's end,
crude oil prices were falling as tensions eased and OPEC increased
its production ceiling to 27.5 million barrels per day. The net
impact on Ashland was lower average crude oil costs for the
quarter and improved refining margins, which were up $.43 per
barrel compared to the December 1996 quarter. Retail gasoline
margins also improved, and sales of gasoline and merchandise
increased due to the addition of 21 stores since December 1996. At
December 31, 1997, there were 771 retail outlets operating (647
SuperAmerica stores and 124 Rich outlets), compared to 750 at
December 31, 1996 (629 SuperAmerica stores and 121 Rich outlets).
Effective January 1, 1998, Ashland and Marathon Oil Company
completed a transaction to form Marathon Ashland Petroleum LLC
(MAP), which combines the refining, marketing and transportation
operations of the two companies. As described in Note G to the
condensed consolidated financial statements on Page 9, the
transaction will result in the restatement of Ashland's financial
statements for the quarter ended December 31, 1997. However, such
restatement will not affect operating income reported for the
Refining and Marketing segment.
Results for the December 1997 quarter include various income and
expense items, including severance costs, associated with the
formation of MAP, but the net effect of these items was not
significant. Potential efficiencies derived by MAP have been
broadly estimated to be in excess of $200 million annually on a
pretax basis. While a modest part of these efficiencies will be
achieved in mid-to-late calendar 1998, full realization of
efficiencies should occur over the next few years as MAP's
integration plans are implemented.
Valvoline
Valvoline reported operating income of $11 million for the quarter
ended December 31, 1997, compared to $13 million for the quarter
ended December 31, 1996. The decrease in earnings reflected lower
R-12 refrigerant sales volumes coupled with higher operating
expenses related to the roll-out of new services for First
Recovery, Valvoline's used oil collection business.
In February 1998, Valvoline completed the acquisition of
California-based Eagle One Industries. With a wide product
portfolio that includes waxes, polishes and cleaners, the Eagle
One acquisition fills Valvoline's need for a premium masterbrand
for "above the hood," or appearance, applications.
11
<PAGE>
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ASHLAND INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
- -----------------------------------------------------------------------------
Chemical
Ashland Chemical was the leading earnings contributor to the
quarter, with $53 million of operating income, compared to $35
million for the same period a year ago. The current quarter
includes a pretax gain of $14 million on the sale of Ashland's 23%
interest in Melamine Chemicals. Excluding the gain, the
improvement in operating income reflects a record first quarter
performance from the specialty chemicals group and better results
from the petrochemicals group. Specialty chemicals benefited from
sales volume and margin improvements for foundry products. The
increase in petrochemicals reflected better margins for maleic
anhydride. Results for the distribution group were down slightly,
as margin declines in industrial chemicals and solvents were
largely offset by higher sales volumes in most of the other
businesses.
APAC
The APAC construction companies reported operating income of $19
million for the first quarter, compared to $18 million for the
same period last year. Net revenue (total revenue less subcontract
work) was up 12%, while hot mix asphalt production was up 7% and
crushed aggregate production was up 20%. The construction backlog
at December 31, 1997, amounted to $651 million (a record level for
December) and represented a 15% improvement over the level of
December 1996.
In February 1998, APAC completed the acquisition of 10
Missouri-based companies known as the Masters-Jackson group. This
is the largest acquisition for APAC in more than 10 years and
provides an opportunity to improve APAC's competitive position in
Missouri, Arkansas, Oklahoma and Kansas.
Coal
Arch Coal had a strong December quarter with operating income of
$29 million, compared to combined earnings of $25 million from
Arch Mineral and Ashland Coal for the same quarter last year. The
current quarter results benefited from a stronger performance by
the Lone Mountain mining complex and continued strength from the
Mingo Logan complex. Cost savings resulting from the July 1997
merger of Arch Mineral and Ashland Coal also contributed to higher
operating income.
In December 1997, a long-term coal supply contract priced well
above current open market prices expired. Arch expects to continue
to supply a significant amount of similar coal to the customer at
less favorable prices. In addition, another customer has informed
Arch that one of its plants will require substantially less coal
under an existing above-market contract. Arch is in discussions
with the customer to attempt to minimize the reductions.
General Corporate Expenses
General corporate expenses amounted to $16 million in the quarter
ended December 31, 1997, compared to $15 million for the quarter
ended December 31, 1996. The increase reflects higher incentive
compensation costs.
Interest expense (net of interest income)
For the three months ended December 31, 1997, interest expense
(net of interest income) totaled $31 million, compared to $44
million for the December 1996 quarter. The decline reflected a 25%
decrease in interest expense as a result of Ashland's improved
financial position. Ashland used the proceeds from the July 1997
sale of its domestic exploration and production operations to
significantly reduce its debt levels.
Discontinued operations
See Note C to the condensed consolidated financial statements on
Page 7 for a discussion of the discontinued operations of the
former Exploration segment.
12
<PAGE>
- -----------------------------------------------------------------------------
ASHLAND INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
- -----------------------------------------------------------------------------
FINANCIAL POSITION
Liquidity
Ashland's financial position has enabled it to obtain capital for
its financing needs and to maintain investment grade ratings on
its senior debt of Baa2 from Moody's and BBB from Standard &
Poor's. Ashland has a revolving credit agreement providing for up
to $320 million in borrowings, under which no borrowings were
outstanding at December 31, 1997. At that date, Arch Coal also had
a revolving credit agreement providing for up to $500 million in
borrowings, of which $190 million was in use. Under a shelf
registration, Ashland can issue an additional $220 million in
medium-term notes should future opportunities or needs arise.
Ashland and Arch Coal also have access to various uncommitted
lines of credit and commercial paper markets, under which
short-term notes of $163 million were outstanding at December 31,
1997.
Cash flows from continuing operations, a major source of Ashland's
liquidity, amounted to a deficit of $3 million for the three
months ended December 31, 1997, compared to $91 million for the
three months ended December 31, 1996. This decrease was due to
increased working capital requirements and the payment of income
taxes related to the sale of Ashland's domestic exploration and
production operations.
Operating working capital (accounts receivable and inventories,
less trade and other payables) at December 31 1997, was $534
million, compared to $414 million at September 30, 1997, and $471
million at December 31, 1996. Liquid assets (cash, cash
equivalents and accounts receivable) amounted to 80% of current
liabilities at December 31, 1997, and 88% at September 30, 1997.
Ashland's working capital is significantly affected by its use of
the LIFO method of inventory valuation, which valued inventories
$411 million below their replacement costs at December 31, 1997.
Capital Resources
For the three months ended December 31, 1997, property additions
amounted to $350 million, compared to $94 million for the same
period last year. The current quarter amount includes $228 million
from purchases of leased assets associated with the formation of
MAP. Property additions (excluding additions for MAP which will be
self-funded) and cash dividends for the remainder of fiscal 1998
are estimated at $325 million and $70 million, respectively.
Ashland anticipates meeting its remaining 1998 capital
requirements for property additions, dividends and $47 million in
contractual maturities of long-term debt from internally generated
funds. However, external financing may be necessary to provide
funds for acquisitions. On February 17, 1998, Ashland issued $150
million aggregate principal amount of 6.625% Senior Notes due
2008. The notes were sold to "qualified institutional buyers" in
reliance on Rule 144A under the Securities Act of 1933.
During January 1998, Ashland contributed an additional $104
million of assets to MAP. Such amount included $26 million of
leased assets which were purchased in January 1998, an additional
$42 million of assets on which the related lease obligations were
retained by Ashland, and cash contributions of $36 million. The
cash contributions resulted from capital expenditure levels during
the preceding calendar year being less than the projected levels
which were agreed upon in the formation of MAP.
Ashland's capital employed at December 31, 1997, consisted of debt
(43%), minority interest (7%) and common stockholders' equity
(50%). Debt as a percent of capital employed was relatively
unchanged from the level at September 30, 1997. At December 31,
1997, long-term debt included about $230 million of floating-rate
debt, and the interest rates on an additional $290 million of
fixed-rate debt had been converted to floating rates through
interest rate swap agreements. As a result, interest costs for the
remainder of 1998 will fluctuate based on short-term interest
rates on about $520 million of Ashland's consolidated long-term
debt, as well as on any short-term notes and commercial paper.
13
<PAGE>
- -----------------------------------------------------------------------------
ASHLAND INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
- -----------------------------------------------------------------------------
ENVIRONMENTAL MATTERS
Federal, state and local laws and regulations relating to the
protection of the environment have resulted in higher operating
costs and capital investments by the industries in which Ashland
operates. Because of the continuing trends toward greater
environmental awareness and increasingly stringent regulations,
Ashland believes that expenditures for environmental compliance
will continue to have a significant effect on its businesses.
Although it cannot accurately predict how such trends will affect
future operations and earnings, Ashland believes the nature and
significance of its ongoing compliance costs will be comparable to
those of its competitors in the chemical, mining and petroleum
industries. For information on certain specific environmental
proceedings and investigations, see the "Legal Proceedings"
section of this Form 10-Q. For information regarding environmental
expenditures and reserves, see the "Miscellaneous - Governmental
Regulation and Action - Environmental Protection" section of
Ashland's Form 10-K.
Environmental reserves are subject to considerable uncertainties
which affect Ashland's ability to estimate its share of the
ultimate costs of required remediation efforts. Such uncertainties
involve the nature and extent of contamination at each site, the
extent of required cleanup efforts under existing environmental
regulations, widely varying costs of alternate cleanup methods,
changes in environmental regulations, the potential effect of
continuing improvements in remediation technology, and the number
and financial strength of other potentially responsible parties at
multiparty sites.
During 1997, the U.S. Environmental Protection Agency (EPA)
completed comprehensive inspections of three refineries owned by
Ashland prior to the formation of MAP. See Note E to the condensed
consolidated financial statements on Page 8 for a discussion of
this matter.
Ashland does not believe that any liability resulting from
environmental matters, after taking into consideration its
insurance coverages and amounts already provided for, will have a
material adverse effect on its consolidated financial position,
cash flows or liquidity.
YEAR 2000
Ashland began developing plans in 1994 to address the possible
exposures related to the impact of the Year 2000 on its computer
systems, as well as on the products and software it has purchased
from third parties. Most of Ashland's key financial, information
and operational systems have been assessed, and detailed plans
have been developed to address systems modifications or
replacements by December 31, 1999. Ashland is also communicating
with systems providers in an attempt to ensure that purchased
systems will handle the Year 2000 processing implications. Ashland
expects to successfully implement the systems and programming
changes necessary to address Year 2000 issues and believes that
the future costs of such changes (including replacements of
systems solely for Year 2000 concerns) are not expected to exceed
$10 million, which would not be material to Ashland's consolidated
financial position, results of operations or cash flows.
FORWARD LOOKING STATEMENTS
This Form 10-Q contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934. Although Ashland
believes that its expectations are based on reasonable
assumptions, it cannot assure that the expectations contained in
such statements will be achieved. Important factors which could
cause actual results to differ materially from those contained in
such statements are discussed in Note A to the Consolidated
Financial Statements under risks and uncertainties in Ashland's
Annual Report for the fiscal year ended September 30, 1997. Other
factors and risks affecting Ashland's revenues and operations are
contained in Ashland's Form 10-K for the fiscal year ended
September 30, 1997, which is on file with the Securities and
Exchange Commission.
14
<PAGE>
- -----------------------------------------------------------------------------
ASHLAND INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
- -----------------------------------------------------------------------------
FORWARD LOOKING STATEMENTS (continued)
The above discussion under "Results of Operations - Refining and
Marketing" contains forward-looking statements with respect to the
amount and timing of efficiencies to be realized by MAP. Some
factors that could potentially cause actual results to differ
materially from present expectations include unanticipated costs
to implement shared technology, difficulties in integrating
corporate structures, delays in leveraging volume procurement
advantages or delays in personnel rationalization.
15
<PAGE>
PART II - OTHER INFORMATION
- ----------------------------------------------------------------------------
ITEM 1. LEGAL PROCEEDINGS
ENVIRONMENTAL PROCEEDINGS - (1) As of December 31, 1997, Ashland had
been identified as a "potentially responsible party" ("PRP") under
Superfund or similar state laws for potential joint and several liability
for cleanup costs in connection with alleged releases of hazardous
substances in connection with 83 waste treatment or disposal sites. These
sites are currently subject to ongoing investigation and remedial
activities, overseen by the USEPA or a state agency, in which Ashland may
be participating as a member of various PRP groups. Generally, the type of
relief sought includes remediation of contaminated soil and/or groundwater,
reimbursement for the costs of site cleanup or oversight expended, and/or
long-term monitoring of environmental conditions at the sites. Ashland
carefully monitors the investigatory and remedial activity at many of these
sites. Based on its experience with site remediation, its familiarity with
current environmental laws and regulations, its analysis of the specific
hazardous substances at issue, the existence of other financially viable
PRPs and its current estimates of investigatory, clean-up and monitoring
costs at each site, Ashland believes that its liability at these sites,
either individually or in the aggregate, after taking into account
established reserves, will not have a material adverse effect on Ashland's
consolidated financial position, cash flow or liquidity. Estimated costs
for these matters are recognized in accordance with generally accepted
accounting principles governing the likelihood that costs will be incurred
and Ashland's ability to reasonably estimate future costs. For additional
information regarding Superfund, see the "Miscellaneous - Governmental
Regulation and Action-Environmental Protection" section of Ashland's Form
10-K.
(2) On March 19, 1996, after consultation with the USEPA, the Kentucky
Division for Air Quality issued a finding that Ashland had not demonstrated
compliance with certain air regulations governing emissions of volatile
organic compounds ("VOC") at its Catlettsburg, Kentucky refinery, and
referred the matter to USEPA - Region IV for formal enforcement action. On
May 27, 1997, Kentucky and Ashland entered into an Agreed Order resolving
the issues in contention. Under the terms of the Agreed Order, Ashland
agreed to pay a civil penalty and to design, construct and install
additional VOC controls. Separately, the USEPA issued a Notice of Violation
to Ashland regarding this matter. In connection with the formation of MAP,
the Catlettsburg Refinery was conveyed to Catlettsburg Refinery, LLC, a
subsidiary of MAP. Under the terms of the agreements pursuant to which the
Catlettsburg Refinery was conveyed, Ashland agreed to retain responsibility
for matters arising out of the Agreed Order and Notice of Violation.
(3) In the fall of 1996, the USEPA conducted multimedia inspections of
Ashland's three refineries. Over the past several months, the USEPA and
Ashland have engaged in discussions to resolve the issues identified during
these inspections. The parties have reached a tentative agreement on many
major issues and have begun the process of drafting a settlement document.
Resolution is expected to involve both a penalty payment and environmental
projects. Ashland expects to finalize the settlement agreement in calendar
1998. In connection with the formation of MAP, the refineries were conveyed
to MAP (or a subsidiary of MAP). Under the terms of the agreements
conveying Ashland's three refineries to MAP, Ashland agreed to retain
responsibility for matters arising out of the multimedia inspections.
(4) On October 24, 1996, the rock strata overlaying an abandoned
underground mine adjacent to the coal-refuse impoundment used by an Arch
Coal subsidiary's preparation plant failed, resulting in an accidental
discharge of approximately 6.3 million gallons of water and fine coal
slurry into a tributary of the Powell River in Lee County, Virginia. As a
consequence, the Director of the State Water Control Board and the
Department of Mines, Minerals and Energy of the Commonwealth of Virginia
filed a suit in Lee County Virginia Circuit Court against the Arch Coal
subsidiary, Lone Mountain Processing, Inc., alleging violations of effluent
limitations and reporting violations under Lone Mountain's National
Pollutant Discharge Elimination System permits under the Clean Water Act.
The Commonwealth of Virginia agreed to vacate two notices of violation and
a show of cause order in exchange for Lone Mountain's payment to the
Commonwealth of a fine of approximately $1.4 million. A final order
effectuating the settlement was
16
<PAGE>
entered as a judgment by the court on October 29, 1997. At the request of
the USEPA and the U.S. Fish & Wildlife Service, the United States Attorney
for the Western District of Virginia also has opened a criminal
investigation of the 1996 incident. Arch Coal is cooperating with the
investigation, the results of which are not expected until sometime in
calendar 1998.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) Ashland's Annual Meeting of Shareholders was held on January 29, 1998,
at the Ashland Petroleum Executive Office Building, Ashland Drive, Russell,
Kentucky at 10:30 a.m.
(b) At its Annual Meeting, Ashland's shareholders elected 2 directors to
serve a three-year term:
Votes
-----
Affirmative Withheld
----------- --------
Samuel C. Butler 66,519,424 976,950
Mannie L. Jackson 66,505,928 990,446
Directors who continued in office: Frank C. Carlucci, Paul W.
Chellgren, James B. Farley, Ralph E. Gomory, Patrick F. Noonan, Jane C.
Pfeiffer, Michael D. Rose and W. L. Rouse, Jr. Jack S. Blanton, Thomas E.
Bolger and Robert B. Stobaugh, directors of Ashland since 1988, 1987 and
1977, respectively, retired at the Annual Meeting.
(c) At its Annual Meeting, Ashland's shareholders ratified the appointment
of Ernst & Young LLP as independent auditors for fiscal year 1998 by a vote
of 66,646,555 affirmative to 635,596 negative and 214,221 abstention votes.
(d) At its Annual Meeting, Ashland's shareholders approved an amendment of
the Second Restated Articles of Incorporation of Ashland to increase the
number of shares of authorized Common Stock, par value $1.00, from
150,000,000 to 300,000,000 shares by a vote of 57,446,866 affirmative to
9,581,798 negative and 461,916 abstention votes. Passage of this amendment
required the vote of a majority of Ashland's shares eligible to vote.
(e) At its Annual Meeting, Ashland's shareholders rejected an amendment of
the Second Restated Articles of Incorporation of Ashland to provide for a
single class of directors, elected annually, by a vote of 39,531,416
affirmative to 11,135,680 negative and 12,241,261 abstention votes. Passage
of this amendment would have required the vote of 80% of Ashland's shares
eligible to vote.
(f) The results of voting on a shareholder proposal to nominate a wage roll
employee to the Board of Directors were 55,637,425 negative to 6,072,152
affirmative and 1,340,796 abstention votes.
17
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3 Second Restated Articles of Incorporation of Ashland, amended
January 30, 1998.
27 Financial Data Schedule
27 Restated Financial Data Schedule
(b) Reports on Form 8-K
A report on Form 8-K was filed on December 12, 1997 to announce the
signing of definitive agreements in connection with the formation of MAP.
Ashland has a 38% ownership interest, and Marathon has a 62% ownership
interest, in the company.
A report on Form 8-K was filed on January 16, 1998 to announce the
January 1 completion of a transaction forming MAP.
18
<PAGE>
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.
