<PAGE>
<PAGE> 1
UNITED STATES
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 Quarter Ended March 31, 1997 Commission File No. 1-5591
PENNZOIL COMPANY
(Exact name of registrant as specified in its charter)
Delaware 74-1597290
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Pennzoil Place, P.O. Box 2967
Houston, Texas 77252-2967
(Address of principal executive offices)
Registrant's telephone number, including area code: (713) 546-4000
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
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 .
Number of shares outstanding of each class of common stock, as
of latest practicable date, April 30, 1997:
Common stock, par value $0.83-1/3 per share, 46,951,151
shares.
<PAGE>
<PAGE> 2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
- ----------------------------
<TABLE>
PENNZOIL COMPANY
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
<CAPTION>
Three Months Ended
March 31
----------------------------
1997 1996
----------- -----------
(Expressed in thousands
except per share amounts)
<S> <C> <C>
REVENUES $ 649,000 $ 587,341
COSTS AND EXPENSES
Cost of sales 355,872 340,095
Selling, general and administrative expenses 80,102 86,637
Depreciation, depletion and amortization 62,568 65,990
Exploration expenses 10,040 9,845
Taxes, other than income 13,112 13,742
Interest charges, net 37,118 47,563
----------- -----------
INCOME BEFORE INCOME TAX 90,188 23,469
Income tax provision 32,637 7,700
----------- -----------
NET INCOME $ 57,551 $ 15,769
=========== ===========
EARNINGS PER SHARE $ 1.23 $ 0.34
=========== ===========
DIVIDENDS PER COMMON SHARE $ 0.25 $ 0.25
=========== ===========
AVERAGE SHARES OUTSTANDING 46,818 46,394
=========== ===========
END OF PERIOD SHARES OUTSTANDING 46,937 46,426
=========== ===========
<FN>
<F1>
See Notes to Condensed Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>
<PAGE> 3
PART I. FINANCIAL INFORMATION - continued
<TABLE>
PENNZOIL COMPANY
CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
<CAPTION>
March 31, December 31,
1997 1996
------------- -------------
(Expressed in thousands)
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 33,972 $ 34,383
Receivables 203,151 250,328
Inventories
Crude oil and natural gas 23,068 24,365
Motor oil and refined products 163,055 147,554
Deferred income tax 18,658 20,834
Other current assets 53,748 60,128
------------- -------------
Total current assets 495,652 537,592
Property, plant and equipment, net 2,388,517 2,318,084
Marketable securities and other investments 952,634 955,182
Other assets 300,595 313,396
------------- -------------
TOTAL ASSETS $ 4,137,398 $ 4,124,254
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Current maturities of long-term debt $ 1,998 $ 1,181
Accounts payable and accrued liabilities 244,266 274,618
Interest accrued 48,300 30,827
Other current liabilities 82,460 86,321
------------- -------------
Total current liabilities 377,024 392,947
Long-term debt 2,194,851 2,217,806
Deferred income tax 258,417 241,791
Other liabilities 276,010 302,635
------------- -------------
TOTAL LIABILITIES 3,106,302 3,155,179
------------- -------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY 1,031,096 969,075
------------- -------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 4,137,398 $ 4,124,254
============= =============
<FN>
<F1>
See Notes to Condensed Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>
<PAGE> 4
PART I. FINANCIAL INFORMATION - continued
<TABLE>
PENNZOIL COMPANY
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Three Months Ended
March 31
---------------------------------
1997 1996
----------- -----------
(Expressed in thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 57,551 $ 15,769
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation, depletion and amortization 62,568 65,990
Dry holes and impairments 2,416 1,574
Deferred income tax 19,569 6,370
Non-cash and other nonoperating items 4,497 13,486
Change in operating assets and liabilities 27,653 (69,761)
----------- -----------
Net cash provided by operating activities 174,254 33,428
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (114,378) (127,663)
Purchases of marketable securities and other investments (131,210) (146,904)
Proceeds from sales of marketable securities and other
investments 135,940 159,516
Proceeds from sales of assets 5,620 121,556
Other investing activities (49,823) (5,815)
----------- -----------
Net cash provided by (used in) investing activities (153,851) 690
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds (repayments) of notes payable, net (19,596) (79,046)
Debt and capital lease obligation repayments (304,296) (303,116)
Proceeds from issuance of debt 300,000 370,000
Dividends paid (11,724) (11,600)
Other Financing Activities 14,802 -
----------- -----------
Net cash used in financing activities (20,814) (23,762)
----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (411) 10,356
CASH AND CASH EQUIVALENTS, beginning of period 34,383 23,615
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 33,972 $ 33,971
=========== ===========
<FN>
<F1>
See Notes to Condensed Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>
<PAGE> 5
PART I. FINANCIAL INFORMATION - continued
PENNZOIL COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) General -
The condensed consolidated financial statements included
herein have been prepared by Pennzoil Company ("Pennzoil")
without audit and should be read in conjunction with the
financial statements and the notes thereto included in Pennzoil's
latest annual report. The foregoing financial statements include
only normal recurring accruals and all adjustments which Pennzoil
considers necessary for a fair presentation.
(2) New Accounting Standard -
In February 1997, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards ("SFAS") No.
128, Earnings Per Share which establishes new standards for
computing and presenting earnings per share. The provisions
of the statement are effective for fiscal years ending after
December 15, 1997. If the provisions of SFAS No. 128 had been
adopted in the first quarter of 1997 and 1996, basic and diluted
earnings per share would not have been materially different from
primary and fully diluted earnings per share, respectively, as
calculated in accordance with Accounting Principles Board Opinion
No. 15.
(3) Accounts Receivable -
In September 1996, Pennzoil Receivables Company, a wholly
owned special purpose subsidiary of Pennzoil, entered into a
receivables sales facility, which provides for the ongoing sales
of up to $135.0 million of accounts receivable of certain
Pennzoil subsidiaries. The facility expires in September 1997.
Accounts receivable sold under this agreement totaled $135.0
million as of March 31, 1997. Pennzoil used the proceeds to
reduce outstanding debt. Fees associated with the sale of
accounts receivable totaled $1.9 million in the first quarter of
1997 and are netted against other income.
(4) Debt -
In April 1997, Pennzoil redeemed $38.5 million principal
amount of indebtedness consisting of all of Pennzoil's
outstanding 9% debentures due 2017. The purchase premium and
related unamortized discount and debt issue costs relating to the
redemption are expected to result in an after-tax charge of
approximately $1.3 million, or $.03 per share, in the second
quarter of 1997.
<PAGE>
<PAGE> 6
PART I. FINANCIAL INFORMATION - continued
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
Net income for the quarter ended March 31, 1997 was $57.6
million, or $1.23 per share, compared to $15.8 million, or $.34
per share, for the same period in 1996. The increase in earnings
for the first quarter of 1997, compared to the prior year, was
primarily attributable to higher crude oil and natural gas prices
in the oil and gas segment and lower interest expense. These
increases were partially offset by lower results in the motor oil
and refined products segment.
Oil and Gas
Operating income from this segment was $107.2 million for
the quarter ended March 31, 1997, compared with $49.3 million for
the same period in 1996. The increase in operating income was
primarily due to higher natural gas and liquids price
realizations and lower operating expenses. These increases were
partially offset by lower natural gas and liquids volumes.
Natural gas price realizations averaged $2.77 per thousand
cubic feet ("Mcf") for the three months ended March 31, 1997
compared to $1.79 per Mcf for the same period in 1996. Natural
gas volumes produced for sale for the three months ended March
31, 1997 were 523.3 million cubic feet ("MMcf") per day compared
to 559.8 MMcf per day for the same period in 1996. Liquids
prices averaged $19.47 per barrel during the first quarter of
1997, up $5.32 per barrel from the comparable period in 1996.
