QUAKER STATE CORP, S-3/A, 1995-10-10

QUAKER STATE CORP
S-3/A, 1995-10-10
PETROLEUM REFINING

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 10, 1995
REGISTRATION NO. 33-63241

================================================================================

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

------------------------

AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

------------------------

QUAKER STATE CORPORATION
(Exact name of registrant as specified in its charter)

<TABLE>
<S> <C>
DELAWARE 25-0742820
(State of incorporation) (IRS Employer
Identification Number)
</TABLE>

255 ELM STREET
OIL CITY, PENNSYLVANIA 16301
(814) 676-7676

(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)

------------------------

PAUL E. KONNEY
VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
QUAKER STATE CORPORATION
255 ELM STREET
OIL CITY, PENNSYLVANIA 16301
(814) 676-7676

(Name, address, including zip code, and telephone number,
including area code, of agent for service)

------------------------

COPIES TO:

<TABLE>
<S> <C>
ANN BAILEN FISHER MORTON A. PIERCE
SULLIVAN & CROMWELL DEWEY BALLANTINE
250 PARK AVENUE 1301 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10177 NEW YORK, NEW YORK 10019
</TABLE>

<PAGE>
<PAGE> 2

------------------------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement, as determined
by market conditions and other factors.

------------------------

If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. / /

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / / ___________________

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. / / ___________________

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.

SUBJECT TO COMPLETION, DATED OCTOBER 10, 1995.
[LOGO]
$100,000,000

Quaker State Corporation

% Notes Due 2005
Interest payable and Due , 2005

------------------

<PAGE>
<PAGE> 3

The Notes will be redeemable in whole or in part, at the option of the Company
at any time, at a redemption price equal to the greater of (i) 100% of their
principal amount and (ii) the sum of the present values of the remaining
scheduled payments of principal and interest thereon discounted, on a
semiannual basis, at the Treasury Yield (as defined herein) plus 15
basis points, together with accrued interest to the date of
redemption. The Notes will not be subject to any sinking
fund.

The Notes will be represented by one or more Global Securities (as defined
herein) registered in the name of the nominee of The Depository Trust Company
("DTC"). Except as provided herein, Notes in definitive form will not
be issued. Settlement for the Notes will be made in immediately
available funds. The Notes will trade in DTC's Same-Day Funds
Settlement System until Maturity, and secondary market
trading activity for the Notes will therefore settle in
immediately available funds. See "Description of
Notes" herein.

Application will be made to have the Notes approved for listing on the New York
Stock Exchange.

------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR AD-
EQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
Underwriting
Price to Discounts and Proceeds to
Public(1) Commissions Company(1)(2)
--------- ------------- -------------
<S> <C> <C> <C>
Per Note..................................... % % %
Total........................................ $ $ $
</TABLE>

(1) Plus accrued interest, if any, from , 1995.
(2) Before deduction of expenses payable by the Company estimated at
$ .
------------------

The Notes are offered by the several Underwriters when, as and if issued by
the Company, delivered to and accepted by the Underwriters and subject to their
right to reject orders in whole or in part. It is expected that delivery of the
Notes, in book-entry form, will be made through the facilities of DTC on or
about , 1995, against payment in immediately available funds.

CS First Boston J.P. Morgan Securities Inc.

The date of this Prospectus is , 1995.

<PAGE>
<PAGE> 4

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES AT A
LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

------------------

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy statements and other
information can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the following Regional Offices of the Commission: Room 1400,
7 World Trade Center, Suite 1300, New York, New York 10048, and Suite 1400,
Citicorp Center, 500 West Madison Street, Chicago, Illinois 60661. Copies of
such material can be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. Such reports, proxy statements and other information concerning the
Company may also be inspected at the offices of the New York Stock Exchange, 20
Broad Street, New York, New York 10005 and the Pacific Stock Exchange, 301 Pine
Street, San Francisco, California 94104, on which exchanges the common stock of
the Company is listed.

This Prospectus does not contain all information set forth in the
Registration Statement on Form S-3 and Exhibits thereto which the Company has
filed with the Commission, certain portions of which have been omitted pursuant
to the Rules and Regulations of the Commission, and to which reference is hereby
made.

INFORMATION INCORPORATED BY REFERENCE

The Company hereby incorporates into this Prospectus by reference the
following documents filed with the Commission:

(i) the Company's Annual Report on Form 10-K for the year ended
December 31, 1994;

(ii) the Company's Quarterly Reports on Form 10-Q for the quarters
ended March 31 and June 30, 1995; and

(iii) the Company's Current Reports on Form 8-K, dated July 24, 1995
and August 21, 1995 and Current Report on Form 8-K/A1, dated September 20,
1995.

All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Notes covered by this Prospectus shall be
deemed to be incorporated by reference in this Prospectus and to be a part
hereof from the dates of filing of such documents. Any statement contained
herein or in a document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.

The Company will furnish without charge to each person to whom this
Prospectus is delivered, upon the written or oral request of such person, a copy
of any or all of the information incorporated by reference in the Registration
Statement of which this Prospectus is a part, other than exhibits to such
information unless specifically incorporated by reference in such information.
Written requests should be addressed to: Quaker State Corporation, 255 Elm
Street, Oil City, Pennsylvania 16301, Attention: Secretary. Telephone requests
may be directed to (814) 676-7676.

<PAGE>
<PAGE> 5

THE COMPANY

Quaker State Corporation ("Quaker State" or the "Company") is a leading
producer and marketer of branded and private label motor oils and other
lubricants. The Company also operates fast lube centers throughout the United
States and Canada, manufactures and sells vehicular safety lighting equipment
and operates a materials handling facility in Canada.

The Company's Motor Oil Division produces, markets and distributes major
national brand, private label and proprietary brand lubricants and other
automotive aftermarket products. The base oil stocks used in Quaker State
lubricants are blended with additives and packaged at manufacturing facilities
operated by the Company in the United States and Canada. Approximately
one-quarter of the base oil stocks used by the Company are produced at its Congo
refinery in West Virginia. The Motor Oil Division also provides collection,
transportation and recycling services for used oil, brake fluid, antifreeze and
filters in certain regions of the United States. During the first six months of
1995, revenues from the Motor Oil Division comprised approximately 78% of the
Company's total revenues from continuing operations.

Quaker State believes that, through its fast lube subsidiaries ("Q Lube"),
it is one of the largest operators of fast lube centers in the United States.
Fast lube centers offer consumers quick and economical oil changes and related
services for passenger vehicles. As of June 30, 1995, there were 434 Q Lube
stores in the United States, of which 326 were owned or leased and operated by Q
Lube and 108 were operated by franchisees. These stores are located in 24
states, primarily in the West, Midwest and Southeast. The Company also has 26
fast lube centers in the Province of Ontario that are owned and operated or
franchised through a joint venture. During the first six months of 1995,
revenues from Q Lube comprised approximately 12% of the Company's total revenues
from continuing operations.

The Company's Truck-Lite subsidiary manufactures safety lighting equipment
for trucks and automobiles, which is sold to original equipment manufacturers
and replacement parts distributors. During the first six months of 1995,
revenues from Truck-Lite comprised approximately 10% of the Company's total
revenues from continuing operations.

The Company also operates an iron ore pellet and potash terminal and a bulk
materials handling dock accessible to Lake Superior at Thunder Bay, Ontario.
During the first six months of 1995, revenues from the materials handling
operations comprised less than 1% of the Company's total revenues from
continuing operations.

Following the appointment of Herbert M. Baum as Chairman and Chief
Executive Officer in June 1993, the Company has taken initiatives to increase
its share of the branded motor oil market. These efforts have included
introducing new products and repositioning the Company's current product line,
extending the Company's existing brands, creating niche markets for the
Company's products, offering incentive programs and marketing allowances to
customers and independent distributors, and emphasizing the Quaker State name
through a new logo, contemporary packaging and increased advertising. According
to the NPD Group, Inc., an independent market research firm, the Company's share
of the U.S. motor oil market increased from 13.3% for 1992 to 14.9% for the
six-month period ended June 30, 1995.

Quaker State's goal is to continue the growth of its core lubricants and
lubricant services businesses and to strengthen further its position as a
leading North American motor oil company by capitalizing on the Company's brand
name, expanding its Q Lube operations, emphasizing its distribution, customer
service and technological capabilities and providing comprehensive lubricant
products and services, including the recycling of used oil and related
materials.

Consistent with the Company's focus on its core businesses, Quaker State
opportunistically has exited non-core businesses and made selective acquisitions
while maintaining a capital structure that the Company believes is conservative.
The Company discontinued its coal operations in December 1992; sold its
insurance subsidiary, Heritage Insurance Group, Inc. ("Heritage"), in August
1994; and sold most of the assets of its Natural Gas Exploration and Production
Division ("E&P") in the third quarter of 1995.

<PAGE>
<PAGE> 6

The Company has made two principal acquisitions which have expanded the
product range and distribution capabilities of its Motor Oil Division. First, in
September 1994, the Company acquired the Specialty Oil Companies ("Specialty")
and Westland Oil Company, Inc. ("Westland"), which together have provided the
Company with a substantial private label motor oil business, two additional
blending and packaging facilities and a network of approximately 25 sales and
distribution operations. In addition, in July 1995, the Company acquired Slick
50, Inc. ("Slick 50"), a producer of automotive engine treatments and related
automotive chemicals. While Quaker State believes that acquisitions and
divestitures will be an important aspect of its corporate strategy, there can be
no assurance that the Company will be successful in finding other suitable
acquisition or expansion opportunities or will exit any of its other businesses.

Quaker State has initiated a restructuring program aimed at integrating its
recent acquisitions, consolidating management and administrative activities and
streamlining operations. As part of these efforts, in April 1995, the Company
announced plans to relocate its corporate headquarters, the headquarters of its
Motor Oil Division and the headquarters of certain of its subsidiaries to the
Dallas, Texas area by early 1996. The Company currently estimates that,
following the anticipated completion of its restructuring program in 1996 (other
than certain actions relating to Q Lube, which are expected to continue beyond
the end of 1996), it will realize an annualized reduction in operating costs of
up to $10 million.

The Company, a Delaware corporation formed in 1931, has its principal
executive offices at 255 Elm Street, Oil City, Pennsylvania 16301. Its telephone
number is (814) 676-7676.

USE OF PROCEEDS

The net proceeds from the sale of the Notes are estimated to be
approximately $ million, of which approximately $56 million will be used to
prepay the Company's outstanding Senior Notes due 2002 which bear interest at a
fixed rate of 8.73%. The remainder of the net proceeds will be used for general
corporate purposes, acquisitions, capital expenditures or the reduction of other
indebtedness. Funds not required immediately for such purposes may be invested
temporarily in short-term marketable securities. The precise amounts and timing
of the application of proceeds will depend upon the funding requirements of the
Company and the availability of other funds. The Company considers certain
acquisitions from time to time but currently has no specific plans to enter into
any such transactions.

<PAGE>
<PAGE> 7

CAPITALIZATION

The following table sets forth the consolidated capitalization of the
Company as of August 31, 1995, and as adjusted to reflect the sale of the Notes
offered hereby and the application of a portion of the net proceeds to prepay
the Company's outstanding Senior Notes due 2002. (See "Use of Proceeds.") This
table should be read in conjunction with the Consolidated Financial Statements
of the Company included in this Prospectus.

<TABLE>
<CAPTION>
AUGUST 31, 1995
(UNAUDITED)
----------------------
ACTUAL AS ADJUSTED
------ -----------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Cash.................................................................... $ 52.2 $
===== =====
Short-term Debt......................................................... $ 4.3 $ 4.3
===== =====
Long-term Debt:
Revolving credit loan due 1998(1)..................................... -- --
Revolving credit loan due 1997(2)..................................... 9.0 9.0
8.73% Senior Notes Due 2002........................................... 50.0 --
% Notes Due 2005.................................................. -- 100.0
Other................................................................. 12.2 12.2
----- -----
Total Long-term Debt............................................... 71.2 121.2
Total Stockholders' Equity.............................................. 281.5 281.5
----- -----
Total Capitalization.................................................... $352.7 $ 402.7
===== =====
</TABLE>

- ---------------
(1) Revolving credit loan of the Company. On October 4, 1995, the Company
terminated its revolving credit agreement and executed a new $45.0 million
credit agreement due on September 28, 1996.

(2) Revolving credit loan of Westland.
<PAGE>
<PAGE> 8

SELECTED FINANCIAL INFORMATION

The following table sets forth summary financial information relating to
the Company. The summary financial data for the five years ended December 31,
1994 are derived from the Consolidated Financial Statements of the Company which
have been audited by Coopers & Lybrand L.L.P., independent certified public
accountants to the Company. In the third quarter of 1995, the Company sold most
of the assets of E&P. Accordingly the operating results of E&P have been
excluded from continuing operations and reclassified as discontinued operations
on the following table for the six months ended June 30, 1995 and 1994 and the
five years ended December 31, 1994. The financial data for the six-month periods
ended June 30, 1995 and 1994 are derived from the unaudited consolidated
financial statements of the Company. Operating results for the six months ended
June 30, 1995 are not necessarily indicative of the results that may be expected
for the full year ending December 31, 1995. The data should be read in
conjunction with the Consolidated Financial Statements included elsewhere in
this Prospectus.

<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED JUNE 30,
------------------------------------------------------- -------------------
1994 1993 1992 1991 1990 1995 1994
------- ------- ------- ------- ------- ------- -------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA
Total revenues............................. $739.5 $612.7 $596.7 $582.0 $654.6 $502.8 $332.1
Costs and expenses
Cost of sales and operating costs........ 503.5 421.9 408.8 399.7 473.2 354.1 220.5
Selling, general and administrative...... 193.4 156.4 158.9 139.7 140.1 115.7 90.8
Depreciation and amortization ........... 21.8 19.2 20.1 20.1 20.8 14.6 10.0
Interest................................. 5.1 5.7 4.8 4.6 5.2 3.1 2.4
Unusual items............................ -- -- 3.2 -- (5.4) 15.8 --
Income from continuing operations before
income taxes............................. 15.7 9.5 0.9 17.9 20.7 (0.5) 8.4
Provision for (benefit from) income
taxes.................................... 6.2 2.5 0.2 7.5 7.5 (0.2) 4.7
------ ------ ------ ------ ------ ------ ------
Income (loss) from continuing operations... 9.5 7.0 0.7 10.4 13.2 (0.3) 3.7
Income (loss) from discontinued operations
(net of taxes)........................... 9.3 6.7 (31.9) 5.1 6.4 2.7 7.0
Cumulative effect of accounting changes.... -- -- (62.6) 7.2 -- -- --
------ ------ ------ ------ ------ ------ ------
Net income (loss).......................... $18.8 $13.7 $(93.8) $22.7 $19.6 $2.4 $10.7
====== ====== ====== ====== ====== ====== ======
BALANCE SHEET DATA
Cash and cash equivalents.................. $ 29.8 $ 15.6 $ 41.3 $ 15.1 $ 12.1 $ 11.6 $ 8.8
Working capital............................ 101.4 35.4 74.9 43.0 41.3 129.9 36.7
Total assets............................... 630.0 783.7 792.8 751.5 757.2 631.7 788.1
Long-term debt............................. 69.5 51.2 73.7 84.1 67.5 68.5 51.2
Total debt................................. 73.2 51.5 79.2 88.9 72.1 71.8 51.3
Stockholders' equity....................... 251.9 188.8 191.2 307.8 304.5 248.4 191.5
</TABLE>

<PAGE>
<PAGE> 9

<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED JUNE 30,
-------------------------------------------------- -----------------
1994 1993 1992 1991 1990 1995 1994
------ ------ ------ ------ ------ ------ ------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
SEGMENT INFORMATION
REVENUES
Motor Oil................ $541.2 $439.3 $441.0 $444.0 $512.2 $399.5 $235.1
Q Lube................... 113.7 105.3 104.4 98.5 93.0 60.3 54.1
Truck-Lite............... 99.6 80.8 63.9 49.9 54.4 49.6 51.2
Materials Handling....... 3.0 3.0 5.3 5.6 6.1 1.7 1.5
Intersegment sales....... (24.9) (21.3) (22.0) (20.4) (15.8) (13.9) (11.8)
------ ------ ------ ------ ------ ------ ------
Total.................... $732.6 $607.1 $592.6 $577.6 $649.9 $497.2 $330.1
====== ====== ====== ====== ====== ====== ======
OPERATING PROFITS
Motor Oil................ $ 16.4 $ 17.5 $ 23.3 $ 36.8 $ 18.8 $ 12.9 $ 8.3
Unusual item(1).......... -- -- -- -- 5.4 -- --
------ ------ ------ ------ ------ ------ ------
Total Motor
Oil............ 16.4 17.5 23.3 36.8 24.2 12.9 8.3
Q Lube................... 5.7 3.1 2.0 (1.1) 6.1 4.1 2.8
Unusual item(2).......... -- -- (3.2) -- -- -- --
------ ------ ------ ------ ------ ------ ------
Total Q Lube..... 5.7 3.1 (1.2) (1.1) 6.1 4.1 2.8
Truck-Lite............... 11.7 5.7 (3.6) (0.3) 3.9 7.3 7.4
Materials Handling....... 1.8 1.1 2.1 1.9 2.5 0.5 0.5
------ ------ ------ ------ ------ ------ ------
Total operating profits.... 35.6 27.4 20.6 37.3 36.7 24.8 19.0
------ ------ ------ ------ ------ ------ ------
Corporate income......... 3.2 2.7 .2 .2 -- 2.6 1.2
Interest expense......... (4.5) (5.4) (4.3) (3.3) (3.3) (3.0) (2.3)
Corporate expense........ (18.6) (15.2) (15.6) (16.3) (12.7) (9.1) (9.5)
Unusual item(3).......... -- -- -- -- -- (15.8) --
------ ------ ------ ------ ------ ------ ------
Income from continuing
operations before
income taxes.......... $ 15.7 $ 9.5 $ .9 $ 17.9 $ 20.7 $ (0.5) $ 8.4
====== ====== ====== ====== ====== ====== ======
OTHER STATISTICS
EBITDA(4).................. $ 42.6 $ 34.4 $ 29.0 $ 42.6 $ 41.3 $ 33.0 $ 20.8
Capital expenditures(5).... 27.9 18.9 12.7 15.0 23.3 15.7 9.5
Ratio of EBITDA to gross
interest expense......... 8.4x 6.0x 6.0x 9.3x 7.9x 10.6x 8.7x
Ratio of total debt to
EBITDA(6)................ 1.7x 1.5x 2.7x 2.1x 1.7x 1.1x 1.2x
Ratio of earnings to fixed
charges.................. 2.3x 1.8x 1.1x 2.6x 2.9x 0.9x(7) 2.4x
</TABLE>

- ---------------

(1) Gain on the sale of the McKean, Pennsylvania and Emlenton, Pennsylvania
facilities.

(2) In the fourth quarter of 1992, Q Lube recorded a pretax charge of $3.2 to
reserve for the future replacement of signage and other assets impaired by
the planned conversion of existing Minit-Lube stores into the Q Lube format.

(3) The restructuring charge of $15.8 includes $9.3 that relates to the Motor
Oil Division.

(4) EBITDA means income from continuing operations before interest, taxes,
unusual items, depreciation and amortization. EBITDA is used as a measure of
the Company's debt service ability. EBITDA should not be construed as an
alternative to cash flows from operating activities or as an indicator of
operating performance.

(5) For continuing operations.

(6) For purposes of this computation, EBITDA for the six months ended June 30,
1994 and June 30, 1995 have been annualized.

(7) Ratio is less than one as a result of the $15.8 restructuring charge
recorded in the second quarter of 1995 which impacted earnings.
<PAGE>
<PAGE> 10

BUSINESS

MOTOR OIL

The Company's Motor Oil Division produces, markets and distributes major
national brand, private label and proprietary brand lubricants and other
automotive aftermarket products. Lubricants produced by the Company include
motor oils, transmission fluids, gear lubricants for automobiles and trucks, as
well as specialty lubricants designed for sport-utility vehicles, marine craft,
farm equipment, motorcycles, snowmobiles and other types of vehicles. Quaker
State also sells certain by-products of its refining process, such as gasoline,
fuel oils (diesel fuel and heating oils) and kerosene, which are not used in the
manufacture of its lubricants. Greases and some specialty lubricants sold by
Quaker State are made by others to the Company's specifications. In addition,
the Company purchases and resells automotive consumer products such as oil, air
and fuel filters, antifreeze, brake and power steering fluids, fuel additives,
spray lubricants and cleaners and automotive undercoatings. The Company's
products are sold under the Quaker State, Slick 50 and certain private label and
proprietary brand names.

Recent Acquisitions. The Company has made two principal acquisitions which
have expanded the product range and distribution capabilities of its Motor Oil
Division.

In September 1994, the Company acquired Specialty, which had been the
Company's largest independent distributor, and Westland, a related blending and
packaging company, in a combined transaction for total consideration of
approximately $119.0 million, consisting of $20.0 million in cash, 4,000,000
shares of Quaker State common stock, approximately $1.5 million for the purchase
of certain related equipment and approximately $40.0 million of assumed
indebtedness. The Specialty and Westland acquisitions have significantly
increased the size of the Company's lubricants business by providing the Company
with an extended product portfolio in branded and private label niche markets, a
stronger distribution network and greater operating efficiencies. These
acquisitions also have provided Quaker State with a significant presence in the
fleet, commercial and industrial markets. Through the Environmental Services
Division of Specialty, Quaker State provides collection, transportation and
recycling services for used oil, brake fluid, antifreeze and oil filters in
certain regions of the country.

In July 1995, the Company acquired Slick 50, a manufacturer of automotive
engine treatments and related automotive chemicals, for total consideration
consisting of approximately $22.0 million in cash, 1,260,403 shares of Quaker
State common stock and approximately $11.0 million in satisfaction of certain
Slick 50 indebtedness. Additional consideration may be payable in the event that
certain financial performance levels are achieved by Slick 50 during the fiscal
years ending December 31, 1996, 1997 and 1998, subject to offset for
indemnification obligations of Slick 50 stockholders. Through the acquisition of
Slick 50, the Company's product line has been expanded to include automotive
engine treatments and related chemicals. Slick 50 had revenues of approximately
$39.1 million and $89.1 million for the six months ended June 30, 1995 and the
fiscal year ended December 31, 1994, respectively. In connection with the Slick
50 acquisition, the Company increased its goodwill and other intangible assets
by approximately $50.0 million which will be amortized on a straight line basis
over periods not exceeding 40 years.

Raw Materials. Motor oils are produced by blending additives with base oil
stocks which are refined from crude oil. Quaker State's motor oils are made from
base oil stocks produced at its Congo refinery located in Newell, West Virginia
or purchased from other refiners. Currently, approximately one-quarter of the
Company's base oil stock requirements are produced at the Congo refinery.

The Congo refinery is designed to produce base oil stocks specifically from
Pennsylvania Grade crude oil. Quaker State purchases most of its crude oil
requirements from suppliers with which Quaker State has been doing business for
many years. During 1994, Quaker State purchased Pennsylvania Grade crude oil
from approximately 1,400 producers, the largest of which accounted for
approximately 12% of Quaker State's purchases. Purchases are made pursuant to
informal arrangements which may be terminated at any time or pursuant to joint
venture, operating, farmout or similar agreements under which Quaker State has
the contractual right to purchase the crude oil, if produced. Raw materials
other than crude oil consist primarily of base oil stocks produced by other
refiners, chemicals, fuels and additives, all of which are currently available

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<PAGE> 11

from a number of sources. During the first six months of 1995, the weighted
average price per barrel of crude oil purchased by Quaker State was $17.27.

Availability of Pennsylvania Grade crude oil depends primarily on the price
which purchasers, including Quaker State, are willing to pay, which in turn
depends on the prevailing world market prices for all types of crude oil.
Although the available supply of Pennsylvania Grade crude oil has been declining
for some time and is expected to continue to decline, Quaker State believes that
an adequate supply of Pennsylvania Grade crude oil will be available for the
Congo refinery for the near future. The Company is studying the cost and
availability of alternatives for the Congo refinery.

Manufacturing. The Congo refinery, which was built in 1971, remains one of
the newer lubricant stock refineries in the United States. The Company believes
the Congo refinery has sufficient capacity to meet currently planned production
requirements. During the year ended December 31, 1994, 3,919,000 barrels of
Pennsylvania Grade crude oil were processed at the Congo refinery. A portion of
the base oil stocks produced at the Congo refinery are also sold to third
parties. As of June 30, 1995, gasoline, fuel oils and kerosene, which are
by-products of the refining process, accounted for approximately 56% of the
output (by volume) of the Congo refinery. Wax is also a by-product of the
refining process and is sold to third parties.