Ashland Inc.
----------------------------------
(Registrant)
Date /s/ Kenneth L. Aulen
------------------- -----------------------------------
Kenneth L. Aulen
Administrative Vice President and
Controller
(Chief Accounting Officer)
Date /s/ Thomas L. Feazell
-------------------- ----------------------------------
Thomas L. Feazell
Senior Vice President, General Counsel
and Secretary
19
[ASHLAND LOGO]
ASHLAND INC.
SECOND RESTATED ARTICLES
OF INCORPORATION
(INCLUDING ALL AMENDMENTS THERETO)
As Effective Jsnuary 30, 1998
<PAGE>
TABLE OF CONTENTS
RECORDING DATA
SECOND RESTATED ARTICLES OF INCORPORATION
ASHLAND INC.
<TABLE>
<CAPTION>
Date Filed In Date
Office of Recorded in Number of
Secretary Office of Shares
of State County Clerk Authorized -
Document of Kentucky Clerk Explanation
- ----------------- --------------- ---------------------- ------------------
<S> <C> <C> <C>
1. Second Restated January 29, 1987 Boyd Co., KY - January 30,000,000 shares
Articles of 30, 1987, Arts. of Inc., Cumulative Preferred
Incorporation Book 25, Page 461; Stock, no par value;
Greenup Co., KY - January 150,000,000 shares
30, 1987, Arts. of Inc., Common Stock, $1 par
Book 9, Page 543 value
2. Certificate and January 29, 1987 Boyd Co., KY - January 10,000,000 shares
Statement, etc. 30, 1987, Arts. of Inc., initially issuable
Establishing and Book 25, Page 470;
Designating Greenup Co., KY - January
Cumulative 30, 1987, Arts. of Inc.,
Preferred Stock, Book 9, Page 552
Series of
1987, etc. of AOI
3. Amendment No. 1 January 28, 1988 Boyd Co., KY - January New Article X
29, 1988, Arts. of Inc.,
Book 25, Page 954;
Greenup Co., KY - January
29, 1988, Arts. of Inc.,
Book 10, Page 169
4. Amendment No. 2 January 27, 1989 Boyd Co., KY - January New Article XI
30, 1989, Arts. of Inc.,
Book 26, Page 522;
Greenup Co., KY - January
30, 1989, Arts. of Inc.,
Book 10, Page 423
5. Amendment No. 3 May 18, 1993 Boyd Co., KY - May 6,000,000 shares of
18, 1993, Arts. of Inc., $3.125 Cumulative
Book 30, Page 59; Convertible
Greenup Co., KY - May Preferred Stock,
18, 1993, Arts. of Inc., no par value
Book 12, Page 322
6. Amendment No. 4 January 27, 1995 Boyd Co., KY - January 27, New Article I
1995, Arts. of Inc.,
Book 31, Page 320;
Greenup Co., KY -
January 27, 1995, Arts.
of Inc., Book 13,
Page 147
7. Amendment No. 5 May 16, 1996 Boyd Co., KY - May 16, 500,000 shares initially
1996, Arts. of Inc., issuable of Series A
Book 32, Page 292; Participating Cumulative
Greenup Co., KY - Preferred Stock
May 17, 1996, Arts.
of Inc., Book 13,
Page 487
8. Amendment No. 6 January 30, 1998 Boyd Co., KY - February 2, 300,000,000 shares Common
1998, Arts. of Inc., Stock, $1 par value
Book 33, Page 374;
Greenup Co., KY -
February 2, 9198, Arts.
of Inc., Book 14, Page 145
</TABLE>
<PAGE>
[STAMP]
ORIGINAL COPY
FILED
SECRETARY OF STATE OF KENTUCKY
FRANKFORT, KENTUCKY
JANUARY 29, 1987
12:45 PM
SECOND RESTATED ARTICLES OF INCORPORATION
OF
ASHLAND OIL, INC.
Pursuant to Section 271A.320 of the Kentucky Business Corporation Act,
Ashland Oil, Inc., pursuant to a resolution duly adopted by its Board of
Directors, hereby adopts the following Second Restated Articles of
Incorporation (hereinafter called the "Articles of Incorporation"):
ARTICLE I
The name of the corporation is Ashland Oil, Inc. (hereinafter called the
"Company" or the "Corporation").
ARTICLE II
The purpose for which the Company is organized is the transaction of
any or all lawful businesses for which corporations may be organized under
the Kentucky Business Corporation Act, or any act amendatory thereof,
supplemental thereto or substituted therefor (hereinafter called the
"Act"), and to do all things necessary, convenient, proper or desirable in
connection with or incident to any of the Company's businesses.
ARTICLE III
A. The Company shall have all the powers conferred upon a corporation
organized under the Act and shall have all powers necessary, convenient or
desirable in order to fulfill and further the purpose of the Company.
B. The Company shall have the power to purchase shares of the stock of
the Company to the extent of unreserved and unrestricted capital and earned
surplus of the Company and to any greater extent permitted by the Act.
C. The Board of Directors of the Company may distribute to the
shareholders of the Company a portion of the Company's assets, in cash or
property, out of capital surplus of the Company and from any other source
permitted by the Act.
ARTICLE IV
A. The aggregate number of shares which the Company is authorized to
issue is 30,000,000 shares of Cumulative Preferred Stock, without par value
(hereinafter called the "Preferred Stock"), and 150,000,000 shares of
Common Stock, par value $1.00 per share (hereinafter called the "Common
Stock").
B. Preferred Stock
(1) To the extent permitted by the Act, the Board of Directors
is authorized, by resolution, to cause the Preferred Stock to be
divided into and issued from time to time in one or more series and
to fix and determine the designation and number of shares, and the
relative rights and preferences of the shares, of each such series,
and to change shares of one series that have been redeemed or
reacquired into shares of another series.
(2) All shares of Preferred Stock shall rank equally and be
identical in all respects except as to the relative rights and
preferences of any series fixed and determined by the Board of
Directors, which may vary to the extent permitted by the Act.
<PAGE>
(3) The Preferred Stock shall be preferred over the Common
Stock as to payment of dividends. Before any dividends or
distributions (other than dividends or distributions payable in
Common Stock) on the Common Stock shall be declared and set apart for
payment or paid, the holders of shares of each series of Preferred
Stock shall be entitled to receive dividends (either in cash, shares
of Common Stock or Preferred Stock, or otherwise) when, as and if
declared by the Board of Directors, at the rate and on the date or
dates fixed in the resolution adopted by the Board of Directors
establishing such series, and no more. With respect to each series of
Preferred Stock, the dividends on each share of such series shall be
cumulative from the date of issue of such share unless some other
date is fixed in the resolution adopted by the Board of Directors
establishing such series. Accruals of dividends shall not bear
interest.
(4) The Preferred Stock shall be preferred over the Common
Stock as to assets so that the holders of each series of Preferred
Stock shall be entitled to be paid, upon the voluntary or involuntary
liquidation, dissolution or winding up of the Company and before any
distribution is made to the holders of Common Stock, the amount fixed
in the resolution adopted by the Board of Directors establishing such
series, but in such case the holders of such series of Preferred
Stock shall not be entitled to any other or further payment. If upon
any such liquidation, dissolution or winding up of the Company its
net assets shall be insufficient to permit the payment in full of the
respective amounts to which the holders of all outstanding Preferred
Stock are entitled, the entire remaining net assets of the Company
shall be distributed among the holders of each series of Preferred
Stock in amounts proportionate to the full amounts to which the
holders of each such series are respectively so entitled. For
purposes of this paragraph (4), the voluntary sale, lease, exchange
or transfer of all or substantially all of the Company's property or
assets to, or its consolidation or merger with, one or more
corporations shall not be deemed to be a voluntary or involuntary
liquidation, dissolution or winding up of the Company.
(5) All shares of any series of Preferred Stock shall be
redeemable to the extent permitted by the Act and fixed in the
resolution adopted by the Board of Directors establishing such
series. All shares of any series of Preferred Stock shall be
convertible into shares of Common Stock or into shares of any other
series of Preferred Stock to the extent permitted by the Act and
fixed in the resolution adopted by the Board of Directors
establishing such series.
(6) Unless otherwise provided herein or by the Act, or unless
otherwise provided in the resolution adopted by the Board of
Directors establishing any series of Preferred Stock, the holders of
shares of Preferred Stock shall be entitled to one vote for each
share of Preferred Stock held by them on all matters properly
presented to shareholders, the holders of Common Stock and the
holders of all series of Preferred Stock voting together as one
class.
(7) So long as any shares of Preferred Stock are outstanding,
the Company shall not:
(a) Redeem, purchase or otherwise acquire any shares of
Common Stock if at the time of making such redemption, purchase
or acquisition, the Company shall be in default with respect to
any dividends accrued on, or any obligation to retire, shares
of Preferred Stock.
(b) Without the affirmative vote or consent of the
holders of at least 66 2/3 percent of the number of shares of
Preferred Stock at the time outstanding, voting or consenting
(as the case may be) separately as a class without regard to
series, given in person or by proxy, either in writing or by
resolution adopted at a meeting called for the purpose, (i)
create any class of stock ranking prior to the Preferred Stock
as to dividends or upon liquidation or increase the authorized
number of shares of any such class of stock or (ii) alter or
change any of the provisions of these Articles of Incorporation
so as adversely to affect the relative rights and preferences
of the Preferred Stock or (iii) increase the authorized number
of shares of Preferred Stock.
(c) Without the affirmative vote or consent of the
holders of at least 66 2/3 percent of the number of shares of
any series of Preferred Stock at the time outstanding, voting
or consenting (as the case may be) separately as a series,
given in person or by proxy, either in writing or by resolution
adopted at a meeting called for the purpose, alter or change
any of the provisions of these Articles of Incorporation so as
adversely to affect the relative rights and preferences of such
series.
2
<PAGE>
C. Common Stock
(1) The holders of Common Stock of the Company shall be
entitled to one vote for each share of Common Stock held by them on
all matters properly presented to shareholders, except as otherwise
provided herein or by the Act.
(2) Subject to the preferential rights of Preferred Stock set
forth herein or in the resolution adopted by the Board of Directors
establishing any series of Preferred Stock, such dividends (either in
cash, shares of Common Stock or Preferred Stock, or otherwise) as may
be determined by the Board of Directors may be declared and paid on
the Common Stock from time to time in accordance with the Act.
D. No holder of shares of any class of stock of the Company shall
have any preemptive right to subscribe to stock, obligations, warrants,
subscription rights or other securities of the Company of any class,
whether now or hereafter authorized.
ARTICLE V
The Company shall have perpetual existence.
ARTICLE VI
Subject to the restriction that the number of directors shall not be
less than the number required by the laws of the Commonwealth of Kentucky,
the number of directors may be fixed, from time to time, pursuant to the
By-laws of the Company.
The members of the Board of Directors (other than those who may be
elected by the holders of any class or series of capital stock of the
Company having a preference over the Common Stock as to dividends or upon
liquidation pursuant to the terms of these Articles of Incorporation or of
such class or series of stock) shall be classified (so long as the Board of
Directors shall consist of at least nine members pursuant to the By-laws),
with respect to the time for which they severally hold office, into three
classes, as nearly equal in number as possible, as shall be provided in the
By-laws of the Company, one class to be originally elected for a term
expiring at the annual meeting of the shareholders to be held in 1987,
another class to be originally elected for a term expiring at the annual
meeting of the shareholders to be held in 1988, and another class to be
originally elected for a term expiring at the annual meeting of the
shareholders to be held in 1989, with each class to hold office until the
successors of such class are elected and qualified. At each annual meeting
of the shareholders, the date of which shall be fixed by or pursuant to the
By-laws of the Company, the successors of the class of directors whose term
expires at that meeting shall be elected to hold office for a term expiring
at the annual meeting of shareholders held in the third year following the
year of their election.
Subject to any requirements of law and the rights of any class or
series of capital stock of the Company having a preference over the Common
Stock as to dividends or upon liquidation pursuant to the terms of these
Articles of Incorporation or of such class or series of stock (and
notwithstanding the fact that a lesser percentage may be specified by law,
these Articles of Incorporation or the terms of such class or series), the
affirmative vote of the holders of 80 percent or more of the voting power
of the then outstanding voting stock of the Company, voting together as a
single class, shall be required to remove any director without cause. For
purposes of this Article VI, "cause" shall mean the willful and continuous
failure of a director to substantially perform such director's duties to
the Company, other than any such failure resulting from incapacity due to
physical or mental illness, or the willful engaging by a director in gross
misconduct materially and demonstrably injurious to the Company. As used in
these Articles of Incorporation, "voting stock" shall mean shares of
capital stock of the Company entitled to vote generally in an election of
directors.
Subject to any requirements of law and the rights of any class or
series of capital stock of the Company having a preference over the Common
Stock as to dividends or upon liquidation pursuant to the terms of these
Articles of Incorporation or of such class or series of stock, newly
created directorships resulting from any
3
<PAGE>
increase in the number of directors may be filled by the Board of
Directors, or as otherwise provided in the By-laws, and any vacancies on
the Board of Directors resulting from death, resignation, removal or other
cause shall only be filled by the affirmative vote of a majority of the
remaining directors then in office, even though less than a quorum of the
Board of Directors, or by a sole remaining director, or as otherwise
provided in the By-laws. Any director elected in accordance with the
preceding sentence shall hold office for the remainder of the full term of
the class of directors in which the new directorship was created or the
vacancy occurred and until such director's successor shall have been
elected and qualified.
ARTICLE VII
In furtherance and not in limitation of the powers conferred upon it
by law, the Board of Directors is expressly authorized to:
A. adopt any By-laws that the Board of Directors may deem necessary
or desirable for the efficient conduct of the affairs of the Company,
including, but not limited to, provisions governing the conduct of, and the
matters which may properly be brought before, annual or special meetings of
the shareholders and provisions specifying the manner and extent to which
prior notice shall be given of the submission of proposals to be considered
at any such meeting or of nominations for election of directors to be held
at any such meeting; and
B. repeal, alter or amend the By-laws.
In addition to any requirements of law and any other provisions of
these Articles of Incorporation or the terms of any class or series of
capital stock having a preference over the Common Stock as to dividends or
upon liquidation (and notwithstanding the fact that a lesser percentage may
be specified by law, these Articles of Incorporation or the terms of such
class or series), the affirmative vote of the holders of 80 percent or more
of the voting power of the then outstanding voting stock of the Company,
voting together as a single class, shall be required to amend, alter or
repeal any provision of the By-laws.
ARTICLE VIII
A. A higher than majority vote of shareholders for certain Business
Combinations shall be required as follows:
(1) In addition to any affirmative vote otherwise required by
law or these Articles of Incorporation or the terms of any class or
series of capital stock of the Company having a preference over the
Common Stock as to dividends or upon liquidation (and notwithstanding
the fact that a lesser percentage may be specified by law, these
Articles of Incorporation or the terms of such class or series) and
except as otherwise expressly provided in Section B of this Article
VIII:
(a) any merger or consolidation of the Company or any
Subsidiary with an Interested Shareholder or with any other
corporation, whether or not itself an Interested Shareholder,
which is, or after such merger or consolidation would be, an
Affiliate of an Interested Shareholder who was an Interested
Shareholder prior to the transaction;
(b) any sale, lease, transfer, or other disposition,
other than in the ordinary course of business, in one
transaction or a series of transactions in any twelve-month
period, to any Interested Shareholder or any Affiliate of an
Interested Shareholder, other than the Company or any
Subsidiary, of any assets of the Company or any Subsidiary
having, measured at the time the transaction or transactions
are approved by the Board of Directors, an aggregate book value
as of the end of the Company's most recently ended fiscal
quarter of 5 percent or more of the total market value of the
outstanding stock of the Company or of its net worth as of the
end of its most recently ended fiscal quarter;
(c) the issuance or transfer by the Company or any
Subsidiary, in one transaction or a series of transactions in
any twelve-month period, of any equity securities of the
Company or any Subsidiary which have an aggregate market value
of 5% or more of the total market value of the outstanding
stock
4
<PAGE>
of the Company, determined as of the end of the Company's most
recently ended fiscal quarter prior to the first such issuance
or transfer, to any Interested Shareholder or any Affiliate of
any Interested Shareholder, other than the Company or any
Subsidiary, except pursuant to the exercise of warrants or
rights to purchase securities offered pro rata to all holders
of the Company's voting stock or any other method affording
substantially proportionate treatment to the holders of voting
stock;
(d) the adoption of any plan or proposal for the
liquidation or dissolution of the Company in which anything
other than cash will be received by an Interested Shareholder
or any Affiliate of an Interested Shareholder; or
(e) any reclassification of securities, including any
reverse stock split; any recapitalization of the Company; any
merger or consolidation of the Company with any Subsidiary; or
any other transaction which has the effect, directly or
indirectly, in one transaction or a series of transactions, of
increasing by 5 percent or more the proportionate amount of the
outstanding shares of any class of equity securities of the
Company or any Subsidiary which is directly or indirectly
beneficially owned by any Interested Shareholder or any
Affiliate of any Interested Shareholder;
shall require the recommendation of the Board of Directors and the
affirmative vote of the holders of at least (i) 80 percent of the
voting power of the then outstanding voting stock of the Company,
voting together as a single class, and (ii) two-thirds of the voting
power of the then outstanding voting stock other than voting stock
beneficially owned by the Interested Shareholder who is, or whose
Affiliate is, a party to the Business Combination or by an Affiliate
or Associate of such Interested Shareholder, voting together as a
single class.
(2) The term "Business Combination" as used in this Article
VIII shall mean any transaction which is referred to in any one or
more of clauses (a) through (e) of paragraph (1) of Section A of this
Article VIII.
B. The provisions of Section A of this Article VIII shall not be
applicable to any Business Combination, and such Business Combination shall
require only such affirmative vote (if any) as is required by law, any
other provision of these Articles of Incorporation or the terms of any
class or series of capital stock of the Company having a preference over
the Common Stock as to dividends or upon liquidation, if all conditions
specified in either of the following paragraphs (1) or (2) are met:
(1) The Business Combination shall have been approved by
resolution by a majority of the Continuing Directors at a meeting of
the Board of Directors at which a quorum consisting of at least a
majority of the then Continuing Directors was present; or
(2) All the following five conditions have been met:
(a) The aggregate amount of the cash and the market value
as of the Valuation Date of consideration other than cash to be
received per share by holders of Common Stock in such Business
Combination is at least equal to the highest of the following:
(i) the highest per share price, including any
brokerage commissions, transfer taxes and soliciting
dealers' fees, paid by the Interested Shareholder for any
shares of Common Stock (a) within the two-year period
immediately prior to the Announcement Date or (b) in the
transaction in which it became an Interested Shareholder,
whichever is higher;
(ii) the market value per share of Common Stock on the
Announcement Date or on the Determination Date, whichever is
higher; and
(iii) the price per share equal to the market value
per share of Common Stock determined pursuant to clause
(ii) immediately preceding, multiplied by the fraction
resulting from (a) the highest per share price, including
any brokerage commissions, transfer taxes and soliciting
dealers' fees, paid by the Interested Shareholder for any
shares of Common Stock acquired by it within the two-year
period immediately prior to the Announcement Date, over
(b) the market value per share of Common Stock on the
first day in such two-year period on which the Interested
Shareholder acquired any shares of Common Stock.