Liquids production volumes were 53.6 thousand barrels ("Mbbls")
per day for the three months ended March 31, 1997 compared to
60.4 Mbbls per day for the same period in 1996. The decrease in
natural gas and liquids volumes was primarily the result of the
disposition of noncore assets in 1996.
Production at Pennzoil's West Cameron 580 block,
located in the Gulf of Mexico, resumed toward the end of first
quarter 1997 after experiencing mechanical problems in December
1996. Gross natural gas production from the two producing wells
in the block is currently at approximately 155 MMcf per day, or
about 115 MMcf per day net to Pennzoil. In addition, the two
wells currently produce about 7,500 barrels per day of liquids,
or about 5,500 barrels per day net to Pennzoil.
Internationally, Pennzoil plans to drill five exploration
wells in 1997. In Azerbaijan, Pennzoil and its partners, LUKoil,
AGIP and LUKAGIP, expect to drill the first exploration well on
the Karabakh structure offshore Baku in June 1997. Pennzoil has
a 30% interest in the Karabakh prospect. In Qatar, Pennzoil plans
to drill two exploration wells on Block 8 (100 percent Pennzoil)
during the second half of 1997. In Egypt, Pennzoil and Repsol
plan to drill an exploration well on the Southeast Gulf of Suez
block (50 percent Pennzoil) during the second half of 1997. Also
during the second half of 1997, Pennzoil plans to drill an
exploration well in southwestern Australia on the Whicher Range
concession (44 percent Pennzoil).
<PAGE>
<PAGE> 7
PART I. FINANCIAL INFORMATION - continued
Motor Oil & Refined Products
Operating income from this segment was $13.0 million for the
quarter ended March 31, 1997, compared with $14.4 million for the
same period in 1996. The decrease in operating income was
primarily due to lower refinery margins.
Production at Excel Paralubes, a lube base oil plant
in which Pennzoil and Conoco Inc. are equal partners, commenced
in the first quarter of 1997. After experiencing some initial
mechanical difficulties, the lube base oil plant is now operating
near capacity. The upgrade of Pennzoil's Shreveport, Louisiana
refinery was completed in April 1997 with first product shipment
expected in May 1997. The Shreveport refinery upgrade will
substantially increase fuels production at the facility.
Franchise Operations
The franchise operations segment recorded operating income
of $4.5 million for the quarter ended March 31, 1997, the same
level as last year's first quarter. Higher sales in the first
quarter of 1997 were offset by start-up costs associated with the
growth in the number of centers since the first quarter of 1996.
Systemwide sales reported on a comparable store basis for
the three months ended March 31, 1997 increased $2.3 million to
$163.6 million, compared with the first quarter of 1996.
Systemwide average ticket prices increased to $35.49 for the
quarter ended March 31, 1997, compared with $34.76 for the first
quarter of 1996. There were 1,419 lube centers (including 555
Jiffy Lube company operated centers) open as of March 31, 1997.
In 1997, Jiffy Lube plans to open approximately 150 centers,
of which 90 will be in Sears Automotive Centers. As of March 31,
1997, there were 134 fast-oil change units open in Sears Centers
of which 100 are company operated.
Other
Other operating income for the quarter ended March 31, 1997
was $15.7 million, compared with $15.5 million for the same
period in 1996. Pennzoil's other income includes dividend income
of $9.8 million during the three months ended March 31, 1997
from its investment in common stock of Chevron Corporation.
Net interest expense for the quarter ended March 31,
1997 decreased $10.4 million from the same period in 1996
primarily due to higher capitalized interest and lower
borrowings.
<PAGE>
<PAGE> 8
PART I. FINANCIAL INFORMATION - continued
Capital Resources and Liquidity
Cash Flow. As of March 31, 1997, Pennzoil had cash and cash
equivalents of $34.0 million. During the three months ended
March 31, 1997, Pennzoil's cash and cash equivalents decreased
$.4 million. Cash flows from operating activities totaled $174.3
million during the first quarter of 1997.
Accounts Receivable. In September 1996, Pennzoil
Receivables Company, a wholly owned special purpose subsidiary of
Pennzoil, entered into a receivables sales facility, which
provides for the ongoing sales of up to $135.0 million of
accounts receivable of certain Pennzoil subsidiaries. The
facility expires in September 1997. Accounts receivable sold
under this agreement totaled $135.0 million as of March 31, 1997.
Pennzoil used the proceeds to reduce outstanding debt. Fees
associated with the sale of accounts receivable totaled $1.9
million in the first quarter of 1997 and are netted against other
income.
Debt. In April 1997, Pennzoil redeemed $38.5 million
principal amount of indebtedness consisting of all of Pennzoil's
outstanding 9% debentures due 2017. The purchase premium and
related unamortized discount and debt issue costs relating to the
redemption are expected to result in an after-tax charge of
approximately $1.3 million, or $.03 per share, in the second
quarter of 1997. Pennzoil used borrowings under its commercial
paper facilities to redeem these debentures.
<PAGE>
<PAGE> 9
PART I. FINANCIAL INFORMATION - continued
<TABLE>
(UNAUDITED)
The following tables show revenues and operating income by segment,
other components of income and operating data.
<CAPTION>
Three Months Ended
March 31
----------------------------
1997 1996
----------- -----------
(Dollar amounts expressed
in thousands)
<S> <C> <C>
REVENUES
Oil and Gas $ 226,741 $ 175,082
Motor Oil & Refined Products 432,952 393,149
Franchise Operations 75,150 71,415
Other 11,470 21,958
Intersegment sales (97,313) (74,263)
----------- -----------
Total revenues $ 649,000 $ 587,341
----------- -----------
OPERATING INCOME
Oil and Gas $ 107,179 $ 49,323
Motor Oil & Refined Products 13,048 14,428
Franchise Operations 4,496 4,525
Other 15,665 15,487
----------- -----------
Total operating income 140,388 83,763
Corporate administrative expenses 13,082 12,731
Interest charges, net 37,118 47,563
----------- -----------
Income before income tax 90,188 23,469
Income tax provision 32,637 7,700
----------- -----------
NET INCOME $ 57,551 $ 15,769
=========== ===========
RATIO OF EARNINGS TO FIXED CHARGES 2.69 1.40
=========== ===========
</TABLE>
<PAGE>
<PAGE> 10
PART I. FINANCIAL INFORMATION - continued
<TABLE>
(UNAUDITED)
<CAPTION>
Three Months Ended
March 31
------------------------------
1997 1996
------------ ------------
<S> <C> <C>
OPERATING DATA
- --------------
OIL AND GAS
Net production
Crude oil, condensate and natural
gas liquids (barrels per day) 53,632 60,402
Natural gas produced for sale (Mcf per day) 523,348 559,776
Weighted average prices
Crude oil, condensate and natural
gas liquids (per barrel) $ 19.47 $ 14.15
Natural gas (per Mcf) $ 2.77 $ 1.79
MOTOR OIL & REFINED PRODUCTS
Sales (barrels per day)
Gasoline and naphtha 20,020 20,618
Distillates and gas oils 26,377 27,630
Lubricating oil and other specialty products 25,916 21,969
Residual fuel oils 3,513 4,042
----------- -----------
Total sales (barrels per day) 75,826 74,259
=========== ===========
Raw materials processed (barrels per day) <F1> 54,090 51,416
Refining capacity (barrels per day) <F2> 62,700 62,700
FRANCHISE OPERATIONS
Domestic systemwide sales (in thousands) $ 178,705 $ 164,819
Same center sales (in thousands) $ 163,625 $ 161,363
Centers open (U.S.) 1,419 1,229
<FN>
<F1> Excludes Excel Paralubes for comparability.
<F2> Excludes capacity at Excel Paralubes and the
Shreveport Refinery upgrade. Final production capacities
are currently being determined.