Quaker State owns and operates blending and packaging plants, where it
blends base oil stocks with chemical additives to produce motor oils, at the
Congo refinery and in Vicksburg, Mississippi, Carson, California, San Antonio,
Texas, and Burlington, Ontario. The Company also blends base oil stocks and
chemical additives into finished lubricants and related products and packages
its products at a leased blending and packaging plant in Shreveport, Louisiana.
The Company has announced plans for a development project at the Red River port
in Shreveport, Louisiana which will serve as its lubricants manufacturing and
technical headquarters. The port development project is subject to a number of
conditions, including the availability of state and local funding for land and
certain infrastructure which, to date, has not been finalized.

Domestic Sales. Quaker State sells motor oils and other lubricants and
automotive consumer products through independent distributors and directly to
retailers, including national and regional chain stores and fast lube centers.
Direct sales are also made to resellers and end users primarily in large
metropolitan areas. Resellers include wholesalers, and end users include
industrial and commercial accounts and fleet customers.

Independent distributors resell to service stations, retailers, automobile
dealers, repair shops, fast lube centers, automobile parts stores, retail food
chains, fleet and commercial customers and wholesale outlets. Independent
distributors sell motor oils and lubricants produced by other companies in
addition to Quaker State products. As of June 30, 1995, Quaker State had 97
independent distributors which sell its products throughout all 50 states. These
independent distributors accounted for approximately 25% of Quaker State's total
branded motor oil sales revenues in the United States during the first six
months of 1995.

Gasoline, fuel oils and kerosene are sold F.O.B. the Congo refinery to
wholesalers located primarily in Ohio, Pennsylvania and West Virginia.

Foreign and Export Sales. Quaker State sells its motor oils in over 74
foreign countries through subsidiaries and independent distributors. The Company
also exports small amounts of greases, gear lubricants and automotive consumer
products, such as filters and chemicals. During the first six months of 1995 and
the three years ended December 31, 1994, total revenues from foreign operations,
including export sales, were approximately $35.7 million, $68.7 million, $55.4
million and $47.4 million, respectively. The largest component of these revenues
was attributable to sales in Canada.

Quaker State believes that its motor oils are the largest selling
independent branded motor oil in Canada as well as the leading private brand in
Mexico and the Dominican Republic. During 1994 and the first six months of 1995,
a significant part of the Company's export sales also were made to Guatemala,
Ecuador, Poland, Sweden and Taiwan. Efforts are being made to increase export
sales by strengthening management, adding distributors and entering into joint
ventures with current distributors and others.

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<PAGE> 12

Sales in Canada are made primarily through independent distributors under
contract with the Company's Canadian subsidiary, but are also made directly to
customers. The Company sells branded motor oils in Japan through a subsidiary.
Sales in Mexico are made through a licensee.

Marketing. Quaker State aggressively markets its branded lubricants and
automotive consumer products. The Company believes that the motor oil business
is brand-driven and has created a marketing strategy which focuses on the
establishment of a unique identity for the Company's products. In particular,
Quaker State relies heavily on media advertising to project the quality image of
its motor oils and other products. In addition to media advertising, the
Company's marketing efforts include sponsorship of automobile racing teams,
participation in automotive trade shows and distribution of promotional
materials. Quaker State also provides marketing allowances to its customers and
has incentive programs for its direct retail customers and independent
distributors.

Following the introduction of Quaker State's new logo in late 1993, the
Company developed a contemporary design for its packaging to heighten the
visibility of Quaker State products. In the spring of 1994, the Company launched
its "Intelligent Oil" advertising campaign which promotes the Quaker State brand
as a high-tech motor oil that adapts to the changing needs of automotive
engines. In the fall of 1994, the Company introduced Quaker State 4X4 motor oil,
a brand designed to meet the needs of sport-utility vehicles.

Quaker State has trademark registrations in effect or applications pending
covering the use of its trademarks "Quaker State," "Quaker State 4X4," "Slick
50," "Lubriguard," "Itasca" and other product names, logos and designs utilized
in connection with the sale of its products. The trademark registrations expire
at various dates, but in each case may be renewed.

Q LUBE

Quaker State believes that, through its fast lube subsidiaries, Q Lube,
Inc. and McQuik's Oilube, Inc. (collectively, "Q Lube"), it is one of the
largest operators of fast lube centers in the United States. Fast lube centers
offer consumers quick and economical oil changes and related services for
passenger vehicles. As of June 30, 1995, there were 434 Q Lube stores in the
United States, of which 326 were owned or leased and operated by Q Lube and 108
were operated by franchisees. These stores are located in 24 states, primarily
in the West, Midwest and Southeast. In addition, Q Lube owns and operates or
franchises 26 fast lube centers in Ontario, Canada through a joint venture.
Quaker State supplies most of the motor oils used and sold in the Q Lube stores,
which, collectively, are the largest purchasers of Quaker State motor oils sold
in bulk.

Fast lube operations have experienced significant growth over the past
several years as the installed ("do-it-for-me") segment of the motor oil market
has become more in demand by consumers. As a result, the "do-it-for-me" segment
of the motor oil market has outpaced the "do-it-yourself" segment, capturing
approximately 42% of the motor oil market in 1994, as compared to 27% of the
motor oil market in 1985. In 1994, sales in the "do-it-for-me" segment of the
motor oil market increased more than 4%. The Company's Q Lube operations
recorded an 8% increase in revenues in 1994 and an 11% increase for the first
six months of 1995.

Certain of the Company's fast lube centers are operated under the names
McQuik's Oilube and Quaker State Minit Lube. In 1992, the Company began
conversion of its fast lube centers to the name Q Lube in order to emphasize the
relationship between Quaker State and its fast lube centers. As of June 30,
1995, approximately 55% of Company-operated centers were operated under the Q
Lube name. The Company plans to complete the conversion of the remaining
Company-operated centers by 1997.

In September 1994, Q Lube entered into a license agreement with Interline
Resources Corporation ("Interline") which provides for the use by Q Lube of
Interline's re-refining technology for the conversion of waste oil into reusable
products in the United States, Canada and Mexico. Q Lube's construction of its
first used oil recovery unit utilizing the technology is nearing completion.
Construction of any additional units will depend upon, among other things, the
operating results of the first unit.
<PAGE>
<PAGE> 13

TRUCK-LITE

Truck-Lite Co., Inc. ("Truck-Lite"), a subsidiary of Quaker State,
manufactures safety lighting equipment for trucks and automobiles, which is sold
to original equipment manufacturers and replacement parts distributors.
Truck-Lite's product line consists of custom-designed safety and interior lights
for passenger cars, light trucks and vans; sealed and bulb replaceable stop,
turn and indicator lights for heavy-duty trucks; and sealed wiring harness
systems for heavy-duty truck trailers. The Company plans to emphasize the heavy-
duty truck and truck trailer lighting businesses which the Company believes
offer more attractive margins than Truck-Lite's other product lines.

Most of Truck-Lite's products for passenger cars, light trucks and vans are
manufactured and distributed from a Company owned and operated facility in
Falconer, New York. Most of the products for heavy-duty trucks and truck
trailers are manufactured at a leased facility in McElhattan, Pennsylvania and a
Company-owned facility in Wellsboro, Pennsylvania and distributed from leased
distribution centers in McElhattan, Pennsylvania and Sacramento, California.

MATERIALS HANDLING

Quaker State's subsidiary, Valley Camp, Inc., operates an iron ore pellet
and potash terminal and a bulk materials handling dock accessible to Lake
Superior at Thunder Bay, Ontario, pursuant to a contract scheduled to expire on
December 31, 1997. The Company currently plans to renew the contract, provided
favorable terms can be negotiated.

DIVESTITURES AND DISCONTINUED OPERATIONS

Consistent with the Company's focus on its core lubricants and lubricant
services businesses, Quaker State opportunistically has exited certain of its
non-core businesses during the past several years.

Natural Gas Exploration and Production Division. In the third quarter of
1995, Quaker State sold most of the assets of E&P for approximately $65.2
million (net gain of approximately $11.2 million after taxes), subject to
certain adjustments. The sales included interests in approximately 1,460
producing oil and gas wells in New York, Ohio, Pennsylvania and West Virginia,
approximately 250,000 leasehold acres, gas-gathering lines, and approximately
10,000 timber acres.

Insurance. From 1984 to 1994, Quaker State was engaged in the insurance
business, including credit life insurance, accident and health insurance and
specialty indemnity coverages for automobiles and consumer appliances, through
Heritage. In August 1994, Quaker State sold Heritage for approximately $82.0
million after satisfaction of certain intercompany obligations.

Coal. From 1976 to 1992, Quaker State was engaged in coal operations
through its subsidiary, The Valley Camp Coal Company ("Valley Camp"). In
December 1992, Valley Camp discontinued its coal operations. Reclamation work
continues at the mines formerly operated by two of Valley Camp's subsidiaries,
as do sales of the remaining assets related to the discontinued coal operations.

COST REDUCTION AND RELOCATION

COMPETITION

The branded motor oil business is highly competitive. In the United States,
the major competitors of Quaker State and their principal brands of motor oil
are Pennzoil Company (Pennzoil), Ashland Inc. (Valvoline), Texaco Inc.
(Havoline) and Burmah Castrol PLC (Castrol). In foreign countries, Quaker State
competes with foreign manufacturers (including some that are government-owned)
and with its major U.S. competitors. The principal methods of competition in the
branded motor oil business are product quality, distribution capability,
advertising and sales promotion. Many of the competitors, particularly the major
integrated oil companies, have greater motor oil production capacities and
financial resources substantially greater than those of the Company. Quaker
State also competes with Pennzoil Company and Witco Corporation in the purchase
of Pennsylvania Grade crude oil.

In the sale of private label lubricants, Quaker State competes with a
number of small blending and packaging companies. The principal methods of
competition are product quality and price. In the waste oil collection,
transportation, management and recycling business, Quaker State competes with
Safety-Kleen Corp., International Petroleum Corp., the First Recovery, Inc.
division of Ashland Inc. and a number of regional waste oil haulers. The
principal methods of competition are reliability and quality of service and
price.

The fast lube business is also highly competitive. The major competitors of
Quaker State are Jiffy Lube International, Inc. (a subsidiary of Pennzoil
Company) and Ashland Inc. through its Valvoline Instant Oil Change centers.
There are also a significant number of independent fast lube chains operating on
a local or regional basis. In addition to competing with other fast lube
centers, Q Lube competes with local automobile dealers, service stations and
garages. The principal methods of competition are quality of service, price and
sales promotion.

The market for vehicular safety lighting equipment is highly competitive.
Truck-Lite competes with other independent manufacturers including Grote
Industries, Inc., Peterson Manufacturing Co., Inc. and the Signal-Stat Division
of Federal-Mogul Corporation, as well as with companies owned by truck and
automobile manufacturers. The principal methods of competition are quality,
price, delivery and technical innovation.

GOVERNMENT REGULATION

Environmental. Quaker State and its subsidiaries are subject to extensive
federal, state and local laws and regulations governing, among other things, air
emissions, waste water discharges, hazardous materials, land use, waste
management and employee health and safety. In particular, these laws and
regulations affect motor oil refining and manufacturing operations, natural gas
and crude oil producing activities, used oil and other automotive fluids
collection and fast lube operations. In motor oil refining and manufacturing,
permits are required for, among other things, the discharge of waste water, air
emissions and for hazardous waste activities. In natural gas and crude oil
production, the laws and regulations relate principally to the discharge of
crude oil, the disposal of wastes such as brine from drilling operations and the
cleanup and plugging of wells upon abandonment of producing properties.
Regulations govern the collection, transportation and disposition of used motor
oil and other automotive fluids. Federal regulations impose standards for tanks
and tank farms storing these materials, recordkeeping and labelling requirements
and management standards. In the fast lube operations, waste management
regulations apply to the handling and disposition of used motor oil and filters,
other petroleum products and antifreeze. While the Company does not believe that
current and anticipated future environmental compliance requirements are likely
to have a material adverse effect upon its financial position, environmental
laws and regulations are subject to frequent change and have become more
stringent in recent years so that there can be no assurance that future
environmental requirements would not have a material adverse effect on the
Company's future quarterly or annual results of operations or cash flows.

Certain environmental laws, such as the federal Superfund law, can impose
joint and several liability for the cleanup of hazardous waste sites upon
certain statutorily defined categories of parties regardless of the lawfulness
of the original activity or disposal. Quaker State and certain of its
subsidiaries have received notices from the U.S. Environmental Protection Agency
(the "EPA") and similar state agencies that they may be responsible for response
and cleanup costs with respect to certain Superfund and state waste sites.
Although the Company does not anticipate, based on current information, that
environmental liabilities associated with

<PAGE>
<PAGE> 15

third party waste sites or currently or formerly owned properties are likely to
have a material adverse effect upon its financial position, there can be no
assurance that new or changed remediation requirements, information regarding
site conditions or liability allocations would not have a material adverse
effect upon the Company's future quarterly or annual results of operations or
cash flows. (See "Legal Proceedings" and "Capital Expenditures.")

Other. Truck-Lite's products are subject to regulations of the U.S.
Department of Transportation that govern the brightness, placement and physical
durability of vehicular lighting.

CAPITAL EXPENDITURES

In April 1995, the Company announced plans for a $25 million development
project for the Red River port in Shreveport, Louisiana which will serve as the
Company's lubricants manufacturing and technical headquarters. The port
development will include a blending, packaging and warehousing facility in
Shreveport, as well as a laboratory and tank farm near the Red River. In
addition, the Company plans to improve and upgrade existing plant and
facilities, and construct additional storage tanks and bulk loading and
unloading facilities near the Red River. The port development project is subject
to a number of conditions, including the availability of state and local funding
for land and certain infrastructure which, to date, has not been finalized.

Capital expenditures in 1995 are anticipated to be $39.7 million, of which
approximately $16.2 million was incurred as of June 30, 1995. Approximately 62%
is planned for use by the Motor Oil Division primarily for manufacturing
upgrades and capital commitments to enhance long-term branded motor oil volumes.
Another 21% is allocated to Q Lube to convert Company stores to the new Q Lube
format. The total planned capital expenditures for 1995 includes approximately
$4.5 million related to the $25 million development project in Shreveport,
Louisiana which should commence in the fourth quarter of 1995.

Capital expenditures for pollution control facilities during the first six
months of 1995 and the three years ended December 31, 1994 were $1.3 million,
$3.2 million, $1.8 million and $2.0 million, respectively. Capital expenditures
for pollution control facilities during the remainder of 1995 are expected to
amount to approximately $1.4 million. Capital expenditures for pollution control
facilities in 1994, 1993 and 1992 included upgrading and replacing underground
storage tanks in Q Lube's operations. During the three years ended December 31,
1994, expenditures were made in connection with new drilling by E&P which was
sold in the third quarter of 1995. Anticipated expenditures in 1995 for
pollution control facilities include expenditures related to continued upgrading
and replacement of underground storage tanks in the Q Lube operations and the
installation of new boiler stacks, monitoring equipment and flow meters at the
Congo refinery to comply with the federal Clean Air Act.

LEGAL PROCEEDINGS

In December 1993, the United States commenced a lawsuit against the Company
in the U.S. District Court for the Northern District of West Virginia. The
complaint alleges the Company violated the federal Resource Conservation and
Recovery Act and the Clean Air Act at the Congo refinery on various dates
starting in 1980 and seeks civil penalties not to exceed $25 thousand per day
for each violation. While the Company intends to defend this lawsuit vigorously,
it has engaged in settlement discussions with the EPA. In 1994, the Company
accrued $1.0 million in accordance with its estimate of the probable liability
associated with this lawsuit. In recent settlement discussions, the Company has
proposed supplemental environmental projects and waste water treatment plant
modifications as part of its settlement proposal which would be implemented over
time and which could cost the Company a total of approximately $2.0 million to
$3.0 million.

Quaker State and certain of its subsidiaries have received notices from the
EPA and a similar state agency that they may be responsible for response and
cleanup costs with respect to certain Superfund sites.

The Company has been named as a party or a potentially responsible party in
a number of government and private actions based on environmental laws and
regulations. The Company anticipates future liability for

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<PAGE> 16

long-term remediation or reclamation at certain formerly owned facilities,
including three refineries and various coal operations.

In April 1994, class actions were commenced in the U.S. District Court for
the Western District of Pennsylvania against the Company and two other refiners
of Pennsylvania Grade crude oil. The consolidated amended complaint alleges
violations of Section 1 of the Sherman Act based upon an allegation that the
defendants, since at least January 1, 1981, combined and conspired to fix,
lower, maintain and stabilize the purchase price of Pennsylvania Grade crude oil
purchased from the plaintiffs and others. The plaintiffs purport to represent a
class of all persons who sold Pennsylvania Grade crude oil to one or more of the
defendants during the period from January 1, 1981 to the present. The complaint
alleges that the applicable statute of limitations has been tolled by a
fraudulent concealment of the alleged combination and conspiracy. The complaint
seeks a class determination, treble damages, an injunction and the recovery of
costs, including attorneys' fees. In July 1995, the U.S. District Court
certified the proceeding as a class action and denied the defendants' motion for
summary judgment, without prejudice to renewal after the close of discovery.
Discovery in this proceeding is continuing. The Company believes there is no
basis for the allegations in the complaint.

Quaker State sold its crude oil refinery in St. Mary's, West Virginia in
December 1987. The purchaser filed for bankruptcy in December 1988, and in
August 1991 the bankruptcy trustee sold the refinery to a second purchaser. In
connection with this transaction, Quaker State provided certain indemnities with
respect to the environmental conditions at the refinery. In April 1990, Quaker
State sold its crude oil refinery in Farmers Valley, Pennsylvania and a wax
plant (formerly also a crude oil refinery) in Emlenton, Pennsylvania and
provided the purchaser with similar indemnities. Quaker State expects that it
will incur some expenditures related to these indemnities and also expects that
it will incur some expenditures for environmental conditions associated with its
discontinued coal operations.

The Company and a subsidiary are involved in several non-judicial
proceedings in which the Federal Trade Commission and two competitors separately
are challenging the accuracy of advertising for different products. The Company
is involved in various other legal proceedings incidental to the normal course
of its business.

While it is impossible at this time to determine with certainty the
ultimate outcome of all current and potential environmental and legal matters
involving the Company, Quaker State has accrued reserves for all items which are
believed by the Company to be probable and can be reasonably estimated and does
not expect any material adverse effect on its financial position. However, not
all of these matters can be predicted with certainty so it is possible that one
or more of these matters could be decided against the Company and result in a
material adverse impact on future quarterly or annual results of operations or
cash flows when resolved. (See "Government Regulation.")

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<PAGE> 17

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The information set forth below is derived from management's discussion and
analysis contained or incorporated by reference in the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1995 and the Company's Annual
Report on Form 10-K for the year ended December 31, 1994 (the "10-K"), each of
which is incorporated by reference into the Registration Statement of which this
Prospectus forms a part. In the third quarter of 1995, the Company sold most of
the assets of E&P. Accordingly, the operating results of E&P have been excluded
from continuing operations and reclassified as discontinued operations in the
following discussions.

References in the following discussion to specific notes to the financial
statements are references to notes in the Consolidated Financial Statements,
incorporated by reference in the 10-K and included elsewhere in this Prospectus,
as relates to the discussion for the annual periods.

SIX MONTHS ENDED JUNE 30, 1995 COMPARED TO SIX MONTHS ENDED JUNE 30, 1994

Consolidated Review of Operations

Quaker State's net income for the first six months of 1995 was $2.4 million
compared to $10.7 million for the first six months of 1994. Sales and operating
revenues from continuing operations were $497.2 million for the first six months
of 1995 compared to $330.1 million for the corresponding period in 1994. The
1995 sales and operating revenues included $164.6 million of additional sales
and operating revenues for the first six months of 1995 from Specialty and
Westland. Expenses for the first six months of 1995 include a pretax
restructuring charge of $15.8 million related to the Company's announced
relocation to the Dallas, Texas area. Total costs under the restructuring plan
are estimated to be $25.0 million with the remainder of such costs to be
expensed as incurred. This charge accounted for the pretax loss from continuing
operations of $495 thousand for the first six months of 1995. Operating profits
from continuing operations, excluding restructuring charges, increased 31%, to
$24.8 million for the first six months of 1995, compared with $19.0 million in
1994, reflecting higher sales for branded motor oil and improved Q Lube
operating results.

Income from discontinued operations was $2.7 million for the first six
months of 1995 compared to $7.0 million for the comparable period of 1994.
Income from discontinued operations in 1994 also included the E&P operations and
the insurance operations of Heritage which were discontinued and sold in 1994.

Motor Oil. Operating profits for the Motor Oil Division, excluding
restructuring charges of $9.3 million, were $12.9 million for the first six
months of 1995 compared to $8.3 million for the comparable period of 1994. Sales
and operating revenues of $399.5 million in this period increased 70% over the
comparable period of 1994 and included 1995 revenues from Specialty and
Westland. Operating profits improved as a result of a 2% increase in branded
motor oil sales volume in the first six months of 1995 compared to the first six
months of 1994. In addition, refinery product margins improved as a result of
higher sales prices for base stocks, gasoline and fuel oil. Operating results
also include $1.5 million of LIFO inventory profits recorded in the second
quarter of 1995 as a result of liquidating certain inventory quantities. In the
Motor Oil Division's private label and industrial lubricants business, operating
results improved in the second quarter of 1995 as first quarter sales price
increases partially offset the impact of higher materials costs.

Q Lube. Q Lube reported operating profits during the first six months of
1995 of $4.1 million on sales and operating revenues of $60.3 million compared
to profits of $2.8 million on sales and operating revenues of $54.1 million for
the comparable period of 1994. Car counts in 1995 increased 6% and average per
car sales were up 5% in the first six months of 1995 compared to the first six
months of 1994 to account for the revenue and operating result improvements.
Higher advertising, depreciation and amortization expenses resulting from the
conversion of fast lube centers to the Q Lube format partially offset the
improvement in operating results. This conversion is expected to continue in the
remainder of 1995 with approximately 100 additional stores expected to be
completed during 1995.

Truck-Lite. Truck-Lite's operating profits in the first six months of 1995
were $7.3 million compared to $7.4 million in the comparable period of 1994.
Sales and operating revenues were down 3% to $49.6 million for

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<PAGE> 18

the first six months of 1995 from $51.2 million during the first six months of
1994. Lower sales volume and negative product mix adversely affected operating
results. Automotive sales slowed down in the second quarter of 1995 as the
overall car market softened. Management was able to reduce operating expenses
for the first six months of 1995 by approximately $1.5 million which partially
offset the slowdown in the business.

Materials Handling. Operating profits during the first six months of 1995
were $481 thousand compared to $469 thousand for the comparable period of 1994.
Sales and operating revenues were $1.7 million for the first six months of 1995
compared to $1.5 million for the comparable period of 1994.

Corporate. Corporate income for the first six months of 1995 was $2.6
million compared to $1.2 million for the comparable period of 1994 and included
approximately $1.0 million of additional royalty payments received for coal
deliveries made by the purchaser under a long-term coal sales agreement.
Six-month interest expense in 1995 increased 30% over the comparable period of
1994 to $3.0 million as a result of debt assumed in the acquisition of Westland.
Corporate expenses were $9.1 million for the first six months of 1995 compared
to $9.5 million for the comparable period of 1994. Lower salary and benefit
expenses account for the reduction in corporate expenses. An unusual charge of
$15.8 million was recorded in the second quarter of 1995 to reserve for
severance costs, employee benefit expenses and the write-off of assets related
to the Company's relocation to the Dallas, Texas area. Approximately $9.3
million of this charge relates to the Motor Oil Division.

The effective tax rate of 38% for continuing operations is higher than the
35% federal rate due to the added impact of state and foreign taxes. The
effective tax rate for continuing operations of 38% is lower than the 1994 rate
of 56% due to lower income from continuing operations, a reduction in the
estimated state tax rate and other changes in estimates.

1994 COMPARED TO 1993 COMPARED TO 1992

In 1994, Quaker State management made two strategic moves, the disposition
of Heritage and the acquisition of Specialty, which were consistent with the
Company's strategy to focus on its core lubricants and lubricant services
businesses and which had a significant impact on the 1994 operations. As a
result of the sale of Heritage in August 1994, as described under
"BUSINESS -- Divestitures and Discontinued Operations -- Insurance," the
operating results of the insurance business, including the gain on the sale,
were segregated and reported as a discontinued operation in the Consolidated
Statement of Operations for the year ended December 31, 1994. Prior year
financial statements were reclassified to conform to current year presentation.
(See Note 3 to the Consolidated Financial Statements.)