5
<PAGE>
(b) The aggregate amount of the cash and the market value
as of the Valuation Date of consideration other than cash to be
received per share by holders of shares of any class or series
of outstanding stock other than Common Stock is at least equal
to the highest of the following, whether or not the Interested
Shareholder has previously acquired any shares of a particular
class or series of stock:
(i) the highest per share price, including any
brokerage commissions, transfer taxes and soliciting
dealers' fees, paid by the Interested Shareholder for any
shares of such class of stock acquired by it (a) within
the two-year period immediately prior to the Announcement
Date or (b) in the transaction in which it became an
Interested Shareholder, whichever is higher;
(ii) the highest preferential amount per share to
which the holders of shares of such class of stock are
entitled in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Company;
(iii) the market value per share of such class of
stock on the Announcement Date or on the Determination Date,
whichever is higher; and
(iv) the price per share equal to the market value
per share of such class of stock determined pursuant to
clause (iii) immediately preceding, multiplied by the
fraction resulting from (a) the highest per share price,
including any brokerage commissions, transfer taxes and
soliciting dealers' fees, paid by the Interested
Shareholder for any shares of any class of voting stock
acquired by it within the two-year period immediately
prior to the Announcement Date over (b) the market value
per share of the same class of voting stock on the first
day in such two-year period on which the Interested
Shareholder acquired any shares or the same class of
voting stock.
(c) In making any price calculation under paragraph (2)
of this Section B, appropriate adjustments shall be made to
reflect any reclassification or stock split (including any
reverse stock split), stock dividend, recapitalization,
reorganization or any similar transaction which has the effect
of increasing or reducing the number of outstanding shares of
the stock. The consideration to be received by holders of any
class or series of outstanding stock is to be in cash or in the
same form as the Interested Shareholder has previously paid for
shares of the same class or series of stock. If the Interested
Shareholder has paid for shares of any class of stock with
varying forms of consideration, the form of consideration for
such class of stock shall be either in cash or the form used to
acquire the largest number of shares of such class or series of
stock previously acquired by it.
(d) After the Interested Shareholder has become an
Interested Shareholder and prior to the consummation of such
Business Combination:
(i) there shall have been no failure to declare and
pay at the regular date thereof any full periodic
dividends, whether or not cumulative, on any outstanding
Preferred Stock of the Company or other capital stock
entitled to a preference over the Common Stock as to
dividends or upon liquidation;
(ii) there shall have been no reduction in the
annual rate of dividends paid on the Common Stock, except
as necessary to reflect any subdivision of the Common
Stock, and no failure to increase the annual rate of
dividends as necessary to reflect any reclassification
(including any reverse stock split), recapitalization,
reorganization or other similar transaction which has the
effect of reducing the number of outstanding shares of
Common Stock; and
(iii) the Interested Shareholder did not become the
beneficial owner of any additional shares of stock of the
Company except as part of the transaction which resulted
in such Interested Shareholder or by virtue of
proportionate stock splits or stock dividends.
The provisions of clauses (i) and (ii) immediately preceding shall
not apply if neither an Interested Shareholder nor any Affiliate or
Associate of an Interested Shareholder voted as a director of the Company
in a manner inconsistent with such clauses and the Interested Shareholder,
within ten days after any act or failure to act inconsistent with such
clauses, notifies the Board of Directors of the Company in writing that the
Interested Shareholder disapproves thereof and requests in good faith that
the Board of Directors rectify such act or failure to act.
6
<PAGE>
(e) After the Interested Shareholder has become an
Interested Shareholder, the Interested Shareholder shall not
have received the benefit, directly or indirectly, except
proportionately as a shareholder, of any loans, advances,
guarantees, pledges or other financial assistance provided by
the Company or any Subsidiary, whether in anticipation of or in
connection with such Business Combination or otherwise.
C. For purposes of this Article VIII:
(1) "Affiliate" or "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as in effect on December 1, 1985
(the term "registrant" in such Rule 12b-2 meaning in this case the
Company).
(2) "Announcement Date" means the first general public announcement
of the proposal or intention to make a proposal of the Business Combination
or its first communication generally to shareholders of the Company,
whichever is earlier.
(3) "Beneficial owner" when used with respect to any voting stock,
means a person who, individually or with any Affiliate or Associate has:
(i) the right to acquire voting stock, whether such right is
exercisable immediately or only after the passage of time and whether
or not such right is exercisable only after specified conditions are
met pursuant to any agreement, arrangement, or understanding or upon
the exercise of conversion rights, exchange rights, warrants or
options, or otherwise;
(ii) the right to vote voting stock pursuant to any agreement,
arrangement, or understanding; or
(iii) any agreement, arrangements, or understanding for the
purpose of acquiring, holding, voting or disposing of voting stock
with any other person who beneficially owns, or whose Affiliates or
Associates beneficially own, directly or indirectly, such shares of
voting stock.
(4) "Continuing Director" means any member of the Board of Directors
who is not an Affiliate or Associate of an Interested Shareholder or any of
its Affiliates, other than the Company or any Subsidiary, and who was a
director of the Company prior to the time the Interested Shareholder became
an Interested Shareholder, and any other member of the Board of Directors
who is not an Affiliate or Associate of an Interested Director or any of
its Affiliates, other than the Company or any Subsidiary, and was
recommended or elected by a majority of the Continuing Directors at a
meeting at which a quorum consisting of a majority of the Continuing
Directors is present.
(5) "Determination Date" means the date on which an Interested
Shareholder first became an Interested Shareholder.
(6) "Equity security" means:
(a) any stock or similar security, certificate of interest, or
participation in any profit-sharing agreement, voting trust
certificate, or certificate of deposit for the foregoing;
(b) any security convertible, with or without consideration,
into an equity security, or any warrant or other security carrying
any right to subscribe to or purchase an equity security; or
(c) any put, call, straddle, or other option, right or
privilege of acquiring an equity security from or selling an equity
security to another without being bound to do so.
(7) "Interested Shareholder" means any person, other than the Company
or any Subsidiary, who:
(a) is the beneficial owner, directly or indirectly, of 10 percent
or more of the voting power of the outstanding voting stock of the
Company; or
(b) is an Affiliate of the Company and at any time within the
two-year period immediately prior to the date in question was the
beneficial owner, directly or indirectly, of 10 percent or more of
the voting power of the then outstanding voting stock of the Company.
7
<PAGE>
For the purpose of determining whether a person is an Interested
Shareholder, the number of shares of voting stock deemed to be outstanding
shall include shares deemed owned by the person through application of
paragraph (3) of this Section C but shall not include any other shares of
voting stock which may be issuable pursuant to any agreement, arrangement,
or understanding, or upon exercise of conversion rights, warrants or
options, or otherwise. Furthermore, any such beneficial ownership or voting
power arising solely out of a trustee or custodial relationship of any
person in connection with a Company "employee benefit or stock plan" shall
be excluded for purposes of determining whether or not any such person is
an Interested Stockholder. For purposes hereof, the term "employee benefit
or stock plan" of the Company shall mean any option, bonus, appreciation,
profit sharing, retirement, incentive, thrift, employee stock ownership,
dividend reinvestment, savings or similar plan of the Company.
(8) "Market value" means:
(a) in the case of stock, the highest closing sale price during
the 30 calendar day period immediately preceding the date in question
of a share of such stock on the Composite Tape for New York Stock
Exchange listed stocks, or, if such stock is not quoted on such
Composite Tape, on the New York Stock Exchange, or if such stock is
not listed on such Exchange, on the principal United States
securities exchange registered under the Securities Exchange Act of
1934 on which such stock is listed, or, if such stock is not listed
on any such exchange, the highest closing bid quotation with respect
to a share of such stock during the 30 calendar day period preceding
the date in question on the National Association of Securities
Dealers, Inc. Automated Quotations System or any system then in use,
or if no such quotation is available, the fair market value on the
date in question of a share of such stock as determined by a majority
of the Continuing Directors at a meeting of the Board of Directors at
which a quorum consisting of at least a majority of the then
Continuing Directors is present; and
(b) in the case of property other than cash or stock, the fair
market value of such property on the date in question as determined
by a majority of the Continuing Directors at a meeting of the Board
of Directors at which a quorum consisting of at least a majority of
the then Continuing Directors is present.
(9) "Subsidiary" means any corporation of which voting stock having a
majority of the votes entitled to be cast is owned, directly or indirectly,
by the Company.
(10) "Valuation Date" means:
(a) for a Business Combination voted upon by shareholders, the
later of the day prior to the date of the shareholders' vote or the
date 20 business days prior to the consummation of the Business
Combination; and
(b) for a Business Combination not voted upon by shareholders, the
date of the consummation of the Business Combination.
(11) "Voting Stock" means shares of capital stock of the Company
entitled to vote generally in an election of directors.
D. In addition to any requirements of law and any other provisions of
these Articles of Incorporation or the terms of any class or series of
capital stock of the Company entitled to a preference over the Common Stock
as to dividends or upon liquidation (and notwithstanding the fact that a
lesser percentage may be specified by law, these Articles of Incorporation
or the terms of such class or series), the affirmative vote of
(1) the holders of at least 80 percent of the voting power of
the then outstanding voting stock of the Company, voting together as
a single class, and
(2) the holders of at least two-thirds of the voting power of
the then outstanding voting stock of the Company other than the
Interested Shareholder, voting together as a single class,
shall be required to amend, alter or repeal, or adopt any provision
inconsistent with, this Article VIII.
8
<PAGE>
ARTICLE IX
In addition to any requirements of law and any other provisions of
these Articles of Incorporation or the terms of any class or series of
capital stock of the Company having a preference over the Common Stock as
to dividends or upon liquidation (and notwithstanding the fact that a
lesser percentage may be specified by law, these Articles of Incorporation
or the terms of such class or series), the affirmative vote of the holders
of 80 percent or more of the voting power of the then outstanding voting
stock of the Company, voting together as a single class, shall be required
to amend, alter or repeal, or adopt any provision inconsistent with, this
Article IX or Article VI or VII of these Articles of Incorporation. Subject
to the foregoing provisions of this Article IX and Section D of Article
VIII, the Company reserves the right from time to time to amend, alter,
change, add to or repeal any provision contained in these Articles of
Incorporation in any manner now or hereafter prescribed by law and in these
Articles of Incorporation, and all rights and powers at any time conferred
upon shareholders, directors and officers of the Company by these Articles
of Incorporation or any amendment thereof are subject to the provisions of
this Article IX and Section D of Article VIII.
The foregoing Second Restated Articles of Incorporation correctly set
forth without change the corresponding provisions sequentially renumbered
of the Restated Articles of Incorporation as heretofore amended, and
supersede the Restated Articles of Incorporation and all amendments
thereto.
Dated: January 29, 1987.
ASHLAND OIL, INC.
/Thomas L. Feazell/
-------------------------------
By: Thomas L. Feazell
Vice President
/John P. Ward/
-------------------------------
By: John P. Ward
Secretary
COMMONWEALTH OF KENTUCKY )
) SS:
COUNTY OF GREENUP )
I, Teresa F. Gabbard, a notary public, do hereby certify that on this
29th day of January, 1987, personally appeared before me JOHN P. WARD, who,
being duly sworn, declared that he is the Secretary of Ashland Oil, Inc.,
that he signed the foregoing document as such, and that the statements
contained therein are true.
My commission expires: October 9, 1989
/Teresa F. Gabbard/
-------------------------
Teresa F. Gabbard
Notary Public
Prepared by John P. Ward
1000 Ashland Drive
Russell, Kentucky
/John P. Ward/
- -----------------------------
John P. Ward
9
<PAGE>
[STAMP] [STAMP]
LODGED FOR RECORD ON LODGED FOR RECORD ON
THE 30 DAY OF JUNE THE 30 DAY OF JANUARY
1987 AT 9:57 AM. RECORDED 1987 AT 10:47 AM. RECORDED
IN ART OF INC. BOOK IN ART OF INC. BOOK
NO. 9 PAGE 552 NO. 25 PAGE 470
TAX ________ FEES $5.50 TAX $________ FEE $5.50
DONALD DAVIDSON, CLERK WILLIAM A. SELBEE, CLERK
GREENUP COUNTY BOYD COUNTY
BY JOAN BURNETT, D.C. BY: DONNA MARCUM, D.C.
<PAGE>
[STAMP]
ORIGINAL COPY
FILED
SECRETARY OF STATE OF KENTUCKY
FRANKFORT, KENTUCKY
JANUARY 29, 1987
12:50 PM
DREXELL R. DAVIS
ASHLAND OIL, INC.
CERTIFICATE AND STATEMENT OF RESOLUTION ESTABLISHING AND
DESIGNATING CUMULATIVE PREFERRED STOCK, SERIES
OF 1987, AND FIXING AND DETERMINING CERTAIN RIGHTS
THEREOF AND THE NUMBER OF SHARES INITIALLY ISSUABLE
KNOW ALL MEN BY THESE PRESENTS, that THOMAS L. FEAZELL, as a Vice
President, and JOHN P. WARD, as the Secretary, of ASHLAND OIL INC., a
Kentucky corporation (the "Company"), do hereby certify that at a meeting
of the Board of Directors of the Company duly called and held in accordance
with the laws of Kentucky and the By-laws of the Company on January 29,
1987, the following resolution establishing and designating the Series of
1987 of the Cumulative Preferred Stock of the Company and fixing and
determining certain rights thereof and the number of shares initially
issuable was duly adopted.
"RESOLVED, that, pursuant to the authority expressly granted to and
vested in the Board of Directors of the Company (the "Board of Directors")
by the Second Restated Articles of Incorporation of the Company (the
"Articles"), this Board of Directors hereby establishes and designates a
series of Cumulative Preferred Stock, without par value, of the Company and
fixes and determines the number of shares to be initially issuable in such
series and the relative rights and preferences thereof (in addition to the
relative rights and preferences thereof set forth in the Articles which are
applicable to Cumulative Preferred Stock of all series) as follows:
SECTION 1. Designation, Number of Shares and Stated Value. The shares
of such series shall be designated as "Cumulative Preferred Stock, Series
of 1987" (the "Series 1987 Preferred Stock"). The stated value per share of
the Series 1987 Preferred Stock shall be $25. The number of shares
initially issuable and constituting the Series 1987 Preferred Stock shall
be 10,000,000.
SECTION 2. Dividends or Distributions. (a) The dividend rate for
shares of the Series 1987 Preferred Stock shall be per share per annum the
amount of cash, securities or other property equal to the sum of the
Formula Amounts with respect to each quarterly dividend payable pursuant to
Section 2(b) hereof on the Series 1987 Preferred Stock. The Formula Amount
with respect to each such quarterly dividend payable shall be the greater
of (1) $1.25 or (2) the Formula Number then in effect times the aggregate
per whole share amount of (x) dividends payable in cash and (y) dividends
or distributions payable in assets, securities or other forms of non-cash
consideration (other than dividends or distributions solely in shares of
common stock, par value $1.00 of the Company or any stock into which such
common stock may be reclassified or changed as contemplated by the second
proviso of this Section 2(a) (the "Common Stock")), declared on the Common
Stock since the immediately preceding date on which a quarterly dividend
was payable under Section 2(b) hereof on the Series 1987 Preferred Stock (a
"Quarterly Dividend Payment Date") or, with respect to the first Quarterly
Dividend Payment Date, since the first issuance of any share or fraction of
a share of Series 1987 Preferred Stock. For purposes of the preceding
sentence, the aggregate per whole share amount of all non-cash dividends or
distributions with respect to each quarterly payment of dividends on the
Series 1987 Preferred Stock shall be the cash amount equivalent to the fair
market value of all non-cash dividends or distributions as determined by
the Board of Directors, which determination shall be final and binding. On
or before the record date fixed or determined pursuant to Section 2(b)
hereof for each Quarterly Dividend Payment Date after the date of issuance
of any shares of the Series 1987 Preferred Stock, the Company shall submit
for filing with the Secretary of State of the Commonwealth of Kentucky a
certificate which sets forth the dividend payable for each share of the
Series 1987 Preferred Stock on such Quarterly Dividend Payment Date
determined in accordance with the provisions of this Section 2(a). As used
herein, the "Formula Number" shall be 10; provided, however, that if at any
time after January 29, 1987, the Company shall (i) pay a dividend
(regardless of when declared) or make a distribution, on its outstanding
shares of Common Stock payable in shares of Common Stock, (ii) subdivide
(by a stock split or otherwise) or split the outstanding shares of Common
Stock into a larger number of shares of Common Stock, or (iii) combine (by
a reverse stock split or otherwise) the outstanding shares of Common Stock
into a smaller number of shares of Common Stock, then in each such event
the Formula Number shall be adjusted to a number determined by multiplying
the Formula Number in effect immediately prior to such event by a fraction,
the numerator of which is the number of shares of Common Stock that are
outstanding immediately after such event and the denominator of which is
the number of shares that are outstanding
<PAGE>
immediately prior to such event (and rounding the result to the nearest
whole number); and provided further that if at any time after January 29,
1987, the Company shall reclassify or change the outstanding shares of
Common Stock into some other stock (including any such reclassification or
change in connection with a merger in which the Company is the surviving
corporation), then in such event the Formula Number shall be appropriately
adjusted to reflect such reclassification or change.
(b) Except as otherwise provided in the provisions of Article IV of
the Articles, and unless prohibited by Kentucky law, the Company shall
declare a dividend or distribution on the Series 1987 Preferred Stock as
provided in Section 2(a), out of funds legally available therefor,
immediately prior to the time it declares a dividend or distribution on the
Common Stock (other than a dividend or distribution in shares of Common
Stock), and such dividend or distribution on the Series 1987 Preferred
Stock shall (except as otherwise provided in Article IV of the Articles) be
payable on the same date on which the corresponding dividend or
distribution on the Common Stock is payable, to holders of shares of Series
1987 Preferred Stock of record at the close of business on the record date
fixed by the Board of Directors, which shall (except as otherwise provided
in Article IV of the Articles) be the same as the record date for the
corresponding dividend or distribution on the Common Stock; provided,
however, that, in the event no dividend or distribution (other than a
dividend or distribution in shares of Common Stock) shall have been
declared on the Common Stock during the three month period after any
Quarterly Dividend Payment Date (or with respect to the first Quarterly
Dividend Payment Date during the three month period after the first
issuance of any share or fraction of a share of Series 1987 Preferred
Stock), a dividend of $1.25 per share on the Series 1987 Preferred Stock
shall, unless prohibited by Kentucky law, nevertheless be payable, out of
funds legally available therefor, 30 days after the last day of such three
month period to holders of shares of Series 1987 Preferred Stock of record
at the close of business on the record date, which shall (except as
otherwise provided in Article IV of the Articles) be 5 days after the last
day of such three month period.