<FN>
</TABLE>
<PAGE>
<PAGE> 11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Pennsylvania Department of Environmental Protection is
seeking civil penalties in excess of $100,000 in connection with
the release of petroleum products from Pennzoil Products
Company's storage facility in Pittsburgh, Pennsylvania. The
company is in active negotiations with the agency with the
objective of arriving at a mutually agreeable resolution.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits -
3 Restated Certificate of Incorporation of Pennzoil Company,
as amended through May 10, 1996.
12 Computation of Ratio of Earnings to Fixed Charges for the three
months ended March 31, 1997 and 1996.
27 Financial Data Schedule
(b) Reports -
No reports on Form 8-K were filed during the quarter for which this report
was filed.
<PAGE>
<PAGE> 12
SIGNATURE
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.
PENNZOIL COMPANY
Registrant
S/N Michael J. Maratea
Michael J. Maratea
Vice President and Controller
May 12, 1997
<TABLE>
EXHIBIT 12
PENNZOIL COMPANY AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<CAPTION>
For the three months ended
March 31,
----------------------------------
1997 1996
------------- -------------
(Dollar amounts expressed in thousands)
<S> <C> <C>
Income from continuing operations before extraordinary items
and cumulative effect of change in accounting principle $ 57,551 $ 15,769
Income tax provision
Federal and foreign 29,197 6,898
State 3,440 802
------------- -------------
Total income tax provision 32,637 7,700
Interest charges 42,730 53,789
------------- -------------
Income before income tax provision and interest charges $ 132,918 $ 77,258
============= =============
Fixed charges $ 49,355 $ 55,241
============= =============
Ratio of earnings to fixed charges 2.69 1.40
============= =============
<CAPTION>
DETAIL OF INTEREST AND FIXED CHARGES
For the three months ended
March 31,
----------------------------------
1997 1996
------------- -------------
(Expressed in thousands)
<S> <C> <C>
Interest charges per Consolidated Statement of Income
which includes amortization of debt discount, expense and premium $ 43,743 $ 49,015
Add: portion of rental expense representative of interest factor <F1> 5,612 6,226
------------- -------------
Total fixed charges $ 49,355 $ 55,241
Less: interest capitalized per Consolidated Statement of Income 6,625 1,452
------------- -------------
Total interest charges $ 42,730 $ 53,789
============= =============
<FN>
<F1> Interest factor based on management's estimates and approximates one-third of rental expense.
</FN>
</TABLE>
UNITED STATES
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 Quarter Ended March 31, 1997 Commission File No. 1-5591
PENNZOIL COMPANY
(Exact name of registrant as specified in its charter)
Delaware 74-1597290
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Pennzoil Place, P.O. Box 2967
Houston, Texas 77252-2967
(Address of principal executive offices)
EXHIBIT
<PAGE>
PENNZOIL COMPANY AND SUBSIDIARIES
INDEX TO EXHIBITS
Exhibit No.
- -----------
3 Restated Certificate of Incorporation of Pennzoil Company,
as amended through May 10, 1996.
12 Computation of Ratio of Earnings to Fixed Charges for the three
months ended March 31, 1997 and 1996.
27 Financial Data Schedule
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 33,972
<SECURITIES> 0
<RECEIVABLES> 212,961
<ALLOWANCES> 9,810
<INVENTORY> 186,123
<CURRENT-ASSETS> 495,652
<PP&E> 5,909,334
<DEPRECIATION> 3,520,817
<TOTAL-ASSETS> 4,137,398
<CURRENT-LIABILITIES> 377,024
<BONDS> 2,262,337
<COMMON> 43,507
0
0
<OTHER-SE> 987,589
<TOTAL-LIABILITY-AND-EQUITY> 4,137,398
<SALES> 631,666
<TOTAL-REVENUES> 649,000
<CGS> 355,872
<TOTAL-COSTS> 365,912
<OTHER-EXPENSES> 75,680
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 37,118
<INCOME-PRETAX> 90,188
<INCOME-TAX> 32,637
<INCOME-CONTINUING> 57,551
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 57,551
<EPS-PRIMARY> 1.23
<EPS-DILUTED> 1.23
</TABLE>
CERTIFICATE OF AMENDMENT TO THE
RESTATED CERTIFICATE OF INCORPORATION
PENNZOIL COMPANY, a corporation organized and existing
under and by virtue of the General Corporation Law of the
State of Delaware, DOES HEREBY CERTIFY:
FIRST: Article FIFTH of the corporation's Restated
Certificate of Incorporation is hereby amended by deleting
the first sentence of subparagraph (f) of Section 1 of
Article FIFTH in its entirety and substituting the following
sentence therefor:
To designate, by resolution or resolutions passed
by a majority of the whole Board, one or more
committees, each committee to consist of one or more of
the Directors of the corporation, which, to the extent
provided in said resolution or resolutions or in the By-
laws of the corporation, shall have and may exercise
the power of the Board of Directors in the management
of the business and affairs of the corporation and may
authorize the seal of the corporation to be affixed to
all papers that may require it.
SECOND: Article FIFTH of the corporation's Restated
Certificate of Incorporation is hereby amended by deleting
the first sentence of Section 2 of Article FIFTH in its
entirety and substituting the following sentence therefor:
The number of Directors which shall constitute the
whole Board of Directors of the corporation shall be
not less than 3 nor more than 13 as specified from time
to time in the By-laws of the corporation, except in
the case of an increase in the number of Directors by
reason of any default provisions contained in Article
FOURTH.
THIRD: The foregoing amendments to the corporation's
Restated Certificate of Incorporation have been unanimously
adopted by the corporation's Board of Directors at a meeting
duly called and held on February 29, 1996 and by the holders
of a majority of the outstanding shares of the corporation's
capital stock at a meeting duly called and held on May 9,
1996, all in accordance with the provisions of Section 242
of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the undersigned has caused this
Certificate to be executed in its name and on its behalf by
its duly authorized officer and its corporate seal to be
affixed hereto and attested by its Secretary on this 9th day
of May, 1996.
PENNZOIL COMPANY
By: THOMAS M. HAMILTON
Thomas M. Hamilton
Executive Vice President
ATTEST:
RESTATED CERTIFICATE OF INCORPORATION
OF
PENNZOIL COMPANY
Under Sections 242 and 245 of the
Delaware General Corporation Law
PENNZOIL COMPANY, a corporation organized and
existing under and by virtue of the Delaware General
Corporation Law, hereby certifies that:
(1) The name of the corporation is Pennzoil
Company. The corporation was, by a Certificate of
Agreement of Consolidation between United Gas
Corporation, a corporation organized and existing under
the laws of the State of Delaware, and Pennzoil
Company, a corporation organized and existing under the
laws of the Commonwealth of Pennsylvania, formed under
the name "Pennzoil United, Inc." Such Certificate of
Agreement of Consolidation was filed by the Secretary
of State of the State of Delaware on the 22nd day of
March, 1968.
(2) This Restated Certificate of Incorporation
restates and further amends the Restated Certificate of
Incorporation of the corporation. The amendments
effected by this Restated Certificate of Incorporation
include, but are not limited to, amendments (i) to
increase the number of authorized shares of the
corporation's common stock, par value $0.83 1/3 per share,
to 100,000,000 and (ii) to eliminate obsolete and
unnecessary provisions.
(3) The restatement of and further amendments to
the Restated Certificate of Incorporation of the
Corporation have been duly adopted by vote of the
stockholders in accordance with Sections 242 and 245 of
the General Corporation Law of the State of Delaware.
(4) The text of the Restated Certificate of
Incorporation of the Pennzoil Company, as heretofore
amended and supplemented, is hereby restated and
further amended hereby to read in its entirety as
follows:
RESTATED CERTIFICATE OF INCORPORATION
of
PENNZOIL COMPANY
First: The name of the corporation is Pennzoil Company.