In September 1994, the Company acquired the stock of Specialty and Westland
for $19.5 million and 4,000,000 shares of Quaker State common stock valued at
$57.8 million. The Company also purchased certain related equipment for $1.5
million and assumed approximately $40.0 million of debt of the acquired
companies. The operating results of Specialty and Westland have been included in
the Company's Consolidated Financial Statements from the date of acquisition.
Specialty and Westland revenues and operating results are reported as part of
the Motor Oil Division. (See "BUSINESS -- Motor Oil Division.")

Consolidated Review of Operations

Quaker State reported net income of $18.8 million in 1994 compared to $13.7
million in 1993. Net income included discontinued operations income of $9.3
million in 1994 compared to $6.7 million in 1993. A net loss of $93.8 million
was recorded in 1992. The 1992 loss included several accounting adjustments
totalling $102.3 million for discontinuing the coal operations of Valley Camp,
implementing Financial Accounting Standards Board Standard Nos. 106 and 109 and
recording a charge for impaired assets. (See Notes 4, 5, 12 and 13 to the
Consolidated Financial Statements.)

Income from continuing operations in 1994 was $9.5 million compared to $7.0
million in 1993. Operating profit improvements, primarily based on sales volume
increases over 1993, were realized by three of the business segments. At Q Lube,
car counts increased 8% while operating profit rose 88%; and automotive and
heavy duty lighting sales volume rose 17% at Truck-Lite which resulted in a 105%
increase in operating
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<PAGE> 19

profits. Branded motor oil sales volume, including sales by Specialty and
Westland in the fourth quarter, increased 7% in 1994, but higher selling,
marketing, freight and administrative expenses of approximately $19.0 million
combined with a shift in product sales mix from packaged goods to bulk sales,
for which the gross margin is lower, reduced motor oil operating profit by 6%.
Specialty and Westland contributed $654 thousand of operating profit to the
Motor Oil Division in 1994. Operating results from materials handling included a
pretax gain of $1.1 million from the termination of a pension plan in the fourth
quarter of 1994. An increase in the 1994 continuing operations effective tax
rate resulted from higher income and adjustments in 1993 due to a federal tax
rate change and a reduction in the valuation allowance.

Income from continuing operations in 1993 improved to $7.0 million from
$656 thousand in 1992. This increase resulted primarily from a $9.4 million
improvement in operating profits at Truck-Lite which experienced a sales volume
increase of 19% along with reduced operating costs. In addition, Q Lube
operating profits improved $4.3 million primarily because 1992 results included
a charge related to future conversions to the Q Lube name. Higher corporate
interest income also contributed to the improved 1993 results. These
improvements were partially offset by an operating profit decline in the Motor
Oil Division. Increased promotion and advertising costs, a shift in product
sales mix from packaged goods to bulk sales, for which the gross margin is
lower, and decreased motor oil volume negatively affected 1993 Motor Oil
Division results. Increased income taxes also negatively impacted 1993 income
from continuing operations.

Sales and operating revenues from continuing operations for 1994 were
$732.6 million compared to $607.1 million in 1993 and $592.6 million in 1992.
Higher sales volumes at each of the major businesses accounted for the increased
revenues in 1994, while a 19% increase in 1993 sales volume at Truck-Lite
accounted for the increase in 1993 revenues.

Motor Oil. Operating profits in 1994 declined 6% to $16.4 million from
$17.5 million in 1993 and included $654 thousand from the Specialty and Westland
businesses acquired on September 30, 1994. Branded motor oil sales volume was 7%
ahead of 1993 and automotive consumer product sales were up 20%. The increase in
operating profits resulting from the higher sales volume was offset by the
negative impact of a shift in product mix to more bulk sales where the gross
margin is lower and an increase of approximately $19.0 million in marketing,
selling, freight and administrative expenses. These increased expenses resulted
primarily from higher volumes and aggressive share-building programs geared
towards developing additional sales volume. The Company also recorded $1.7
million of expenses and reserves associated with a lawsuit commenced against the
Company for alleged environmental violations at the Congo refinery. (See
"BUSINESS -- Legal Proceedings" and Note 10 to the Consolidated Financial
Statements.) For segment reporting purposes, motor oils and other automotive
consumer products, such as filters, are sold by the Motor Oil Division to Q Lube
at prices comparable to the prices the Motor Oil Division charges to other
customers.

Sales and operating revenues in 1994 of $541.2 million, including $71.4
million from fourth quarter sales at Specialty and Westland, were 23% ahead of
1993's total of $439.3 million. This resulted from a 7% increase in branded
motor oil volume and an additional 20% of automotive consumer product sales.
Despite a 3% price increase for branded motor oil, effective September 1, 1994,
the 1994 average sales price for these products declined due to a shift in
product mix to bulk sales where the average sales price was 33% below that for
packaged goods. Another price increase took effect in January 1995 for branded
motor oil which improved gross margins in 1995. Gasoline, fuel oil and kerosene
sales volumes were up 3% in 1994, but the average sales prices were down 4%.

Operating profits in 1993 of $17.5 million were 25% below profits of $23.3
million in 1992. Several items contributed to the decline, including a 7%
increase in promotion and advertising expenses, an 11% increase in freight costs
related to a higher percentage of bulk motor oil sales, approximately $1.4
million of LIFO inventory costs resulting from reduced inventory levels, an 8%
drop in the average price of gasoline and fuel oil, a 2% decline in 1993 motor
oil sales volume and a charge of approximately $750 thousand to close the
Company's St. Louis blending and warehouse facility.

Motor Oil Division sales and operating revenues declined $1.7 million in
1993 to $439.3 million from $441.0 million in 1992. Slight increases in lube
stock volume and automotive consumer product sales were offset by declines in
the sale of gasoline, fuel oil and excess crude oil.
<PAGE>
<PAGE> 20

Q Lube. Operating profits in 1994 of $5.7 million were up 88% compared to
$3.1 million in 1993. An 8% increase in the number of cars serviced in
Company-operated stores primarily accounted for the improvement in operating
results. Advertising, depreciation and repair and maintenance expenses increased
$2.0 million. The higher sales volume and expenses resulted from the conversion
of 67 Company stores in 1994 to Q Lube format. Q Lube revenues of $113.7 million
in 1994 were up 8% as a result of the increase in the number of cars serviced at
Company stores.

The 1993 operating profits of $3.1 million compared to an operating loss of
$1.2 million in 1992. The 1992 loss included an unusual charge of $3.2 million
representing the impairment of certain assets as a result of the planned
conversion of existing Minit-Lube stores to Q Lube. Excluding the unusual item,
operating profits were $2.0 million in 1992. The Company's divestiture of 16
stores in unprofitable markets in the first quarter of 1993 and reduced
operating expenses accounted for the improved 1993 operating profits.

Sales and operating revenues of $105.3 million in 1993 were flat compared
to $104.4 million in 1992 as total cars serviced and average ticket price
remained about the same.

Truck-Lite. Truck-Lite had a record year in 1994 for both sales volume and
operating profits. Sales volume increased 17% and resulted in operating profits
of $11.7 million which more than doubled 1993 operating profits of $5.7 million.
Strong sales were recorded in both the automotive business and the heavy duty
safety lighting business. Selling, general and administrative expenses were up
$1.3 million in 1994 as a result of higher legal, environmental and incentive
costs. Operating results included a $1.5 million charge recorded in the fourth
quarter of 1994 to reserve for future losses associated with a contract to
manufacture automotive safety lights. In the future, the Company plans to
emphasize its heavy duty truck and trailer lighting businesses which offer more
attractive margins than other product lines.

Sales and operating revenues in 1994 increased to $99.6 million from $80.8
million in 1993, due to the sales volume increase and a shift in product mix to
higher priced products.

Operating profits in 1993 increased to $5.7 million compared to a loss of
$3.6 million in 1992, as a result of a 19% sales volume increase combined with
manufacturing efficiencies and a 22% reduction in selling, general and
administrative expenses. The 1992 operating loss included a $1.6 million
write-off of unrecoverable development costs.

Sales and operating revenues increased 26% to $80.8 million from $63.9
million in 1992 due to the higher sales volume.

Materials Handling. Operating profits in 1994 of $1.8 million compared to
$1.1 million in 1993. The 1994 operating profits included a pretax gain of $1.1
million from the termination of a pension plan in the fourth quarter of 1994.
Revenues in each of 1993 and 1994 were approximately $3.0 million.

Operating profits in 1993 were $1.1 million on sales and operating revenues
of $3.0 million compared to operating profits of $2.1 million on sales and
operating revenues of $5.3 million in 1992. The decline in 1993 sales and
operating revenues and operating profits resulted from the sale of the Company's
U.S. materials handling operation in December 1992 and a new long-term contract
at the Company's Canadian materials handling operation.

Corporate. Corporate expenses in 1994 increased $3.4 million to $18.6
million from $15.2 million in 1993. Higher expenses for postretirement benefits,
performance incentives and legal services accounted for this increase.

Corporate income of $3.2 million in 1994 included additional interest of
$614 thousand on the proceeds from the sale of Heritage. In 1993, corporate
income was $2.7 million compared to $187 thousand in 1992. The 1993 income
includes $1.1 million of interest on an income tax refund and $1.5 million of
interest on supplemental payments from the December 30, 1992 sale of certain
coal assets. (See Note 4 to the Consolidated Financial Statements.) Corporate
expenses of $15.2 million in 1993 did not change significantly from 1992.
<PAGE>
<PAGE> 21

Interest expense of $4.5 million in 1994 was down 16% from 1993 due to
lower average debt in 1994. Higher interest expense in 1993, over 1992, included
the cost of the 8.73% Senior Notes due 2002.

The 1994 effective tax rate of 39% for continuing operations was higher
than the 1993 rate of 27% due to higher income in 1994 and benefits in 1993 from
an enacted federal rate change that increased the value of deferred tax assets,
net adjustments to the valuation allowance and other credits. (See Note 12 to
the Consolidated Financial Statements.)

LIQUIDITY AND FINANCIAL CONDITION

Net cash provided by operations for the first six months of 1995 was $2.2
million compared to $19.1 million for the comparable period in 1994. This
decrease resulted from additional working capital requirements and the loss of
operating cash flows from Heritage which was sold in the third quarter of 1994.
Cash used by discontinued coal activities in the first six months of 1995 was
$5.8 million compared to $8.9 million in the corresponding period of 1994. Cash
used in financing activities was $7.8 million and included $6.3 million paid for
dividends and $1.5 million paid on long-term debt, primarily related to
Westland. It is expected that $9.0 million of cash will be used in discontinued
coal operations in 1995.

Cash used by investing activities during the first six months of 1995
included capital expenditures of $16.2 million and proceeds from the sale of
property and equipment of $3.6 million, of which $412 thousand related to
discontinued coal operations. In July 1995, the Company acquired Slick 50 for
total consideration that included $22.0 million in cash and approximately $11.0
million in satisfaction of certain Slick 50 indebtedness.

Capital expenditures for 1995 are anticipated to be approximately $39.7
million. Approximately 62% is planned for use by the Motor Oil Division,
including Specialty and Westland, primarily for manufacturing upgrades and
capital commitments to enhance long-term branded motor oil volume. Another 21%
is allocated to Q Lube to convert Company stores to the Q Lube format.

Total debt at June 30, 1995 was $71.8 million, compared to $73.2 million at
December 31, 1994 with a total debt to total capital ratio of 22.4% and 22.5% at
June 30, 1995 and December 31, 1994, respectively. The Company had $68.2 million
of unused lines of credit at June 30, 1995.

In light of the Slick 50 acquisition and employee loans which the Company
has made in connection with its relocation to Dallas, Texas and in order to
facilitate the offering of the Notes contemplated hereby, the Company has
obtained waivers through December 30, 1995 from compliance with certain of the
covenants under the Note Agreement, dated as of September 1, 1992, as amended
(the "Note Agreement"), relating to the Company's 8.73% Senior Notes Due
September 30, 2002. The waivers relate to covenants requiring the Company to
maintain a specified minimum Consolidated Tangible Net Worth (as defined),
covenants restricting loans to employees and covenants relating to maximum
leverage and maintenance of a specified minimum fixed charge coverage ratio. The
Company has committed to the lenders under the Note Agreement that, upon
completion of the offering contemplated hereby, it will notify the lenders of
its intention to repay the indebtedness under the Note Agreement, as described
under "Use of Proceeds." In addition, on October 4, 1995, the Company executed a
$45.0 million credit agreement with Morgan Guaranty Trust Company of New York
(an affiliate of J.P. Morgan Securities Inc.), as agent, and terminated its
revolving credit agreement with a different group of banks which contained
covenants similar to those in the Note Agreement. The new credit agreement
expires on September 28, 1996.

Working capital at June 30, 1995 was approximately $129.9 million with a
ratio of current assets to current liabilities of 2.0 to 1.0 compared to $101.4
million and 1.8 to 1.0 at December 31, 1994.

Stockholders' equity at June 30, 1995 was $248.4 million compared to $251.9
million at December 31, 1994. The net deferred tax asset recorded on the balance
sheet at December 31, 1994 of $40.3 million will be realized either through the
carryback provisions of the tax law or recovered in the future through existing
levels of taxable income from continuing operations.
<PAGE>
<PAGE> 22

On July 27, 1995, the Board of Directors of the Company declared a
quarterly dividend of $0.10 per share, payable September 15, 1995 to
shareholders of record as of August 15, 1995.

ADDITIONAL FINANCIAL AND OTHER INFORMATION

The effect of inflation has a minor impact on the Company's results of
operations and the carrying value of its assets and liabilities. Historically,
the Company has been able to meet the effects of inflation through increased
productivity, adjustments to selling prices and cost controls.

On May 25, 1995, the Company's stockholders approved an amendment to the
Company's Certificate of Incorporation to increase the authorized number of
shares of Quaker State common stock from 37,500,000 to 95,000,000 shares.

On September 28, 1995, the Board of Directors of the Company adopted a
stockholder rights plan.

RECENT ACCOUNTING STATEMENTS

In March 1995, the Financial Accounting Standards Board issued Standard No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of" which establishes accounting standards for the
impairment of long-lived assets, certain identifiable intangibles, and goodwill
related to those assets to be held and used and for long-lived assets and
certain identifiable intangibles to be disposed of. The new Standard must be
implemented in 1996. The Company is currently evaluating what effect, if any,
this Standard will have on its financial position and results of operations.
<PAGE>
<PAGE> 23

DESCRIPTION OF NOTES

The Notes will be issued under an Indenture, to be dated as of
, 1995 (the "Indenture") between the Company and Chemical Bank,
as Trustee (the "Trustee"), a form of which is filed as an exhibit to the
Registration Statement of which this Prospectus is a part. The following
summaries of certain provisions of the Indenture do not purport to be complete,
and are subject to, and are qualified in their entirety by reference to, all of
the provisions of the Indenture, including the definitions therein of certain
terms. Section references appearing below are references to sections in the
Indenture. Whenever particular sections or defined terms of the Indenture are
referred to herein, such sections and defined terms are incorporated herein by
reference.

GENERAL

The Notes will be unsecured obligations of the Company, will be limited to
$100,000,000 aggregate principal amount, will mature on , 2005
and will rank on a parity with all other unsecured and unsubordinated
indebtedness of the Company. The Notes are not redeemable prior to Maturity by
the Company except as provided below and do not provide for any sinking fund.
The Notes will bear interest at the rate per annum stated on the cover page of
this Prospectus from , 19 or from the most recent Interest
Payment Date to which interest has been paid or provided for, payable
semi-annually on and of each year, commencing
, 19 , to the Person in whose name the Note (or any predecessor Note) is
registered at the close of business on the preceding or
, as the case may be. (Sections 301 and 307)

Principal of (and premium, if any) and interest on the Notes will be
payable, and, subject to the limitations applicable to global securities, the
Notes will be exchangeable and transfers thereof will be registrable, at the
corporate trust office of the Trustee in New York, New York. In addition, at the
option of the Company, payment of interest may be made by check mailed to the
address of the Person entitled thereto as it appears in the Security Register.
Payment of any interest due on any Note will be made to the Person in whose name
such Note is registered at the close of business on the Regular Record Date for
such interest. (Sections 301, 305, 307 and 1002)

OPTIONAL REDEMPTION

The Notes will be redeemable in whole or in part, at the option of the
Company at any time, at a redemption price equal to the greater of (i) 100% of
their principal amount and (ii) the sum of the present values of the remaining
scheduled payments of principal and interest thereon discounted, on a semiannual
basis, at the Treasury Yield plus 15 basis points, together with accrued
interest to the date of redemption. Interest shall be calculated on the basis of
a 360-day year consisting of twelve 30-day months.

Holders of Notes to be redeemed will receive notice thereof by first-class
mail at least 30 and not more than 60 days prior to the date fixed for
redemption.

GLOBAL NOTES; FORM, EXCHANGE AND TRANSFER

The Notes will be issued in the form of one or more fully registered global
securities (collectively, a "Global Note") registered in the name of The
Depository Trust Company (the "Depositary") or the Depositary's nominee. Such
Global Note will be deposited with, or on behalf of, the Depositary and will
bear a legend regarding the restrictions on exchange and registration of
transfer thereof as provided for in the Indenture. Unless and until it is
exchanged in whole or in part for Notes in definitive form as set forth below, a
Global Note may not be transferred except as a whole by the Depositary to a
nominee of such Depositary or by a nominee of such Depositary to such
Depositary.

Upon the issuance of a Global Note, the Depositary will credit, on its
book-entry registration and transfer system, the respective principal amounts of
the Notes represented by such Global Note to the accounts of institutions that
have accounts with the Depositary or its nominee ("Participants"). The accounts
to be credited will be designated by the Underwriters, dealers or agents.
Ownership of beneficial interests in a
<PAGE>
<PAGE> 24

Global Note will be limited to Participants and to Persons that may hold
beneficial interests through Participants. Ownership of beneficial interests in
such Global Note will be shown only on, and the transfer of those ownership
interests will be effected only through, records maintained by the Depositary
(with respect to Participants' interests) or any such Participant (with respect
to interests of Persons held by such Participants on their behalf). The laws of
some jurisdictions require that certain purchasers of securities take physical
delivery of such securities in definitive form. The depositary arrangements
described above and such laws may impair the ability to transfer or pledge
beneficial interests in a Global Note.

As long as the Depositary, or its nominee, is the registered Holder of a
Global Note, the Depositary or such nominee, as the case may be, will be
considered the sole owner and Holder of such Global Note and the Notes
represented thereby for all purposes under the Notes and the Indenture. Except
as set forth below, owners of beneficial interests in the Global Note will not
be entitled to have the Notes represented by such Global Note registered in
their names, will not receive or be entitled to receive physical delivery of
certificated Notes in definitive form and will not be considered to be the
owners or Holders of any Notes under the Indenture. Accordingly, each Person
owning a beneficial interest in a Global Note must rely on the procedures of the
Depositary and, if such Person is not a Participant, on the procedures of the
Participant through which such Person owns its interest, to exercise any rights
of a Holder of Notes under the Indenture or such Global Note. The Company
understands that under existing industry practice, in the event the Company
requests any action of Holders of Notes or an owner of a beneficial interest in
a Global Note desires to take any action that the Depositary, as the holder of
such Global Note, is entitled to take, the Depositary would authorize the
Participants to take such action, and that the Participants would authorize
beneficial owners owning through such Participants to take such action or would
otherwise act upon the instructions of beneficial owners owning through them.

All payments of principal of (and premium, if any) and interest on a Global
Note will be made to the Depositary or its nominee, as the case may be, as the
Holder thereof. The Company has been advised that the Depositary, upon receipt
of any payment of principal of (and premium, if any) or interest in respect of a
Global Note, will credit immediately the accounts of the Participants with such
payment in amounts proportionate to their respective holdings in principal
amount of beneficial interest in the Global Note as shown on the records of the
Depositary. The Company expects that payments by Participants to owners of
beneficial interests in a Global Note held through such Participants will be
governed by standing instructions and customary practices, as is now the case
with securities held for the accounts of customers in bearer form or registered
in "street name", and will be the responsibility of such Participants. None of
the Company, the Trustee or any agent of the Company or the Trustee will have
any responsibility or liability for any aspect of the Depositary's or any
Participant's records relating to, or for payments made on account of,
beneficial interests in a Global Note, or for maintaining, supervising or
reviewing any records relating to such beneficial interests.

Notes represented by a Global Note will be exchangeable for Notes in
definitive form of like tenor as such Global Note in denominations of $1,000 and
in any greater amount that is an integral multiple thereof if (i) the Depositary
notifies the Company that it is unwilling or unable to continue as Depositary
for such Global Note and is not replaced by a successor depositary approved by
the Trustee, or if at any time the Depositary ceases to be a clearing agency
registered under the Exchange Act, (ii) the Company in its sole discretion at
any time determines not to have all of the Notes represented by the Global Note
and notifies the Trustee thereof or (iii) there shall have occurred and be
continuing an Event of Default with respect to the Notes represented by such
Global Note. Any Global Note that is exchangeable pursuant to the preceding
sentence is exchangeable for certificated Notes in definitive form issuable in
authorized denominations and registered in such names as the Depositary shall
direct and an owner of a beneficial interest in a Global Note will be entitled
to physical delivery of such Notes in definitive form. Subject to the foregoing,
a Global Note is not exchangeable except for a Global Note or Global Notes of
the same aggregate denominations to be registered in the name of the Depositary
or its nominee. (Sections 204 and 305)

Subject to the terms of the Indenture and the limitations applicable to
Global Notes, Notes may be presented for exchange as provided above or for
registration of transfer (duly endorsed or with the form of transfer endorsed
thereon duly executed) at the office of the Security Registrar or at the office
of any transfer agent designated by the Company for such purpose. No service
charge will be made for any registration of
<PAGE>
<PAGE> 25

transfer or exchange of Notes, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. Such transfer or exchange will be effected upon the Security
Registrar or such transfer agent, as the case may be, being satisfied with the
documents of title and identity of the Person making the request. The Company
has appointed the Trustee as Security Registrar. (Section 305) The Company may
at any time designate additional transfer agents or rescind the designation of
any transfer agent or approve a change in the office through which any transfer
agent acts, except that the Company will be required to maintain a transfer
agent in each Place of Payment for the Notes. (Section 1002)

The Depositary has advised the Company and the Underwriters as follows: The
Depositary is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York Banking
Law, a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. The
Depositary was created to hold securities of Participants and to facilitate the
clearance and settlement of securities transactions among the Participants in
deposited securities through electronic book-entry changes in accounts of the
Participants, thereby eliminating the need for physical movement of securities
and certificates. Participants include securities brokers and dealers (including
the Underwriters), banks, trust companies, clearing corporations and certain
other organizations, some of which (and/or their representatives) own the
Depositary. Access to the Depositary's book-entry system is also available to
others such as banks, brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a Participant, either directly or
indirectly ("indirect participants"). Persons who are not Participants may
beneficially own securities held by the Depositary only through Participants or
indirect Participants. The rules applicable to the Depositary and the
Participants are on file with the Commission. The Depositary currently accepts
only notes denominated and payable in U.S. dollars.

SAME DAY SETTLEMENT AND PAYMENT

Settlement for the Notes will be made by the Underwriters in immediately
available funds. Secondary trading in notes and debentures of corporate issuers
is generally settled in clearinghouse (next-day) funds. In contrast, the Notes
will trade in DTC's Same-Day Funds Settlement System until maturity, and
secondary market trading activity in the Notes will therefore settle in
immediately available funds. No assurance can be given as to the effect, if any,
of settlements in immediately available funds on trading activity in the Notes.