SECTION 3. Voting Rights. Except as otherwise provided in the
provisions of Article IV of the Articles and by the provisions of
applicable law, the holders of shares of Series 1987 Preferred Stock shall
have the following voting rights:
(a) Each holder of record of one whole share of the Series 1987
Preferred Stock shall be entitled to a number of votes equal to the
Formula Number then in effect on all matters on which holders of the
Common Stock or stockholders generally are entitled to vote. Each
holder of record of a fraction of a share of the Series 1987
Preferred Stock shall be entitled, for each one-tenth (1/10th) of a
share, to a number of votes equal to one-tenth (1/10th) of the
Formula Number then in effect on all matters on which holders of the
Common Stock or stockholders generally are entitled to vote; and
(b) The holders of shares of Series 1987 Preferred Stock and
the holders of shares of Common Stock shall vote together as one
class for the election of directors of the Company and on all other
matters submitted to a vote of stockholders of the Company.
SECTION 4. Liquidation Rights. Upon the voluntary or involuntary
liquidation, dissolution or winding up of the Company, and before any
distribution is made to the holders of Common Stock, the holder of each
full share or fraction of a share of Series 1987 Preferred Stock shall be
entitled to be paid an amount equal to the accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such
payment, plus an amount per whole share equal to the greater of (1) $25 per
share or (2) the Formula Number then in effect times the aggregate amount
to be distributed per share to holders of Common Stock.
SECTION 5. Consolidation, Merger, etc. Except as otherwise provided
in Article IV of the Articles, in case the Company shall enter into any
consolidation, merger, combination or other transaction in which the
outstanding shares of Common Stock are exchanged for or changed into other
stock or securities, cash or any other property, then in any such case the
then outstanding shares of Series 1987 Preferred Stock shall at the same
time be similarly exchanged or changed in an amount per share equal to the
Formula Number then in effect times the aggregate amount of stock,
securities, cash or other property (payable in kind), as the case may be,
into which or for which each share of Common Stock is exchanged or changed.
SECTION 6. No Redemption. Except as otherwise provided in Section 5, the
shares of Series 1987 Preferred Stock shall not be subject to redemption by
the Company or at the option of any holder of Series 1987 Preferred
2
<PAGE>
Stock; provided, however, that the Company may purchase or otherwise
acquire outstanding shares of Series 1987 Preferred Stock in the open
market or by offer to any holder or holders of shares of Series 1987
Preferred Stock.
SECTION 7. Fractional Shares. The Series 1987 Preferred Stock shall
be issuable upon exercise of the Rights issued pursuant to the Rights
Agreement dated as of May 15, 1986, between the Company and The Chase
Manhattan Bank, N.A., as Rights Agent, as amended, (a copy of which is
filed with the Securities and Exchange Commission), in whole shares or, at
the option of the Company, in any fraction of a share that is one-tenth
(1/10th) of a share or any integral multiple of such fraction. At the
election of the Company prior to the first issuance of a share or a
fraction of a share of Series 1987 Preferred Stock, either (1) certificates
may be issued to evidence any such authorized fraction of a share of Series
1987 Preferred Stock, or (2) any such authorized fraction of a share of
Series 1987 Preferred Stock may be evidenced by scrip or warrants in
registered form which shall entitle the holder thereof to receive a
certificate for a full share upon the surrender of such scrip or warrants
aggregating a full share. The holders of such scrip or warrants shall have
all the rights, privileges and preferences to which the holders of
fractional shares are entitled. In lieu of such fractional shares or scrip
or warrants, the Company may pay registered holders cash equal to the same
fraction of the current market value of a share of Series 1987 Preferred
Stock (if any are outstanding) or the equivalent number of shares of Common
Stock.
SECTION 8. Amendments. The Board of Directors reserves the right by
subsequent amendment of this resolution from time to time to increase and,
in its discretion, to decrease the number of shares issuable in this series
and in other respects to amend this resolution within the limitations
provided by Kentucky law and the Articles.
SECTION 9. Definitions. For purposes of this resolution, all terms
defined in the Articles shall have the same meaning herein, except as
otherwise specifically provided herein."
IN TESTIMONY WHEREOF, witness our signatures this 29th day of
January, 1987.
/Thomas L. Feazell/
----------------------------
Thomas L. Feazell
Vice President
/John P. Ward/
----------------------------
John P. Ward
Secretary
COMMONWEALTH OF KENTUCKY )
) SS:
COUNTY OF GREENUP )
I, Teresa F, Gabbard, a Notary Public, do hereby certify that on
this 29th day of January, 1987, personally appeared before me JOHN P. WARD,
who being by me first duly sworn, declared that he is the Secretary of
ASHLAND OIL,INC., and that he signed the foregoing document as Secretary of
the Company and that the statements therein contained are true.
/TERESA F. GABBARD/
------------------------------
Notary Public
[STAMP]
Prepared by: TERESA F. GABBARD
John P. Ward My Commission expires October 9, 1989
1000 Ashland Drive
Russell, Kentucky 41169
/John P. Ward/
- -------------------------------
John P. Ward
3
<PAGE>
[STAMP] [STAMP]
LODGED FOR RECORD ON LODGED FOR RECORD ON
THE 30 DAY OF JANUARY THE 30 DAY OF JANUARY
1987 AT 10:46 AM. RECORDED 1987 AT 9:56 AM. RECORDED
IN ART OF INC. BOOK IN ART OF INC. BOOK
NO. 25 PAGE 461 NO. 9 PAGE 543
TAX ________ FEES $14.50 TAX $________ FEE $14.50
WILLIAM A. SELBEE, CLERK DONALD L. DAVIDSON, CLERK
BOYD COUNTY GREENUP COUNTY
BY: DONNA MARCUM, D.C. BY JOAN BURNETT, D.C.
<PAGE>
[STAMP]
ORIGINAL COPY FILED
SECRETARY OF STATE OF KENTUCKY,
FRANKFORT, KENTUCKY
JAN 28, 1988
11:05 AM
BREMER EHRLER
SECRETARY OF STATE
AMENDMENT TO SECOND RESTATED
ARTICLES OF INCORPORATION
OF ASHLAND OIL, INC.
AMENDMENT NO. 1
KNOW ALL MEN BY THESE PRESENTS, that Thomas L. Feazell, as Vice
President, and John P. Ward, as Secretary of Ashland Oil, Inc., a Kentucky
corporation (the "Company") do hereby certify that, at a meeting on January
28, 1988 of the holders of its issued and outstanding stock, which meeting
was duly called upon notice of the specific purpose, the holders of a
majority of the outstanding stock entitled to vote adopted a new Article X
of the Second Restated Articles of Incorporation (the "Articles") of the
Company which reads in its entirety as follows:
Notwithstanding any right to indemnification provided by the
Act to any director, officer, employee or agent of the Company, the
Company may, but shall not be required to, to the maximum extent
permitted by law, indemnify any such person against costs and
expenses (including but not limited to attorneys' fees) and any
liabilities (including but not limited to judgments, fines, penalties
and settlements) paid by or imposed against any such person in
connection with any actual or threatened claim, action, suit or
proceeding, whether civil, criminal, administrative, legislative,
investigative or other (including any appeal relating thereto) and
whether made or brought by or in the right of the Company or
otherwise, in which any such person is involved, whether as a party,
witness, or otherwise, because he or she is or was a director,
officer, employee or agent of the Company or a director, officer,
partner, trustee, employee or agent of any other corporation,
partnership, employee benefit plan or other entity.
The indemnification authorized by this Article X shall not
supersede or be exclusive of any other right of indemnification which
any such person may have or hereafter acquire under any provision of
these Articles or the By-laws of the Company, agreement, vote of
shareholders or disinterested directors or otherwise. The Company may
take such steps as may be deemed appropriate by the Board of
Directors to provide indemnification to any such person, including,
without limitation, entering into contracts for indemnification
between the Company and individual directors, officers, employees or
agents which may provide rights to indemnification which are broader
or otherwise different than the rights authorized by this Article.
The Company may take such steps as may be deemed appropriate by the
Board of Directors to secure, subject to the occurrence of such
conditions or events as may be determined by the Board of Directors,
the payment of such amounts as are required to effect any
indemnification permitted or authorized by this Article, including,
without limitation, purchasing and maintaining insurance, creating a
trust fund, granting security interests or using other means
(including, without limitation, irrevocable letters of credit).
Any amendment or repeal of this Article X shall operate
prospectively only and shall not affect any action taken, or failure
to act, by the Company or any such person prior to such amendment or
repeal.
IN TESTIMONY WHEREOF, witness our signatures this 28th day of
January, 1988.
/Thomas L. Feazell/ /John P. Ward/
- ---------------------------------- ----------------------------------
Thomas L. Feazell, Vice President John P. Ward, Secretary
<PAGE>
COMMONWEALTH OF KENTUCKY )
) SS:
COUNTY OF GREENUP )
I, Valerie J. Parks, Notary Public, do hereby certify that on this
28th day of January, 1988, personally appeared before me JOHN P. WARD, who
being by me first duly sworn, declared that he is the Secretary of ASHLAND
OIL, INC., and that he signed the foregoing document as such and that the
statements therein contained are true.
/VALERIE J. PARKS/
----------------------------------
VALERIE J. PARKS
[STAMP]
VALERIE J. PARKS
Prepared by John P. Ward My Commission expires November 11,
1000 Ashland Drive, 1990
Russell, Kentucky
/John P. Ward/
- --------------------------------
John P. Ward
[STAMP] [STAMP]
LODGED FOR RECORD ON LODGED FOR RECORD ON
THE 29th DAY OF JANUARY THE 29 DAY OF JANUARY
1988 AT 10:55 AM. RECORDED 1988 AT 10:15 AM. RECORDED
IN ART OF INC. BOOK IN ART OF INC. BOOK
NO. 25 PAGE _________ NO. 10 PAGE 169
TAX ________FEES $5.50 TAX $________ FEE $5.50
WILLIAM A. SELBEE, CLERK DONALD L. DAVIDSON, CLERK
BOYD COUNTY GREENUP COUNTY
BY: D.R. MARCUM, D.C. BY: MARY STULTZ, D.C.
<PAGE>
[STAMP]
DATE: JANUARY 27, 1989
TIME: 2:02 PM
AMOUNT: $40.00
BREMER EHRLER
SECRETARY OF STATE
COMMONWEALTH OF KENTUCKY
ARTICLES OF AMENDMENT
TO
SECOND RESTATED ARTICLES OF INCORPORATION
OF ASHLAND OIL, INC.
AMENDMENT NO. 2
Pursuant to the provisions of Section 271B.10-060 of the Kentucky
Business Corporation Act, the undersigned corporation adopts the following
articles of amendment to its Second Restated Articles of Incorporation:
FIRST: The name of the corporation is Ashland Oil, Inc.
SECOND: At a meeting of the Board of Directors held on November 3,
1988, the Board of Directors proposed that the Second Restated Articles of
Incorporation be amended by adding a new Article XI, and directed that the
proposed amendment be submitted to the shareholders with the affirmative
recommendation of the Board of Directors at a meeting of the company's
shareholders to be held on January 26, 1989 (the "Meeting"), which Meeting
was duly called upon notice of the specific purpose. The text of the new
Article XI is as follows:
ARTICLE XI
No director shall be personally liable to the Company or its
shareholders for monetary damages for breach of his duties as a
director except to the extent that the applicable law from time to
time in effect shall provide that such liability may not be
eliminated or limited.
Neither the amendment nor repeal of this Article XI shall
affect the liability of any director of the Company with respect to
any act or failure to act which occurred prior to such amendment or
repeal.
This Article XI is not intended to eliminate or limit any
protection otherwise available to the directors of the Company.
THIRD: There were 58,707,121 shares of Ashland Oil, Inc. Common
Stock, each of which was entitled to cast one vote, outstanding at December
8, 1988, the record date for the Meeting, which represent all of the shares
entitled to vote on such amendment.
FOURTH: There were 50,687,052 shares of Ashland Oil, Inc. Common Stock
indisputably represented at the Meeting.
FIFTH: The total number of votes cast for such amendment was 47,745,995
and the total number of votes cast against such amendment was 2,231,353.
Dated January 27, 1989.
ASHLAND OIL, INC.
/Thomas L. Feazell/
By: _____________________________
Thomas L. Feazell
Administrative Vice President
and General Counsel
and
/John P. Ward/
-----------------------------
John P. Ward
Secretary
<PAGE>
COMMONWEALTH OF KENTUCKY )
COUNTY OF GREENUP )
The foregoing instrument was acknowledged before me this 27th day of
January, 1989, by Thomas L. Feazell, Administrative Vice President and
General Counsel, and John P. Ward, Secretary, of ASHLAND OIL, INC., a
Kentucky corporation, on behalf of the corporation.
/Valerie J. Parks/
-------------------------------
Valerie J. Parks
Notary Public
[STAMP]
VALERIE J. PARKS
Prepared by John P. Ward My Commission Expires November 11,
1000 Ashland Drive 1990
Russell, Kentucky 41114
/John P. Ward/
- -------------------------
[STAMP]
LODGED FOR RECORD ON
THE 30 DAY OF JANUARY
1989 AT 9:40 AM. RECORDED
IN ART OF INC. BOOK
NO. 10 PAGE 423
TAX $________ FEE $5.50
DONALD L. DAVIDSON, CLERK
GREENUP COUNTY
BY JOAN BURNETT, D.C.
[STAMP]
NO.
LODGED FOR RECORD
THE 30 DAY OF JAN
1989 AT 10:25 AM RECORDED
IN ART OF INC BOOK
NO. 26 PAGE 522
<PAGE>
[STAMP]
RECEIVED & FILED CH $40.00
MAY 18 10:52 AM 93
BOB BABBAGE
SECRETARY OF STATE
COMMONWEALTH KENTUCKY
ARTICLES OF AMENDMENT
TO
SECOND RESTATED ARTICLES OF INCORPORATION
OF ASHLAND OIL, INC.
AMENDMENT NO. 3
Pursuant to the provisions of Section 271B.10-060 of the Kentucky
Business Corporation Act, the undersigned corporation adopts the following
articles of amendment to set forth the preferences, limitations and
relative rights of a series of shares of its Cumulative Preferred Stock, no
par value, under Article IV of its Second Restated Articles of
Incorporation:
FIRST: The name of the Corporation is Ashland Oil, Inc.
SECOND: The text of the amendment determining the terms of the series of
shares of the Cumulative Preferred Stock is as follows:
I. Designation of Series and Number of Shares to be Issuable Therein.
This series of the Cumulative Preferred Stock shall be designated $3.125
Cumulative Convertible Preferred Stock (hereinafter called the "Convertible
Preferred Stock"), of which 6,000,000 shares shall be issuable.
II. Rank. All shares of Convertible Preferred Stock shall rank prior,
both as to payment of dividends and as to distributions of assets upon
liquidation, dissolution or winding up of the Corporation, whether voluntary
or involuntary, to all of the Corporation's now or hereafter issued Common
Stock (the "Common Stock"), to all of the Corporation s Cumulative Preferred
Stock, Series of 1987, when and if issued, and to all of the Corporation s
hereafter issued capital stock ranking junior to the Convertible Preferred
Stock both as to the payment of dividends and as to distributions of assets
upon liquidation, dissolution or winding up of the Corporation, whether
voluntary or involuntary, when and if issued (the Common Stock, the Cumulative
Preferred Stock, Series of 1987, and any such other capital stock being herein
referred to as "Junior Stock").
III. Dividends. The holders of Convertible Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of Directors out
of funds at the time legally available therefor, dividends at the rate of
$3.125 per annum per share, and no more, which shall be fully cumulative,
shall accrue without interest from the date of the initial issuance of such
shares of Convertible Preferred Stock (on a daily basis whether or not such
amounts would be available at that time for distribution to holders of
shares of Convertible Preferred Stock) and shall be payable in cash
quarterly in arrears on March 15, June 15, September 15 and December 15 of
each year commencing June 15, 1993 (with respect to the period from such
date of initial issuance to June 15, 1993) (except that if any such date is
a Saturday, Sunday or legal holiday, then such dividend shall be payable on
the next day that is not a Saturday, Sunday or legal holiday) to holders of
record as they appear upon the stock transfer books of the Corporation on
such record dates, not more than sixty days nor less than ten days
preceding the payment dates for such dividends, as are fixed by the Board
of Directors (or, to the extent permitted by applicable law, a duly
authorized committee thereof). In no event shall any such dividend record
date be fixed less than (a) six business days prior to any date fixed for
the redemption of the Convertible Preferred Stock or (b) with respect to
the dividend payment date occurring on March 15, 1997, less than ten
business days prior to any date fixed for such redemption. For purposes
hereof, the term "legal holiday" shall mean any day on which banking
institutions are authorized to close in New York, New York and the term
"business day" shall mean any day other than a Saturday, Sunday or legal
holiday. Subject to the next paragraph of this Section III, dividends on
account of arrears for any past dividend period may be declared and paid at
any time, without reference to any regular dividend payment date. The
amount of dividends payable per share of Convertible Preferred Stock for
each quarterly dividend period shall be computed by dividing the annual
dividend amount by four. The amount of dividends payable for the initial
dividend period and any period shorter than a full quarterly period shall
be computed on the basis of a 360-day year of twelve 30-day months. No
interest shall be payable in respect of any dividend payment on the
Convertible Preferred Stock which may be in arrears.
No dividends or other distributions, other than dividends payable
solely in shares of Junior Stock, shall be
1
<PAGE>
declared, paid or set apart for payment on shares of Junior Stock or any
other capital stock of the Corporation ranking junior as to dividends to
the Convertible Preferred Stock (the Junior Stock and any such other class
or series of the Corporation's capital stock being herein referred to as
"Junior Dividend Stock"), unless and until all accrued and unpaid dividends
on the Convertible Preferred Stock for all dividend payment periods ending
on or before the payment date of such dividends or other distributions on
Junior Dividend Stock shall have been paid or declared and set apart for
payment.