Second: The address of its registered office in the
State of Delaware is 1209 Orange Street in the City of
Wilmington, County of New Castle. The name of its
registered agent at such address is The Corporation Trust
Company.
Third: The purpose of the corporation is to engage in
any lawful act or activity for which corporations may be
organized under the General Corporation Law of the State of
Delaware.
Fourth: The total number of shares of all classes of
stock which the corporation shall have authority to issue is
137,610,644, divided into classes as follows:
9,747,720 shares shall be Preferred Stock, par
value $1.00 per share ("Preferred Stock");
27,862,924 shares shall be Preference Common
Stock, par value $0.83 1/3 per share ("Preference Common
Stock"); and
100,000,000 shares shall be Common Stock, par
value $0.83 1/3 per share ("Common Stock").
Shares of any class of stock of the corporation may be
issued for such consideration and for such corporate
purposes as the Board of Directors may from time to time
determine.
The following is a statement of the powers, preferences
and rights, and the qualifications, limitations or
restrictions, of the Preferred Stock, Preference Common
Stock and Common Stock.
Section I. Preferred Stock
Shares of Preferred Stock shall be issuable in one or
more series with such voting powers, full or limited, or no
voting powers, and such designations, powers, preferences
and relative, participating, optional, redemption,
conversion, exchange and other rights, and qualifications,
limitations or restrictions thereof, as are stated and
expressed herein, and, to the extent not stated and
expressed herein, as shall be fixed by the Board of
Directors pursuant to the authority to do so, which is
hereby expressly vested in it, and stated and expressed in a
resolution or resolutions adopted by the Board of Directors
providing for the issuance of the Preferred Stock of such
series.
In accordance with this Section I of Article Fourth,
the Board of Directors has designated shares of Preferred
Stock with the voting powers, preferences, rights,
qualifications, limitations and restrictions as set forth on
Exhibit A hereto.
Section II. Preference Common Stock
Shares of Preference Common Stock shall be issuable in
one or more series with such designations, powers,
preferences and relative, participating, optional,
redemption, conversion, exchange and other rights, and
qualifications, limitations or restrictions thereof, as are
stated and expressed herein, and, to the extent not stated
and expressed herein, as shall be fixed by the Board of
Directors pursuant to the authority to do so, which is
hereby expressly vested in it, and stated and expressed in a
resolution or resolutions adopted by the Board of Directors
providing for the issuance of the Preference Common Stock of
such series.
Subject to the prior rights of the holders of Preferred
Stock as may be set forth in a resolution or resolutions of
the Board of Directors providing for the issuance of any
series of Preferred Stock, the holders of Preference Common
Stock, in preference to the holders of Common Stock, shall
be entitled to receive if, as and when declared by the Board
of Directors, out of the assets of the corporation which are
by law available for the payment of dividends, dividends at
but not exceeding the rate set forth in a resolution or
resolutions of the Board of Directors providing for the
issuance of any series of Preference Common Stock.
In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the
corporation, then, before any distribution may be made to
the holders of Common Stock, the holders of Preference
Common Stock (subject to the prior rights of holders of
Preferred Stock as may be set forth in a resolution or
resolutions of the Board of Directors providing for the
issuance of any series of Preferred Stock) shall be entitled
to be paid an amount equal to the accrued and unpaid
dividends thereon to the date of payment thereof. After
payment or provision for payment of the debts and other
liabilities of the corporation and any accrued and unpaid
dividends due the holders of Preference Common Stock
(subject to the prior rights of holders of Preferred Stock
as may be set forth in a resolution or resolutions of the
Board of Directors providing for the issuance of any series
of Preferred Stock), the holders of Preference Common Stock
and Common Stock shall be entitled to share ratably in the
remaining assets of the corporation. Neither the merger or
consolidation of the corporation into or with another
corporation nor the merger or consolidation of any other
corporation into or with the corporation shall be deemed to
be a liquidation, dissolution or winding up of the
corporation within the meaning of this paragraph, but the
sale, lease or conveyance of all or substantially all of the
assets of the corporation shall be deemed to be a
liquidation, dissolution or winding up of the corporation
within the meaning of this paragraph.
In addition to any other voting powers of the holders
of Preference Common Stock as may be provided by law,
(i) without the affirmative vote of the holders of at least
a majority of the total number of shares of Preference
Common Stock at the time outstanding, the corporation shall
not merge or consolidate with or into any other corporation
or sell or otherwise dispose of all or substantially all of
its assets (provided, however, that no such vote shall be
required in connection with a merger into the corporation of
a subsidiary at least 90% of the outstanding shares of each
class of stock of which is owned by the corporation),
(ii) without the affirmative vote of the holders of at least
two-thirds of the total number of shares of Preference
Common Stock at the time outstanding, the corporation shall
not voluntarily liquidate, dissolve or wind up the affairs
of the corporation, (iii) without the affirmative vote of
the holders of at least two-thirds of the total number of
shares of Preference Common Stock at the time outstanding,
the corporation shall not amend, alter or repeal any of the
rights, preferences or powers of the holders of Preference
Common Stock so as to affect adversely any such rights,
preferences or powers (provided, however, that if such
amendment, alteration or repeal affects adversely the
rights, preferences or powers of one or more, but not all,
series of Preference Common Stock at the time outstanding,
only the affirmative vote of the holders of at least two-
thirds of the total number of outstanding shares of all
series so affected shall be required; and provided, further,
that an amendment to increase or decrease the authorized
number of shares of Preference Common Stock or to create or
authorize, or increase or decrease the amount of, any class
of stock ranking prior to or on a parity with the
outstanding shares of Preference Common Stock as to
dividends shall not be deemed to affect adversely the
rights, preferences or powers of the holders of Preference
Common Stock or any series thereof) and (iv) without the
affirmative vote of the holders of at least two-thirds of
the total number of shares of Preference Common Stock at the
time outstanding, the corporation shall not create or
authorize any shares of any class of stock ranking prior to
the Preference Common Stock as to dividends or assets (other
than Preferred Stock) or issue any shares of any such prior
ranking stock (other than Preferred Stock) more than 12
months after the date as of which the corporation was
empowered to create or authorize such prior ranking stock.
Section III. Common Stock
After the requirements with respect to any preferential
dividends upon the Preferred Stock and Preference Common
Stock have been met, the holders of the Common Stock shall
be entitled to receive such dividends as may be declared
from time to time by the Board of Directors.
Section IV. Provisions Applicable to Capital Stock
1. Voting Rights. Each share of Common Stock and each
share of Preference Common Stock shall entitle the holder
thereof to one vote for each share held and, except as
otherwise provided herein or by law, the Common Stock and
the Preference Common Stock (and any other stock of the
corporation at the time entitled to vote) shall vote
together as one class. At all elections of directors, each
holder of record of shares of Common Stock and/or Preference
Common Stock shall be entitled to as many votes as shall
equal the number of such shares of Common Stock and/or
Preference Common Stock so held multiplied by the number of
directors to be elected, and such holder may cast all of
such votes for a single director, or may distribute them
among the number to be voted for, or for any two or more of
them, as such holder may see fit.
2. Regarding Pre-emptive Rights. No stockholder of the
corporation shall by reason of his holding shares of any
class of stock have any pre-emptive or preferential right to
subscribe for, purchase or otherwise acquire or receive any
shares of any class of stock issued by the corporation,
whether now or hereafter authorized, or any shares of any
class of stock of the corporation now or hereafter acquired
by the corporation as treasury stock and subsequently
reissued or sold or otherwise disposed of, or any notes,
debentures, bonds or other securities convertible into or
carrying options or warrants to purchase shares of any class
of stock, whether now or hereafter authorized, whether or
not the issuance of any such shares, or such notes,
debentures, bonds or other securities, would adversely
affect the dividend or voting rights of such stockholder;
and the Board of Directors may issue shares of any class of
stock of the corporation, or any notes, debentures, bonds or
other securities convertible into or carrying options or
warrants to purchase shares of any class of stock, without
offering any such shares of any class, either in whole or in
part, to the existing stockholders of any class.