CERTAIN COVENANTS OF THE COMPANY

Restrictions on Liens

The Indenture contains a covenant providing that so long as any of the
Notes are Outstanding, the Company will not, and will not permit any Restricted
Subsidiary to, issue, assume, incur or guarantee any Indebtedness secured by a
Lien on or with respect to any Principal Property of the Company or any
Restricted Subsidiary, or upon any shares of capital stock or indebtedness of
any Restricted Subsidiary, whether now owned or leased or hereafter acquired,
without in any such case effectively providing that the Notes shall be secured
equally and ratably with (or prior to) such Indebtedness, except that the
foregoing restrictions shall not apply to (a) Liens existing as of the date of
the Indenture, (b) Liens to secure the payment of all or any part of the
purchase price or cost of construction or improvements in respect of property or
properties acquired by the Company or a Restricted Subsidiary after the date of
the Indenture securing Indebtedness incurred prior to, at the time of, or within
270 days after, the acquisition of any such property or the completion of any
such construction or improvements and which secure indebtedness not in excess of
the amount expended in the acquisition of, or construction or improvements on,
such properties, (c) Liens upon any property owned or leased by any Restricted
Subsidiary when it becomes a Restricted Subsidiary, (d) Liens existing on any
property at the time of its acquisition by the Company or a Restricted
Subsidiary (including acquisition through merger or consolidation), (e) Liens
securing Indebtedness of a Restricted Subsidiary to the Company or to another
Restricted Subsidiary and (f) the extension, renewal or replacement (or
successive extensions, renewals or replacements), in whole or in part, of any
Lien referred to in the foregoing clauses (a) through
<PAGE>
<PAGE> 26

(e), or of any Indebtedness secured thereby, but only if the principal amount of
Indebtedness secured by the Lien immediately prior thereto is not increased and
the Lien is not extended to other property. Notwithstanding the foregoing, the
Company or any Restricted Subsidiary may issue, assume, incur or guarantee
Indebtedness secured by Liens which otherwise would be subject to the foregoing
restrictions, in an aggregate amount which, together with all other such
Indebtedness outstanding secured by Liens as provided above (not including
Indebtedness excluded as provided in clauses (a) through (f) above) and all
Attributable Debt in respect of Sale and Leaseback Transactions which would not
be permitted by either clause (a), (b) or (c) under "Restrictions on Sale and
Leaseback Transactions" below, does not exceed 15% of Consolidated Net Tangible
Assets.

Restrictions on Sale and Leaseback Transactions

The Indenture contains a covenant providing that so long as any of the
Notes are Outstanding, the Company will not, nor will it permit any Restricted
Subsidiary to, enter into any arrangement with any Person (other than the
Company or a Restricted Subsidiary) providing for the leasing by the Company or
any Restricted Subsidiary of any Principal Property, whether now owned or
hereafter acquired, which has been or is to be sold or transferred by the
Company or such Restricted Subsidiary to such Persons with the intention of
taking back a lease on such property (a "Sale and Leaseback Transaction") unless
(a) such transaction involves a lease or right to possession or use for a
temporary period not to exceed three years following such sale, by the end of
which it is intended that the use of such property by the lessee will be
discontinued, (b) the Company or such Restricted Subsidiary would, on the
effective date of such transaction, be entitled to issue, assume or guarantee
Indebtedness secured by a Lien on such property at least equal in an amount to
the Attributable Debt in respect thereof, without equally and ratably securing
the Notes as set forth in the Indenture, or (c) if the proceeds of such sale (i)
are equal to or greater than the fair market value (as determined by the Board
of Directors of the Company) of such property and (ii) are applied within 270
days after the receipt of the proceeds of sale or transfer to either the
purchase or acquisition of fixed assets or equipment used in the operation of
the business or the construction of fixed improvements on real property or to
the repayment of Notes or Senior Funded Debt of the Company or any Restricted
Subsidiary. The preceding restrictions shall not apply to any Sale and Leaseback
Transaction between the Company and a Restricted Subsidiary or between
Restricted Subsidiaries. Notwithstanding the foregoing, the Company or any
Restricted Subsidiary may enter into Sale and Leaseback Transactions in addition
to any permitted by the two immediately preceding sentences and without any
obligation to retire any Notes or other Indebtedness, provided that, at the time
of entering into such Sale and Leaseback Transactions, and after giving effect
thereto, the amount of Attributable Debt in respect of such Sale and Leaseback
Transaction, together with all such other Attributable Debt outstanding and all
Indebtedness outstanding secured by Liens (not including Indebtedness excluded
as provided in clauses (a) through (f) under "Restrictions on Liens" above),
does not exceed 15% of Consolidated Net Tangible Assets.

Certain Definitions. Set forth below are certain significant terms which
are defined in Section 101 of the Indenture:

"Attributable Debt" in respect of a Sale and Leaseback Transaction means,
at the time of determination, the then present value (discounted at the actual
rate of interest of such transaction) of the obligation of the lessee for net
rental payments during the remaining term of the lease included in such Sale and
Leaseback Transaction (including any period for which such lease has been
extended or may, at the option of the lessor, be extended).

"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term of the Notes that would be utilized, at the time of selection
and in accordance with customary financial practice, in pricing new issues of
corporate debt securities of comparable maturity to the remaining term of the
Notes. "Independent Investment Banker" means CS First Boston Corporation or, if
such firm is unwilling or unable to select the Comparable Treasury Issue, an
independent investment banking institution of national standing appointed by the
Trustee.
<PAGE>
<PAGE> 27

"Comparable Treasury Price" means, with respect to any redemption date, (i)
the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
business day preceding such redemption date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (ii) if such release (or any successor release) is not
published or does not contain such prices on such business day, (A) the average
of the Reference Treasury Dealer Quotations for such redemption date, after
excluding the highest and lowest such Reference Treasury Dealer Quotations, or
(B) if the Trustee obtains fewer than four such Reference Treasury Dealer
Quotations, the average of all such Quotations. "Reference Treasury Dealer
Quotations" means, with respect to each Reference Treasury Dealer and any
redemption date, the average, as determined by the Trustee, of the bid and asked
prices for the Comparable Treasury Issue (expressed in each case as a percentage
of its principal amount) quoted in writing to the Trustee by such Reference
Treasury Dealer at 5:00 p.m. on the third business day preceding such redemption
date.

"Consolidated" when used with respect to any of the terms defined in the
Indenture, refers to such terms as reflected in a consolidation of the accounts
of the Company and its Subsidiaries in accordance with GAAP.

"Funded Debt" means Indebtedness of the Company and its Restricted
Subsidiaries, whether incurred, assumed or guaranteed, which by its terms
matures more than one year from the date of creation thereof, or which is
extendable or renewable at the sole option of the obligor so that it may become
payable more than one year from such date.

"GAAP" means, unless otherwise specified in the Indenture, such accounting
principles as are generally accepted in the United States as of the date of the
relevant calculation.

"Indebtedness" of any person means, without duplication, notes, bonds,
debentures or other evidences of indebtedness for borrowed money and all
indebtedness under purchase money mortgages or other purchase money liens or
conditional sales or similar title retention agreements, in each case where such
indebtedness has been created, incurred, assumed or guaranteed by such person or
where such person is otherwise liable therefor, and indebtedness for borrowed
money secured by any mortgage, pledge or other lien or encumbrance upon property
owned by such person even though such person has not assumed or become liable
for the payment of such indebtedness.

"Lien" means any mortgage, pledge, hypothecation, charge, assignment,
deposit arrangement, encumbrance, security interest, lien (statutory or other),
or preference, priority, or other security or similar agreement or preferential
arrangement of any kind or nature whatsoever (including, without limitation, any
agreement to give or grant a Lien or any lease, conditional sale or other title
retention agreement having substantially the same economic effect as any of the
foregoing).

"Net Tangible Assets" means the total amounts of assets (less depreciation
and valuation reserves and other reserves and items deductible from gross book
value of specific asset accounts under generally accepted accounting principles)
which under GAAP would be included on a balance sheet after deducting therefrom
(a) all liability items except Funded Debt and stockholders' equity and (b) all
goodwill, trade names, trademarks, patents, unamortized debt discount and
expense and other like intangibles, which in each such case would be so included
on such balance sheet.

"Principal Property" means any refinery, processing or manufacturing plant
(together with any pipeline, terminal or other facility related to such refinery
or processing or manufacturing plant and necessary for its economic operation),
blending, packaging or bulk materials handling facility, distribution center,
service center or store in any case located in the United States or Canada and
owned or leased by the Company or a Subsidiary or any interest of the Company or
any Subsidiary in such property (in each case including the real estate related
thereto), except any such property which the Company's Board of Directors, in
its good faith opinion, reasonably determines not to be of material importance
to the business of the Company and its Subsidiaries, as evidenced by a Board
Resolution.

"Reference Treasury Dealer" means each of CS First Boston Corporation and
J.P. Morgan Securities Inc. and their respective successors; provided, however,
that if any of the foregoing shall cease to be a primary
<PAGE>
<PAGE> 28

U.S. Government securities dealer in New York City (a "Primary Treasury
Dealer"), the Company shall substitute therefor another Primary Treasury Dealer.

"Restricted Subsidiary" means any Subsidiary that owns or leases any
Principal Property.

"Senior Funded Debt" means all Funded Debt, except Funded Debt the payment
of which is subordinated to the payment of the Notes.

"Subsidiary" means a corporation, partnership or other business entity of
which more than 50% of the outstanding voting stock is owned, directly or
indirectly, by the Company or by one or more other Subsidiaries, or by the
Company and one or more other Subsidiaries. For the purposes of this definition,
"voting stock" means stock which ordinarily has voting power for the election of
directors, managers or trustees, whether at all times or only so long as no
senior class of stock has such voting power by reason of any contingency.

"Treasury Yield" means, with respect to any redemption date, the rate per
annum equal to the semiannual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as
a percentage of its principal amount) equal to the Comparable Treasury Price for
such redemption date.

CONSOLIDATION, MERGER AND DISPOSITION OF ASSETS

The Company may not consolidate with or merge into, or convey, transfer or
lease its properties and assets substantially as an entirety to, any Person, and
may not permit any Person to consolidate with or merge into, or convey, transfer
or lease its properties and assets substantially as an entirety to, the Company,
unless (a) the successor is a Person organized and validly existing under the
laws of any domestic jurisdiction, and such successor, if other than the
Company, expressly assumes the Company's obligations under the Indenture and the
Notes, (b) immediately after giving effect to such transaction, no Event of
Default under the Indenture or event which, after notice or lapse of time or
both, would become an Event of Default thereunder would exist and be continuing,
(c) if, as a result of such transaction, properties or assets of the Company
would become subject to a Lien that would not be permitted under the limitation
on Liens described above under "Certain Covenants of the Company," the Company
takes such steps as shall be necessary to secure the Notes equally and ratably
with (or prior to) all indebtedness secured by such Lien and (d) the Company has
delivered to the Trustee an Officers' Certificate and an Opinion of Counsel,
each stating that such transaction complies with the Indenture. Upon compliance
with these provisions, the successor Person will succeed to, and be substituted
for, the Company under the Indenture, and the Company will be relieved (except
in the case of a lease) of its obligations under the Indenture and the Notes.
(Sections 801 and 802)

EVENTS OF DEFAULT

Each of the following will constitute an "Event of Default" under the
Indenture with respect to the Notes: (a) default in the payment of any interest
upon any Note when due, continued for 30 days, (b) default in the payment of
principal of (or premium, if any, on) any Note, (c) default in the performance,
or breach, of any covenant or warranty of the Indenture (other than a covenant
or warranty otherwise specifically dealt with in the Indenture) continued for 60
days after written notice to the Company by the Trustee or to the Company and
the Trustee by the Holders of at least 10% in principal amount of the
Outstanding Notes, (d) default in the payment of principal at maturity (subject
to any applicable grace period) of any indebtedness for money borrowed by the
Company or any Subsidiary in an aggregate principal amount of $15 million or
more or the acceleration of such indebtedness, if such acceleration is not
rescinded or annulled within 10 days after written notice as specified in clause
(c), and (e) certain events of bankruptcy, insolvency or reorganization.
(Section 501)

If an Event of Default (other than an Event of Default described in clause
(e) above) with respect to the Outstanding Notes shall occur and be continuing,
either the Trustee or the Holders of not less than 25% in aggregate principal
amount of the Outstanding Notes may, by notice in writing to the Company (and to
the Trustee if given by Holders), declare the principal amount of all Notes to
be due and payable immediately. If an Event of Default described in clause (e)
above with respect to the Notes shall occur, the principal amount
<PAGE>
<PAGE> 29

of all the Notes will automatically, and without any action by the Trustee or
any Holder, become immediately due and payable. (Section 502) After any such
acceleration, but before a judgment or decree for payment of the money due has
been obtained by the Trustee, the Holders of a majority in aggregate principal
amount of the Outstanding Notes may, under certain circumstances, rescind and
annul such acceleration if all Events of Default, other than the non-payment of
accelerated principal, have been cured or waived as provided in the Indenture.
(Section 502) For information as to waiver of defaults, see "--Modification and
Waivers."

The Indenture will provide that the Trustee shall, within 90 days after the
occurrence of a default with respect to the Notes, give to the Holders of the
Notes notice of such default known to it, unless such default shall have been
cured or waived; provided, however, that, except in the case of a default in the
payment of the principal of or interest on any of the Notes, the Trustee shall
be protected in withholding such notice if in good faith it determines that the
withholding of such notice is in the interest of such Holders; and provided,
further, that in the case of a default in respect of certain covenants and
warranties, no such notice shall be given until at least 60 days after the
occurrence of such default. (Section 602) The Indenture provides that, subject
to the duty of the Trustee during a default to act with the required standard of
care, the Trustee will not be under an obligation to exercise any right or power
under the Indenture at the request or direction of any of the Holders, unless
the Holders shall have offered to the Trustee a reasonable indemnity. (Sections
601 and 603) The Indenture provides that the Holders of a majority in aggregate
principal amount of the Outstanding Notes may direct the time, method and place
of conducting proceedings for remedies available to the Trustee or exercising
any trust or power conferred on the Trustee with respect to the Notes. (Section
512)

No Holder of any Note will have any right to institute any proceeding with
respect to the Indenture, or for the appointment of a receiver or a trustee, or
for any other remedy thereunder, unless (a) such Holder shall have previously
given to the Trustee written notice of a continuing Event of Default with
respect to the Notes, (b) the Holders of not less than 25% in aggregate
principal amount of the Outstanding Notes shall have made written request to the
Trustee to institute proceedings as Trustee, (c) such Holder or Holders shall
have offered to the Trustee reasonable indemnity, (d) the Trustee shall have
failed to institute such proceeding within 60 days thereafter and (e) the
Trustee shall not have received from the Holders of a majority in aggregate
principal amount of the Outstanding Notes a direction inconsistent with such
request. (Section 507) However, such limitations do not apply to a suit
instituted by a Holder of a Note for the enforcement of payment of the principal
of and premium, if any, or interest on such Note or after the applicable due
date specified in such Note. (Section 508)

The Company will be required to furnish to the Trustee annually a statement
as to the performance by the Company of its obligations under the Indenture and
as to any default in such performance. (Section 1004)

MODIFICATION AND WAIVERS

Modifications and amendments of the Indenture may be made by the Company
and the Trustee, with the consent of the Holders of a majority in aggregate
principal amount of the Outstanding Notes, by executing supplemental indentures
for the purpose of adding any provisions to, or changing or eliminating any of
the provisions of, the Indenture or modifying the rights of the Holders of the
Outstanding Notes; provided, that no such modification or amendment may, without
the consent of the Holders of each Outstanding Note affected thereby, (a) change
the Stated Maturity of the principal of, or any installment of interest on, any
Note, (b) reduce the principal amount of, or premium or interest on, any Note,
(c) change the place or currency of payment of principal of, or the premium or
any interest on, any Note, (d) impair the right to institute suit for the
enforcement of any payment on or with respect to any Note when due, (e) reduce
the percentage of aggregate principal amount of Outstanding Notes necessary to
modify or amend the Indenture or for waiver of compliance with certain
provisions of the Indenture or for waiver of certain defaults, or (f) modify
certain provisions of the Indenture with respect to modification and waiver.
(Section 902)

The Holders of at least a majority in aggregate principal amount of the
Outstanding Notes may waive compliance by the Company with certain restrictive
provisions of the Indenture. (Section 1010) The Holders of not less than a
majority in aggregate principal amount of the Outstanding Notes may waive any
past default
<PAGE>
<PAGE> 30

under the Indenture, except a default in the payment of the principal of (or
premium, if any) or interest on any Note and certain covenants and provisions of
the Indenture which cannot be modified or amended without the consent of the
Holder of each Outstanding Note. (Section 513)

DEFEASANCE AND COVENANT DEFEASANCE

Defeasance and Discharge

The Indenture will provide that the Company, at its option, (a) will be
discharged from any and all obligations with respect to the Notes (except for
certain obligations which include exchanging or registering the transfer of the
Notes, replacing stolen, lost or mutilated Notes, maintaining paying agencies
and holding monies for payment in trust) ("defeasance"), or (b) need not comply
with certain restrictive covenants of the Indenture ("covenant defeasance"), and
the occurrence of certain Events of Default will be deemed not to be or result
in an Event of Default with respect to the Notes, upon the deposit with the
Trustee, in trust for the benefit of the Holders of the Notes, of money or U.S.
Government Obligations, or both, which through the payment of principal of (or
premium, if any) and interest in respect thereof in accordance with their terms
will provide money in an amount sufficient to pay principal of and any premium
and interest on the Notes on the dates such payments are due in accordance with
the terms of the Indenture. To establish such defeasance or covenant defeasance,
the Company will be required to meet certain conditions, including delivery to
the Trustee of an Opinion of Counsel to the effect that the Holders of the Notes
will not recognize income, gain or loss for Federal income tax purposes as a
result of such defeasance or covenant defeasance and will be subject to Federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such defeasance or covenant defeasance had not
occurred. In the case of defeasance pursuant to clause (a), such Opinion of
Counsel must refer to and be based upon either (i) a ruling received by the
Company from, or published by, the Internal Revenue Service or (ii) a change in
applicable Federal income tax law after the date of the Indenture. (Article 11)

Defeasance and Events of Default

In the event the Company establishes covenant defeasance and the Notes are
declared due and payable because of the occurrence of any Event of Default, the
amount of money and U.S. Government Obligations on deposit with the Trustee
should be sufficient to pay amounts due on the Notes at the time of their Stated
Maturity but may not be sufficient to pay amounts due on the Notes at the time
of the acceleration resulting from such Event of Default. In such case, the
Company would remain liable for such payments. (Sections 1103 and 1104)

NOTICES

Notices to Holders of Notes will be given by mail to the addresses of such
Holders as they may appear in the Security Register. (Sections 106 and 305)

TITLE

The Company, the Trustee and any agent of the Company or the Trustee may
treat the Person in whose name a Note is registered as the absolute owner
thereof (whether or not such Note may be overdue) for the purpose of making
payment and for all other purposes. (Section 308)

GOVERNING LAW

The Indenture and the Notes will be governed by, and construed in
accordance with, the laws of the State of New York. (Section 112)

CONCERNING THE TRUSTEE

Chemical Bank is the Trustee under the Indenture. The Company may maintain
banking and other commercial relationships with the Trustee in the ordinary
course of business. (See "Underwriting.")
<PAGE>
<PAGE> 31

UNDERWRITING

Under the terms and subject to the conditions contained in an Underwriting
Agreement, dated , 1995 (the "Underwriting Agreement"), the
Underwriters named below (the "Underwriters"), for whom CS First Boston
Corporation and J.P. Morgan Securities Inc. are acting as representatives (the
"Representatives"), have severally but not jointly agreed to purchase from the
Company the following respective principal amounts of the Notes:

<TABLE>
<CAPTION>
PRINCIPAL
UNDERWRITER AMOUNT
------------ ---------
<S> <C>
CS First Boston Corporation............................................ $
J.P. Morgan Securities Inc. ...........................................
Chemical Securities Inc. ..............................................
NationsBanc Capital Markets, Inc. .....................................
------------
Total........................................................ $100,000,000
============
</TABLE>

The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent and that the
Underwriters will be obligated to purchase all the Notes, if any are purchased.
The Underwriting Agreement provides that, in the event of a default by an
Underwriter, in certain circumstances the purchase commitments of non-defaulting
Underwriters may be increased or the Underwriting Agreement may be terminated.

The Company has been advised by the Representatives that the Underwriters
propose to offer the Notes to the public initially at the public offering price
set forth on the cover page of this Prospectus and, through the Representatives,
to certain dealers at such price less a concession of % of the principal
amount per Note, and the Underwriters and such dealers may allow a discount of
% of such principal amount per Note on sales to certain other dealers.
After the initial public offering, the public offering price and concession and
discount to dealers may be changed by the Representatives.

Application will be made to have the Notes approved for listing on the New
York Stock Exchange.

The Company has agreed to indemnify the Underwriters against certain
liabilities, including civil liabilities under the Securities Act, or to
contribute to payments which the Underwriters may be required to make in respect
thereof.

In the ordinary course of their respective businesses, the Representatives
and Chemical Securities Inc. and their respective affiliates have engaged, and
may in the future engage, in financial advisory, commercial banking and
investment banking transactions with the Company and affiliates of the Company.
Morgan Guaranty Trust Company of New York, an affiliate of J.P. Morgan
Securities Inc., is the sole agent for the Company's $45.0 million credit
agreement, dated as of September 29, 1995. Chemical Bank, an affiliate of
Chemical Securities Inc., is Trustee under the Indenture related to the Notes.
(See "Description of Notes -- Concerning the Trustee.")

NOTICE TO CANADIAN RESIDENTS

RESALE RESTRICTIONS

The distribution of the Notes in Canada is being made only on a private
placement basis exempt from the requirement that the Company prepare and file a
prospectus with the securities regulatory authorities in each province where
trades of Notes are effected. Accordingly, any resale of the Notes in Canada
must be made in accordance with applicable securities laws which will vary
depending on the relevant jurisdiction, and which may require resales to be made
in accordance with available statutory exemptions or pursuant to a discretionary
exemption granted by the applicable Canadian securities regulatory authority.
Purchasers are advised to seek legal advice prior to any resale of the Notes.
<PAGE>
<PAGE> 32

REPRESENTATIONS OF PURCHASERS

Each purchaser of Notes in Canada who receives a purchase confirmation will
be deemed to represent to the Company and the dealer from whom such purchase
confirmation is received that (i) such purchaser is entitled under applicable
provincial securities laws to purchase such Notes without the benefit of a
prospectus qualified under such securities laws, (ii) where required by law,
that such purchaser is purchasing as principal and not as agent, and (iii) such
purchaser has reviewed the text above under "Resale Restrictions."

RIGHTS OF ACTION AND ENFORCEMENT

The securities being offered are those of a foreign issuer and Ontario
purchasers will not receive the contractual right of action prescribed by
section 32 of the Regulation under the Securities Act (Ontario). As a result,
Ontario purchasers must rely on other remedies that may be available, including
common law rights of action for damages or rescission or rights of action under
the civil liability provisions of the U.S. federal securities laws.

All of the issuer's directors and officers as well as the experts named
herein may be located outside of Canada and, as a result, it may not be possible
for Ontario purchasers to effect service of process within Canada upon the
issuer or such persons. All or a substantial portion of the assets of the issuer
and such persons may be located outside of Canada and, as a result, it may not
be possible to satisfy a judgment against the issuer or such persons in Canada
or to enforce a judgment obtained in Canadian courts against such issuer or
persons outside of Canada.

NOTICE TO BRITISH COLUMBIA RESIDENTS

A purchaser of Notes to whom the Securities Act (British Columbia) applies
is advised that such purchaser is required to file with the British Columbia
Securities Commission a report within ten days of the sale of any Notes acquired
by such purchaser pursuant to this offering. Such report must be in the form
attached to British Columbia Securities Commission Blanket Order BOR #88/5, a
copy of which may be obtained from the Company. Only one such report must be
filed in respect of Notes acquired on the same date and under the same
prospectus exemption.

VALIDITY OF NOTES

The validity of the Notes will be passed upon for the Company by Sullivan &
Cromwell, New York, New York. Certain legal matters will be passed upon for the
Underwriters by Dewey Ballantine, New York, New York.

EXPERTS

The consolidated financial statements of the Company and its Subsidiaries
at December 31, 1994 and 1993 and for each of the three years in the period
ended December 31, 1994 appearing in this Prospectus and the consolidated
financial statements and the related financial statement schedule included in
the Company's Annual Report on Form 10-K which is incorporated by reference into
the Registration Statement have been audited by Coopers & Lybrand L.L.P.,
independent auditors, as set forth in their reports thereon appearing elsewhere
herein by reference and in the Registration Statement, and are included in
reliance upon such reports given upon the authority of such firm as experts in
accounting and auditing.
<PAGE>
<PAGE> F-1

QUAKER STATE CORPORATION

YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
AND SIX MONTHS ENDED JUNE 30, 1995 AND 1994

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<S> <C>
REPORT OF COOPERS & LYBRAND L.L.P., INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS....... F-5
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Statement of Operations for each of the three years in the period
ended December 31, 1994....................................................... F-6
Consolidated Statement of Cash Flows for each of the three years in the period
ended December 31, 1994....................................................... F-7
Consolidated Balance Sheet as of December 31, 1994 and 1993...................... F-8
Consolidated Statement of Stockholders' Equity for each of the three years in the
period ended December 31, 1994................................................ F-9
Notes to Consolidated Financial Statements....................................... F-10-24
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Statement of Operations for each of the six-month periods ended June
30, 1995 and 1994............................................................. F-25
Consolidated Statement of Cash Flows for each of the six-month periods ended June
30, 1995 and 1994............................................................. F-26
Consolidated Balance Sheet as of June 30, 1995................................... F-27
Other Financial Information for each of the six-month periods ended June 30, 1995
and 1994...................................................................... F-28
Notes to Consolidated Financial Statements....................................... F-29-31
</TABLE>

F-1

<PAGE>
<PAGE> F-2

SEGMENT INFORMATION

The company's operations are organized into four segments. The Motor Oil
segment produces and markets lubricants and also sells related petroleum and
automotive aftermarket products to distributors and national and regional
retailers. On September 30, 1994, the company purchased the Specialty Oil
Companies and Westland Oil Company, Inc. (Specialty/Westland). In addition to
the above activities, the Specialty/Westland companies package, sell and
distribute private label lubricants, antifreeze and greases and collect and
transport used motor oil, brake fluid, antifreeze and used oil filters. The
revenues and operating profits generated by the Specialty/Westland companies
from the date of acquisition to December 31, 1994, are included in the 1994
Motor Oil segment revenues and operating profits.