No payment on account of the purchase, redemption, retirement or
other acquisition of shares of Junior Dividend Stock or any other class or
series of the Corporation's capital stock ranking junior to the Convertible
Preferred Stock as to distributions of assets upon liquidation, dissolution
or winding up of the Corporation, whether voluntary or involuntary (the
Junior Stock and any other class or series of the Corporation's capital
stock ranking junior to the Convertible Preferred Stock as to such
distributions being herein referred to as "Junior Liquidation Stock") shall
be made unless and until all accrued and unpaid dividends on the
Convertible Preferred Stock for all dividend payment periods ending on or
before such payment for such Junior Dividend Stock or Junior Liquidation
Stock shall have been paid or declared and set apart for payment; provided,
however, that the restrictions set forth in this sentence shall not apply
to the purchase or other acquisition of Junior Dividend Stock or Junior
Liquidation Stock either (A) pursuant to any employee or director incentive
or benefit plan or arrangement (including any employment, severance or
consulting agreement) of the Corporation or any subsidiary of the
Corporation heretofore or hereafter adopted or (B) in exchange solely for
Junior Stock.
No full dividends shall be declared, paid or set apart for payment on
shares of any class or series of the corporation's capital stock hereafter
issued ranking, as to dividends, on a parity with the Convertible Preferred
Stock (any such class or series of the Corporation's capital stock being
herein referred to as "Parity Dividend Stock") for any period unless full
cumulative dividends have been, or contemporaneously are, paid or declared
and set apart for such payment on the Convertible Preferred Stock for all
dividend payment periods ending on or before the payment date of such
dividends on Parity Dividend Stock. No dividends shall be paid on Parity
Dividend Stock except on dates on which dividends are paid on the
Convertible Preferred Stock. All dividends paid or declared and set apart
for payment on the Convertible Preferred Stock and the Parity Dividend
Stock shall be paid or declared and set apart for payment pro rata so that
the amount of dividends paid or declared and set apart for payment per
share on the Convertible Preferred Stock and the Parity Dividend Stock on
any date shall in all cases bear to each other the same ratio that accrued
and unpaid dividends to the date of payment on the Convertible Preferred
Stock and the Parity Dividend Stock bear to each other.
No payment on account of the purchase, redemption, retirement or
other acquisition of shares of Junior Stock, Parity Dividend Stock or any
class or series of the Corporation's capital stock ranking on a parity with
the Convertible Preferred Stock as to distributions of assets upon
liquidation, dissolution or winding up of the Corporation, whether
voluntary or involuntary (any such class or series of the Corporation's
capital stock being herein referred to as "Parity Liquidation Stock") shall
be made, and, other than dividends to the extent permitted by the preceding
paragraph, no distributions shall be declared, paid or set apart for
payment on shares of Parity Dividend Stock or Parity Liquidation Stock,
unless and until all accrued and unpaid dividends on the Convertible
Preferred Stock for all dividend payment periods ending on or before such
payment for, or the payment date of such distributions on, such Parity
Dividend Stock or Parity Liquidation Stock shall have been paid or declared
and set apart for payment; provided, however, that the restrictions set
forth in this sentence shall not apply to the purchase or other acquisition
of Parity Dividend Stock or Parity Liquidation Stock either (A) pursuant to
any employee or director incentive or benefit plan or arrangement
(including any employment, severance or consulting agreement) of the
Corporation or any subsidiary of the Corporation hereafter adopted or (B)
in exchange solely for Junior Stock.
Any reference to "distribution" contained in this Section III shall
not be deemed, except as expressly stated, to include any distribution made
in connection with any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary.
IV. Liquidation Preference. In the event of a liquidation, dissolution
or winding up of the Corporation,
2
<PAGE>
whether voluntary or involuntary, the holders of shares of Convertible
Preferred Stock shall be entitled to receive out of the assets of the
Corporation available for distribution to shareholders an amount equal to
the dividends accrued and unpaid on such shares on the date of final
distribution to such holders, whether or not declared, without interest,
plus a sum equal to $50 per share, and no more, before any payment shall be
made or any assets distributed to the holders of shares of Junior
Liquidation Stock; provided, however, that such rights shall accrue to the
holders of shares of Convertible Preferred Stock only with respect to
assets (if any) remaining after the Corporation's payments with respect to
the liquidation preferences of the shares of any class or series of the
Corporation capital stock hereafter issued ranking prior to the Convertible
Preferred Stock as to distributions of assets upon such liquidation,
dissolution or winding up ("Senior Liquidation Stock") are fully met. The
entire assets of the Corporation available for distribution to shareholders
after the liquidation preferences of the shares of Senior Liquidation Stock
are fully met shall be distributed ratably among the holders of the
Convertible Preferred Stock and Parity Liquidation Stock in proportion to
the respective preferential amounts to which each is entitled (but only to
the extent of such preferential amounts). After payment in full of the
liquidation preferences of the shares of the Convertible Preferred Stock,
the holders of such shares shall not be entitled to any further
participation in any distribution of assets by the Corporation. The
voluntary sale, lease, exchange or transfer of all or substantially all of
the Company's property or assets to, or its consolidation or merger with,
one or more corporations shall not be deemed to be considered a voluntary
or involuntary liquidation, dissolution or winding up of the Corporation.
V. Redemption at Option of the Corporation. The Convertible Preferred
Stock may not be redeemed by the Corporation prior to March 25, 1997. On
and after such date, the Convertible Preferred Stock may be redeemed by the
Corporation, at its option on any date set by the Board of Directors, in
whole or in part at any time, subject to the limitations, if any, imposed
by the Kentucky Business Corporation Act, for an amount in cash equal to
the applicable price per share set forth for the date fixed for redemption
in the following table:
Date Fixed for Redemption
Price
On or after March 25, 1997 and on or before March 14,1998. $51.88
After March 14, 1998 and on or before March 14, 1999...... $51.56
After March 14, 1999 and on or before March 14, 2000...... $51.25
After March 14, 2000 and on or before March 14, 2001...... $50.94
After March 14, 2001 and on or before March 14, 2002...... $50.63
After March 14, 2002 and on or before March 14, 2003...... $50.31
Any date after March 14, 2003............................. $50.00
plus, in each case, an amount in cash equal to all per share dividends on
the Convertible Preferred Stock accrued and unpaid thereon, whether or not
declared, to but excluding the date fixed for redemption, such sum being
hereinafter referred to as the "Redemption Price".
In case of the redemption of less than all of the then outstanding
Convertible Preferred Stock, the Corporation shall designate by lot, or in
such other manner as the Board of Directors may determine to be fair, the
shares to be redeemed, or shall effect such redemption pro rata.
Notwithstanding the foregoing, the Corporation shall not redeem less than
all of the Convertible Preferred Stock at any time outstanding until all
dividends accrued and in arrears upon all Convertible Preferred Stock then
outstanding shall have been paid in full for all past dividend periods.
Not more than ninety nor less than thirty days prior to the date
fixed for redemption by the Board of Directors, notice thereof by first
class mail, postage prepaid, shall be given to the holders of record of the
shares of Convertible Preferred Stock to be redeemed, addressed to such
holders at their last addresses as shown upon the stock transfer books of
the Corporation. Each such notice of redemption shall specify the date
fixed for redemption, the Redemption Price, the place or places of payment,
that payment will be made upon presentation and surrender of the shares of
Convertible Preferred Stock, that on and after the date fixed for
redemption dividends will cease to accrue on such shares, the
then-effective conversion price pursuant to Section VI and that the right
of holders to convert shares of Convertible Preferred Stock shall terminate
at the close of business on
3
<PAGE>
the fifth business day prior to the date fixed for redemption (unless the
Corporation defaults in the payment of the Redemption Price).
Any notice that is mailed as herein provided shall be conclusively
presumed to have been duly given, whether or not the holder of shares of
Convertible Preferred Stock receives such notice; and failure to give such
notice by mail, or any defect in such notice, to the holders of any shares
designated for redemption shall not affect the validity of the proceedings
for the redemption of any other shares of Convertible Preferred Stock. On
or after the date fixed for redemption as stated in such notice, each
holder of the shares called for redemption shall surrender the certificate
evidencing such shares to the Corporation at the place designated in such
notice and shall thereupon be entitled to receive payment of the Redemption
Price. If less than all the shares evidenced by any such surrendered
certificate are redeemed, a new certificate shall be issued evidencing the
unredeemed shares.
No fractional shares of Convertible Preferred Stock shall be issued
upon redemption of less than all Convertible Preferred Stock. If more than
one certificate evidencing shares of Convertible Preferred Stock shall be
held at one time by the same holder, the number of full shares issuable
upon redemption of less than all of such shares of Convertible Preferred
Stock shall be computed on the basis of the aggregate number of shares of
Convertible Preferred Stock so held. Instead of any fractional share of
Convertible Preferred Stock that would otherwise be issuable to a holder
upon redemption of less than all shares of Convertible Preferred Stock, the
Corporation shall pay a cash adjustment in respect of such fractional share
in an amount equal to the same fraction of the fair value per share of
Convertible Preferred Stock (as determined in good faith by the Board of
Directors or in any manner prescribed by the Board of Directors) at the
close of business on the date fixed for redemption.
Notice having been given as aforesaid, if, on the date fixed for
redemption, funds necessary for the redemption shall be available therefor
and shall have been deposited with a bank or trust company with irrevocable
instructions and authority to pay the Redemption Price to the holders of
the Convertible Preferred Stock, then, notwithstanding that the
certificates evidencing any shares so called for redemption shall not have
been surrendered, dividends with respect to the shares so called shall
cease to accrue on and after the date fixed for redemption, such shares
shall no longer be deemed outstanding, the holders thereof shall cease to
be shareholders of the Corporation and all rights whatsoever with respect
to the shares so called for redemption (except the right of the holders to
receive the Redemption Price without interest upon surrender of their
certificates therefor) shall terminate. If funds legally available for such
purpose are not sufficient for redemption of the shares of Convertible
Preferred Stock which were to be redeemed, then the certificates evidencing
such shares shall be deemed not to be surrendered, such shares shall remain
outstanding and the right of holders of shares of Convertible Preferred
Stock thereafter shall continue to be only those of a holder of shares of
the Convertible Preferred Stock.
The shares of Convertible Preferred Stock shall not be subject to the
operation of any mandatory purchase, retirement or sinking fund.
VI. Conversion Privilege.
(a) Right of Conversion. Each share of Convertible Preferred Stock
shall be convertible at the option of the holder thereof, at any time prior
to the close of business on the fifth business day prior to the date fixed
for redemption of such share as herein provided, into fully paid and
nonassessable shares of Common Stock, at the rate of that number of shares
of Common Stock for each full share of Convertible Preferred Stock that is
equal to $50 divided by the conversion price applicable per share of Common
Stock, or into such additional or other securities, cash or property and at
such other rates as required in accordance with the provisions of this
Section VI. For purposes of this resolution, the "conversion price"
applicable per share of Common Stock shall initially be equal to $32.343
and shall be adjusted from time to time in accordance with the provisions
of this Section VI.
(b) Conversion Procedures. Any holder of shares of Convertible Preferred
Stock desiring to convert such shares into Common Stock shall surrender the
certificate or certificates evidencing such shares of Convertible
4
<PAGE>
Preferred Stock at the office of the transfer agent for the Convertible
Preferred Stock, which certificate or certificates, if the Corporation
shall so require, shall be duly endorsed to the Corporation or in blank, or
accompanied by proper instruments of transfer to the Corporation or in
blank, accompanied by irrevocable written notice to the Corporation that
the holder elects so to convert such shares of Convertible Preferred Stock
and specifying the name or names (with address or addresses) in which a
certificate or certificates evidencing shares of Common Stock are to be
issued.
Subject to Section VI(l) hereof, no payments or adjustments in
respect of dividends on shares of Convertible Preferred Stock surrendered
for conversion or on account of any dividend on the Common Stock issued
upon conversion shall be made upon the conversion of any shares of
Convertible Preferred Stock and the holder will lose any right to payment
of dividends on the shares of Convertible Preferred Stock surrendered for
conversion.
The Corporation shall, as soon as practicable after such deposit of
certificates evidencing shares of Convertible Preferred Stock accompanied
by the written notice and compliance with any other conditions herein
contained, deliver at such office of such transfer agent to the person for
whose account such shares of Convertible Preferred Stock were so
surrendered, or to the nominee or nominees of such person, certificates
evidencing the number of full shares of Common Stock to which such person
shall be entitled as aforesaid, together with a cash adjustment in respect
of any fraction of a share of Common Stock as hereinafter provided. Such
conversion shall be deemed to have been made as of the date of such
surrender of the shares of Convertible Preferred Stock to be converted, and
the person or persons entitled to receive the Common Stock deliverable upon
conversion of such Convertible Preferred Stock shall be treated for all
purposes as the record holder or holders of such Common Stock on such date.
(c) Adjustment of Conversion Price. The conversion price at which a
share of Convertible Preferred Stock is convertible into Common Stock shall be
subject to adjustment from time to time as follows:
(i) In case the Corporation shall pay or make a dividend or
other distribution on its Common Stock exclusively in Common Stock or
shall pay or make a dividend or other distribution on any other class
or series of capital stock of the Corporation which dividend or
distribution includes Common Stock, the conversion price in effect at
the opening of business on the day following the date fixed for the
determination of shareholders entitled to receive such dividend or
other distribution shall be reduced by multiplying such conversion
price by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding at the close of business on the
date fixed for such determination and the denominator shall be the
sum of such number of shares and the total number of shares
constituting such dividend or other, such reduction to become
effective immediately after the opening of business on the day
following the date fixed for such determination.
(ii) In case the Corporation shall pay or make a dividend or
other distribution on its Common Stock consisting exclusively of, or
shall otherwise issue to all holders of its Common Stock, rights or
warrants entitling the holders thereof to subscribe for or purchase
shares of Common Stock at a price per share less than the current
market price per share (determined as provided in subparagraph (vi)
of this Section VI(c)) of the Common Stock on the date fixed for the
determination of shareholders entitled to receive such rights or
warrants, the conversion price in effect at the opening of business
on the day following the date fixed for such determination shall be
reduced by multiplying such conversion price by a fraction of which
the numerator shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for such
determination plus the number of shares of Common Stock which the
aggregate of the offering price of the total number of shares of
Common Stock so offered for subscription or purchase would purchase
at such current market price and the denominator shall be the number
of shares of Common Stock outstanding at the close of business on the
date fixed for such determination plus the number of shares of Common
Stock so offered for subscription or purchase, such reduction to
become effective immediately after the opening of business on the day
following the date fixed for such determination. In case any rights
or warrants referred to in this subparagraph (ii) in respect of which
an adjustment shall have been made shall
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expire unexercised within 45 days after the same shall have been
distributed or issued by the Corporation, the conversion price shall
be readjusted at the time of such expiration to the conversion price
that would have been in effect if no adjustment had been made on
account of the distribution or issuance of such expired rights or
warrants. For the purposes of this Section VI(c)(ii), if both (A) a
Distribution Date (as such term is defined in the Rights Agreement)
and (B) an event set forth in Section 11(d)(i) or 13(a) of the Rights
Agreement shall have occurred, then the later to occur of such events
shall be deemed to constitute an issuance of rights to purchase
shares of the related common stock.
(iii) In case outstanding shares of Common Stock shall be
subdivided into a greater number of shares of Common Stock, the
conversion price in effect at the opening of business on the day
following the day upon which such subdivision becomes effective shall
be proportionately reduced, and conversely, in case outstanding
shares of Common Stock shall each be combined into a smaller number
of shares of Common Stock, the conversion price in effect at the
opening of business on the day following the day upon which such
combination becomes effective shall be proportionately increased,
such reduction or increase, as the case may be, to become effective
immediately after the opening of business on the day following the
day upon which such subdivision or combination becomes effective.
(iv) Subject to the last sentence of this subparagraph (iv), in
case the Corporation shall, by dividend or otherwise, distribute to
all holders of its Common Stock evidences of its indebtedness, shares
of any class or series of capital stock, cash or assets (including
securities, but excluding any rights or warrants referred to in
subparagraph (ii) of this Section VI(c), any dividend or distribution
paid exclusively in cash and any dividend or distribution referred to
in subparagraph (i) of this Section VI(c)), the conversion price
shall be reduced so that the same shall equal the price determined by
multiplying the conversion price in effect immediately prior to the
effectiveness of the conversion price reduction contemplated by this
subparagraph (iv) by a fraction of which the numerator shall be the
current market price per share (determined as provided in
subparagraph (vi) of this Section VI(c)) of the Common Stock on the
date fixed for the payment of such distribution (the "Reference
Date") less the fair market value (as determined in good faith by the
Board of Directors, whose determination shall be conclusive and
described in a resolution of the Board of Directors), on the
Reference Date, of the portion of the evidences of indebtedness,
shares of capital stock, cash and assets so distributed applicable to
one share of Common Stock and the denominator shall be such current
market price per share of the Common Stock, such reduction to become
effective immediately prior to the opening of business on the day
following the Reference Date. If the Board of Directors determines
the fair market value of any distribution for purposes of this
subparagraph (iv) by reference to the actual or when issued trading
market for any securities comprising such distribution, it must in
doing so consider the prices in such market over the same period used
in computing the current market price per share of Common Stock
pursuant to subparagraph (vi) of this Section VI(c). For purposes of
this subparagraph (iv), any dividend or distribution that includes
shares of Common Stock or rights or warrants to subscribe for or
purchase shares of Common Stock shall be deemed instead to be (1) a
dividend or distribution of the evidences of indebtedness, cash,
assets or shares of capital stock other than such shares of Common
Stock or rights or warrants (making any further conversion price
reduction required by this subparagraph (iv) immediately followed by
(2) a dividend or distribution of such shares of Common Stock or such
rights or warrants (making any further conversion price reduction
required by subparagraph (i) or (ii) of this Section VI(c), except
(A) the Reference Date of such dividend or distribution as defined in
this subparagraph (iv) shall be substituted as "the date fixed for
the determination of shareholders entitled to receive such dividend
or other distribution or to exchange such Rights", "the date fixed
for the determination of shareholders entitled to receive such rights
or warrants" and "the date fixed for such determination" within the
meaning of subparagraphs (i) and (ii) of this Section VI(c) and (B)
any shares of Common Stock included in such dividend or distribution
shall not be deemed "outstanding at the close of business on the date
fixed for such determination" within the meaning of subparagraph (i)
of this Section VI(c)).