Fifth: 1. All corporate powers shall be exercised by
the Board of Directors except as otherwise provided by law
or by the Certificate of Incorporation.
In furtherance and not in limitation of the powers
conferred by statute, the Board of Directors is expressly
authorized:
(a) Except as may be otherwise provided in the
By-laws, to make, alter, amend and repeal the By-laws
of the corporation, subject always to the power of the
stockholders to change such action.
(b) To fix in or pursuant to the By-laws from time
to time the number of Directors of the corporation,
none of whom need be stockholders.
(c) To fix, determine and vary from time to time
the amount to be maintained as surplus of the
corporation and the amount or amounts to be set apart
as working capital of the corporation.
(d) To authorize and cause to be executed
mortgages and liens upon the real and personal property
of the corporation.
(e) To set apart out of any of the funds of the
corporation available for dividends a reserve or
reserves for any proper purposes and/or to abolish any
such reserve in the manner in which it was created.
(f) To designate, by resolution or resolutions
passed by a majority of the whole Board, one or more
committees, each committee to consist of two or more of
the Directors of the corporation, which, to the extent
provided in said resolution or resolutions or in the
By-laws of the corporation, shall have and may exercise
the power of the Board of Directors in the management
of the business and affairs of the corporation, and may
authorize the seal of the corporation to be affixed to
all papers which may require it. Such committee or
committees shall have such name or names as may be
stated in the By-laws of the corporation or as may be
determined from time to time by resolutions adopted by
the Board of Directors.
2. The number of Directors which shall constitute the
whole Board of Directors of the corporation shall be not
less than 3 nor more than 18 as specified from time to time
in the By-laws of the corporation, except in the case of an
increase in the number of directors by reason of any default
provisions adopted pursuant to Article Fourth. The Board of
Directors shall be divided into three classes, Class I,
Class II and Class III. Such classes shall be as nearly
equal in number of directors as possible. Each Director
shall serve for a term ending on the third annual meeting
following the annual meeting at which such Director was
elected. The foregoing notwithstanding, each Director shall
serve until his successor shall have been duly elected and
qualified, unless he shall resign, become disqualified,
disabled or shall otherwise be removed.
At each annual election, the Directors chosen to
succeed those whose terms then expire shall be of the same
class as the Directors they succeed, unless, by reason of
any intervening changes in the authorized number of
Directors, the Board shall designate one or more
directorships whose term then expires as directorships of
another class in order more nearly to achieve equality of
number of Directors among the classes.
Notwithstanding the provision that the three classes
shall be as nearly equal in number of Directors as possible,
in the event of any change in the authorized number of
Directors, each Director then continuing to serve as such
shall nevertheless continue as a Director of the class of
which he is a member until the expiration of his current
term, or his prior death, resignation or removal. If any
newly created directorship may, consistent with the
provision that the three classes shall be as nearly equal in
number of Directors as possible, be allocated to one or two
or more classes, the Board shall allocate it to that of the
available classes whose terms of office are due to expire at
the earliest date following such allocation.
3. No Director of the corporation shall be removed from
his office as a Director by vote or other action of
stockholders or otherwise except for cause.
4. Except as provided in or pursuant to Article Fourth
hereof, newly created directorships resulting from any
increase in the number of Directors and any vacancies on the
Board of Directors resulting from death, resignation,
disqualification, removal or other cause shall 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. 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. No decrease in the number of
Directors constituting the Board of Directors shall shorten
the term of any incumbent Director.
5. No contract or other transaction between the
corporation and any other corporation shall be affected or
invalidated by the fact that one or more of the Directors of
the corporation are interested in, or is a director or
directors or officer or officers of such other corporation,
and no contract or other transaction between the corporation
and any other person or firm shall be affected or
invalidated by the fact that one or more of the Directors of
the corporation is a party to, or are parties to, or
interested in, such contract or transaction; provided that
in each such case the nature and extent of the interest of
such Director or Directors in such contract or other
transaction and/or the fact that such Director or Directors
is or are a director or directors or officer or officers of
such other corporation is known to the Board of Directors or
is disclosed at the meeting of the Board of Directors at
which such contract or other transaction is authorized.
Sixth: 1. Except as set forth in Paragraph 4 of this
Article Sixth, the affirmative vote or consent of the
holders of 80% of all stock of this corporation entitled to
vote in elections of directors (excluding stock entitled so
to be exercised only upon the happening of some contingency
unless such contingency shall have occurred and is
continuing), considered for the purposes of this Article
Sixth as one class and hereinafter in this Article Sixth
embraced in the term "voting stock", shall be required:
(i) for a merger or consolidation of the
corporation with or into any other corporation, or
(ii) for any sale or lease of all or any
substantial part of the assets of the corporation to
any other corporation, person or other entity, or
(iii) any sale or lease to the corporation or any
subsidiary thereof of any assets (except assets having
an aggregate fair market value of less than $5,000,000)
in exchange for voting stock (or securities convertible
into or exchangeable for voting stock or options,
warrants or rights to purchase voting stock or
securities convertible into voting stock) of the
corporation or any subsidiary of the corporation by any
other corporation, person or entity,
if as of the record date for the determination of
stockholders entitled to notice thereof and to vote thereon
or consent thereto, or as of the time the Board of Directors
shall have approved a memorandum of understanding, or the
corporation shall have entered into any agreement, with
respect to any such transaction for which the vote or
consent of the holders of no class or series of stock of the
corporation is otherwise required by law, the Certificate of
Incorporation or any other contract or agreement, such other
corporation, person or entity which is party to such a
transaction is the beneficial owner, directly or indirectly,
of 5% or more of the outstanding shares of any class or
series of voting stock of the corporation. There shall also
be required for any such transaction for which such
affirmative vote or consent shall be required by this
Paragraph 1 the affirmative vote or consent of the holders
of a majority of all voting stock of this corporation,
exclusive of all voting stock of this corporation of which
such other corporation, person or entity which is party to
such transaction is, directly or indirectly, the beneficial
owner. Each such affirmative vote or consent shall be in
addition to the vote or consent of the holders of any class
or series of stock of the corporation otherwise required by
law or the Certificate of Incorporation or the resolution or
resolutions providing for the issuance of such class or
series which have been adopted by the Board of Directors or
any agreement between the corporation and any national
securities exchange.
2. For purposes of this Article Sixth any corporation,
person or other entity shall be deemed to be the beneficial
owner of any shares of stock of the corporation:
(i) which it owns directly, whether or not of
record, or
(ii) which it has the right to acquire pursuant to
any agreement or understanding or upon exercise of
conversion rights, exchange rights, warrants or options
or otherwise, or
(iii) which are beneficially owned, directly or
indirectly (including shares deemed to be owned through
application of clause (ii) above), by any "affiliate"
or "associate" as those terms are defined in Rule 12b-2
of the General Rules and Regulations under the
Securities Exchange Act of 1934 as in effect on
March 1, 1975, or
(iv) which are beneficially owned, directly or
indirectly (including shares deemed owned through
application of clause (ii) above), by any other
corporation, person or entity with which it or its
"affiliate" or "associate" has any agreement or
arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of stock of the
corporation.
For the purposes of this Article Sixth, the
outstanding shares of any class or series of stock of
the corporation shall include shares deemed owned
through the application of clauses (2)(ii), (iii) and
(iv) above, but shall not include any other shares
which may be issuable pursuant to any agreement or upon
exercise of conversion rights, warrants, options or
otherwise. As used in this Article Sixth, the term
"subsidiary" shall mean a corporation a majority of the
voting power of the capital stock (that is, voting
power entitled to be exercised in the election of
directors, but excluding voting power entitled so to be
exercised only upon the happening of some contingency
unless such contingency shall have occurred and is
continuing) of which shall be owned by the corporation
or by one or more subsidiaries or by the corporation
and one or more subsidiaries.