Q Lube is the fast service automobile oil change and lubrication business
operated through company owned and franchised centers. Truck-Lite manufactures
and sells automotive and heavy-duty truck lighting. The Materials Handling
operation is a bulk material handling dock accessible to Lake Superior at
Thunder Bay, Ontario, Canada.

Intersegment Motor Oil sales are at market. Operating profits are total
segment revenues less segment expenses. Corporate expenses are those which are
not directly related to the company's segments. Corporate assets consist
principally of deferred tax assets, cash and cash equivalents and assets not
identifiable with the operations of a segment.

Revenues and operating profits exclude Natural Gas Exploration and
Production Division which was discontinued in the second quarter of 1995,
Insurance, which was discontinued in the second quarter of 1994, and Coal, which
was discontinued in the fourth quarter of 1992. (Refer to Notes 3, 4 and 17 of
Notes to Consolidated Financial Statements.)

<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
REVENUES
Motor Oil
Lubricants....................................... $419,408 $343,767 $337,347
Fuels............................................ 47,874 48,351 53,651
Other............................................ 73,923 47,165 50,007
-------- -------- --------
Total Motor Oil.................................... 541,205 439,283 441,005
Q Lube............................................. 113,674 105,361 104,398
Truck-Lite......................................... 99,638 80,776 63,878
Materials Handling................................. 2,997 2,955 5,319
Intersegment Motor Oil sales....................... (24,880) (21,290) (21,950)
-------- -------- --------
Total.............................................. $732,634 $607,085 $592,650
======== ======== ========
OPERATING PROFITS
Motor Oil.......................................... $ 16,401 $ 17,484 $ 23,336
-------- -------- --------
Q Lube............................................. 5,726 3,045 1,958
Unusual item (Note 5)............................ -- -- (3,200)
-------- -------- --------
Total Q Lube..................................... 5,726 3,045 (1,242)
-------- -------- --------
Truck-Lite......................................... 11,756 5,731 (3,665)
Materials Handling................................. 1,753 1,138 2,137
-------- -------- --------
Total operating profits............................ 35,636 27,398 20,566
-------- -------- --------
Corporate income................................... 3,235 2,730 187
Interest expense................................... (4,534) (5,410) (4,282)
Corporate expense.................................. (18,669) (15,193) (15,570)
-------- -------- --------
Income from continuing operations before income
taxes............................................ $ 15,668 $ 9,525 $ 901
======== ======== ========
</TABLE>
<PAGE>
<PAGE> F-3

<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
IDENTIFIABLE ASSETS
Motor Oil.......................................... $309,894 $144,687 $151,348
Q Lube............................................. 113,733 114,703 122,692
Truck-Lite......................................... 37,497 33,433 37,501
Materials Handling................................. 2,481 2,112 3,438
Discontinued operations............................ 49,449 389,179 355,794
-------- -------- --------
Subtotal......................................... 513,054 684,114 670,773
Corporate.......................................... 116,964 99,563 122,047
-------- -------- --------
Total.............................................. $630,018 $783,677 $792,820
======== ======== ========
CAPITAL EXPENDITURES
Motor Oil.......................................... $ 13,385 $ 11,459 $ 7,523
Q Lube............................................. 11,463 5,522 3,489
Truck-Lite......................................... 2,978 1,884 1,583
Materials Handling................................. -- 5 135
Discontinued operations............................ 8,618 10,890 12,976
-------- -------- --------
Total.............................................. $ 36,444 $ 29,760 $ 25,706
======== ======== ========
DEPRECIATION, DEPLETION AND AMORTIZATION
Motor Oil.......................................... $ 12,784 $ 10,767 $ 10,680
Q Lube............................................. 6,597 5,879 6,109
Truck-Lite......................................... 2,426 2,496 2,393
Materials Handling................................. 38 38 895
Discontinued operations............................ 10,414 9,578 15,006
-------- -------- --------
Total.............................................. $ 32,259 $ 28,758 $ 35,083
======== ======== ========
</TABLE>
<PAGE>
<PAGE> F-4

QUAKER STATE CORPORATION AND SUBSIDIARIES

FIVE-YEAR SUMMARY OF NET INCOME AND COMPARATIVE STATISTICAL DATA

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------------------------------
1994 1993 1992 1991 1990
---------- ---------- ---------- ---------- ----------
(IN THOUSANDS EXCEPT PER SHARE AND STATISTICAL DATA)
<S> <C> <C> <C> <C> <C>
REVENUES
Sales and operating revenues....................... $732,634 $607,085 $592,650 $577,613 $649,892
Other, net......................................... 6,923 5,595 4,063 4,450 4,694
----------- ----------- ----------- ----------- -----------
Total............................................ 739,557 612,680 596,713 582,063 654,586
----------- ----------- ----------- ----------- -----------
COSTS AND EXPENSES
Cost of sales and operating costs.................. 503,539 421,894 408,830 399,747 473,219
Selling, general and administrative................ 193,390 156,359 158,920 139,709 140,112
Depreciation and amortization...................... 21,845 19,181 20,077 20,148 20,796
Interest........................................... 5,115 5,721 4,785 4,567 5,172
Unusual items...................................... -- -- 3,200(c) -- (5,398)(d)
----------- ----------- ----------- ----------- -----------
Total............................................ 723,889 603,155 595,812 564,171 633,901
----------- ----------- ----------- ----------- -----------
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME
TAXES AND CUMULATIVE EFFECT OF
ACCOUNTING CHANGES............................... 15,668 9,525 901 17,892 20,685
PROVISION FOR INCOME TAXES......................... 6,167 2,534 245 7,443 7,518
----------- ----------- ----------- ----------- -----------
INCOME FROM CONTINUING OPERATIONS BEFORE CUMULATIVE
EFFECT OF ACCOUNTING CHANGES..................... 9,501 6,991 656 10,449 13,167
INCOME (LOSS) FROM DISCONTINUED OPERATIONS(a)...... 9,265 6,711 (31,904) 5,090 6,390
----------- ----------- ----------- ----------- -----------
INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF
ACCOUNTING CHANGES............................... 18,766 13,702 (31,248) 15,539 19,557
CUMULATIVE EFFECT OF ACCOUNTING CHANGES(b)......... -- -- (62,600) 7,170 --
----------- ----------- ----------- ----------- -----------
NET INCOME (LOSS).................................. $ 18,766 $13,702 $(93,848) $ 22,709 $ 19,557
=========== =========== =========== =========== ===========
PER SHARE:
Income from continuing operations before cumulative
effect of accounting changes..................... $ .33 $ .25 $ .02 $ .39 $ .48
Income (loss) from discontinued operations(a)...... .33 .25 (1.17) .19 .24
Cumulative effect of accounting changes(b)......... -- -- (2.30) .26 --
----------- ----------- ----------- ----------- -----------
Net income (loss).................................. $.66 $.50 $(3.45) $.84 $.72
----------- ----------- ----------- ----------- -----------
DIVIDENDS:
Cash per share................................... $.40 $.60 $.80 $.80 $.80
Amount........................................... 11,358 16,310 21,720 21,704 21,700
Capital expenditures............................... 36,444 29,760 25,706 32,037 40,178
Working capital.................................... 101,439 35,403 74,911 43,041 41,311
Total assets....................................... 630,018 783,677 792,820 751,496 757,229
Total debt......................................... 73,249 51,450 79,183 88,924 72,146
Stockholders' equity............................... 251,850 188,750 191,194 307,790 304,511
Book value per share............................... 8.00 6.93 7.04 11.34 11.23
----------- ----------- ----------- ----------- -----------
Number of stockholders of record................... 11,792 12,147 12,606 12,308 12,172
Weighted average capital and equivalent shares
outstanding...................................... 28,459,000 27,234,000 27,184,000 27,167,000 27,155,000
=========== =========== =========== =========== ===========
</TABLE>

- ---------------
(a) In the second quarter of 1995 the company discontinued its Natural Gas
Exploration and Production (E&P) business. Prior year amounts have been
reclassified to exclude E & P activities. In the second quarter of 1994 the
company decided to exit the insurance business. In the fourth quarter of
1992 the company decided to exit the coal business. These businesses have
been reported as discontinued operations. Refer to Notes 3, 4 and 17 of
Notes to Consolidated Financial Statements.

(b) Cumulative effect of implementing Statement of Financial Accounting Standard
No. 106, "Employers' Accounting For Postretirement Benefits Other than
Pensions" and Standard No. 109, "Accounting For Income Taxes" in 1992 and
Standard No. 96, "Accounting For Income Taxes" in 1991. Refer to Notes 12
and 13 of Notes to Consolidated Financial Statements.

(c) Charge for assets to be replaced by future conversion of Minit-Lube stores
to Q Lube facilities. Refer to Note 5 of Notes to Consolidated Financial
Statements.

(d) Gain on the sale of the McKean and Emlenton facilities.

<PAGE>
<PAGE> F-5

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To Stockholders
Quaker State Corporation

We have audited the accompanying consolidated balance sheets of Quaker
State Corporation and Subsidiaries as of December 31, 1994 and 1993, and the
related consolidated statements of operations, stockholders' equity and cash
flows for each of the three years in the period ended December 31, 1994. These
financial statements are the responsibility of the company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Quaker State
Corporation and Subsidiaries as of December 31, 1994 and 1993, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1994, in conformity with generally
accepted accounting principles.

As discussed in Notes 12 and 13 of Notes to Consolidated Financial
Statements, the company changed its methods of accounting for income taxes and
postretirement benefits other than pensions in 1992.

Coopers & Lybrand L.L.P.

600 Grant Street
Pittsburgh, Pennsylvania
January 25, 1995, except as to Note 17, for which
the date is August 9, 1995.
<PAGE>
<PAGE> F-6

QUAKER STATE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------
1994 1993 1992
-------- -------- --------
(IN THOUSANDS EXCEPT PER SHARE
DATA)
<S> <C> <C> <C>
REVENUES
Sales and operating revenues............................... $732,634 $607,085 $592,650
Other, net................................................. 6,923 5,595 4,063
-------- -------- --------
Total.................................................... 739,557 612,680 596,713
-------- -------- --------
COSTS AND EXPENSES
Cost of sales and operating costs.......................... 503,539 421,894 408,830
Selling, general and administrative........................ 193,390 156,359 158,920
Depreciation and amortization.............................. 21,845 19,181 20,077
Interest................................................... 5,115 5,721 4,785
Unusual item (Note 5)...................................... -- -- 3,200
-------- -------- --------
Total.................................................... 723,889 603,155 595,812
-------- -------- --------
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND
CUMULATIVE EFFECT OF ACCOUNTING CHANGES.................. 15,668 9,525 901
-------- -------- --------
PROVISION FOR (BENEFIT FROM) INCOME TAXES (NOTE 12)
Current.................................................... 9,550 9,800 6,064
Deferred................................................... (3,383) (7,266) (5,819)
-------- -------- --------
Total.................................................... 6,167 2,534 245
-------- -------- --------
INCOME FROM CONTINUING OPERATIONS BEFORE CUMULATIVE EFFECT
OF ACCOUNTING CHANGES.................................... 9,501 6,991 656
-------- -------- --------
DISCONTINUED OPERATIONS (NOTES 3, 4 AND 17)
Income from operations, net of taxes....................... 8,888 6,711 5,796
Income (loss) on disposition, net of taxes................. 377 -- (37,700)
-------- -------- --------
Total.................................................... 9,265 6,711 (31,904)
-------- -------- --------
INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF ACCOUNTING
CHANGES.................................................. 18,766 13,702 (31,248)
CUMULATIVE EFFECT OF ACCOUNTING CHANGES (NOTES 12 AND
13)...................................................... -- -- (62,600)
-------- -------- --------
NET INCOME (LOSS).......................................... $ 18,766 $ 13,702 $(93,848)
======== ======== ========
PER SHARE:
INCOME FROM CONTINUING OPERATIONS BEFORE CUMULATIVE EFFECT
OF ACCOUNTING CHANGES.................................... $ .33 $ .25 $ .02
INCOME (LOSS) FROM DISCONTINUED OPERATIONS................. .33 .25 (1.17)
CUMULATIVE EFFECT OF ACCOUNTING CHANGES.................... -- -- (2.30)
-------- -------- --------
NET INCOME (LOSS) PER SHARE................................ $ .66 $ .50 $ (3.45)
======== ======== ========
</TABLE>

The accompanying notes are an integral part of the financial statements.
<PAGE>
<PAGE> F-7

QUAKER STATE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------
1994 1993 1992
------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)................................................... $18,766 $ 13,702 $ (93,848)
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Depreciation, depletion and amortization........................ 32,259 28,758 35,083
Deferred income taxes and investment tax credit................. 2,669 3,380 (4,900)
Postretirement benefits other than pensions..................... 826 2,810 5,600
Unusual items -- noncurrent..................................... -- -- 3,200
(Gain) loss on disposition of discontinued operations
(Notes 3 and 4)............................................... (377) -- 37,700
Cumulative effect of changes in accounting principles
(Notes 12 and 13)............................................. -- -- 62,600
Increase (decrease) from changes in:
Receivables................................................... (4,711) 2,746 (8,011)
Inventories................................................... (3,894) 11,887 (3,705)
Other current assets.......................................... 3,911 1,708 7,817
Accounts payable.............................................. (8,537) 3,267 (5,453)
Accrued liabilities........................................... (11,434) (25,028) (17,753)
Other......................................................... 458 (8,621) 7,694
Changes in discontinued operations.............................. 7,626 12,626 5,801
-------- --------- ---------
Net cash provided by operating activities......................... 37,562 47,235 31,825
-------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from disposal of property and equipment.................... 4,556 1,741 6,806
Capital expenditures................................................ (36,444) (29,760) (25,706)
Proceeds from sale of discontinued operations, net of discontinued
operations cash (Notes 3 and 4)................................... 78,529 6,261 47,929
Discontinued insurance operations:
Proceeds from sale of bonds and securities........................ 47,781 105,052 41,520
Purchase of bonds and securities.................................. (60,513) (112,206) (46,786)
Acquisitions, net of cash acquired (Notes 2 and 15)................. (28,366) -- --
-------- --------- ---------
Net cash provided by (used in) investing activities............... 5,543 (28,912) 23,763
-------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid...................................................... (11,358) (16,310) (21,720)
Proceeds from long-term debt........................................ 418 223 93,918
Payments on long-term debt.......................................... (17,988) (27,956) (101,535)
-------- --------- ---------
Net cash used in financing activities............................. (28,928) (44,043) (29,337)
-------- --------- ---------
Net increase (decrease) in cash and cash equivalents................ 14,177 (25,720) 26,251
-------- --------- ---------
Cash and cash equivalents at beginning of year:
Other than insurance.............................................. 6,220 34,146 9,305
Discontinued insurance operations................................. 9,408 7,202 5,792
-------- --------- ---------
Total cash and cash equivalents at beginning of year................ 15,628 41,348 15,097
-------- --------- ---------
Cash and cash equivalents at end of year:
Other than insurance.............................................. 29,805 6,220 34,146
Discontinued insurance operations................................. -- 9,408 7,202
-------- --------- ---------
TOTAL CASH AND CASH EQUIVALENTS AT END OF YEAR...................... $29,805 $ 15,628 $ 41,348
======== ========= =========
</TABLE>

The accompanying notes are an integral part of the financial statements.
<PAGE>
<PAGE> F-8

QUAKER STATE CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1994 1993
-------- --------
<S> <C> <C>
(IN THOUSANDS
EXCEPT SHARE DATA)
ASSETS
Current assets:
Cash and cash equivalents.............................................. $ 29,805 $ 6,220
Accounts and notes receivable, less allowance of $2,185 in 1994
and $1,679 in 1993................................................... 91,858 55,290
Inventories (Note 6)................................................... 73,442 39,954
Deferred income taxes (Note 12)........................................ 11,790 18,375
Other current assets................................................... 11,708 16,911
Discontinued operation assets (Note 17)................................ 3,537 2,234
-------- --------
Total current assets................................................. 222,140 138,984
-------- --------
Property, plant and equipment, net of accumulated depreciation
(Note 7).............................................................. 199,983 175,047
Discontinued operation assets (Note 17)................................ 37,491 40,458
Other assets (Note 6).................................................. 170,404 93,226
-------- --------
Total assets other than insurance.................................... 630,018 447,715
-------- --------
Discontinued insurance assets (Note 3)................................. -- 335,962
-------- --------
TOTAL ASSETS......................................................... $630,018 $783,677
======== ========
LIABILITIES
Current liabilities:
Accounts payable....................................................... $ 58,500 $ 35,980
Accrued liabilities (Note 8)........................................... 58,487 67,339
Debt payable within one year........................................... 3,714 262
-------- --------
Total current liabilities............................................ 120,701 103,581
-------- --------
Long-term debt, less debt payable within one year (Note 9)............. 69,535 51,188
Other long-term liabilities (Note 8)................................... 187,932 179,054
-------- --------
Total liabilities other than insurance............................... 378,168 333,823
-------- --------
Discontinued insurance liabilities (Note 3)............................ -- 261,104
-------- --------
Commitments and contingencies (Note 10)

STOCKHOLDERS' EQUITY
Capital stock $1.00 par value; authorized shares, 37,500,000; issued
shares, 31,517,305 in 1994 and 27,250,818 in 1993 (Note 11).......... 31,517 27,251
Treasury stock, 33,498 shares, at cost................................. (467) --
Additional capital..................................................... 120,131 63,044
Retained earnings (Note 9)............................................. 104,286 98,877
Cumulative foreign currency translation adjustment..................... (709) 75
Unearned compensation (Note 11)........................................ (2,908) (497)
-------- --------
Total stockholders' equity........................................... 251,850 188,750
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY............................. $630,018 $783,677
======== ========
</TABLE>

The accompanying notes are an integral part of the financial statements.
<PAGE>
<PAGE> F-9

QUAKER STATE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
FOREIGN
CURRENCY
CAPITAL ADDITIONAL RETAINED TRANSLATION UNEARNED
STOCK CAPITAL EARNINGS ADJUSTMENT COMPENSATION TOTAL
------- ---------- -------- ----------- ------------ --------
(IN THOUSANDS EXCEPT SHARES AND PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1991....... $27,145 $ 61,921 $217,147 $ 1,577 -- $307,790
------- -------- -------- ------- ------- --------
Net loss......................... -- -- (93,848) -- -- (93,848)
Cash dividends ($.80 per
share)......................... -- -- (21,720) -- -- (21,720)
7,183 shares of capital stock
issued under stock option plan
(Note 11)...................... 7 83 -- -- -- 90
Net changes in unrealized gains
and losses on marketable equity
securities of discontinued
insurance operations........... -- -- 56 -- -- 56
Change in foreign currency
translation.................... -- -- -- (1,174) -- (1,174)
------- -------- -------- ------- ------- --------
BALANCE, DECEMBER 31, 1992....... 27,152 62,004 101,635 403 -- 191,194
------- -------- -------- ------- ------- --------
Net income....................... -- -- 13,702 -- -- 13,702
Cash dividends ($.60 per
share)......................... -- -- (16,310) -- -- (16,310)
98,963 shares of capital stock
issued under stock option plans
and employment contract (Note
11)............................ 99 1,040 -- -- $ (497) 642
Net changes in unrealized gains
and losses on marketable equity
securities of discontinued
insurance operations........... -- -- (150) -- -- (150)
Change in foreign currency
translation.................... -- -- -- (328) -- (328)
------- -------- -------- ------- ------- --------
BALANCE, DECEMBER 31, 1993....... 27,251 63,044 98,877 75 (497) 188,750
------- -------- -------- ------- ------- --------
Net income....................... -- -- 18,766 -- -- 18,766
Cash dividends ($.40 per
share)......................... -- -- (11,358) -- -- (11,358)
265,687 shares of capital stock
issued under stock option and
incentive plans (Note 11)...... 266 3,337 -- -- (2,411) 1,192
Net changes in unrealized gains
and losses on marketable equity
securities of discontinued
insurance operations........... -- -- (1,999) -- -- (1,999)
Change in foreign currency
translation.................... -- -- -- (784) -- (784)
4,000,000 shares issued for
acquisition (Note 2)........... 4,000 53,750 -- -- -- 57,750
Purchase of 33,497 shares
for treasury................... (33) (434) -- -- -- (467)
------- -------- -------- ------- ------- --------
BALANCE, DECEMBER 31, 1994....... $31,484 $ 119,697 $104,286 $ (709) $ (2,908) $251,850
======= ======== ======== ======= ======= ========
</TABLE>

The accompanying notes are an integral part of the financial statements.
<PAGE>
<PAGE> F-10

QUAKER STATE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. BASIS OF CONSOLIDATION: The consolidated financial statements include
the accounts of Quaker State Corporation and all of its subsidiaries more than
50% owned (the company). Intercompany accounts and transactions are eliminated.

b. INVENTORIES: Inventories are stated at the lower of cost or market.
Cost is determined on the last-in, first-out (LIFO) basis for all crude oil, the
majority of company refined petroleum products and vehicular lighting. For other
inventories, including purchased finished lubricating oils and automotive
aftermarket products, cost is determined on the first-in, first-out (FIFO)
basis.

c. PROPERTY, PLANT AND EQUIPMENT, AT COST: Costs of buildings and
equipment, other than natural gas and crude oil producing properties, are
charged against income over their estimated useful lives, using the straight
line method of depreciation. Repairs and maintenance, which are not considered
betterments and do not extend the useful life of property, are charged to
expense as incurred. When property, plant and equipment is retired or otherwise
disposed of, the asset and accumulated depreciation are removed from the
accounts and the resulting profit or loss is reflected in income.

The company capitalizes interest cost as a part of constructing major
facilities. Interest cost capitalized in 1994, 1993 and 1992 was not material.

d. INCOME TAXES AND INVESTMENT CREDIT: The company uses the liability
method of accounting for income taxes. The company accounts for investment
credit on the deferral method which recognizes the investment credit as a
reduction of the provision for income taxes over the life of the related assets.

e. EARNINGS PER SHARE: The calculation of earnings per share is based on
the weighted average number of shares of capital stock outstanding and capital
stock equivalents which would arise from the exercise of stock options.

f. PRE-OPENING COSTS: Costs associated with the opening of new fast
service automobile lubrication centers are expensed as incurred.

g. CASH EQUIVALENTS: The company considers all highly liquid debt
instruments purchased with a maturity of three months or less to be cash
equivalents.

h. FOREIGN CURRENCY TRANSLATION: For all foreign operations the functional
currency is the local currency. The assets and liabilities for the company's
foreign operations are translated into U.S. dollars using current exchange
rates. Income statement items are translated at average exchange rates
prevailing during the period. Exchange gains or losses are not material.

i. ENVIRONMENTAL EXPENDITURES: Costs in connection with compliance and
monitoring of compliance with existing environmental regulations as they relate
to ongoing operations are expensed or capitalized as appropriate. Costs
associated with remediation efforts resulting from prior activities are recorded
no later than at the completion of an environmental site assessment. A liability
is recorded earlier if it is probable that a liability exists and a cost can be
reasonably estimated. All cleanup estimates are based on current technology.
Evaluations of the probability of potential insurance or other third party
recoveries are made independently of the liability assessment. Environmental
costs are capitalized only if they extend the life, increase the capacity, or
improve the safety or efficiency of the property.

j. INTANGIBLES: Goodwill and other intangible assets arising from
acquisitions are being amortized on a straight line basis over periods not
exceeding 40 years. The company regularly evaluates whether events or
circumstances have occurred that indicate the intangible asset may not be
recoverable. When factors indicate the asset may not be recoverable, the company
uses an estimate of the related undiscounted future cash flows compared to the
carrying value of intangibles to determine if an impairment exists. Adjustments
are made if the sum of expected future net cash flows is less than carrying
value.
<PAGE>
<PAGE> F-11

QUAKER STATE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

K. ADVERTISING COSTS: Advertising costs are expensed as incurred.

2. ACQUISITION

On September 30, 1994, the company acquired all the stock of the Specialty
Oil Companies (Specialty) and Westland Oil Company, Inc. (Westland) of
Shreveport, Louisiana. Specialty was acquired for $19,500,000. The purchase
price of Westland was 4,000,000 shares of capital stock with a market value of
$57,750,000. The company also purchased certain related equipment for
approximately $1,500,000 and assumed approximately $40,000,000 of debt of the
acquired companies of which approximately $22,000,000 was satisfied by the
company at the time of closing.