(v) In case the Corporation shall pay or make a dividend or
other distribution on its Common Stock exclusively in cash (excluding
(A) cash that is part of a distribution referred to in (iv) above
and, (B) in the
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case of any quarterly cash dividend on the Common Stock, the portion
thereof that does not exceed the per share amount of the next
preceding quarterly cash dividend on the Common Stock (as adjusted to
appropriately reflect any of the events referred to in subparagraphs
(i), (ii), (iii), (iv) and (v) of this Section VI(c)), or all of such
quarterly cash dividend if the amount thereof per share of Common
Stock multiplied by four does not exceed 15 percent of the current
market price per share (determined as provided in subparagraph (vi)
of this Section VI(c) of the Common Stock on the Trading Day (as
defined in Section VI(i) next preceding the date of declaration of
such dividend), the conversion price shall be reduced so that the
same shall equal the price determined by multiplying the conversion
price in effect immediately prior to the effectiveness of the
conversion price reduction contemplated by this subparagraph (v) by a
fraction of which the numerator shall be the current market price per
share (determined as provided in subparagraph (vi) of this Section
VI(c)) of the Common Stock on the date fixed for the payment of such
distribution less the amount of cash so distributed and not excluded
as provided above applicable to one share of Common Stock and the
denominator shall be such current market price per share of the
Common Stock, such reduction to become effective immediately prior to
the opening of business on the day following the date fixed for the
payment of such distribution.
(vi) For the purpose of any computation under subparagraphs
(ii), (iv) and (v) of this Section VI(c), the current market price
per share of Common Stock on any date in question shall be deemed to
be the average of the daily Closing Prices (as defined in Section
VI(i)) for the five consecutive Trading Days prior to and including
the date in question; provided, however, that (1) if the "ex" date
(as hereinafter defined) for any event (other than the issuance or
distribution requiring such computation) that requires an adjustment
to the conversion price pursuant to subparagraph (i), (ii), (iii),
(iv), or (v) above ("Other Event") occurs after the fifth Trading Day
prior to the day in question and prior to the "ex" date for the
issuance or distribution requiring such computation (the "Current
Event"), the Closing Price for each Trading Day prior to the "ex"
date for such Other Event shall be adjusted by multiplying such
Closing Price by the same fraction by which the conversion price is
so required to be adjusted as a result of such Other Event, (2) if
the "ex" date, for any Other Event occurs after the "ex" date for the
Current Event and on or prior to the date in question, the Closing
Price for each Trading Day on and after the "ex" date for such Other
Event shall be adjusted by multiplying such Closing Price by the
reciprocal of the fraction by which the conversion price is so
required to be adjusted as a result of such Other Event, (3) if the
"ex" date for any Other Event occurs on the "ex" date for the Current
Event, one of those events shall be deemed for purposes of clauses
(1) and (2) of this proviso to have an "ex" date occurring prior to
the "ex" date for the other event, and (4) if the "ex" date for the
Current Event is on or prior to the date in question, after taking
into account any adjustment required pursuant to clause (2) of this
proviso, the Closing Price for each Trading Day on or after such "ex"
date shall be adjusted by adding thereto the amount of any cash and
the fair market value on the date in question (as determined in good
faith by the Board of Directors in a manner consistent with any
determination of such value for purposes of paragraph (iv) or (v) of
this Section VI(c), whose determination shall be conclusive and
described in a resolution of the Board of Directors) of the portion
of the rights, warrants, evidences of indebtedness, shares of capital
stock or assets being distributed applicable to one share of Common
Stock. For purposes of this paragraph, the term "ex" date, (1) when
used with respect to any issuance or distribution, means the first
date on which the Common Stock trades regular way on the relevant
exchange or in the relevant market from which the Closing Price was
obtained without the right to receive such issuance or distribution
and (2) when used with respect to any subdivision or combination of
shares of Common Stock, means the first date on which the Common
Stock trades regular way on such exchange or in such market after the
time at which such subdivision or combination becomes effective.
(vii) No adjustment in the conversion price shall be required
unless such adjustment would require an increase or decrease of at
least 1 percent in the conversion price; provided, however, that any
adjustments which by reason of this subparagraph (vii) are not
required to be made shall be carried forward and taken into account
in any subsequent adjustment.
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(viii) Whenever the conversion price is adjusted as herein
provided:
(1) the Corporation shall compute the adjusted conversion
price and shall prepare a certificate signed by the Treasurer
of the Corporation setting forth the adjusted conversion price
and showing in reasonable detail the facts upon which such
adjustment is based, and such certificate shall forthwith be
filed with the transfer agent for the Convertible Preferred
Stock; and
(2) a notice stating that the conversion price has been
adjusted and setting forth the adjusted conversion price shall
forthwith be required, and as soon as practicable after it is
required, such notice shall be mailed by the Corporation to all
record holders of shares of Convertible Preferred Stock at
their last addresses as they shall appear upon the stock
transfer books of the Corporation.
(ix) The Corporation from time to time may reduce the
conversion price by any amount for any period of time if the period
is at least twenty days, the reduction is irrevocable during the
period and the Board of Directors of the Corporation shall have made
a determination that such reduction would be in the best interest of
the Corporation, which determination shall be conclusive. Whenever
the conversion price is reduced pursuant to the preceding sentence,
the Corporation shall mail to holders of record of the Convertible
Preferred Stock a notice of the reduction at least fifteen days prior
to the date the reduced conversion price takes effect, and such
notice shall state the reduced conversion price and the period it
will be in effect.
(d) No Fractional Shares. No fractional shares of Common Stock shall
be issued upon conversion of Convertible Preferred Stock. If more than one
certificate evidencing shares of Convertible Preferred Stock shall be
surrendered for conversion at one time by the same holder, the number of
full shares issuable upon conversion thereof shall be computed on the basis
of the aggregate number of shares of Convertible Preferred Stock so
surrendered. Instead of any fractional share of Common Stock that would
otherwise be issuable to a holder upon conversion of any shares of
Convertible Preferred Stock, the Corporation shall pay a cash adjustment in
respect of such fractional share in an amount equal to the same fraction of
the market price per share of Common Stock (as determined by the Board of
Directors or in any manner prescribed by the Board of Directors, which, so
long as the Common Stock is listed on the New York Stock Exchange, shall be
the reported last sale price regular way on the New York Stock Exchange) at
the close of business on the day of conversion.
(e) Reclassification, Consolidation, Merger or Sale of Assets. In the
event that the Corporation shall be a party to any transaction (including
without limitation any recapitalization or reclassification of the Common
Stock (other than a change in par value, or from par value to no par value,
or from no par value to par value, or as a result of a subdivision or
combination of the Common Stock), any consolidation of the Corporation
with, or merger of the Corporation into, any other person, any merger of
another person into the Corporation (other than a merger which does not
result in a reclassification, conversion, exchange or cancellation of
outstanding shares of Common Stock of the Corporation), any sale or
transfer of all or substantially all of the assets of the Corporation or
any share exchange) pursuant to which the Common Stock is converted into
the right to receive other securities, cash or other property, then lawful
provisions shall be made as part of the terms of such transaction whereby
the holder of each share of Convertible Preferred Stock then outstanding
shall have the right thereafter to convert such share only into (i) in the
case of any such transaction other than a Common Stock Fundamental Change
and subject to funds being legally available for such purpose under
applicable law at the time of such conversion, the kind and amount of
securities, cash and other property receivable upon such transaction by a
holder of the number of shares of Common Stock of the Corporation into
which such share of Convertible Preferred Stock might have been converted
immediately prior to such transaction, after giving effect, in the case of
any Non-Stock Fundamental Change, to any adjustment in the conversion price
required by the provisions of Section VI(h), and (ii) in the case of a
Common Stock Fundamental Change, common stock of the kind received by
holders of Common Stock as a result of such Common Stock Fundamental Change
in an amount determined pursuant to the provisions of Section VI(h). The
Corporation or the person formed by such consolidation or resulting from
such merger or which acquires such assets or which acquires the
Corporation's shares, as the case may be, shall make provisions in its
certificate or articles of incorporation or other constituent document to
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establish such right. Such certificate or articles of incorporation or
other constituent document shall provide for adjustments which, for events
subsequent to the effective date of such certificate or articles of
incorporation or other constituent document, shall be as nearly equivalent
as may be practicable to the adjustments provided for in this Section VI.
The above provisions shall similarly apply to successive transactions of
the foregoing type.
(f) Reservation of Shares; Etc. The Corporation shall at all times
reserve and keep available, free from preemptive rights out of its
authorized and unissued stock, solely for the purpose of effecting the
conversion of the Convertible Preferred Stock, such number of shares of its
Common Stock as shall from time to time be sufficient to effect the
conversion of all shares of Convertible Preferred Stock from time to time
outstanding. The Corporation shall from time to time, in accordance with
the laws of the Commonwealth of Kentucky, in good faith and as
expeditiously as possible endeavor to cause the authorized number of shares
of Common Stock to be increased if at any time the number of shares of
authorized and unissued Common Stock shall not be sufficient to permit the
conversion of all the then-outstanding shares of Convertible Preferred
Stock.
If any shares of Common Stock required to be reserved for purposes of
conversion of the Convertible Preferred Stock hereunder require
registration with or approval of any governmental authority under any
Federal or State law before such shares may be issued upon conversion, the
Corporation will in good faith and as expeditiously as possible endeavor to
cause such shares to be duly registered or approved as the case may be. If
the Common Stock is listed on the New York Stock Exchange or any other
national securities exchange, the Corporation will, if permitted by the
rules of such exchange, list and keep listed on such exchange, upon
official notice of issuance, all shares of Common Stock issuable upon
conversion of the Convertible Preferred Stock.
(g) Prior Notice of Certain Events. In case:
(i) the Corporation shall (1) declare any dividend (or any
other distribution) on its Common Stock, other than (A) a dividend
payable in shares of Common Stock or (B) a dividend payable in cash
out of its retained earnings other than any special or nonrecurring
or other extraordinary dividend or (2) declare or authorize a
redemption or repurchase of in excess of 10 percent of the
then-outstanding shares of Common Stock; or
(ii) the Corporation shall authorize the granting to all
holders of Common Stock of rights or warrants to subscribe for or
purchase any shares of stock of any class or series or of any other
rights or warrants; or
(iii) of any reclassification of Common Stock (other than a
subdivision or combination of the outstanding Common Stock, or a
change in par value, or from par value to no par value, or from no
par value to par value), or of any consolidation or merger to which
the Corporation is a party and for which approval of any shareholders
of the Corporation shall be required, or of the sale or transfer of
all or substantially all of the assets of the Corporation or of any
share exchange whereby the Common Stock is converted into other
securities, cash or other property; or
(iv) of the voluntary or involuntary dissolution, liquidation or
winding up of the Corporation;
then the Corporation shall cause to be filed with the transfer agent for
the Convertible Preferred Stock, and shall cause to be mailed to the
holders of record of the Convertible Preferred Stock, at their last
addresses as they shall appear upon the stock transfer books of the
Corporation, at least fifteen days prior to the applicable record or
effective date hereinafter specified, a notice stating (x) the date on
which a record (if any) is to be taken for the purpose of such dividend,
distribution, redemption, repurchase, 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, redemption, rights or
warrants are to be determined or (y) the date on which such
reclassification, consolidation, merger, sale, transfer, share exchange,
dissolution, liquidation or winding up 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 shares of Common Stock for securities,
cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, share exchange, dissolution,
liquidation or winding up (but no failure to mail such notice or any defect
therein or in the mailing thereof shall affect the validity of the
corporate action required to be specified in such notice).
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(h) Adjustments in Case of Fundamental Changes. Notwithstanding any
other provision in this Section VI to the contrary, if any Fundamental
Change (as defined in Section VI(i) occurs, then the conversion price in
effect will be adjusted immediately after such Fundamental Change as
described below. In addition, in the event of a Common Stock Fundamental
Change (as defined in Section VI(i), each share of Convertible Preferred
Stock shall be convertible solely into common stock of the kind received by
holders of Common Stock as the result of such Common Stock Fundamental
Change.
For purposes of calculating any adjustment to be made pursuant to
this Section VI(h) in the event of a Fundamental Change, immediately after
such Fundamental Change:
(i) in the case of a Non-Stock Fundamental Change (as defined
in Section VI(i)), the conversion price of the Convertible Preferred
Stock shall thereupon become the lower of (A) the conversion price in
effect immediately prior to such Non-Stock Fundamental Change, but
after giving effect to any other prior adjustments effected pursuant
to this Section VI, and (B) the result obtained by multiplying the
greater of the Applicable Price (as defined in Section VI(i)) or the
then applicable Reference Market Price (as defined in Section VI(i))
by a fraction of which the numerator shall be $50 and the denominator
shall be (x) the then-current Redemption Price per share of
Convertible Preferred Stock or (y) for any Non-Stock Fundamental
Change that occurs before the Convertible Preferred Stock becomes
redeemable by the Corporation pursuant to Section V, the applicable
price per share set forth for the date of such Non-Stock Fundamental
Change in the following table:
Date of Non-Stock Fundamental Change
Price
After date of original issuance of Convertible
Preferred Stock and on or before March 14,1994................. $53.13
After March 14, 1994 and on or before March 14,1995.......... . $52.81
After March 14, 1995 and on or before March 14,1996. .......... $52.50
After March 14, 1996 and on or before March 24,1997............ $52.19
plus, in any case referred to in this clause (y), an amount equal to
all per share dividends on the Convertible Preferred Stock accrued
and unpaid thereon, whether or not declared, to but excluding the
date of such Non-Stock Fundamental Change; and
(ii) in the case of a Common Stock Fundamental Change, the
conversion price of the Convertible Preferred Stock in effect
immediately prior to such Common Stock Fundamental Change, but after
giving effect to any other prior adjustments effected pursuant to
this Section VI, shall thereupon be adjusted by multiplying such
conversion price by a fraction of which the numerator shall be the
Purchaser Stock Price (as defined in Section VI(i)) and the
denominator shall be the Applicable Price; provided, however, that in
the event of a Common Stock Fundamental Change in which (A) 100
percent by value of the consideration received by a holder of Common
Stock is common stock of the successor, acquiror or other third party
(and cash, if any, is paid with respect to any fractional interests
in such common stock resulting from such Common Stock Fundamental
Change) and (B) all of the Common Stock shall have been exchanged
for, converted into or acquired for common stock (and cash with
respect to fractional interests) of the successor, acquiror or other
third party, the conversion price of the Convertible Preferred Stock
in effect immediately prior to such Common Stock Fundamental Change
shall thereupon be adjusted by multiplying such conversion price by a
fraction of which the numerator shall be one (1) and the denominator
shall be the number of shares of common stock of the successor,
acquiror, or other third party received by a holder of one share of
Common Stock as a result of such Common Stock Fundamental Change.
(i) Definitions. The following definitions shall apply to terms used in
this Section VI:
(1) "Applicable Price" shall mean (i) in the event of a
Non-Stock Fundamental Change in which the holders of the Common Stock
receive only cash, the amount of cash received by the holder of one
share of Common Stock and (ii) in the event of any other Non-Stock
Fundamental Change or any Common Stock Fundamental Change, the
average of the daily Closing Prices of the Common Stock for the ten
consecutive
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Trading Days prior to and including the record date for the
determination of the holders of Common Stock entitled to receive
cash, securities, property or other assets in connection with such
Non-Stock Fundamental Change or Common Stock Fundamental Change, or,
if there is no such record date, the date upon which the holders of
the Common Stock shall have the right to receive such cash,
securities, property or other assets, in each case, as adjusted in
good faith by the Board of Directors of the Corporation to
appropriately reflect any of the events referred to in subparagraphs
(i), (ii), (iii), (iv) and (v) of Section VI(c).
(2) "Closing Price" of any common stock on any day shall mean
the last reported sale price regular way on such day or, in case no
such sale takes place on such day, the average of the reported
closing bid and asked prices regular way of the common stock in each
case on the New York Stock Exchange, or, if the common stock is not
listed or admitted to trading on such Exchange, on the principal
national securities exchange or quotation system on which the common
stock is listed or admitted to trading or quoted, or, if not listed
or admitted to trading or quoted on any national securities exchange
or quotation system, the average of the closing bid and asked prices
of the common stock in the over-the-counter market on the day in
question as reported by the National Quotation Bureau Incorporated,
or a similarly generally accepted reporting service, or, if not so
available in such manner, as furnished by any New York Stock Exchange
member firm selected from time to time by the Board of Directors of
the Corporation for that purpose.
(3) "Common Stock Fundamental Change" shall mean any
Fundamental Change in which more than 50 percent by value (as
determined in good faith by the Board of Directors of the
Corporation) of the consideration received by holders of Common Stock
consists of common stock that for each of the ten consecutive Trading
Days referred to with respect to such Fundamental Change in Section
VI(i)(1) above has been admitted for listing or admitted for listing
subject to notice of issuance on a national securities exchange or
quoted on the National Association of Securities Dealers Automated
Quotation ("NASDAQ") National Market System; provided, however, that
a Fundamental Change shall not be a Common Stock Fundamental Change
unless either (i) the Corporation continues to exist after the
occurrence of such Fundamental Change and the outstanding shares of
Convertible Preferred Stock continue to exist as outstanding shares
of Convertible Preferred Stock, or (ii) not later than the occurrence
of such Fundamental Change, the outstanding shares of Convertible
Preferred Stock are converted into or exchanged for shares of
convertible preferred stock of a corporation succeeding to the
business of the Corporation, which convertible preferred stock has
powers, preferences and relative, participating, optional or other
rights, and qualifications, limitations and restrictions,
substantially similar to those of the Convertible Preferred Stock.
(4) "Fundamental Change" shall mean the occurrence of any
transaction or event in connection with a plan pursuant to which all
or substantially all of the Common Stock shall be exchanged for,
converted into, acquired for or constitute solely the right to
receive cash, securities, property or other assets (whether by means
of an exchange offer, liquidation, tender offer, consolidation,
merger, combination, reclassification, recapitalization or
otherwise); provided, however, in the case of a plan involving more
than one such transaction or event, for purposes of adjustment of the
conversion price, such Fundamental Change shall be deemed to have
occurred when substantially all of the Common Stock of the
Corporation shall be exchanged for, converted into, or acquired for
or constitute solely the right to receive cash, securities, property
or other assets, but the adjustment shall be based upon the highest
weighted average of consideration per share which a holder of Common
Stock could have received in such transactions or events as a result
of which more than 50 percent of the Common Stock of the Corporation
shall have been exchanged for, converted into, or acquired for or
constitute solely the right to receive cash, securities, property or
other assets.
(5) "Non-Stock Fundamental Change" shall mean any Fundamental
Change other than a Common Stock Fundamental Change.
(6) "Purchaser Stock Price" shall mean, with respect to any
Common Stock Fundamental Change, the average of the daily Closing
Prices of the Common Stock received in such Common Stock Fundamental
Change for the ten consecutive Trading Days prior to and including
the record date for the determination of the holders of the Common
Stock entitled to receive such common stock, or, if there is no such
record date,
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the date upon which the holders of the Common Stock shall have the
right to receive such common stock, in each case, as adjusted in good
faith by the Board of Directors of the Corporation to appropriately
reflect any of the events referred to in subparagraphs (i), (ii),
(iii), (iv) and (v) of Section VI(c); provided, however, if no such
Closing Prices of the common stock for such Trading Days exist, then
the Purchaser Stock Price shall be set at a price determined in good
faith by the Board of Directors of the Corporation.