3. The Board of Directors shall have the power and duty
to determine for the purposes of this Article Sixth on the
basis of information known to this corporation whether
(i) such other corporation, person or other entity
beneficially owns 5% or more of the outstanding shares
of any class or series of voting stock of the
corporation,
(ii) a corporation, person or entity is an
"affiliate" or "associate" (as defined in Paragraph 2
above) of another,
(iii) the assets being acquired by the
corporation, or any subsidiary thereof, have an
aggregate fair market value of less than $5,000,000,
and
(iv) the memorandum of understanding referred to
in Paragraph 4 below is substantially consistent with
the transaction covered thereby.
Any such determination shall be conclusive and binding
for all purposes of this Article Sixth.
4. The provisions of Paragraph 1 of this Article Sixth
shall not apply to:
(i) any merger or consolidation of this
corporation with any corporation, or any sale or lease
to this corporation or any subsidiary thereof of any
assets of, or any sale or lease by this corporation or
any subsidiary thereof of any of its assets to, any
corporation, person or entity, if the Board of
Directors of this corporation has approved a memorandum
of understanding with such other corporation, person or
entity with respect to such transaction prior to the
time that such other corporation, person or entity
shall have become a beneficial owner of 5% or more of
the outstanding shares of any class or series of voting
stock of the corporation; or
(ii) any merger or consolidation of this
corporation with, or any sale or lease to this
corporation or any subsidiary thereof of any assets of,
or any sale or lease by this corporation or any
subsidiary thereof of any of its assets to, any
corporation 40% or more of the outstanding voting stock
of which is beneficially owned, directly or indirectly,
by this corporation.
5. The corporation shall have the right, subject to any
express provisions or restrictions contained in the
Certificate of Incorporation or the By-laws, from time to
time to amend the Certificate of Incorporation or any
provision thereof in any manner now or hereafter provided by
law, and all rights and powers at any time conferred upon
the Directors or stockholders of the corporation by the
Certificate of Incorporation or any amendment thereof are
subject to such right of the corporation.
6. Notwithstanding any other provision of this
Certificate of Incorporation or the By-laws (and in addition
to any other vote that may be required by law, this
Certificate of Incorporation or the By-laws), there shall be
required to amend, alter, change or repeal, directly or
indirectly, this Article Sixth the affirmative vote or
consent of (i) the holders of 80% of all voting stock of the
corporation (considered for this purpose as one class) and
(ii) the holders of a majority of all voting stock of the
corporation (considered for this purpose as one class),
exclusive of all voting stock of the corporation
beneficially owned, directly or indirectly, by any
corporation, person or entity which is, as of the record
date for the determination of stockholders entitled to
notice of such amendment, alteration, change or repeal and
to vote thereon or consent thereto, the beneficial owner of
5% or more of the outstanding shares of any class or series
of voting stock of the corporation.
Seventh: No action required to be taken or which may be
taken at any annual or special meeting of stockholders of
the corporation may be taken without a meeting, and the
power of stockholders to consent in writing to the taking of
any action is specifically denied.
Eighth: No director of the corporation shall be
personally liable to the corporation or any of its
stockholders for monetary damages for breach of fiduciary
duty as a director involving any act or omission of any such
director occurring on or after April 30, 1987; provided,
however, that the foregoing provision shall not eliminate or
limit the liability of a director (a) for any breach of such
director's duty of loyalty to the corporation or its
stockholders, (b) for acts or omissions not in good faith or
which involve intentional misconduct or knowing violation of
law, (c) under Title 8, Section 174 of the General
Corporation Law of the State of Delaware or (d) for any
transaction from which such director derived an improper
personal benefit. Any repeal or modification of this
Article Eighth by the stockholders of the corporation shall
be prospective only, and shall not adversely affect any
limitation on the personal liability of a director of the
corporation existing at the time of such repeal or
modification.
________________________________
(5) This Certificate shall become effective upon
the filing hereof in the office of the Secretary of
State of the State of Delaware.
IN WITNESS WHEREOF, Pennzoil Company has caused this
Restated Certificate of Incorporation to be signed by its
authorized officer this 3rd day of May, 1995.
PENNZOIL COMPANY
By: DAVID P. ALDERSON, II
David P. Alderson, II
Group Vice President - Finance
EXHIBIT A
CERTIFICATE OF DESIGNATION
of
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
of
PENNZOIL COMPANY
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
PENNZOIL COMPANY, a corporation organized and existing
under the General Corporation Law of the State of Delaware,
in accordance with the provisions of Section 103 thereof,
DOES HEREBY CERTIFY:
That pursuant to the authority vested in the Board of
Directors in accordance with the provisions of the Restated
Certificate of Incorporation of the said Corporation, the
said Board of Directors on October 28, 1994 adopted the
following resolution creating a series of 750,000 shares of
Preferred Stock designated as "Series A Junior Participating
Preferred Stock":
RESOLVED, that pursuant to the authority vested in
the Board of Directors of this Corporation in
accordance with the provisions of the Restated
Certificate of Incorporation, a series of Preferred
Stock, par value $1.00 per share, of the Corporation be
and hereby is created, and that the designation and
number of shares thereof and the voting and other
powers, preferences and relative, participating,
optional or other rights of the shares of such series
and the qualifications, limitations and restrictions
thereof are as follows:
Series A Junior Participating Preferred Stock
1. Designation and Amount. There shall be a series of
Preferred Stock that shall be designated as "Series A Junior
Participating Preferred Stock," and the number of shares
constituting such series shall be 750,000. Such number of
shares may be increased or decreased by resolution of the
Board of Directors; provided, however, that no decrease
shall reduce the number of shares of Series A Junior
Participating Preferred Stock to less than the number of
shares then issued and outstanding plus the number of shares
issuable upon exercise of outstanding rights, options or
warrants or upon conversion of outstanding securities issued
by the Corporation.
2. Dividends and Distributions.
(A) Subject to the prior and superior rights of the
holders of any shares of any series of Preferred Stock
ranking prior and superior to the shares of Series A Junior
Participating Preferred Stock with respect to dividends, the
holders of shares of Series A Junior Participating Preferred
Stock, in preference to the holders of shares of any class
or series of stock of the Corporation ranking junior to the
Series A Junior Participating Preferred Stock, shall be
entitled to receive, when, as and if declared by the Board
of Directors out of funds legally available for the purpose,
quarterly dividends payable in cash on the 15th day of
March, June, September and December in each year (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 fraction
of a share of Series A Junior Participating Preferred Stock,
in an amount per share (rounded to the nearest cent) equal
to the greater of (a) $2.00 or (b) the Adjustment Number (as
defined below) times the aggregate per share amount of all
cash dividends, and the Adjustment Number times the
aggregate per share amount (payable in kind) of all non-cash
dividends or other distributions other than a dividend
payable in shares of Common Stock or a subdivision of the
outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock, par value $0.83 1/3
per share, of the Corporation (The "Common Stock") 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 Junior Participating Preferred Stock. The
"Adjustment Number" shall initially be 100. In the event the
Corporation shall at any time after October 28, 1994 (the
"Rights Declaration Date") (i) declare any dividend on
Common Stock payable in shares of Common Stock,
(ii) subdivide the outstanding Common Stock or (iii) combine
the outstanding Common Stock into a smaller number of
shares, then in each such case the Adjustment Number in
effect immediately prior to such event shall be adjusted by
multiplying such Adjustment Number by a fraction the
numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator
of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or
distribution on the Series A Junior Participating Preferred
Stock as provided in paragraph (A) above immediately after
it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock);
provided that, in the event no dividend or distribution
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 $2.00 per share on the Series A Junior Participating
Preferred Stock shall nevertheless be payable on such
subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative
on outstanding shares of Series A Junior Participating
Preferred Stock from the Quarterly Dividend Payment Date
next preceding the date of issue of such shares of Series A
Junior Participating Preferred Stock, unless the date of
issue of such shares is prior to the record date for the
first Quarterly Dividend Payment Date, in which case
dividends on such shares shall begin to accrue from the date
of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the
record date for the determination of holders of shares of
Series A Junior Participating Preferred Stock entitled to
receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such
Quarterly Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends paid on the
shares of Series A Junior Participating 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. The Board of Directors may
fix a record date for the determination of holders of shares
of Series A Junior Participating Preferred Stock entitled to
receive payment of a dividend or distribution declared
thereon, which record date shall be no more than 30 days
prior to the date fixed for the payment thereof.