The agreements also provide for the purchase by the company of certain real
property used in the acquired companies' operations for $9,000,000 at a later
date. The company indemnified the prior owners for certain loan obligations,
tax-related and other liabilities.

Specialty and Westland are engaged in the blending, packaging, sale and
distribution of private label and branded lubricants, antifreeze and greases and
the collection and transportation of used motor oil, brake fluid, antifreeze and
used oil filters.

The acquisition has been accounted for under the purchase method and,
accordingly, the operating results of Specialty and Westland are included in the
accompanying consolidated financial statements from the date of acquisition.

The acquisition resulted in goodwill of $54,072,000 and other intangible
assets, primarily covenants not to compete and brand names, of $26,525,000.
These items are being amortized monthly on a straight-line basis over periods of
8 years for $6,525,000 of covenants not to compete and 40 years for the
remaining intangible assets.

The following summary is prepared on a pro forma basis as though Specialty
and Westland had been acquired as of the beginning of the periods presented,
after including the impact of adjustments, such as amortization of intangible
assets, the intercompany sales elimination, and related tax effects. The
discontinued insurance and Natural Gas Exploration and Production operations
have also been excluded.

<TABLE>
<CAPTION>
1994 1993
----------- -----------
(UNAUDITED) (UNAUDITED)
(IN THOUSANDS EXCEPT
PER SHARE AMOUNTS)
<S> <C> <C>
Revenues..................................................... $ 981,945 $ 895,197
Income from continuing operations............................ $ 12,216 $ 9,506
Income per share from continuing operations.................. $ .39 $ .30
</TABLE>

The pro forma results are not necessarily indicative of what would have
occurred if the acquisition had been in effect for the entire periods presented.
In addition, they are not intended to be a projection of future results and do
not reflect any synergies that might be achieved from combining the operations.

3. DISCONTINUED INSURANCE OPERATIONS

On August 31, 1994, the company sold the stock of its wholly owned
subsidiary, Heritage Insurance Group, Inc., to General Electric Capital
Corporation for approximately $82,000,000 paid at the time of closing after
satisfaction of certain intercompany obligations. Accordingly, the operating
results of the insurance business, including the gain on the sale, have been
segregated and reported as a discontinued operation in the accompanying
Consolidated Statement of Operations. Prior year financial statements have been
reclassified to conform to the current year presentation.
<PAGE>
<PAGE> F-12

QUAKER STATE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

A gain on the sale of $377,000, net of taxes of $2,695,000, was recorded in
the third quarter. Taxes related to the sale included $1,969,000 to reflect the
probable tax liability which will result from certain tax elections to be made
by the purchaser. If the purchaser does not make such elections, the company
will record $1,969,000 as additional gain on the sale of discontinued insurance
operations at that time.

Condensed income statements for the eight months ended August 31, 1994 and the
years ended December 31, 1993 and 1992 are presented below:

<TABLE>
<CAPTION>
1994 1993 1992
-------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Revenues......................................... $ 87,566 $ 131,265 $ 114,440
Costs and expenses............................... (82,392) (127,741) (109,033)
-------- --------- ---------
Income before income taxes....................... 5,174 3,524 5,407
Provision for (benefit from) income taxes........ 790 (286) 569
-------- --------- ---------
Net income....................................... $ 4,384 $ 3,810 $ 4,838
======== ========= =========
</TABLE>

The effective tax rates for discontinued insurance operations differ from
the federal statutory rate due primarily to tax exempt interest and dividends
received deductions.

Effective January 1, 1994, the company adopted Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt and
Equity Securities" which addresses the accounting and reporting for investments
in equity securities that have readily determinable values and for investments
in debt securities. This Standard did not have a material impact on the
company's financial position and results of operations.

4. DISCONTINUED COAL OPERATIONS

In December 1992, the company discontinued its coal operations. The
operating results of the coal business have been segregated and reported as a
discontinued operation in the accompanying Consolidated Statement of Operations.
The company recorded an estimated loss on disposal of $37,700,000, net of income
tax benefits of $22,700,000.

The sale of certain coal assets resulted in a payment to be received from
the purchaser from 1994 through 2013 which was recorded as an $18,800,000
receivable, at present value at the time of the sale. Amounts in excess of the
minimum payment may be received subject to the delivery requirements of a
long-term coal sales agreement of the purchaser.

The cessation of the coal operations continued throughout 1994 and 1993. No
adjustments to the 1992 estimated loss on disposition were required as a result
of 1994 and 1993 activity.

The Condensed Statement of Operations relating to the discontinued coal
operations for the year December 31, 1992 is presented below:

<TABLE>
<CAPTION>
1992
---------------
(IN THOUSANDS)
<S> <C>
Revenues............................................... $ 95,140
Costs and expenses..................................... (102,181)
---------
Loss before income taxes............................... (7,041)
Income tax benefit..................................... 4,100
---------
Net income............................................. $ (2,941)
=========
</TABLE>
<PAGE>
<PAGE> F-13

QUAKER STATE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

At December 31, 1994 and 1993, assets held for sale of approximately
$2,200,000 and $4,400,000, respectively, related to the discontinued coal
operations are classified as other current assets in the Consolidated Balance
Sheet. Other liabilities at December 31, 1994 and 1993 related to the
discontinued coal operations include workers' compensation and black lung
liabilities of $21,300,000 and $24,300,000 and health care and death benefit
liabilities of $23,400,000 and $25,700,000 respectively.

5. UNUSUAL ITEMS

In the fourth quarter of 1992, the company's fast lube subsidiary, Q Lube,
Inc., recorded a pretax charge of $3,200,000 to reserve for the future
replacement of signage and other assets impaired by the planned conversion of
existing Minit-Lube stores to the Q lube format.

6. INVENTORIES AND OTHER ASSETS

Inventories consist of:

<TABLE>
<CAPTION>
1994 1993
------- -------
(IN THOUSANDS)
<S> <C> <C>
Crude oil........................................................ $ 1,328 $ 2,442
Finished and in-process petroleum products....................... 49,252 23,225
Other............................................................ 22,862 14,287
------ ------
Total............................................................ $73,442 $39,954
====== ======
</TABLE>

The reserve to reduce the carrying value of inventories from current costs
to the LIFO basis amounted to $19,915,000 in 1994 and $18,807,000 in 1993.

At December 31, 1994 and 1993, $38,268,000 and $19,734,000, respectively,
of inventories were valued on the LIFO basis.

During 1993 and 1992 certain inventory quantities were reduced resulting in
liquidations of LIFO inventory. The effect of these liquidations was a decrease
in net income of $900,000 or $.03 per share, in 1993 and an increase in net
income of $400,000, or $.01 per share, in 1992.

Other assets consist of:

<TABLE>
<CAPTION>
1994 1993
-------- -------
(IN THOUSANDS)
<S> <C> <C>
Goodwill........................................................ $ 58,656 $ 4,756
Other intangible assets......................................... 32,861 6,184
Deferred tax asset.............................................. 39,300 45,130
Notes and royalties receivable.................................. 28,726 27,998
Prepaid pension cost............................................ 9,483 8,423
Other........................................................... 1,378 735
------- ------
Total........................................................... $170,404 $93,226
======= ======
</TABLE>
<PAGE>
<PAGE> F-14

QUAKER STATE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

7. PROPERTY, PLANT AND EQUIPMENT

Major classes of property, including land and construction work in progress
of $45,205,000 in 1994 and $46,961,000 in 1993 are:

<TABLE>
<CAPTION>
1994 1993
-------- --------
(IN THOUSANDS)
<S> <C> <C>
MOTOR OIL
Refining..................................................... $ 97,710 $ 97,453
Marketing.................................................... 126,360 98,425
Q LUBE......................................................... 122,611 118,316
TRUCK-LITE..................................................... 31,341 33,595
MATERIALS HANDLING............................................. 12,948 12,948
------- -------
Subtotal..................................................... 390,970 360,737
Less: accumulated depreciation................................. 190,987 185,690
------- -------
Total.......................................................... $199,983 $175,047
======= =======
</TABLE>

8. ACCRUED LIABILITIES, OTHER LONG-TERM LIABILITIES AND ADVERTISING EXPENSES

Accrued liabilities include workers' compensation and health
self-insurance, advertising accruals and accrued royalties of $5,704,000,
$6,672,000 and $1,330,000, respectively, at December 31, 1994 and $6,888,000,
$9,255,000 and $7,013,000, respectively, at December 31, 1993.

Other long-term liabilities include postretirement benefits, other employee
benefits and environmental reserves of $91,206,000, $48,660,000 and $21,800,000,
respectively, at December 31, 1994 and $90,380,000, $53,500,000 and $18,200,000,
respectively, at December 31, 1993.

Advertising expenses were $77,791,000, $71,297,000 and $67,834,000 in 1994,
1993, and 1992, respectively.

9. LONG-TERM DEBT AND FINANCIAL INSTRUMENTS

Long term debt consists of:

<TABLE>
<CAPTION>
1994 1993
------- -------
(IN THOUSANDS)
<S> <C> <C>
Senior Notes due 2002 (a)........................................ $50,000 $50,000
Revolving credit loan due 1997 (b)............................... -- --
Revolving credit loan due 1997 (c)............................... 9,000 --
Term loan due 1997 (c)........................................... 10,184 --
Other, 3% to 10.50% due in various installments to 2005.......... 4,065 1,450
------- -------
Subtotal.................................................... 73,249 51,450
Less: payments due within one year............................... 3,714 262
------- -------
Total............................................................ $69,535 $51,188
======= =======
</TABLE>

(a) On September 30, 1992, the company issued $50,000,000 of Senior Notes, due
September 30, 2002. The notes have a fixed interest rate of 8.73%, are
subject to an early prepayment premium and do not require payment on
principal until maturity.

(b) This agreement provides for a $45,000,000 revolving line of credit until
June 30, 1997, with annual extensions available at the option of the
lenders, and has a variable interest rate based, at the option of the
<PAGE>
<PAGE> F-15

QUAKER STATE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

company, upon prime, LIBOR or CD rates for one, two, three or six month
periods. The annual commitment fee is 1/4 percent of the average daily
unborrowed funds.

(c) This agreement provides to the company's subsidiary, Westland Oil Company,
Inc., a $15,000,000 revolving line of credit and a term loan for
$10,720,000 until September 1, 1997. The revolving line of credit and term
loan have a variable interest rate based upon LIBOR rates plus one percent.
The unpaid balance of the revolving line of credit is to be paid at
termination date and the term loan is to be repaid in monthly installments
until termination date. The revolving line of credit has an annual
commitment fee of 1/4 percent of the average daily unborrowed funds. The
loans are collateralized by Westland Oil Company, Inc.'s accounts
receivable, inventory and cash funds. In addition, the loans are guaranteed
by the current Vice Chairman and Chief Executive Officer, Motor Oil
Division and a Vice President of the Motor Oil Division, both previous
owners of Westland Oil Company, Inc.

At December 31, 1994, the company had unused bank lines of credit
aggregating $68,200,000 providing for borrowings at various rates.

The debt agreements contain various restrictions pertaining to tangible net
worth, financial ratios, and dividends. Under the most restrictive of these
provisions, approximately $19,700,000 of consolidated retained earnings at
December 31, 1994, was free of any restrictions as to payment of cash dividends.

The aggregate long-term debt maturing in the next five years is
approximately as follows: 1995-$3,714,000; 1996-$2,720,000; 1997-$15,444,000;
1998-$554,000; 1999-$493,000.

The fair value of debt at December 31, 1994 was $71,994,000 and for other
financial instruments the fair value does not materially differ from the value
reflected in the financial statements. The fair value of the instruments was
based upon quoted market prices of the same or similar instruments or on a
discounted basis using the rates available to the company for instruments of the
same remaining maturity.

10. COMMITMENTS, RELATED PARTIES AND CONTINGENCIES

The company has operating leases for continuing operations in effect for
equipment and facilities with initial terms ranging from 2 to 20 years, with
renewal options generally being available. Future minimum annual rentals, net of
estimated sublease rentals under operating leases of $13,900,000, during each of
the next five years are: 1995-$14,200,000; 1996-$11,500,000; 1997-$10,600,000;
1998-$8,800,000; 1999-$7,200,000 and thereafter $56,500,000.

Rental expenses for continuing operations amounted to approximately
$15,500,000 for 1994, $15,200,000 for 1993 and $15,500,000 for 1992, net of
sublease rentals of approximately $3,800,000 for 1994, $3,900,000 for 1993 and
$3,600,000 for 1992.

As part of its acquisition of the Specialty Oil Companies (refer to Note 2)
the company assumed the terms of 10 operating leases, which expire in 2004, for
facilities located throughout the southwest. These facilities are leased from a
real estate firm that is owned, in part, by the current Vice Chairman and Chief
Executive Officer of the Motor Oil Division. The amount paid for these leases
since October 1994 was $376,000.

On September 13, 1994, the company's subsidiary, Q Lube Inc. (Q Lube),
entered into license and construction agreements with Interline Resources
Corporation (Interline) that provide for the exclusive use of Interline's used
oil rerefining technology in North America and for the construction of
facilities at which the re-refining process will be conducted by Q Lube. Under
the agreement Q Lube could pay up to $9,400,000 over six years to maintain the
exclusivity rights; however, Q Lube is not obligated to pay in full for these
rights. Q Lube paid $500,000 in 1994 for these rights.
<PAGE>
<PAGE> F-16

QUAKER STATE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Westland Oil Company, Inc. regularly purchases lubricant base stocks from
Calumet Lubricants Co., the President of which is a Director of the company. The
amount of such purchases in the fourth quarter of 1994 was $393,000 at prices
comparable to other purchases. In addition, in October 1994, the company and
Legacy Resources Company (Legacy), a limited partnership in which the same
Director owns partnership interests, entered into a farmout agreement for the
development of certain oil and gas properties owned by the company. The amount
paid to the company by Legacy was $364,000.

In December 1993, the United States commenced a lawsuit against the company
in the U.S. District Court for the Northern District of West Virginia. The
complaint alleges the company violated the federal Resource Conservation and
Recovery Act and the federal Clean Air Act at the Congo refinery on various
dates starting in 1980 and seeks civil penalties not to exceed $25,000 per day
for each violation. The company intends to vigorously defend this lawsuit. In
1994, the company recorded a charge of $1,000,000 as its estimate of probable
liability associated with this lawsuit.

In addition, the company has received notices from the EPA and others that
it is a "potentially responsible party" relative to certain waste disposal sites
identified by the EPA and may be required to share in the cost of cleanup. The
company has accrued for all matters which are probable and can be reasonably
estimated.

In April 1994, purported class actions were commended in the U.S. District
Court for the Western District of Pennsylvania against the company and two other
oil companies. The complaints allege violations of Section 1 of the Sherman Act.
The company believes there is no basis for the allegations in the complaint and
intends to defend the matter vigorously.

Contingent liabilities of an indeterminate amount exist in connection with
suits and claims arising in the ordinary course of business.

In the opinion of management, all matters discussed above are adequately
accrued for or covered by insurance or, if not so provided for, are without
merit or the disposition is not anticipated to have a material effect on the
company's financial position; however, one or more of these matters could have a
material effect on future quarterly or annual results of operations or cash flow
when resolved.

11. STOCK OPTIONS AND MANAGEMENT COMPENSATION

The company has various stock option, incentive and award plans.

Under these plans, options have been granted to employees to purchase
capital stock at a price no less than 100% of the market value on the date of
grant. Options granted may not be exercised for at least six months from the
date of grant and substantially all options must be exercised within ten years
of the date granted.

Options issued prior to December 31, 1991, also provide for stock
appreciation rights (SARs), which are an alternate form of settlement on an
option giving an optionee the right, subject to certain conditions, to surrender
an option or portion of an option and receive cash and/or shares of capital
stock of the company, having a value equal to the appreciation on such option or
portion thereof. The change in appreciation of the optioned shares most likely
to be surrendered for SARs results in a charge or credit to income as
applicable.

In May 1994, the company's stockholders approved the 1994 Stock Incentive
Plan. Under this plan, 1,250,000 shares may be issued and the plan includes
stock options, SARs, cash payment rights, restricted shares, performance shares
and other share awards. In 1994, 225,800 shares were issued under this plan to
certain key employees as follows: (1) 165,800 performance restricted shares and
(2) 60,000 restricted shares. Of the 165,800 performance restricted shares,
65,800 shares are subject to forfeiture if certain three year performance goals
are not met and are expensed as compensation expense over the performance
period. The remaining 100,000 performance restricted shares are subject to
forfeiture if the market price of the company's
<PAGE>
<PAGE> F-17

QUAKER STATE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

stock does not achieve specified levels prior to August 1999. Compensation
expense will be recorded related to these shares upon achieving the specified
stock market price levels. The 60,000 restricted shares are subject to certain
employment restrictions that expire at various dates through July 1997 and are
expensed as compensation expense over the restriction period. As a result of the
grant of these shares, the company recognized $485,000 as compensation expense
for 1994 and recorded unearned compensation of $2,624,000 at December 31, 1994
on the Consolidated Balance Sheet. Unearned compensation and related
compensation expense are adjusted for the performance restricted shares based on
the appreciation or depreciation in the company's stock market price.

In May 1994, the company's stockholders also approved the 1994 Non-Employee
Directors' Stock Option Plan. The number of shares which may be issued under
this plan is 100,000. Each non-employee who is a member of the Board of
Directors of the company is annually granted a non-statutory stock option to
purchase 1,000 shares of the company's capital stock. The exercise price for
each stock option is the fair market value of the stock on the date the stock
option is granted. In 1994, 8,000 shares were granted under this plan.

In conjunction with the acquisition of the Specialty and Westland Companies
(refer to Note 2) employment contracts were issued to certain key employees of
those companies. These contracts were for five years and included provisions for
a base salary, grants of an aggregate of 390,000 stock options and non-
competition clauses that extend three years beyond the end of the employment
contracts. Expenses related to these contracts amounted to $237,000 since
October 1994.

During 1993, the company entered into an employment contract with Herbert
M. Baum who was named Chairman and Chief Executive Officer. In 1994 a new
contract was executed that provides for annual compensation, a signing bonus,
stock award grants and stock option grants. In connection with the stock award
grant, the company issued 90,000 shares of capital stock, at no cost, of which
55,000 shares are subject to restrictions which expire at various dates through
August 1998. Compensation expense is charged to earnings over the initial
employment contract term. The unearned compensation related to these restricted
grants was $284,000 and $497,000 at December 31, 1994 and 1993, respectively, on
the Consolidated Balance Sheet. In 1994 and 1993, the company recognized
$213,000 and $532,000, respectively, as compensation expense for these stock
grants and approximately $800,000 and $1,000,000, respectively, for all other
provisions of this employment contract. The stock option grant provides for the
purchase of 270,000 shares of capital stock at various prices, no less than
market value on the date of grant ($11.625 to $17.935), at various dates. These
options expire at various dates through June 2005.

The options outstanding at the end of 1994 were exercisable at $9.4375 to
$26.4375 per share except for 648,500 shares which will become exercisable
between March 29, 1995 and October 27, 1999 at a range of $11.625 to $17.9375.
At December 31, 1994 and 1993, 905,449 and 122,013 shares of capital stock,
respectively, are available for grant.

At December 31, 1994, 1993 and 1992, 2,512,520, 1,465,917 and 1,285,120
shares of capital stock, respectively, were reserved for options outstanding and
for options or other awards which may be granted in the future.
<PAGE>
<PAGE> F-18

QUAKER STATE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Information with respect to shares under option for the aforementioned
plans is summarized below:

<TABLE>
<CAPTION>
1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
Outstanding stock options at the beginning of
year............................................ 1,343,904 1,073,414 911,094
Options granted during the year:
1994, $13.375 to $16.50 per share
1993, $11.625 to $17.9375 per share
1992, $12.4375 per share........................ 434,000 378,200 245,250
Options exercised at $13.125 to $15.9375.......... (40,704) (8,963) (7,183)
Options surrendered upon exercise of SARs......... (49,296) (24,287) (30,567)
Options lapsed and canceled....................... (80,833) (74,460) (45,180)
--------- --------- ---------
Outstanding stock options at end of year.......... 1,607,071 1,343,904 1,073,414
========= ========= =========
</TABLE>

12. INCOME TAXES

Effective January 1, 1992, the company adopted Statement of Financial
Accounting Standard No. 109 "Accounting for Income Taxes." The cumulative effect
of the accounting change was not material.

Income before income taxes from continuing operations consists of:

<TABLE>
<CAPTION>
1994 1993 1992
------- ------ -------
(IN THOUSANDS)
<S> <C> <C> <C>
Domestic $12,914 $8,471 $(1,140)
Foreign 2,754 1,054 2,041
------ ----- ------
Total $15,668 $9,525 $ 901
====== ===== ======
</TABLE>

The components of the provision for income taxes from continuing operations
are as follows:

<TABLE>
<CAPTION>
1994 1993 1992
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Current:
Federal............................................. $ 7,170 $ 6,394 $ 2,395
State............................................... 680 2,056 1,369
Foreign............................................. 1,700 1,350 2,300
Deferred:
Federal............................................. (2,827) (4,531) (3,160)
State............................................... 44 (1,835) (859)
Foreign............................................. (200) -- (600)
Tax credits amortized............................... (400) (900) (1,200)
----- ------ ------
Total................................................. $ 6,167 $ 2,534 $ 245
===== ====== ======
</TABLE>
<PAGE>
<PAGE> F-19

QUAKER STATE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The 1993 tax provision benefited from an adjustment of $1,200,000 to
deferred taxes for the enacted U.S. tax rate changes and an adjustment to the
beginning of the year valuation allowance of $1,400,000 to recognize the
realizability of deferred tax assets in future years. A reconciliation from the
federal statutory tax rate to the effective tax rate for continuing operations
follows:

<TABLE>
<CAPTION>
1994 1993 1992
---- ----- -----
(% OF PRETAX INCOME)
<S> <C> <C> <C>
Federal statutory tax rate........................................... 35.0 35.0 34.0
Add (deduct) the tax effect of:
Investment credit.................................................. (2.4) (6.6) (87.5)
Net adjustment to valuation allowance.............................. -- (14.3) --
Enacted rate change................................................ -- (12.4) --
Other tax credits.................................................. (1.2) (2.1) (5.7)
State and foreign income taxes..................................... 4.7 11.7 22.2
Other, net......................................................... 3.2 15.3 64.2
---- ----- -----
Effective tax rate................................................... 39.3 26.6 27.2
==== ===== =====
</TABLE>

The deferred tax assets and liabilities as of December 31, 1994 and 1993
are as follows:

<TABLE>
<CAPTION>
DEFERRED DEFERRED DEFERRED
TAX DEFERRED TAX TAX TAX
ASSETS LIABILITIES ASSETS LIABILITIES
1994 1994 1993 1993
------- ------------ -------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Depreciation, depletion and
amortization.......................... -- $ 32,553 -- $26,572
Employee benefits....................... $56,287 -- $ 56,387 --
Coal loss provision..................... 1,436 -- 6,604 --
Insurance policy reserves............... -- -- 31,795 --
Deferred policy acquisition costs....... -- -- -- 20,402
Due from reinsurers..................... -- -- -- 11,267
Environmental reserves.................. 8,308 -- 7,278 --
Other................................... 14,980 7,595 21,877 7,591
------- ------- -------- -------
Subtotal.............................. 81,011 40,148 123,941 65,832
Valuation allowance..................... 539 -- 1,101 --
------- ------- -------- -------
Total................................... $80,472 $ 40,148 $122,840 $65,832
======= ======= ======== =======
</TABLE>

Deferred investment tax credit amounted to $600,000 and $900,000 at
December 31, 1994 and 1993, respectively.