(7) "Reference Market Price" shall initially mean $17.25 (which
is an amount equal to 66 2/3 percent of the reported last sale price
for the Common Stock on the New York Stock Exchange on May 13, 1993),
and in the event of any adjustment to the conversion price other than
as a result of a Fundamental Change, the Reference Market Price shall
also be adjusted so that the ratio of the Reference Market Price to
the conversion price after giving effect to any such adjustment shall
always be the same as the ratio of $17.25 to the initial conversion
price per share set forth in the last sentence of Section VI(a).
(8) "Trading Day" shall mean a day on which securities traded
on the national securities exchange or quotation system or in the
over-the-counter market used to determine the Closing Price.
(j) Dividend or Interest Reinvestment Plans. Notwithstanding the
foregoing provisions, the issuance of any shares of Common Stock pursuant
to any plan providing for the reinvestment of dividends or interest payable
on securities of the Corporation and the investment of additional optional
amounts in shares of Common Stock under any such plan, and the issuance of
any shares of Common Stock or options or rights to purchase such shares
pursuant to any employee benefit plan or program of the Corporation or
pursuant to any option, warrant, right or exercisable, exchangeable or
convertible security outstanding as of the date the Convertible Preferred
Stock was first designated (except as expressly provided in Section
VI(c)(1) or VI(c)(ii) with respect to certain events under the Rights
Agreement), and any issuance of Rights (as hereinafter defined), shall not
be deemed to constitute an issuance of Common Stock or exercisable,
exchangeable or convertible securities by the Corporation to which any of
the adjustment provisions described above applies. There shall also be no
adjustment of the conversion price in case of the issuance of any stock (or
securities convertible into or exchangeable for stock) of the Corporation
except as specifically described in this Section VI. If any action would
require adjustment of the conversion price pursuant to more than one of the
provisions described above, only one adjustment shall be made and such
adjustment shall be the amount of adjustment which has the highest absolute
value to holders of Convertible Preferred Stock.
(k) Preferred Share Purchase Rights. So long as Preferred Share
Purchase Rights of the kind declared and distributed by the Corporation's
Board of Directors in May 1986, as the same have been and may hereafter be
amended ("Rights"), are attached to the outstanding shares of Common Stock
of the Corporation, each share of Common Stock issued upon conversion of
the shares of Convertible Preferred Stock prior to the earliest of any
Distribution Date (as defined in the Rights Agreement), the date of
redemption of the Rights or the date of expiration of the Rights shall be
issued with Rights in an amount equal to the amount of Rights then attached
to each such outstanding share of Common Stock.
(l) Certain Additional Rights. In case the Corporation shall, by
dividend or otherwise, declare or make a distribution on its Common Stock
referred to in Section VI(c)(iv) or VI(c)(v) (including, without
limitation, dividends or distributions referred to in the last sentence of
Section VI(c)(iv)), the holder of each share of Convertible Preferred
Stock, upon the conversion thereof subsequent to the close of business on
the date fixed for the determination of shareholders entitled to receive
such distribution and prior to the effectiveness of the conversion price
adjustment in respect of such distribution, shall also be entitled to
receive for each share of Common Stock into which such share of Convertible
Preferred Stock is converted, the portion of the shares of Common Stock,
rights, warrants, evidences of indebtedness, shares of capital stock, cash
and assets so distributed applicable to one share of Common Stock;
provided, however, that, at the election of the Corporation (whose election
shall be evidenced by a resolution of the Board of Directors) with respect
to all holders so converting, the Corporation may, in lieu of distributing
to such holder any portion of such distribution not consisting of cash
securities of the Corporation, pay such holder an amount in cash equal to
the fair market value thereof (as determined in good faith by the Board of
Directors, whose determination shall be conclusive and
12
<PAGE>
described in a resolution of the Board of Directors). If any conversion of
a share of Convertible Preferred Stock described in the immediately
preceding sentence occurs prior to the payment date for a distribution to
holders of Common Stock which the holder of the share of Convertible
Preferred Stock so converted is entitled to receive in accordance with the
immediately preceding sentence, the Corporation may elect (such election to
be evidenced by a resolution of the Board of Directors) to distribute to
such holder a due bill for the shares of Common Stock, rights, warrants,
evidences of indebtedness, shares of capital stock, cash or assets to which
such holder is so entitled, provided that such due bill (i) meets any
applicable requirements of the principal national securities exchange or
other market on which the Common Stock is then traded and (ii) requires
payment or delivery of such shares of Common Stock, rights, warrants,
evidences of indebtedness, shares of capital stock, cash or assets no later
than the date of payment or delivery thereof to holders of shares of Common
Stock receiving such distribution.
VII. Voting Rights.
(a) General. The holders of shares of Convertible Preferred Stock
shall not have any voting rights except as set forth below or as otherwise
from time to time required by law. In connection with any right to vote,
each holder of a share of Convertible Preferred Stock shall have one vote
for each share held. Any shares of Convertible Preferred Stock owned,
directly or indirectly, by any entity of which the Corporation owns,
directly or indirectly, a majority of the shares entitled to vote for
directors, shall not have voting rights hereunder and shall not be counted
in determining the presence of a quorum.
(b) Default Voting Rights. Whenever dividends on the Convertible
Preferred Stock or any other class or series of Parity Dividend Stock shall
be in arrears in an aggregate amount equal to at least six quarterly
dividends (whether or not consecutive), (i) the number of members of the
Board of Directors of the Corporation shall be increased by two, effective
as of the time of election of such directors as hereinafter provided and
(ii) the holders of shares of Convertible Preferred Stock (voting
separately as a class with all other affected classes or series of Parity
Dividend Stock upon which like voting rights have been conferred and are
exercisable) shall have the exclusive right to vote for and elect such two
additional directors of the Corporation who shall continue to serve during
the period such dividends remain in arrears. The right of the holders of
shares of Convertible Preferred Stock to vote for such two additional
directors shall terminate when all accrued and unpaid dividends on the
Convertible Preferred Stock and all other affected classes or series of
Parity Dividend Stock have been declared and paid or set apart for payment.
The term of office of all directors so elected shall terminate immediately
upon the termination of the right of the holders of shares of Convertible
Preferred Stock and such Parity Dividend Stock to vote for such two
additional directors, and the number of directors of the Board of Directors
of the Corporation shall immediately thereafter be reduced by two.
The foregoing right of the holders of shares of Convertible Preferred
Stock with respect to the election of two directors may be exercised at any
annual meeting of shareholders or at any special meeting of shareholders
held for such purpose. If the right to elect directors shall have accrued
to the holders of shares of Convertible Preferred Stock more than ninety
days preceding the date established for the next annual meeting of
stockholders, the President of the Corporation shall, within twenty days
after the delivery to the Corporation at its principal office of a written
request for a special meeting signed by the holders of at least 10 percent
of all outstanding shares of Convertible Preferred Stock, call a special
meeting of the holders of Convertible Preferred Stock to be held within
sixty days after the delivery of such request for the purpose of electing
such additional directors.
The holders of shares of Convertible Preferred Stock and any Parity
Dividend Stock referred to above voting as a class shall have the right to
remove without cause at any time and replace any directors such holders
shall have elected pursuant to this Section VII.
VIII. Outstanding Shares. For purposes of this amendment, all shares
of Convertible Preferred Stock issued by the Corporation shall be deemed
outstanding, all shares of Convertible Preferred Stock issued by the
Corporation shall be deemed outstanding except (i) from the date fixed for
redemption pursuant to Section V, all shares of Convertible Preferred Stock
that have been so called for redemption under Section V, to the extent
13
<PAGE>
provided thereunder; (ii) from the date of surrender of certificates
evidencing shares of Convertible Preferred Stock, all shares of Convertible
Preferred Stock converted into Common Stock; and (iii) from the date of
registration of transfer, all shares of Convertible Preferred Stock owned,
directly or indirectly, by any entity of which the Corporation owns,
directly or indirectly, a majority of the shares entitled to vote for
directors.
IX. Partial Payments. Upon an optional redemption by the Corporation,
if at any time the Corporation does not pay amounts sufficient to redeem
all Convertible Preferred Stock, then such funds which are paid shall be
applied to redeem such shares of Convertible Preferred Stock as the
Corporation may designate by lot or in such other manner as the Board of
Directors may determine to be fair, or such redemption shall be effected
pro rata.
X. 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.
XI. Miscellaneous. (a) The Corporation shall pay any and all stock
transfer and documentary stamp taxes that may be payable in respect of any
issuance or delivery of shares of Convertible Preferred Stock or shares of
Common Stock or other securities issued on account of Convertible Preferred
Stock pursuant hereto or certificates or instruments evidencing such shares
or securities. The Corporation shall not, however, be required to pay any
such tax which may be payable in respect of any transfer involved in the
issuance or delivery of shares of Convertible Preferred Stock or Common
Stock or other securities in a name other than that in which the shares of
Convertible Preferred Stock with respect to which such shares or other
securities are issued or delivered were registered, or in respect of any
payment to any person with respect to any such shares or securities other
than a payment to the registered holder thereof, and shall not be required
to make any such issuance, delivery or payment unless and until the person
otherwise entitled to such issuance, delivery or payment has paid to the
Corporation the amount of any such tax or has established, to the
satisfaction of the Corporation, that such tax has been paid or is not
payable.
(b) In the event that a holder of shares of Convertible Preferred
Stock shall not by written notice designate the name in which shares of
Common Stock to be issued upon conversion of such shares should be
registered or to whom payment upon redemption of shares of Convertible
Preferred Stock should be made or the address to which the certificates or
instruments evidencing such shares or such payment, should be sent, the
Corporation shall be entitled to register such shares and make such
payment, in the name of the holder of such Convertible Preferred Stock as
shown on the records of the Corporation and to send the certificates or
instruments evidencing such shares or such payment, to the address of such
holder shown on the records of the Corporation.
THIRD: The Amendment was adopted on May 18, 1993.
FOURTH: The Amendment was duly adopted by the Board of Directors.
ASHLAND OIL, INC.
/Paul W. Chellgren/
-------------------------
Paul W. Chellgren
President
COMMONWEALTH OF KENTUCKY )
COUNTY OF GREENUP )
14
<PAGE>
The foregoing instrument was acknowledged before me this 17th day of
May, 1993, by Paul W. Chellgren, President of ASHLAND OIL, INC., a Kentucky
corporation, on behalf the corporation.
/Mary E. Mell/
---------------------------------
Mary E. Mell
Notary Public
[STAMP]
MARY E. MELL
My commission expires: July 3,
1994
Prepared by Thomas L. Feazell
1000 Ashland Drive
Russell, Kentucky 41114
/Thomas L. Feazell/
- ---------------------------------
Thomas L. Feazell
15
<PAGE>
[STAMP]
LODGED FOR RECORD ON
THE 18 DAY OF MAY
1993 AT 3:45 PM RECORDED
IN ART. OF INC. BOOK
NO. 12 PAGE 322
TAX $______ FEES $23.50
DONALD L. DAVIDSON, CLERK
GREENUP COUNTY
BY J. THOMPSON D.C.
NO. ___________
[STAMP]
LODGED FOR RECORD
ON THE 18 DAY OF MAY
1993 AT 2:55 PM RECORDED
IN ART. OF INC. BOOK
NO. 30 PAGE 59
[STAMP]
RECEIVED & FILED
$40.00
JAN 27 8:34AM '95
BOB BABBAGE
SECRETARY OF STATE
COMM. OF KENTUCKY
BY: ACH
ARTICLES OF AMENDMENT
TO
SECOND RESTATED ARTICLES OF INCORPORATION
OF ASHLAND OIL, INC.
AMENDMENT NO. 4
Pursuant to the provisions of Section 271B.10-060 of the Kentucky
Business Corporation Act, the undersigned corporation adopts the following
articles of amendment to its Second Restated Articles of Incorporation:
First: The name of the corporation is Ashland Oil, Inc.
Second: At a meeting of the Board of Directors held on November 3,
1994, the Board of Directors proposed that the Second Restated Articles of
Incorporation be amended by substituting a new Article I for the existing
Article I, and directed that the proposed amendment be submitted to the
shareholders with the affirmative recommendation of the Board of Directors
at a meeting of the corporation's shareholders to be held on January 26,
1995 (the "Meeting"), which Meeting was duly called upon notice of the
specific purpose.
The text of the new Article I is as follows:
ARTICLE I
The name of the corporation is Ashland Inc. (hereinafter called the
"Company" or the "Corporation").
Third: There were 60,754,474 shares of Ashland Oil, Inc. Common
Stock, each of which was entitled to cast one vote, outstanding at November
28, 1994, the record date for the Meeting, which represent all of the
shares entitled to vote on such amendment.
Fourth: There were 52,983,021 shares of Ashland Oil, Inc. Common
Stock indisputably represented at the Meeting.
Fifth: The total number of undisputed votes cast for such
amendment was 51,239,239 and the total number of votes cast against such
amendment was 1,370,949. The number of votes cast for the amendment was
sufficient for approval.
Sixth: The amendment will become effective at 4:00 p.m. on January
27, 1995.
ASHLAND OIL, INC.
/Paul W. Chellgren/
By: _____________________________
Paul W. Chellgren
President
[STAMP] BOOK 31 PAGE 320
<PAGE>
Commonwealth of Kentucky
County of Greenup
The foregoing instrument was acknowledged before me this 27th day of
January, 1995, by Paul W. Chellgren, President of Ashland Oil, Inc., a
Kentucky corporation, on behalf of the corporation.
/Teresa F. Gabbard/
---------------------------
Notary Public
[STAMP] TERESA F. GABBARD
My commission expires October 9, 1997
Prepared by Thomas L. Feazell
1000 Ashland Drive
Russell, Kentucky 41169
/Thomas L. Feazell/
- -----------------------------
[STAMP]
DOCUMENT NO: 440448
RECORDED ON: JANUARY 27, 1995 12:58:53PM
TOTAL FEES: $9.00
COUNTY CLERK: MAXINE SELBEE
COUNTY: BOYD COUNTY
DEPUTY CLERK: GAIL BOGGS
BOOK 31 PAGE 321
[STAMP]
LODGED FOR RECORD ON
THE 27 DAY OF JAN., 1995
AT 1:45PM RECORDED IN ART.
OF INC. BOOK NO. 13 PAGE
147 TAX $_________ FEES
$9.00
DONALD L. DAVIDSON, CLERK
GREENUP COUNTY
BY: JOAN BURNETT D.C.
<PAGE>
[STAMP]
RECEIVED & FILED
$40.00
MAY 16 11:03AM '96
JOHN Y BROWN III
SECRETARY OF STATE
COMM. OF KENTUCKY
BY: GH
ARTICLES OF AMENDMENT
TO
SECOND RESTATED ARTICLES OF INCORPORATION
OF
ASHLAND INC.
AMENDMENT NO. 5
Pursuant to the provisions of Section 271B.10-060 of the Kentucky Business
Corporation Act, the undersigned corporation adopts the following articles
of amendment to set forth the preferences, limitations and relative rights
of a series of shares of its Cumulative Preferred Stock, without par value,
under Article IV of its Second Restated Articles of Incorporation.
FIRST: The name of the Corporation is Ashland Inc.
SECOND: The text of the amendment determining the terms of the series
of shares of the Cumulative Preferred Stock is as follows:
I. DESIGNATION AND NUMBER OF SHARES. This series of the Cumulative
Preferred Stock shall be designated as "Series A Participating Cumulative
Preferred Stock" (the "Series A Preferred Stock"). The number of shares
initially issuable as the Series A Preferred Stock shall be 500,000;
provided, however, that, if more than a total of 500,000 shares of Series A
Preferred Stock shall be issuable upon the exercise of Rights (the
"Rights") issued pursuant to the Rights Agreement dated as of May 16, 1996,
between the Corporation and Harris Trust and Savings Bank, as Rights Agent
(the "Rights Agreement"), the Board of Directors of the Corporation,
pursuant to Section 271B.10-060 of the Kentucky Business Corporation Act,
shall direct by resolution or resolutions that Articles of Amendment of the
Articles of Incorporation of the Corporation be properly executed and filed
with the Secretary of State of Kentucky providing for the total number of
shares issuable as Series A Preferred Stock to be increased (to the extent
that the Articles of Incorporation then permit) to the largest number of
whole shares (rounded up to the nearest whole number) issuable upon
exercise of such Rights.
II. DIVIDENDS OR DISTRIBUTIONS. (a) Subject to the prior and superior
rights of the holders of shares of any other series of Preferred Stock or
other class of capital stock of the Corporation ranking prior and superior
to the shares of Series A Preferred Stock with respect to dividends, the
holders of shares of the Series A Preferred Stock shall be entitled to
receive, when, as and if declared by the Board of Directors, out of the
assets of the Corporation legally available therefor, (i) quarterly
dividends payable in cash on the last day of each fiscal quarter in each
year, or such other dates as the Board of Directors of the Corporation
shall approve (each such date being referred to herein as a "Quarterly
Dividend Payment Date"), commencing on the first Quarterly Dividend Payment
Date after the first issuance of a share or a fraction of a share of Series
A Preferred Stock, in the amount of $.01 per whole share (rounded to the
nearest cent), less the amount of all cash dividends declared on the Series
A Preferred Stock pursuant to the following clause (ii) since the
immediately preceding Quarterly Dividend Payment Date or, with respect to
the first Quarterly Dividend Payment Date, since the first issuance of any
share or fraction of a share of Series A Preferred Stock (the total of
which shall not, in any event, be less than zero) and (ii) dividends
payable in cash on the payment date for each cash dividend declared on the
Common Stock in an amount per whole share (rounded to the nearest cent)
equal to the Formula Number (as hereinafter defined) then in effect times
the cash dividends then to be paid on each share of Common Stock. In
addition, if the Corporation shall pay any dividend or make any
distribution on the Common Stock payable in assets, securities or other
forms of non-cash consideration (other than dividends or distributions
solely in shares of Common Stock), then, in each such case, the Corporation
shall simultaneously pay or make on each outstanding whole share of Series
A Preferred Stock a dividend or distribution in like kind equal to the
Formula Number then in effect times such dividend or distribution on each
share of the Common Stock. As used herein, the "Formula Number" shall be
1,000; PROVIDED, HOWEVER, that, if at any time after May 16, 1996, the
Corporation shall (x) declare or pay any dividend on the Common Stock
payable in shares of Common Stock or make any distribution on the Common
Stock in shares of Common Stock, (y) subdivide (by a stock split or
otherwise) the outstanding shares of Common Stock into a larger number of
shares of Common Stock or (z) combine (by a
<PAGE>
reverse stock split or otherwise) the outstanding shares of Common Stock
into a smaller number of shares of Common Stock, then, in each such event,
the Formula Number shall be adjusted to a number determined by multiplying
the Formula Number in effect immediately prior to such event by a fraction,
the numerator of which is the number of shares of Common Stock that are
outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that are outstanding immediately prior
to such event (and rounding the result to the nearest whole number); and
PROVIDED FURTHER, that, if at any time after May 16, 1996, the Corporation
shall issue any shares of its capital stock in a merger, share exchange,
reclassification, or change of the outstanding shares of Common Stock,
then, in each such event, the Formula Number shall be appropriately
adjusted to reflect such merger, share exchange, reclassification or change
so that each share of Preferred Stock continues to be the economic
equivalent of a Formula Number of shares of Common Stock prior to such
merger, share exchange, reclassification or change.