3. Voting Rights. The holders of shares of Series A
Junior Participating Preferred Stock shall have the
following voting rights:
(A) Each share of Series A Junior Participating
Preferred Stock shall entitle the holder thereof to a number
of votes equal to the Adjustment Number on all matters
submitted to a vote of the stockholders of the Corporation.
At all elections of directors at which the Series A Junior
Participating Preferred Stock shall vote together with the
Common Stock (and any other capital stock of the Corporation
at the time entitled thereto), each share of Series A
Participating Preferred Stock shall entitle the holder
thereof to as many votes as shall equal the Adjustment
Number multiplied by the number of directors to be elected,
and such holder may cast all of such votes for a single
director, or may distribute them among the number to be
voted for, or for any two or more of them, as such holder
may see fit.
(B) Except as otherwise provided herein, in the
Restated Certificate of Incorporation or by law, the holders
of shares of Series A Junior Participating Preferred Stock,
the holders of shares of Preference Common Stock, par value
$0.83 1/3 per share, of the Corporation ("Preference Common
Stock") and the holders of shares of Common Stock shall vote
together as one class on all matters submitted to a vote of
stockholders of the Corporation.
(C)(i) If at any time dividends on any Series A Junior
Participating Preferred Stock shall be in arrears in an
amount equal to six quarterly dividends thereon, the
occurrence of such contingency shall mark the beginning of a
period (herein called a "default period") that shall extend
until such time when all accrued and unpaid dividends for
all previous quarterly dividend periods and for the current
quarterly dividend period on all shares of Series A Junior
Participating Preferred Stock then outstanding shall have
been declared and paid or set apart for payment. During
each default period, (1) the number of Directors shall be
increased by two, effective as of the time of election of
such Directors as herein provided, and (2) the holders of
Preferred Stock (including holders of the Series A Junior
Participating Preferred Stock) upon which these or like
voting rights have been conferred and are exercisable (the
"Voting Preferred Stock") with dividends in arrears in an
amount equal to six quarterly dividends thereon, voting as a
class, irrespective of series, shall have the right to elect
such two Directors.
(ii) During any default period, such voting right of
the holders of Series A Junior Participating Preferred Stock
may be exercised initially at a special meeting called
pursuant to subparagraph (iii) of this Section 3(C) or at
any annual meeting of stockholders, and thereafter at annual
meetings of stockholders, provided that such voting right
shall not be exercised unless the holders of at least one-
third in number of the shares of Voting Preferred Stock
outstanding shall be present in person or by proxy. The
absence of a quorum of the holders of Common Stock shall not
affect the exercise by the holders of Voting Preferred Stock
of such voting right.
(iii) Unless the holders of Voting Preferred Stock
shall, during an existing default period, have previously
exercised their right to elect Directors, the Board of
Directors may order, or any stockholder or stockholders
owning in the aggregate not less than ten percent of the
total number of shares of Voting Preferred Stock
outstanding, irrespective of series, may request, the
calling of a special meeting of the holders of Voting
Preferred Stock, which meeting shall thereupon be called by
the Chairman of the Board, the President, a Vice President
or the Secretary of the Corporation. Notice of such meeting
and of any annual meeting at which holders of Voting
Preferred Stock are entitled to vote pursuant to this
paragraph (C)(iii) shall be given to each holder of record
of Voting Preferred Stock by mailing a copy of such notice
to him at his last address as the same appears on the books
of the Corporation. Such meeting shall be called for a time
not earlier than 20 days and not later than 60 days after
such order or request or, in default of the calling of such
meeting within 60 days after such order or request, such
meeting may be called on similar notice by any stockholder
or stockholders owning in the aggregate not less than ten
percent of the total number of shares of Voting Preferred
Stock outstanding. Notwithstanding the provisions of this
paragraph (C)(iii), no such special meeting shall be called
during the period within 60 days immediately preceding the
date fixed for the next annual meeting of the stockholders.
(iv) In any default period and after the holders of
Voting Preferred Stock shall have exercised their right to
elect Directors voting as a class, (x) the Directors so
elected by the holders of Voting Preferred Stock shall
continue in office until their successors shall have been
elected by such holders or until the expiration of the
default period, and (y) any vacancy in the Board of
Directors may be filled by vote of a majority of the
remaining Directors theretofore elected by the holders of
the class or classes of stock which elected the Director
whose office shall have become vacant. References in this
paragraph (C) to Directors elected by the holders of a
particular class or classes of stock shall include Directors
elected by such Directors to fill vacancies as provided in
clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a default
period, (x) the right of the holders of Voting Preferred
Stock as a class to elect Directors shall cease, (y) the
term of any Directors elected by the holders of Voting
Preferred Stock as a class shall terminate and (z) the
number of Directors shall be such number as may be provided
for in the Restated Certificate of Incorporation or By-Laws
irrespective of any increase made pursuant to the provisions
of paragraph (C) of this Section 3 (such number being
subject, however, to change thereafter in any manner
provided by law or in the Restated Certificate of
Incorporation or By-Laws). Any vacancies in the Board of
Directors effected by the provisions of clauses (y) and
(z) in the preceding sentence may be filled by a majority of
the remaining Directors.
(D) Except as set forth herein, holders of Series A
Junior Participating 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 taking any
corporate action.
4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Junior Participating
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 Junior Participating 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 Junior Participating 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 Junior Participating Preferred
Stock, except dividends paid ratably on the Series A Junior
Participating 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; or
(iii) redeem or purchase or otherwise acquire for
consideration any shares of Series A Junior Participating
Preferred Stock, or any shares of stock ranking on a parity
with the Series A Junior Participating 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 Series A Junior Participating Preferred
Stock, or to such holders and holders of any such shares
ranking on a parity therewith, upon such terms as the Board
of Directors, after consideration of the respective annual
dividend rates 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.
5. Reacquired Shares. Any shares of Series A Junior
Participating Preferred Stock purchased or otherwise
acquired by the Corporation in any manner whatsoever shall
be retired and cancelled promptly after the acquisition
thereof. All such shares shall upon their cancellation
become authorized but unissued shares of Preferred Stock and
may be reissued as part of a new series of Preferred Stock
to be created by resolution or resolutions of the Board of
Directors, subject to any conditions and restrictions on
issuance set forth herein.
6. Liquidation, Dissolution or Winding Up. (A) Upon any
liquidation (voluntary or otherwise), dissolution or winding
up of the Corporation, no distribution shall be made to the
holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to
the Series A Junior Participating Preferred Stock unless,
prior thereto, the holders of shares of Series A Junior
Participating Preferred Stock shall have received $100 per
share, plus an amount equal to accrued and unpaid dividends
and distributions thereon, whether or not declared, to the
date of such payment (the "Series A Liquidation
Preference"). Following the payment of the full amount of
the Series A Liquidation Preference, no additional
distributions shall be made to the holders of shares of
Series A Junior Participating Preferred Stock unless, prior
thereto, the holders of shares of Common Stock and
Preference Common Stock shall have received an amount per
share (the "Common Adjustment") equal to the quotient
obtained by dividing (i) the Series A Liquidation Preference
by (ii) the Adjustment Number. Following the payment of the
full amount of the Series A Liquidation Preference and the
Common Adjustment in respect of all outstanding shares of
(1) Series A Junior Participating Preferred Stock and
(2) Common Stock and Preference Common Stock, respectively,
(a) holders of Series A Junior Participating Preferred Stock
and (b) holders of shares of Common Stock and Preference
Common Stock shall, subject to the prior rights of all other
series of Preferred Stock, if any, ranking prior thereto,
receive their ratable and proportionate share of the
remaining assets to be distributed in the ratio of the
Adjustment Number to 1 with respect to (x) the Series A
Junior Participating Preferred Stock and (y) the Common
Stock and Preference Common Stock, on a per share basis,
respectively.