13. EMPLOYEE RETIREMENT AND BENEFIT PLANS

The company has noncontributory pension plans covering substantially all of
its employees. Plans covering salaried employees provide pension benefits that
are generally based on the employees' compensation and length of service. Plans
covering hourly employees provide benefits of stated amounts for each year of
service. The company's funding policy is based on an actuarially determined cost
method allowable under statutory regulations.
<PAGE>
<PAGE> F-20

QUAKER STATE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Net pension cost for 1994, 1993, 1992 is summarized below:

<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Service cost benefits earned during the period..... $ 3,675 $ 3,130 $ 3,996
Interest cost...................................... 9,015 8,840 8,584
Actual return on assets............................ (1,025) (13,371) (11,850)
Net amortization and deferral...................... (11,188) 1,325 (280)
-------- -------- --------
Total pension cost (income)........................ 477 (76) 450
Less: pension cost (income) of discontinued
operations....................................... 186 204 (753)
-------- -------- --------
Pension cost (income) of continuing operations..... $ 291 $ (280) $ 1,203
======== ======== ========
</TABLE>

The funded status of the plans is reconciled to prepaid pension cost at
December 31, 1994 and 1993 as follows:

<TABLE>
<CAPTION>
1994 1993
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Plan assets at fair value, primarily investments in IPG
insurance contracts and pooled separate accounts............. $127,623 $135,807
-------- --------
Accumulated benefit obligation, including vested benefits of:
1994 -- $104,320; 1993 -- $112,052........................... 111,640 120,001
Effect of future salary increases.............................. 11,692 12,681
-------- --------
Projected benefit obligation................................... 123,332 132,682
-------- --------
Plan assets in excess of projected benefit obligations......... 4,291 3,125
Unrecognized net loss.......................................... 16,458 18,035
Unrecognized transition asset.................................. (11,266) (12,737)
-------- --------
Prepaid pension cost........................................... $ 9,483 $ 8,423
======== ========
</TABLE>

Significant assumptions used in determining net pension costs and related
pension obligations are:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Discount rate................................................. 8% 7% 7 1/2%
Rate of increase in compensation levels....................... 4 1/2% 4 1/2% 4 1/2%
Expected long-term rate of return on assets................... 9% 9% 9%
</TABLE>

Former hourly employees of the discontinued coal operations are covered by
a pension plan of the United Mine Workers of America (UMWA). Former salaried
coal employees are covered by the company's pension plan. Payments made to the
plan administered by the UMWA were based on hours worked and were $526,000 and
$4,153,000 for 1993 and 1992. As a result of the company's decision to
discontinue coal operations in 1992 (refer to Note 4), the company will withdraw
from the UMWA plan resulting in an estimated withdrawal liability of
approximately $11,000,000. In addition, in 1992 the company recognized a
$4,519,000 pension curtailment gain related to the salaried coal employees. The
withdrawal liability and the curtailment gain are reflected in the 1992
Consolidated Statement of Operations as a component of the loss on disposition
related to the discontinued coal operations.

In 1994, the Materials Handling operation terminated a pension plan that
resulted in a pre-tax gain of $1,100,000.
<PAGE>
<PAGE> F-21

QUAKER STATE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The company has certain defined contribution plans including a Thrift and
Stock Purchase Plan and an Employee Stock Ownership Plan. The 1994 cost of these
plans was $2,450,000 and the 1993 and 1992 cost of these plans was $1,100,000
per year.

In addition to providing pension benefits, Quaker State and certain of its
subsidiaries provide health care and life insurance benefits for active and
retired employees. These plans are unfunded, and the company retains the right
to modify or eliminate these benefits.

Effective January 1, 1992, the company adopted Statement of Financial
Accounting Standard No. 106, "Employers' Accounting for Postretirement Benefits
Other Than Pensions."

As of January 1, 1992, the company recognized the full amount of its
estimated accumulated postretirement benefit obligation on that date, which
represented the present value of the estimated future benefits payable to
current retirees and a pro rata portion of the estimated benefits payable to
eligible active employees after retirement. The accounting change resulted in a
one-time charge to 1992 earnings of approximately $62,600,000, net of taxes of
$40,100,000, or $2.30 per share. The components of periodic expense for
postretirement benefits in 1994, 1993 and 1992 were as follows:

<TABLE>
<CAPTION>
1994 1993 1992
------ ------ -------
(IN THOUSANDS)
<S> <C> <C> <C>
Service costs of benefits earned........................ $ 805 $ 947 $ 1,865
Interest cost on liability.............................. 6,812 7,300 8,485
Amortization of gain.................................... (115) (240) --
------ ------ -------
Net periodic postretirement benefit cost................ 7,502 8,007 10,350
Less: discontinued operations cost...................... 267 257 6,591
------ ------ -------
Continuing operations cost.............................. $7,235 $7,750 $ 3,759
====== ====== =======
</TABLE>

The accumulated postretirement benefit obligation (APBO) at December 31,
1994 and 1993 is summarized below:

<TABLE>
<CAPTION>
1994 1993
------- -------
(IN THOUSANDS)
<S> <C> <C>
Retirees......................................................... $74,154 $74,803
Fully eligible active participants............................... 6,906 6,667
Other active participants........................................ 9,910 13,035
------- -------
APBO............................................................. 90,970 94,505
Unrecognized net gain............................................ 5,236 875
Less: current portion............................................ (5,000) (5,000)
------- -------
Long-term portion................................................ $91,206 $90,380
======= =======
</TABLE>

As a result of the company's decision during 1992 to discontinue its coal
operations (refer to Note 4), it recognized in 1992 a $16,206,000 curtailment
gain related to its postretirement benefit plans other than pension plans. This
curtailment gain is reflected in the 1992 Consolidated Statement of Operations
as a component of the loss on disposition related to the discontinued coal
operations.

For measurement purposes, a 10% annual rate of increase in the per capita
claims cost was assumed for 1995, declining gradually to 5% by the year 2002 and
thereafter.
<PAGE>
<PAGE> F-22

QUAKER STATE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Significant assumptions used in determining postretirement benefit expenses
and accumulated postretirement benefit obligations are:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1994 1993 1992
--- --- ---
<S> <C> <C> <C>
Discount rate.................................................. 8% 7 1/2% 8 1/2%
Rate of increase in compensation levels........................ 4 1/2% 5% 5 1/2%
</TABLE>

The health care cost trend rate assumption has a significant effect on the
APBO and net periodic benefit costs. A 1% increase in the trend rate for health
care costs would have increased the APBO at December 31, 1994 by 11% and 1994
service and interest costs by 12%.

In 1993, the company adopted Statement of Financial Accounting Standard No.
112, "Employers' Accounting for Postemployment Benefits." This Standard requires
the cost of benefits provided for former or inactive employees, after employment
and before retirement, be recognized on the accrual basis of accounting. The
cumulative effect of this accounting change was not material.

14. FINANCIAL RESULTS BY QUARTER

<TABLE>
<CAPTION>
QUARTERS ENDED
-------------------------------------------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31,
------------------- ------------------- ------------------- -------------------
1994 1993 1994 1993 1994 1993 1994 1993
-------- -------- -------- -------- -------- -------- -------- --------
(UNAUDITED)
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues (a).............. $168,515 $144,431 $161,545 $158,217 $179,702 $154,765 $222,872 $149,672
Gross profit
(a)(b)(c)(d)............ 58,586 42,520 50,958 48,162 57,051 48,881 62,500 45,628
Income from continuing
operations (a)(e)....... 2,284 126 1,622 1,169 3,872 5,101 1,724 595
Income (loss) from
discontinued
operations.............. 3,299 3,277 3,447 3,212 1,526 (1,125) 992 1,347
Net income................ $ 5,583 $ 3,403 $ 5,069 $ 4,381 $ 5,398 $ 3,976 $ 2,716 $ 1,942
======== ======== ======== ======== ======== ======== ======== ========
PER SHARE:
Income from continuing
operations.............. $ .08 $ .01 $ .06 $ .04 $ .14 $ .18 $ .06 $ .02
Income (loss) from
discontinued
operations.............. .12 .12 .13 .12 .05 (.04) .03 .05
Net Income................ .20 .13 .19 .16 .19 .14 .09 .07
Dividends................. .10 .20 .10 .20 .10 .10 .10 .10
======== ======== ======== ======== ======== ======== ======== ========
</TABLE>

- ---------------
(a) In the second quarter of 1995, the company discontinued the Natural Gas
Exploration and Production (E & P) business and reported it as a
discontinued operation. Amounts exclude E & P activities which are reported
as discontinued operations (refer to Note 17). In the second quarter of
1994, the company decided to exit the insurance business and report it as a
discontinued operation. Amounts exclude insurance activities which are
reported as income from discontinued operations (refer to Note 3).

(b) Gross profit equals total sales and operating revenues less cost of sales
and operating costs (excluding depreciation and amortization) and unusual
items.

(c) Gross profit for the third and fourth quarter of 1993 was impacted
negatively by the effect of LIFO liquidations of approximately $600,000 and
$800,000.

(d) Truck-Lite operating results included a $1,500,000 charge recorded in the
fourth quarter of 1994 to reserve for future losses associated with a
contract to manufacture automotive safety lights.
<PAGE>
<PAGE> F-23

QUAKER STATE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(e) Income from continuing operations in the third quarter of 1994 and 1993 was
positively impacted by a change of $1,400,000 due to a reduction in the
estimated state tax rate and additional tax credits and a one-time benefit
of $1,200,000 related to the change in U.S. corporate tax rate,
respectively. Income from continuing operations in the fourth quarter of
1993 was impacted positively by a change of $1,300,000 in estimated taxes,
resulting from a lower tax rate due to valuation allowance adjustments and
lower earnings in 1993.

15. SUPPLEMENTAL CASH FLOW INFORMATION

<TABLE>
<CAPTION>
1994 1993 1992
-------- ------ -------
(IN THOUSANDS)
<S> <C> <C> <C>
CASH PAID DURING THE YEAR FOR:
Interest, net of amounts capitalized................ $ 5,101 $5,717 $ 6,126
Income taxes........................................ 9,174 9,714 14,581
======= ===== ======
NONCASH INVESTING AND FINANCING ACTIVITIES:
Supplemental receivable (Note 4).................... -- -- $18,800
Preferred stock..................................... -- -- 10,000
Capital stock issued for acquisition (Note 2)....... $ 57,750 -- --
Capital stock issued under incentive plan (Note
11).............................................. 3,109 -- --
======= ===== ======
DETAILS OF ACQUISITION (NOTE 2):
Fair value of assets acquired....................... $171,219 -- --
Liabilities assumed................................. 82,748 -- --
Stock issued........................................ 57,750 -- --
------- ----- ------
Cash paid........................................... 30,721 -- --
Less: cash acquired................................... 2,355 -- --
------- ----- ------
Net cash paid for acquisition......................... $ 28,366 -- --
======= ===== ======
</TABLE>

In 1992, as a result of the bankruptcy of the purchaser of the McKean and
Emlenton plants, the company eliminated preferred stock and deferred income,
associated with the sale, from the Consolidated Balance Sheet.

16. SEGMENT INFORMATION

Information on the company's operations in different segments is contained
on pages F-2 and F-3 of this report.

17. SUBSEQUENT EVENTS

On July 11, 1995, Quaker State completed the acquisition of all the stock
of Slick 50 through the merger of Slick 50 into a wholly owned subsidiary of
Quaker State named Quaker State -- Slick 50, Inc. The consideration given in the
acquisition included payment of approximately $22,000,000 in cash and the
issuance of 1,260,403 shares of Quaker State capital stock. In addition, the
company paid approximately $11,000,000 to satisfy certain Slick 50 indebtedness
outstanding prior to the closing. Under the terms of the Merger Agreement,
additional consideration may be payable by Quaker State for Slick 50 stock
depending upon the merged company's performance during the fiscal years ending
December 31, 1996, 1997 and 1998 but subject to offset for indemnification
obligations of Slick 50 stockholders under the Merger Agreement. The acquisition
will be accounted for under the purchase method.

On August 9, 1995 the company sold most of the assets of its Natural Gas
Exploration and Production Division. Accordingly, the operating results of the
Natural Gas Exploration and Production Division have
<PAGE>
<PAGE> F-24

QUAKER STATE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

been reclassified as discontinued operations in the Consolidated Statement of
Operations for the years ended December 31, 1994, 1993, and 1992. All prior
periods have been reclassified to conform to this presentation. Additionally,
the assets of the Natural Gas Exploration and Production Division have been
reclassified as discontinued operation assets on the Consolidated Balance Sheet
as of December 31, 1994 and 1993. Notes to Consolidated Financial Statement have
been restated to exclude the Natural Gas and Production Division where the
information was available and it was practical to do.

Condensed income statements for the years ended December 31, 1994, 1993,
and 1992 are presented below:

<TABLE>
<CAPTION>
1994 1993 1992
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Revenues.............................................. $29,751 $28,010 $27,752
Cost and expenses..................................... 24,364 24,907 23,917
------ ------ ------
Income before income taxes............................ 5,387 3,103 3,835
Provision for (benefit from) income taxes............. 883 202 (64)
------ ------ ------
Net income............................................ $ 4,504 $ 2,901 $ 3,899
====== ====== ======
</TABLE>
<PAGE>
<PAGE> F-25

QUAKER STATE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
SIX MONTHS ENDED
-----------------------
6/30/95 6/30/94
-------- --------
(IN THOUSANDS EXCEPT
PER SHARE DATA,
UNAUDITED)
<S> <C> <C>
Revenues
Sales and operating revenues......................................... $497,231 $330,060
Other, net........................................................... 5,609 2,073
-------- --------
502,840 332,133
Costs and expenses
Cost of sales and operating costs.................................... 354,136 220,516
Selling, general and administrative.................................. 115,711 90,857
Depreciation and amortization........................................ 14,570 10,004
Interest............................................................. 3,118 2,403
Unusual item (Note 6)................................................ 15,800 --
-------- --------
503,335 323,780
-------- --------
Income (loss) from continuing operations before income taxes......... (495) 8,353
-------- --------
Provision for (benefit from) income taxes
Current............................................................ (400) 6,000
Deferred........................................................... 212 (1,317)
-------- --------
(188) 4,683
-------- --------
Income (loss) from continuing operations............................. (307) 3,670
Income from discontinued operations, net of taxes (Note 11).......... 2,678 6,982
-------- --------
Net income (loss).................................................... $ 2,371 $ 10,652
======== ========
Per share:
Income (loss) from continuing operations............................. $ (.01) $ .13
Income from discontinued operations.................................. .09 .26
-------- --------
Net income (loss) per share.......................................... $ .08 $ .39
======== ========
Weighted average shares outstanding.................................. 31,591 27,358
======== ========
Cash dividends paid per share........................................ $ .20 $ .20
======== ========
</TABLE>

The accompanying notes are an integral part of the financial statements.

<PAGE>
<PAGE> F-26

QUAKER STATE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED JUNE 30,
---------------------
1995 1994
-------- --------
(IN THOUSANDS,
UNAUDITED)
<S> <C> <C>
Cash flows from operating activities
Net income............................................................. $ 2,371 $ 10,652
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation, depletion and amortization............................. 19,289 15,465
Unusual item......................................................... 15,800 --
Deferred income taxes and investment tax credit...................... 1,861 (121)
Increase (decrease) from changes in:
Receivables....................................................... (13,945) (6,336)
Inventories....................................................... (1,988) (5,182)
Other current assets.............................................. (268) (911)
Accounts payable.................................................. 3,245 525
Accrued liabilities............................................... (7,924) 1,687
Other............................................................. (16,195) (1,934)
Changes in discontinued insurance operations......................... -- 5,224
-------- --------
Net cash provided by operating activities....................... 2,246 19,069
-------- --------
Cash flow from investing activities
Proceeds from disposal of property and equipment....................... 3,175 1,544
Capital expenditures................................................... (16,189) (11,555)
Proceeds from sale of discontinued coal operation assets............... 412 1,568
Discontinued insurance operations
Proceeds from sale of bonds and securities........................... -- 37,046
Purchase of bonds and securities..................................... -- (49,259)
-------- --------
Net cash used in investing activities........................... (12,602) (20,656)
-------- --------
Cash flow from financing activities
Dividends paid......................................................... (6,303) (5,457)
(Payments on) Proceeds from notes payable.............................. (34) 320
Payments on long-term debt............................................. (1,464) (137)
-------- --------
Net cash used in financing activities........................... (7,801) (5,274)
-------- --------
Net increase (decrease) in cash and cash equivalents................... (18,157) (6,861)
Cash and cash equivalents at beginning of year:
Other than discontinued insurance operations......................... 29,805 6,220
Discontinued insurance operations.................................... -- 9,408
-------- --------
Total cash and cash equivalents at beginning of year................... 29,805 15,628
-------- --------
Cash and cash equivalents at end of period:
Other than discontinued insurance operations......................... 11,648 3,063
Discontinued insurance operations.................................... -- 5,704
-------- --------
Cash and cash equivalents at end of period............................. $ 11,648 $ 8,767
======== ========
</TABLE>

The accompanying notes are an integral part of the financial statements.

<PAGE>
<PAGE> F-27

QUAKER STATE CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

6/30/95 12/31/94*
-------- -----------
(UNAUDITED)
(IN THOUSANDS EXCEPT
SHARE DATA)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................................... $ 11,648 $ 29,805
Accounts and notes receivable, less allowance of $3,049
at 6/30/95 and $2,185 at 12/31/94..................................... 104,920 91,858
-------- --------
Inventories: (Note 2)
Crude oil............................................................. 1,816 976
Finished and in-process petroleum products............................ 45,533 49,252
Other................................................................. 27,797 22,862
-------- --------
Total inventories.................................................. 75,146 73,090
-------- --------
Deferred income taxes................................................... 9,929 11,790
Other current assets.................................................... 11,637 11,708
Discontinued operation assets (Note 11)................................. 48,052 3,889
-------- --------
Total current assets.................................................. 261,332 222,140
Property, plant, and equipment, net of accumulated depreciation
of $202,126 at 6/30/95 and $190,986 at 12/31/94....................... 199,962 199,983
Discontinued operation assets (Note 11)................................. -- 48,257
Other assets............................................................ 170,401 159,638
-------- --------
Total assets....................................................... $631,695 $630,018
======== ========
LIABILITIES
Current Liabilities:
Accounts payable........................................................ $ 61,711 $ 58,500
Accrued liabilities..................................................... 66,363 58,487
Installments on long-term debt.......................................... 3,314 3,714
-------- --------
Total current liabilities............................................. 131,388 120,701
-------- --------
Long-term debt, less debt payable within one year....................... 68,471 69,535
Other long-term liabilities............................................. 183,456 187,932
-------- --------
Total liabilities..................................................... 383,315 378,168
-------- --------
Commitments and contingencies (Note 3)
STOCKHOLDERS' EQUITY
Capital stock, $1.00 par value; authorized shares, 95,000,000;
issued shares, 31,513,968 at 6/30/95 and 31,517,305 at 12/31/94....... 31,514 31,517
Treasury stock, at cost, 49,786 shares at 6/30/95 and 33,498 shares at
12/31/94.............................................................. (690) (467)
Additional capital...................................................... 120,757 120,131
Retained earnings....................................................... 100,354 104,286
Cumulative foreign currency translation adjustment...................... (488) (709)
Unearned compensation................................................... (3,067) (2,908)
-------- --------
Total stockholders' equity............................................ 248,380 251,850
-------- --------
Total liabilities and stockholders' equity......................... $631,695 $630,018
======== ========
</TABLE>

- ---------------
* Amounts are from December 31, 1994 audited balance sheet and footnotes.

The accompanying notes are an integral part of the financial statements.

<PAGE>
<PAGE> F-28

OTHER FINANCIAL INFORMATION

QUAKER STATE CORPORATION AND SUBSIDIARIES

The sales and operating revenues and contributions to income from
continuing operations, by industry segment, are as follows:

<TABLE>
<CAPTION>
SIX MONTHS ENDED
---------------------
6/30/95 6/30/94
-------- --------
(IN THOUSANDS,
UNAUDITED)
<S> <C> <C>
Sales and operating revenue
Motor oil.............................................................. 399,577 235,047
Fast lube.............................................................. 60,264 54,126
Truck-Lite............................................................. 49,617 51,218
Materials Handling..................................................... 1,662 1,447
Intersegment sales..................................................... (13,889) (11,778)
-------- --------
Total sales and operating revenue.................................... $497,231 $330,060
======== ========
Operating profit (loss)
Motor oil.............................................................. 12,874 8,268
Fast lube.............................................................. 4,140 2,779
Truck-Lite............................................................. 7,343 7,434
Materials Handling..................................................... 481 469
-------- --------
Total operating profit from continuing operations...................... 24,838 18,950
Corporate income....................................................... 2,577 1,253
Interest expense....................................................... (3,023) (2,318)
Corporate expenses..................................................... (9,087) (9,532)
Unusual item*.......................................................... (15,800) --
-------- --------
Income (loss) from continuing operations before income taxes........... (495) 8,353
======== ========
</TABLE>

- ---------------
* The restructuring charge of $15,800 includes $9,280 that relates to Motor oil.

The accompanying notes are an integral part of the financial statements.

<PAGE>
<PAGE> F-29

QUAKER STATE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. In the opinion of management of Quaker State Corporation (the company), the
accompanying financial statements include all adjustments which are
necessary to a fair statement of the results for such periods. All of these
adjustments are of a normal recurring nature. These statements should be
read in conjunction with the financial statements included as a part of the
1994 annual report on Form 10-K.

2. Inventories are stated at the lower of cost or market. Cost is determined on
the last-in, first-out (LIFO) basis for all crude oil, the majority of
company refined petroleum and vehicular lighting products; and on the
first-in, first-out (FIFO) basis for other inventories. The reserve to
reduce the carrying value of inventories from FIFO basis to LIFO basis
amounted to $22,255,000 at June 30, 1995, and $20,267,000 at December 31,
1994.

In the second quarter of 1995 certain inventory quantities were reduced
resulting in liquidations of LIFO inventory. The effect of these
liquidations was an increase in net income of $900,000, or $.03 per share.

3. In December 1993, the United States commenced a lawsuit against the company
in the U.S. District Court for Northern District of West Virginia. The
complaint alleges the company violated the federal Resource Conservation and
Recovery Act and the federal Clean Air Act at the Congo refinery on various
dates starting in 1980 and seeks civil penalties not to exceed $25,000 per
day for each violation. The company intends to vigorously defend this
lawsuit. However, the ultimate outcome of this litigation cannot presently
be determined.

In addition, the company has received notices from the EPA and others
that it is a "potentially responsible party" relative to certain waste
disposal sites identified by the EPA and may be required to share in the
cost of cleanup. The company has accrued for all matters which are probable
and can be reasonably estimated.

In April 1994, purported class actions were commenced in the U.S.
District Court for the Western District of Pennsylvania against the company
and two other oil companies. The complaints allege violations of Section 1
of the Sherman Act. In July 1995, the United States District Court certified
the proceeding as a class action and denied the defendants' motion for
summary judgment. The company believes there is no basis for the allegations
in the complaint and intends to defend the matter vigorously.

Contingent liabilities of an indeterminate amount exist in connection
with suits and claims arising in the ordinary course of business.

In the opinion of management, all matters discussed above are
adequately accrued for or covered by insurance or, if not so provided for,
are without merit or the disposition is not anticipated to have a material
effect on the company's financial position; however, one or more of these
matters could have a material effect on future quarterly or annual results
of operations when resolved.

4. The effective tax rate of 38% for continuing operations is higher than the
35% federal rate due to the added impact of state and foreign taxes. The
effective tax rate for continuing operations of 38% is lower than the 1994
rate of 56% due to lower income from continuing operations, a reduction in
the estimated state tax rate, and other changes in estimates.

5. On July 11, 1995, Quaker State completed the acquisition of all the stock of
Slick 50 through the merger of Slick 50 into a wholly owned subsidiary of
Quaker State named Quaker State-Slick 50, Inc. The consideration given in
the acquisition included payment of approximately $22,000,000 in cash and
the issuance of 1,260,403 shares of Quaker State capital stock. In addition,
the company paid approximately $11,000,000 to satisfy certain Slick 50
indebtedness outstanding prior to the closing. Under the terms of the Merger
Agreement, additional consideration may be payable by Quaker State for Slick
50 stock depending upon the merged company's performance during the fiscal
years ending December 31, 1996,
<PAGE>
<PAGE> F-30

QUAKER STATE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)

1997 and 1998 but subject to offset for indemnification obligations of Slick
50 stockholders under the Merger Agreement.