(b) The Corporation shall declare a dividend or distribution on the
Series A Preferred Stock as provided in Section 2(a) immediately prior to
or at the same time it declares a dividend or distribution on the Common
Stock (other than a dividend or distribution solely in shares of Common
Stock); PROVIDED, HOWEVER, that, in the event no dividend or distribution
(other than a dividend or distribution in shares of Common Stock) shall
have been declared on the Common Stock during the period between any
Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend
Payment Date, a dividend of $.01 per share on the Series A Preferred Stock
shall nevertheless be payable on such subsequent Quarterly Dividend Payment
Date. The Board of Directors may fix a record date for the determination of
holders of shares of Series A Preferred Stock entitled to receive a
dividend or distribution declared thereon, which record date shall be the
same as the record date for any corresponding dividend or distribution on
the Common Stock.
(c) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Preferred Stock from and after the Quarterly Dividend
Payment Date next preceding the date of original issue of such shares of
Series A Preferred Stock; PROVIDED, HOWEVER, that dividends on such shares
that are originally issued after the record date for the determination of
holders of shares of Series A Preferred Stock entitled to receive a
quarterly dividend and on or prior to the next succeeding Quarterly
Dividend Payment Date shall begin to accrue and be cumulative from and
after such Quarterly Dividend Payment Date. Notwithstanding the foregoing,
dividends on shares of Series A Preferred Stock that are originally issued
prior to the record date for the determination of holders of shares of
Series A Preferred Stock entitled to receive a quarterly dividend on the
first Quarterly Dividend Payment Date shall be calculated as if cumulative
from and after the last day of the fiscal quarter next preceding the date
of original issuance of such shares. Accrued but unpaid dividends shall not
bear interest. Dividends paid on the shares of Series A Preferred Stock in
an amount less than the total amount of such dividends at the time accrued
and payable on such shares shall be allocated pro rata on a share-by-share
basis among all such shares at the time outstanding and entitled to receive
such dividends.
(d) So long as any shares of the Series A Preferred Stock are
outstanding, no dividends or other distributions shall be declared, paid or
distributed, or set aside for payment or distribution, on the Common Stock,
unless, in each case, the dividend required by this Section 2 to be
declared on the Series A Preferred Stock shall have been declared and paid.
(e) The holders of the shares of Series A Preferred Stock shall not be
entitled to receive any dividends or other distributions, except as
provided herein.
III. VOTING RIGHTS. The holders of shares of Series A Preferred Stock
shall have the following voting rights:
(a) Each holder of Series A Preferred Stock shall be entitled to a
number of votes equal to the Formula Number then in effect, for each share
of Series A Preferred Stock held of record on each matter on which holders
of the Common Stock or shareholders generally are entitled to vote,
multiplied by the maximum number of votes per share which any holder of the
Common Stock or shareholders generally then have with respect to such
matter (assuming any holding period or other requirement to vote a greater
number of shares is satisfied).
(b) Except as otherwise provided herein or by applicable law, the
holders of shares of Series A Preferred
<PAGE>
Stock and the holders of shares of Common Stock shall vote together as
one voting group for the election of directors of the Corporation and on
all other matters submitted to a vote of shareholders of the Corporation.
(c) If, at the time of any annual meeting of shareholders for the
election of directors, the equivalent of six quarterly dividends (whether
or not consecutive) payable on any share or shares of Series A Preferred
Stock are in default, the number of directors constituting the Board of
Directors of the Corporation shall be increased by two. In addition to
voting together with the holders of Common Stock for the election of other
directors of the Corporation, the holders of record of the Series A
Preferred Stock, voting separately as a voting group to the exclusion of
the holders of Common Stock, shall be entitled at said meeting of
shareholders (and at each subsequent annual meeting of shareholders),
unless all dividends in arrears have been paid or declared and set apart
for payment prior thereto, to vote for the election of two directors of the
Corporation, the holders of any Series A Preferred Stock being entitled to
cast a number of votes per share of Series A Preferred Stock equal to the
Formula Number. Until the default in payments of all dividends that
permitted the election of said directors shall cease to exist, any director
who shall have been so elected pursuant to the next preceding sentence may
be removed at any time, either with or without cause, only by the
affirmative vote of the holders of the shares of Series A Preferred Stock
at the time entitled to cast such number of votes as are required by law
for the election of any such director at a special meeting of such holders
called for that purpose, and any vacancy thereby created may be filled only
by the vote of such holders. If and when such default shall cease to exist,
the holders of the Series A Preferred Stock shall be divested of the
foregoing special voting rights, subject to revesting in the event of each
and every subsequent like default in payments of dividends. Upon the
termination of the foregoing special voting rights, the terms of office of
all persons who may have been elected directors pursuant to said special
voting rights shall forthwith terminate to the extent permitted by law, and
the number of directors constituting the Board of Directors shall be
reduced by two. The voting rights granted by this Section 3(c) shall be in
addition to any other voting rights granted to the holders of the Series A
Preferred Stock in this Section 3.
(d) Except as provided herein, in Section 11 or by applicable law,
holders of Series A Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are entitled
to vote with holders of Common Stock as set forth herein) for authorizing
or taking any corporate action.
IV. CERTAIN RESTRICTIONS. (a) Whenever quarterly dividends or other
dividends or distributions payable on the Series A Preferred Stock as
provided in Section 2 are in arrears, thereafter and until all accrued and
unpaid dividends and distributions, whether or not declared, on shares of
Series A Preferred Stock outstanding shall have been paid in full, the
Corporation shall not
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire for
consideration any shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Series A Preferred Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity (either
as to dividends or upon liquidation, dissolution or winding up)
with the Series A Preferred Stock, except dividends paid ratably
on the Series A Preferred Stock and all such parity stock on which
dividends are payable or in arrears in proportion to the total
amounts to which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either as
to dividends or upon liquidation, dissolution or winding up) with
the Series A Preferred Stock; PROVIDED that the Corporation may at
any time redeem, purchase or otherwise acquire shares of any such
parity stock in exchange for shares of any stock of the
Corporation ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Series A Preferred
Stock; or
(iv) purchase or otherwise acquire for consideration any
shares of Series A Preferred Stock, or any shares of stock ranking
on a parity with the Series A Preferred Stock, except in
accordance with a purchase offer made in writing or by publication
(as determined by the Board of Directors) to all holders of such
shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates
<PAGE>
and other relative rights and preferences of the respective
series and classes, shall determine in good faith will result
in fair and equitable treatment among the respective series or
classes.
(b) The Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of stock of
the Corporation unless the Corporation could, under paragraph (a) of this
Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
V. LIQUIDATION RIGHTS. Upon the liquidation, dissolution or winding up
of the Corporation, whether voluntary or involuntary, no distribution shall
be made (a) to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Stock, unless, prior thereto, the holders of shares of Series A
Preferred Stock shall have received an amount equal to the accrued and
unpaid dividends and distributions thereon, whether or not declared, to the
date of such payment, plus an amount equal to the greater of (i) $.01 per
whole share or (ii) an aggregate amount per share equal to the Formula
Number then in effect times the aggregate amount to be distributed per
share to holders of Common Stock or (b) to the holders of stock ranking on
a parity (either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Preferred Stock, except distributions made
ratably on the Series A Preferred Stock and all other such parity stock in
proportion to the total amounts to which the holders of all such shares are
entitled upon such liquidation, dissolution or winding up.
VI. CONSOLIDATION, MERGER, ETC. In case the Corporation shall enter
into any consolidation, merger, share exchange, combination or other
transaction in which the shares of Common Stock are exchanged for or
changed into other stock or securities, cash or any other property, then,
in any such case, the then outstanding shares of Series A Preferred Stock
shall at the same time be similarly exchanged or changed into an amount per
share equal to the Formula Number then in effect times the aggregate amount
of stock, securities, cash or any other property (payable in kind), as the
case may be, into which or for which each share of Common Stock is
exchanged or changed. In the event both this Section 6 and Section 2 appear
to apply to a transaction, this Section 6 will control.
VII. NO REDEMPTION; NO SINKING FUND. (a) The shares of Series A
Preferred Stock shall not be subject to redemption by the Corporation or at
the option of any holder of Series A Preferred Stock; provided, however,
that the Corporation may purchase or otherwise acquire outstanding shares
of Series A Preferred Stock in the open market or by offer to any holder or
holders of shares of Series A Preferred Stock.
(b) The shares of Series A Preferred Stock shall not be subject to or
entitled to the operation of a retirement or sinking fund.
VIII. Ranking. The Series A Preferred Stock shall rank junior to all
other series of Preferred Stock of the Corporation, unless the Board of
Directors shall specifically determine otherwise in fixing the powers,
preferences and relative, participating, optional and other special rights of
the shares of such series and the qualifications, limitations and restrictions
thereof.
IX. FRACTIONAL SHARES. The Series A Preferred Stock shall be issuable
upon exercise of the Rights issued pursuant to the Rights Agreement in
whole shares or in any fraction of a share that is one-thousandth (1/1,000)
of a share or any integral multiple of such fraction which shall entitle
the holder, in proportion to such holder's fractional shares, to receive
dividends, exercise voting rights, participate in distributions and have
the benefit of all other rights of holders of Series A Preferred Stock. In
lieu of fractional shares, the Corporation, prior to the first issuance of
a share or a fraction of a share of Series A Preferred Stock, may elect (a)
to make a cash payment as provided in the Rights Agreement for fractions of
a share other than one-thousandth (1/1,000) of a share or any integral
multiple thereof or (b) to issue depository receipts evidencing such
authorized fraction of a share of Series A Preferred Stock pursuant to an
appropriate agreement between the Corporation and a depository selected by
the Corporation; PROVIDED that such agreement shall provide that the
holders of such depository receipts shall have all the rights, privileges
and preferences to which they are entitled as holders of the Series A
Preferred Stock.
<PAGE>
X. REACQUIRED SHARES. Any shares of Series A Preferred Stock purchased
or otherwise acquired by the Corporation in any manner whatsoever shall be
retired and canceled promptly after the acquisition thereof. All such
shares shall upon their cancelation become authorized but unissued shares
of Preferred Stock, without par value, of the Corporation, undesignated as
to series, and may thereafter be reissued as part of a new series of such
Preferred Stock as permitted by law.
XI. AMENDMENT. None of the powers, preferences and relative,
participating, optional and other special rights of the Series A Preferred
Stock as provided herein or in the Articles of Incorporation shall be
amended in any manner that would alter or change the powers, preferences,
rights or privileges of the holders of Series A Preferred Stock so as to
affect such holders adversely without the affirmative vote of the holders
of at least 66-2/3% of the outstanding shares of Series A Preferred Stock,
voting as a separate voting group; PROVIDED, HOWEVER, that no such
amendment approved by the holders of at least 66-2/3% of the outstanding
shares of Series A Preferred Stock shall be deemed to apply to the powers,
preferences, rights or privileges of any holder of shares of Series A
Preferred Stock originally issued upon exercise of a Right after the time
of such approval without the approval of such holder.
THIRD: This amendment was duly adopted by the Board of Directors of
the Corporation without shareholder action on May 16, 1996. Shareholder
action was not required.
IN WITNESS WHEREOF, the undersigned has executed these Articles of
Amendment as of this 16th day of May, 1996.
ASHLAND INC.
by /s/ Paul W. Chellgren
----------------------------------
Paul W. Chellgren
President
<PAGE>
COMMONWEALTH OF KENTUCKY)
COUNTY OF GREENUP )
The foregoing instrument was acknowledged before me this 16th day of
May, 1996, by , of ASHLAND INC., a Kentucky corporation, on behalf of the
corporation.
Mary E. Mell
----------------------------------
Notary Public
Prepared by Thomas L. Feazell
1000 Ashland Drive
Russell, Kentucky 41114
/s/ Thomas L. Feazell
- -------------------------
Thomas L. Feazell
[STAMP]
DOCUMENT NO: 452017
RECORDED ON: MAY 16, 1996 01:42:31PM
TOTAL FEES: $15.00
COUNTY CLERK: MAXINE SELBEE
COUNTY: BOYD COUNTY CLERK
DEPUTY CLERK: KATHY FISHER
BOOK 32 PAGE 292
[STAMP]
LODGED FOR RECORD ON
THE 17 DAY OF MAY, 1996,
AT 9:00AM RECORDED IN ART.
OF INC. BOOK NO. 13 PAGE
487 TAX $_________ FEES
$15.00
DONALD L. DAVIDSON, CLERK
GREENUP COUNTY
BY: JOAN BURNETT D.C.
<PAGE>
[STAMP]
RECEIVED & FILED
$300,040.00
JAN 30 10:55AM '98
JOHN Y BROWN III
SECRETARY OF STATE
COMMONWEALTH OF KY
BY SANDRA PERRY
ARTICLES OF AMENDMENT
TO
SECOND RESTATED ARTICLES OF INCORPORATION
OF ASHLAND INC.
AMENDMENT NO. 6
Pursuant to the provisions of Section 271B.10 - 060 of the
Kentucky Business Corporation Act, the undersigned corporation adopts the
following articles of amendment to its Second Restated Articles of
Incorporation:
First: The name of the corporation is Ashland Inc.
Second: At a meeting of the Board of Directors held on November 6,
1997, the Board of Directors proposed that the Second Restated Articles of
Incorporation be amended by substituting a new Subsection A of Article IV
for the existing Subsection A of Article IV, and directed that the proposed
amendment be submitted to the shareholders with the affirmative
recommendation of the Board of Directors at a meeting of the corporation's
shareholders to be held on January 29, 1998 (the "Meeting"), which Meeting
was duly called upon notice of the specific purpose. The text of the new
Subsection A of Article IV is as follows:
ARTICLE IV
A. The aggregate number of shares which the Company is authorized
to issue is 30,000,000 shares of Cumulative Preferred Stock
(hereinafter called the "Preferred Stock") and 300,000,000 shares
of Common Stock, par value $1.00 per share (hereinafter called the
"Common Stock").
Third: There were 75,056,489 shares of Ashland Inc. Common Stock,
each of which was entitled to cast one vote, outstanding at November 24,
1997, the record date for the Meeting, which represent all of the shares
entitled to vote on such amendment.
Fourth: There were 67,000,600 shares of Ashland Inc. Common Stock
indisputably represented at the Meeting.
Fifth: The total number of undisputed votes cast for such
amendment was 56,944,191 and the total number of votes cast against such
amendment was 9,587,590. The number of votes cast for the amendment was
sufficient for approval.
Dated: January 29, 1998
ASHLAND INC.
By: /s/ Thomas L. Feazell
-----------------------------------
Thomas L. Feazell
Senior Vice President,
General Counsel and Secretary
<PAGE>
Commonwealth of Kentucky )
County of Greenup )
The foregoing instrument was acknowledged before me this 29th day
of January, 1998, by Thomas L. Feazell, Senior Vice President, General
Counsel and Secretary of Ashland Inc., a Kentucky corporation, on behalf of
the corporation.
/s/ Teresa F. Gabbard
-----------------------------------
Notary Public
Prepared by Jami K. Suver
1000 Ashland Drive
Russell, Kentucky 41169
/s/ Jami K. Suver
- ----------------------------------
Jami K. Suver
[STAMP]
DOCUMENT NO: 468173
RECORDED ON: FEBRUARY 2, 1998 03:44:08PM
TOTAL FEES: $9.00
COUNTY CLERK: MAXINE SELBEE
COUNTY: BOYD COUNTY CLERK
DEPUTY CLERK: TERESA CAUDILL
BOOK 33 PAGE 374
[STAMP]
LODGED FOR RECORD ON
THE 2 DAY OF FEB. 1998
AT 2:55PM RECORDED IN ART.
OF INC. BOOK NO. 14 PAGE
145 TAX $_________ FEES
$9.00
DONALD L. DAVIDSON, CLERK
GREENUP COUNTY
BY: JUDITH THOMPSON D.C.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM ASHLAND INC.'S 1ST QUARTER 10-Q AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH 10-Q.
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> DEC-31-1997
<CASH> 70
<SECURITIES> 0
<RECEIVABLES> 1,702
<ALLOWANCES> 23
<INVENTORY> 770
<CURRENT-ASSETS> 2,770
<PP&E> 7,814
<DEPRECIATION> 3,652
<TOTAL-ASSETS> 7,721
<CURRENT-LIABILITIES> 2,195
<BONDS> 1,577
<COMMON> 75
0
0
<OTHER-SE> 1,981
<TOTAL-LIABILITY-AND-EQUITY> 7,721
<SALES> 3,550
<TOTAL-REVENUES> 3,605
<CGS> 3,134
<TOTAL-COSTS> 3,134
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 31
<INCOME-PRETAX> 101
<INCOME-TAX> 39
<INCOME-CONTINUING> 52
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 52
<EPS-PRIMARY> .69
<EPS-DILUTED> .68
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM ASHLAND INC.'S 1ST QUARTER 1998 10-Q
WHICH RESTATED THE PERIOD ENDED DECEMBER 31, 1996, AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH 10-Q
AND NOTES B AND C OF NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS THAT EXPLAIN THE RESTATEMENT.
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> DEC-31-1996
<CASH> 79
<SECURITIES> 0
<RECEIVABLES> 1,790
<ALLOWANCES> 27
<INVENTORY> 811
<CURRENT-ASSETS> 2,917
<PP&E> 7,527
<DEPRECIATION> 3,666
<TOTAL-ASSETS> 7,991
<CURRENT-LIABILITIES> 2,311
<BONDS> 2,087
<COMMON> 65
0
293
<OTHER-SE> 1,490
<TOTAL-LIABILITY-AND-EQUITY> 7,991
<SALES> 3,545
<TOTAL-REVENUES> 3,576
<CGS> 3,150
<TOTAL-COSTS> 3,150
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 44
<INCOME-PRETAX> 48
<INCOME-TAX> 15
<INCOME-CONTINUING> 24
<DISCONTINUED> 12
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 36
<EPS-PRIMARY> .48
<EPS-DILUTED> .47
</TABLE>