(B) In the event, however, that there are not
sufficient assets available to permit payment in full of the
Series A Liquidation Preference and the liquidation
preferences of all other series of Preferred Stock, if any,
that rank on a parity with the Series A Junior Participating
Preferred Stock, then such remaining assets shall be
distributed ratably to the holders of such parity shares in
proportion to their respective liquidation preferences. In
the event, however, that there are not sufficient assets
available to permit payment in full of the Common
Adjustment, then such remaining assets shall be distributed
ratably to the holders of Common Stock and Preference Common
Stock.
(C) Neither the merger or consolidation of the
Corporation into or with another corporation nor the merger
or consolidation of any other corporation into or with the
Corporation shall be deemed to be a liquidation, dissolution
or winding up of the Corporation within the meaning of this
Section 6, but the sale, lease or conveyance of all or
substantially all the Corporation's assets shall be deemed
to be a liquidation, dissolution or winding up of the
Corporation within the meaning of this Section 6.
7. Consolidation, Merger, etc. In case the Corporation
shall enter into any consolidation, merger, combination or
other transaction in which the shares of Common Stock are
exchanged for or changed into other stock or securities,
cash and/or any other property, then in any such case each
share of Series A Junior Participating Preferred Stock shall
at the same time be similarly exchanged or changed in an
amount per share equal to the Adjustment Number times the
aggregate amount of stock, securities, cash and/or any other
property (payable in kind), as the case may be, into which
or for which each share of Common Stock is changed or
exchanged.
8. Redemption. (A) The Corporation, at its option, may
redeem shares of the Series A Junior Participating Preferred
Stock in whole at any time and in part from time to time, at
a redemption price equal to the Adjustment Number times the
current per share market price (as such term is hereinafter
defined) of the Common Stock on the date of the mailing of
the notice of redemption, together with unpaid accumulated
dividends to the date of such redemption. The "current per
share market price" on any date shall be deemed to be the
average of the closing price per share of such Common Stock
for the ten consecutive Trading Days (as such term is
hereinafter defined) immediately prior to such date;
provided, however, that in the event that the current per
share market price of the Common Stock is determined during
a period following the announcement of (i) a dividend or
distribution on the Common Stock other than a regular
quarterly cash dividend or (ii) any subdivision, combination
or reclassification of such Common Stock and the ex-dividend
date for such dividend or distribution, or the record date
for such subdivision, combination or reclassification, shall
not have occurred prior to the commencement of such ten
Trading Day period, then, and in each such case, the current
per share market price shall be properly adjusted to take
into account ex-dividend trading. The closing price for
each day shall be the last sales price, regular way, or, in
case no such sale takes place on such day, the average of
the closing bid and asked prices, regular way, in either
case as reported in the principal transaction reporting
system with respect to securities listed or admitted to
trading on the New York Stock Exchange, or, if the Common
Stock is not listed or admitted to trading on the New York
Stock Exchange, on the principal national securities
exchange on which the Common Stock is listed or admitted to
trading, or, if the Common Stock is not listed or admitted
to trading on any national securities exchange but sales
price information is reported for such security, as reported
by the National Association of Securities Dealers, Inc.
Automated Quotations System ("NASDAQ") or such other self-
regulatory organization or registered securities information
processor (as such terms are used under the Securities
Exchange Act of 1934, as amended) that then reports
information concerning the Common Stock, or, if sales price
information is not so reported, the average of the high bid
and low asked prices in the over-the-counter market on such
day, as reported by NASDAQ or such other entity, or, if on
any such date the Common Stock is not quoted by any such
entity, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in
the Common Stock selected by the Board of Directors of the
Corporation. If on any such date no such market maker is
making a market in the Common Stock, the fair value of the
Common Stock on such date as determined in good faith by the
Board of Directors of the Corporation shall be used. The
term "Trading Day" shall mean a day on which the principal
national securities exchange on which the Common Stock is
listed or admitted to trading is open for the transaction of
business, or, if the Common Stock is not listed or admitted
to trading on any national securities exchange but is quoted
by NASDAQ, a day on which NASDAQ reports trades, or, if the
Common Stock is not so quoted, a Monday, Tuesday, Wednesday,
Thursday or Friday on which banking institutions in the
State of New York are not authorized or obligated by law or
executive order to close.
(B) In the event that fewer than all the outstanding
shares of the Series A Junior Participating Preferred Stock
are to be redeemed, the number of shares to be redeemed
shall be determined by the Board of Directors and the shares
to be redeemed shall be determined by lot or pro rata as may
be determined by the Board of Directors or by any other
method that may be determined by the Board of Directors in
its sole discretion to be equitable.
(C) Notice of any such redemption shall be given by
mailing to the holders of the shares of Series A Junior
Participating Preferred Stock to be redeemed a notice of
such redemption, first class postage prepaid, not later than
the fifteenth day and not earlier than the sixtieth day
before the date fixed for redemption, at their last address
as the same shall appear upon the books of the Corporation.
Each such notice shall state: (i) the redemption date;
(ii) the number of shares to be redeemed and, if fewer than
all the shares held by such holder are to be redeemed, the
number of such shares to be redeemed from such holder;
(iii) the redemption price; (iv) the place or places where
certificates for such shares are to be surrendered for
payment of the redemption price; and (v) that dividends on
the shares to be redeemed will cease to accrue on the close
of business on such redemption date. Any notice that is
mailed in the manner herein provided shall be conclusively
presumed to have been duly given, whether or not the
stockholder received such notice, and failure duly to give
such notice by mail, or any defect in such notice, to any
holder of Series A Junior Participating Preferred Stock
shall not affect the validity of the proceedings for the
redemption of any other shares of Series A Junior
Participating Preferred Stock that are to be redeemed. 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 fewer than all the shares represented
by any such surrendered certificate are redeemed, a new
certificate shall be issued representing the unredeemed
shares.
(D) The shares of Series A Junior Participating
Preferred Stock shall not be subject to the operation of any
purchase, retirement or sinking fund.
9. Ranking. The Series A Junior Participating
Preferred Stock shall rank junior to all other series of the
Corporation's Preferred Stock as to the payment of dividends
and the distribution of assets, unless the terms of any such
series shall provide otherwise, and shall rank senior to the
Common Stock and Preference Common Stock as to such matters.
10. Amendment. At any time that any shares of Series A
Junior Participating Preferred Stock are outstanding, the
Restated Certificate of Incorporation of the Corporation
shall not be amended in any manner which would materially
alter or change the powers, preferences or special rights of
the Series A Junior Participating Preferred Stock so as to
affect them adversely without the affirmative vote of the
holders of a majority or more of the outstanding shares of
Series A Junior Participating Preferred Stock, voting
separately as a class.
11. Fractional Shares. Series A Junior Participating
Preferred Stock may be issued in fractions of a share that
shall entitle the holder, in proportion to such holder's
fractional shares, to exercise voting rights, receive
dividends, participate in distributions and to have the
benefit of all other rights of holders of Series A Junior
Participating Preferred Stock.
By: LINDA F. CONDIT
Linda F. Condit
Corporate Secretary
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