The source of funds used for cash consideration in the transaction and
the payment of Slick 50 indebtedness was borrowing under Quaker State's
$45,000,000 Revolving Credit Agreement.

The acquisition will be accounted for under the purchase method.

6. On April 28, 1995 the company announced plans to restructure its
organization to integrate recent acquisitions, consolidate management and
administrative activities, and move its corporate headquarters and Motor Oil
Division to the Dallas, Texas area. The company plans to complete the move
by the first quarter of 1996. The pre-tax costs and expenses associated with
the restructuring and relocating the workforce and closing the headquarters
facility in Oil City, Pennsylvania and its administrative unit in
Shreveport, Louisiana will approximate $25,000,000. A charge of $15,800,000
was recorded in the second quarter, of which $9,280,000 related directly to
the Motor Oil Division. The after tax restructuring charge recorded in the
quarter was $9,490,000. The remainder will be expensed as incurred.

7. On April 28, 1995 the company announced that the Board of Directors approved
a $25,000,000 development project for the Red River port in Shreveport,
Louisiana, which will become the company's manufacturing and technical
headquarters.

8. The following schedule is prepared on a pro forma basis as though Specialty
and Westland had been acquired as of the beginning of 1994, after including
the impact of adjustments, such as amortization of intangible assets,
intercompany sales elimination and related tax effects.

For the six months ended June 30, 1994

<TABLE>
<CAPTION>
For the Six Months Ended
6/30/94
------------------------
(in thousands except
per share data,
unaudited)
<S> <C>
Revenues............................................... $483,979
Income from continuing operations (Note 11)............ $ 6,520
Income per share from continuing
operations........................................... $ 0.21
</TABLE>

The pro forma results are not necessarily indicative of what would have
occurred if the acquisition had been in effect for the periods presented. In
addition, they are not intended to be a projection of future results and do
not reflect any synergies that might be achieved from combining the
operations.

9. In March 1995, the Financial Accounting Standards Board issued Standard No.
121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of " which establishes accounting standards for the
impairment of long-lived assets, certain identifiable intangibles, and
goodwill related to those assets to be held and used and for long-lived
assets and certain identifiable intangibles to be disposed of. The new
Standard must be implemented in 1996. The company is currently evaluating
what effect, if any, this Standard will have on its financial position and
results of operations.

10. On May 25, 1995 the company's stockholders approved the Amendment of Quaker
State's Certificate of Incorporation to increase the authorized number of
shares of Quaker State's capital stock from 37,500,000 to 95,000,000 shares.

11. On July 26, 1995 Quaker State signed a definitive agreement to sell most of
the assets of its Natural Gas Exploration and Production Division to Belden
& Blake Corporation of Canton, Ohio for a purchase price of $56,000,000
subject to certain possible adjustments. Accordingly, the operating results
of Natural Gas Exploration and Production have been reported as a
discontinued operation in the accompanying

<PAGE>
<PAGE> F-31

QUAKER STATE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)

Consolidated Statement of Operations for the period ending June 30, 1995.
Prior year and prior period financial statements have been reclassified to
conform to the current period presentation. Completion of the transaction
occurred on August 9, 1995. The company expects to record a gain from the
sale of these assets which will be reported under discontinued operations in
the third quarter.

- ------------------------------------------------------

NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT
TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY SINCE SUCH DATE.

------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information.................
Information Incorporated by
Reference...........................
The Company...........................
Use of Proceeds.......................
Capitalization........................
Selected Financial Information........
Business..............................
Management's Discussion and Analysis
of Financial Condition and Results
of Operations.......................
Description of Notes..................
Underwriting..........................
Notice to Canadian Residents..........
Validity of Notes.....................
Experts...............................
Index to Consolidated Financial
Statements.......................... F-1
</TABLE>

- ------------------------------------------------------

[LOGO]
QUAKER STATE
CORPORATION

$100,000,000

% Notes Due 2005

P R O S P E C T U S

CS First Boston

J.P. Morgan Securities Inc.

- ------------------------------------------------------

<PAGE>
<PAGE> II-1

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION*

The fees and expenses to be paid in connection with the distribution of the
Notes being registered hereby are established as follows:

<TABLE>
<S> <C>
Registration Fee.......................................................... $ 34,483
National Association of Securities Dealers, Inc. Filing Fee............... 10,500
Legal Fees and Expenses*.................................................. 150,000
Printing and Engraving Expenses*.......................................... 60,000
Trustee Fees*............................................................. 15,000
Accounting Fees and Expenses*............................................. 50,000
Rating Agency Fees*....................................................... 50,000
Blue Sky Fees and Expenses (including legal fees and disbursements)*...... 15,000
Miscellaneous*............................................................ 15,017
-------
Total*.......................................................... $400,000*
=======
</TABLE>

- ---------------
* Estimate.

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Certificate of Incorporation of the Company provides that to the
fullest extent that the law of the State of Delaware, as the same exists or may
hereafter be amended, permits elimination of the personal liability of
directors, no director of the Company shall be personally liable to the Company
or to its stockholders for monetary damages for breach of fiduciary duty as a
director. The Delaware General Corporation Law (the "DGCL") permits a
corporation's certificate of incorporation to provide that no director of the
corporation shall be personally liable to the corporation or its stockholders
for monetary damages for any breach of his or her fiduciary duty as a director;
provided that such provision shall not eliminate or limit the liability of a
director (1) for any breach of a director's duty of loyalty to the corporation
or its stockholders, (2) for acts or omissions that are not in good faith or
involve intentional misconduct or a knowing violation of the law, (3) under
Section 174 of the DGCL or (4) for any transaction from which the director
derived an improper personal benefit.

The Certificate of Incorporation of the Company also provides, in general,
that the Company shall indemnify its officers and directors against reasonable
expenses and any liability paid or incurred by such person in connection with
any actual or threatened claim, action, suit or proceeding, civil, criminal,
administrative, investigative or other, whether brought by or in the right of
the Company or otherwise, in which he or she may be involved, as a party or
otherwise, by reason of such person being or having been a director or officer
of the Company or by reason of the fact that such person is or was serving at
the request of the Company as a director, officer, employee, fiduciary or other
representative of another corporation, partnership, joint venture, trust,
employee benefit plan or other entity, except as prohibited by law. Section 145
of the DGCL provides, in general, that each director and officer of a
corporation may be indemnified against expenses (including attorneys' fees,
judgments, fines and amounts paid in settlement) actually and reasonably
incurred in connection with the defense or settlement of any threatened, pending
or completed legal proceedings in which he is involved by reason of the fact
that he is or was a director or officer if he acted in good faith and in a
manner that he reasonably believed to be in or not opposed to the best interests
of the corporation and, with respect to any criminal action or proceeding, if he
had no reasonable cause to believe that his conduct was unlawful. If the legal
proceeding, however, is by or in the right of the corporation, the director or
officer may not be indemnified in respect of any claim, issue or matter as to
which he shall have

<PAGE>
<PAGE> II-2

been adjudged to be liable for negligence or misconduct in the performance of
his duty to the corporation unless a court determines otherwise.

In addition, the Certificate of Incorporation of the Company provides that
the Company may purchase and maintain insurance to protect itself and any
director or officer entitled to indemnification pursuant to the Certificate of
Incorporation. Accordingly, the Company carries directors and officers liability
coverage which is subject to certain limitations and exclusions.

Reference is made to the indemnity agreements contained in the Underwriting
Agreement relating to the Notes filed as Exhibit 1 to the Registration
Statement.

ITEM 16. EXHIBITS

The following is a complete list of Exhibits filed as part of this
Registration Statement, which are incorporated herein:

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- ------------
<S> <C>
1.1 Form of Underwriting Agreement.

4.1 Form of Indenture, to be dated as of , 1995, between the Company and
Chemical Bank, as Trustee.

5.1 Opinion of Sullivan & Cromwell with respect to the legality of the Notes.*

10.1 Credit Agreement, dated as of September 29, 1995, among the Company, the Banks from
time to time party thereto and Morgan Guaranty Trust Company of New York, as Agent.*

12.1 Statement re Computation of Ratio of Earnings to Fixed Charges.*

23.1 Consent of Sullivan & Cromwell (included in its opinion filed as Exhibit 5.1).*

23.2 Consent of Coopers & Lybrand L.L.P.*

24.1 Powers of Attorney.*

25.1 Statement of Eligibility on Form T-1 of Chemical Bank, as trustee for the Notes
(bound separately).*
</TABLE>

- ---------------
* Previously filed.

ITEM 17. UNDERTAKINGS

(a) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.

(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnifica-

<PAGE>
<PAGE> II-3

tion by it is against public policy as expressed in the Act and will be governed
by the final adjudication of such issue.

(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

<PAGE>
<PAGE> II-4

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has duly caused this Amendment No. 1 to the Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Oil City, Commonwealth of Pennsylvania, on
October 10, 1995.

QUAKER STATE CORPORATION

By: /s/ HERBERT M. BAUM
------------------------------------

Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed by the following persons in the
capacities and on the date indicated.

<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- -----
<C> <S> <C>
/s/ HERBERT M. BAUM Chairman of the Board, Chief October 10, 1995
- ---------------------------------------- Executive Officer and Director
(Herbert M. Baum) (Principal Executive Officer)

/s/ CONRAD A. CONRAD Vice Chairman, Chief Financial October 10, 1995
- ---------------------------------------- Officer and Director (Principal
(Conrad A. Conrad) Financial Officer)

/s/ KEITH S. KRZEMINSKI Controller (Principal Accounting October 10, 1995
- ---------------------------------------- Officer)
(Keith S. Krzeminski)

/s/ LEONARD M. CARROLL Director October 10, 1995
- ----------------------------------------
(Leonard M. Carroll)

/s/ LAUREL CUTLER Director October 10, 1995
- ----------------------------------------
(Laurel Cutler)

/s/ C. FREDERICK FETTEROLF Director October 10, 1995
- ----------------------------------------
(C. Frederick Fetterolf)
</TABLE>

<PAGE>
<PAGE> II-5

<TABLE>
<CAPTION>
NAME TITLE DATE
- ---------------------------------------- ---------------------------------- ----------------
<C> <S> <C>
/s/ THOMAS A GARDNER Director October 10, 1995
- ----------------------------------------
(Thomas A. Gardner)

/s/ F. WILLIAM GRUBE Director October 10, 1995
- ----------------------------------------
(F. William Grube)

/s/ FORREST R. HASELTON Director October 10, 1995
- ----------------------------------------
(Forrest R. Haselton)

/s/ DELBERT J. MCQUAIDE Director October 10, 1995
- ----------------------------------------
(Delbert J. McQuaide)

/s/ L. DAVID MYATT Director October 10, 1995
- ----------------------------------------
(L. David Myatt)

/s/ RAYMOND A. ROSS, JR. Director October 10, 1995
- ----------------------------------------
(Raymond A. Ross, Jr.)

/s/ LORNE R. WAXLAX Director October 10, 1995
- ----------------------------------------
(Lorne R. Waxlax)
</TABLE>

________________________________________
* Attorney-in-Fact

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
- ------ ----------- ----
<C> <S> <C>
1.1 Form of Underwriting Agreement ................................................

4.1 Form of Indenture, to be dated as of , 1995, between the Company
and Chemical Bank, as Trustee .................................................

5.1 Opinion of Sullivan & Cromwell with respect to the legality of the Notes* .....

10.1 Credit Agreement, dated as of September 29, 1995, among the Company, the Banks
from time to time party thereto and Morgan Guaranty Trust Company of New York,
as Agent* .....................................................................

12.1 Statement re Computation of Ratio of Earnings to Fixed Charges* ...............

23.1 Consent of Sullivan & Cromwell (included in its opinion filed as
Exhibit 5.1)* .................................................................

23.2 Consent of Coopers & Lybrand L.L.P.* ..........................................

24.1 Powers of Attorney* ...........................................................

25.1 Statement of Eligibility on Form T-1 of Chemical Bank, as trustee for the Notes
(bound separately)* ...........................................................
</TABLE>

- ---------------
* Previously filed.

<PAGE> 1
Draft of October 10, 1995

$100,000,000

QUAKER STATE CORPORATION

__% Notes Due 2005

UNDERWRITING AGREEMENT

October __, 1995

CS FIRST BOSTON CORPORATION
J.P. MORGAN SECURITIES INC.
As Representatives of the Several Underwriters,
c/o CS First Boston Corporation,
Park Avenue Plaza
New York, NY 10055

Dear Sirs:

1. Introductory. Quaker State Corporation, a Delaware
corporation ("Company"), proposes to issue and sell $100,000,000 principal
amount of its __% Notes Due 2005 ("Securities") to be issued under an
indenture, dated as of October __, 1995 ("Indenture"), between the Company
and Chemical Bank, N.A., as Trustee. The Company hereby agrees with the
several Underwriters named in Schedule A hereto ("Underwriters") as
follows:

2. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, the several Underwriters that:

(a) A registration statement on Form S-3 (No. 33-63241)
relating to the Securities, including a form of prospectus, has been
filed with the Securities and Exchange Commission ("Commission") and
either (i) has been declared effective under the Securities Act of
1933, as amended ("Act"), and is not proposed to be amended or (ii)
is proposed to be amended by amendment or post-effective amendment.
If such registration statement ("initial registration statement") has
been declared effective, either (i) an additional registration
statement ("additional registration statement") relating to the
Securities may have been filed with the Commission pursuant to Rule
462(b) ("Rule 462(b)") under the Act and, if so filed, has become
effective upon filing pursuant to such Rule and the Securities all
have been duly registered under the Act pursuant to the initial
registration statement and, if applicable, the additional
registration statement or (ii) such an additional registration
statement is proposed to be filed with the Commission pursuant to
Rule 462(b) and will become effective upon filing pursuant to such
Rule and upon such filing the Securities will all have been duly
registered under the Act pursuant to the initial registration
statement and such additional registration statement. If the Company
does not propose to amend the initial registration statement or, if
an additional registration statement has been filed and the Company
does not propose

<PAGE>
<PAGE> 2

to amend it, and if any post-effective amendment to such registration
statement has been filed with the Commission prior to the execution and
delivery of this Agreement, the most recent amendment (if any) to each such
registration statement has been declared effective by the Commission or has
become effective upon filing pursuant to Rule 462(c) ("Rule 462(c)") under
the Act or, in the case of the additional registration statement, Rule
462(b). For purposes of this Agreement, "Effective Time" with respect to
the initial registration statement or, if filed prior to the execution and
delivery of this Agreement, the additional registration statement means (i)
if the Company has advised the Representatives that it does not propose to
amend such registration statement, the date and time as of which such
registration statement, or the most recent post-effective amendment thereto
(if any) filed prior to the execution and delivery of this Agreement, was
declared effective by the Commission or has become effective upon filing
pursuant to Rule 462(c), or (ii) if the Company has advised the
Representatives that it proposes to file an amendment or post-effective
amendment to such registration statement, the date and time as of which
such registration statement, as amended by such amendment or post-effective
amendment, as the case may be, is declared effective by the Commission. If
an additional registration statement has not been filed prior to the
execution and delivery of this Agreement but the Company has advised the
Representatives that it proposes to file one, "Effective Time" with respect
to such additional registration statement means the date and time as of
which such registration statement is filed and becomes effective pursuant
to Rule 462(b). "Effective Date" with respect to the initial registration
statement or the additional registration statement (if any) means the date
of the Effective Time thereof. The initial registration statement, as
amended at its Effective Time, including all material incorporated by
reference therein and including all information contained in the additional
registration statement (if any) and deemed to be a part of the initial
registration statement as of the Effective Time of the additional
registration statement pursuant to the General Instructions of the Form on
which it is filed and including all information (if any) deemed to be a
part of the initial registration statement as of its Effective Time
pursuant to Rule 430A(b) ("Rule 430A(b)") under the Act, is hereinafter
referred to as the "Initial Registration Statement." The additional
registration statement, as amended at its Effective Time, including the
contents of the initial registration statement incorporated by reference
therein and including all information (if any) deemed to be a part of the
additional registration statement as of its Effective Time pursuant to Rule
430A(b), is hereinafter referred to as the "Additional Registration
Statement." The Initial Registration Statement and the Additional
Registration Statement are herein referred to collectively as the
"Registration Statements" and individually as a "Registration Statement."
The form of prospectus relating to the Securities, as first filed with the
Commission pursuant to and in accordance with Rule 424(b) ("Rule 424(b)")
under the Act or (if no such filing is required) as included in a
Registration Statement, including all material incorporated by reference in
such prospectus, is hereinafter referred to as the "Prospectus." No
document has been or will be prepared or distributed in reliance on Rule
434 under the Act. No stop order suspending the effectiveness of such
Registration Statement or any part thereof has been issued and no
proceeding for that purpose has been instituted or, to the Company's
knowledge, threatened by the Commission.

(b) If the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this Agreement:
(i) on the Effective Date of the Initial Registration Statement, the
Initial Registration Statement conformed in all respects to the
requirements of the Act, the Trust Indenture Act of 1939 ("Trust
Indenture

<PAGE>
<PAGE> 3

Act") and the rules and regulations of the Commission ("Rules and
Regulations") and did not include any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, (ii) on the
Effective Date of the Additional Registration Statement (if any), each
Registration Statement conformed, or will conform, in all respects to the
requirements of the Act, the Trust Indenture Act and the Rules and
Regulations and did not include, or will not include, any untrue statement
of a material fact and did not omit, or will not omit, to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading and (iii) on the date of this Agreement,
the Initial Registration Statement and, if the Effective Time of the
Additional Registration Statement is prior to the execution and delivery of
this Agreement the Additional Registration Statement each conforms, and at
the time of filing of the Prospectus pursuant to Rule 424(b) or (if no such
filing is required) at the Effective Date of the Additional Registration
Statement in which the Prospectus is included, and on the Closing Date (as
hereinafter defined), each Registration Statement and the Prospectus will
conform, in all respects to the requirements of the Act, the Trust
Indenture Act and the Rules and Regulations, and neither of such documents
includes, or will include, any untrue statement of a material fact or
omits, or will omit, to state any material fact required to be stated
therein or necessary to make the statements therein not misleading. If the
Effective Time of the Initial Registration Statement is subsequent to the
execution and delivery of this Agreement: (A) on the Effective Date of the
Initial Registration Statement, the Initial Registration Statement and the
Prospectus will conform in all respects to the requirements of the Act, the
Trust Indenture Act and the Rules and Regulations, and neither of such
documents will include any untrue statement of a material fact or will omit
to state any material fact required to be stated therein or necessary to
make the statements therein not misleading, and no Additional Registration
Statement has been or will be filed and (B) on the Closing Date, the
Initial Registration Statement and the Prospectus will conform in all
respects to the requirements of the Act, the Trust Indenture Act and the
Rules and Regulations, and neither of such documents will include any
untrue statement of a material fact or will omit to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading, and no Additional Registration Statement has been or will
be filed. The two preceding sentences do not apply to statements in or
omissions from a Registration Statement or Prospectus based upon written
information furnished to the Company by any Underwriter through the
Representatives specifically for use therein, it being understood and
agreed that the only such information is that described as such in Section
7(b).

(c) Each preliminary prospectus filed as part of a
registration statement as originally filed or as part of any
amendment thereto, or filed pursuant to Rule 424 under the Act,
conformed when so filed in all respects to the requirements of the
Act and the Rules and Regulations.

(d) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
State of Delaware with corporate power and authority to own, lease
and operate its properties and conduct its business as described in
the Prospectus; and the Company is duly qualified to do business as a
foreign corporation in good standing in all other jurisdictions in
which its ownership, leasing or operation of property or the conduct
of its business requires such qualification.

<PAGE>
<PAGE> 4

(e) Each of the Company's material subsidiaries is listed on
Exhibit I hereto (collectively, "Material Subsidiaries"). Each
Material Subsidiary of the Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws of
the jurisdiction of its incorporation, with corporate power and
authority to own, lease and operate its properties and conduct its
business as described in the Prospectus; and each Material Subsidiary
of the Company is duly qualified to do business as a foreign
corporation in good standing in all other jurisdictions in which its
ownership, leasing or operation of property or the conduct of its
business requires such qualification; all of the issued and
outstanding capital stock of each Material Subsidiary of the Company
has been duly authorized and validly issued and is fully paid and
nonassessable and the capital stock of each Material Subsidiary is
owned by the Company, directly or through subsidiaries, free and
clear of any mortgage, pledge, lien, security interest, claim or
other encumbrance or defect of any kind; and there are no rights
granted to or in favor of any third party (whether acting in an
individual, fiduciary or other capacity) other than the Company to
acquire any such capital stock, any additional capital stock or any
other securities of any Material Subsidiary.

(f) The Indenture has been duly authorized by the Company
and, if the Effective Time of a Registration Statement is prior to
the execution and delivery of this Agreement, has been or otherwise
upon such Effective Time will be duly qualified under the Trust
Indenture Act with respect to the Securities registered thereby; the
Securities have been duly authorized; and when the Securities are
delivered and paid for pursuant to this Agreement on the Closing Date
(as defined in Section 3 below), the Indenture will have been duly
executed and delivered, such Securities will have been duly executed,
authenticated, issued and delivered and will conform to the
description thereof contained in the Prospectus and the Indenture and
such Securities will constitute valid and legally binding obligations
of the Company, enforceable in accordance with their terms, subject
to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or
affecting creditors' rights and to general equity principles.

(g) No consent, approval, authorization, order, registration
or qualification of, or filing with, any third party (whether acting
in an individual, fiduciary or other capacity) or any governmental
agency or body or any court is required for the consummation of the
transactions contemplated by this Agreement in connection with the
issuance and sale of the Securities by the Company, including,
without limitation, consummation by the Company of the transactions
contemplated in the Prospectus under the caption "Use of Proceeds,"
except such as have been obtained and made under the Act, the Trust
Indenture Act or the Rules and Regulations and such as may be
required under state securities laws.

(h) The execution, delivery and performance of the Indenture
and this Agreement and the issuance and sale of the Securities and
compliance with the terms and provisions thereof will not result in a
breach or violation of any of the terms and provisions of, or
constitute a default under, or result in the creation or imposition
of any lien, charge or encumbrance upon any assets or property of the
Company or any of its subsidiaries under, any statute, any rule,
regulation, order or decree of any governmental agency or body or any
court, domestic or foreign, having jurisdiction over the Company or
any subsidiary of the Company or any of their properties, assets or
operations, or any indenture, mortgage, loan or credit agreement,
note, lease, license or other agreement or instrument to which the

<PAGE>
<PAGE> 5

Company or any such subsidiary is a party or by which the Company or any
such subsidiary is bound or to which any of the properties, assets or
operations of the Company or any such subsidiary is subject, or the charter
or by-laws of the Company or any such subsidiary, and the Company has full
power and authority to authorize, issue and sell the Securities as
contemplated by this Agreement and the Indenture.

(i) This Agreement has been duly authorized, executed and
delivered by the Company.

(j) The Company and its subsidiaries have good and marketable
title to all material real properties and all other material
properties and assets owned by them, in each case free and clear of
any mortgage, pledge, lien, security interest, claim or other
encumbrance or defect that would materially affect the value thereof
or materially interfere with the use made or to be made thereof by
them; and the Company and its subsidiaries hold any leased or
subleased real or personal property under valid, subsisting and
enforceable leases or subleases with no exceptions that would
materially interfere with the use made or to be made thereof by them;
neither the Company nor any of its subsidiaries is in default under
any such lease or sublease; and no material claim of any sort has
been asserted by anyone adverse to the rights of the Company or any
subsidiary under any such lease or sublease or affecting or
questioning the right of such entity to the continued possession of
the leased or subleased properties under any such lease or sublease.

(k) The Company and its subsidiaries possess adequate
certificates, authorizations, permits or licenses issued by
appropriate governmental agencies or bodies necessary to own, lease
or operate their properties and conduct the business now operated by
them ("Licenses") and all such Licenses are in full force and effect.
Neither the Company nor any of its subsidiaries has received notice
of any proceedings (or is aware of any facts that would reasonably be
expected to result in any such proceedings) relating to the
revocation or modification of any such License that, if determined
adversely to the Company or any of its subsidiaries, would
individually or in the aggregate have a material adverse effect on
the financial condition, business or results of operations of the
Company and its subsidiaries taken as a whole.

(l) No labor dispute with the employees of the Company or any
subsidiary exists or, to the knowledge of the Company, is imminent
that might have a material adverse effect on the financial condition,
business or results of operations of the Company and its subsidiaries
taken as a whole.

(m) The Company and its subsidiaries own or have obtained
valid licenses for all trademarks, trademark registrations, service
marks, service mark registrations, trade names, copyrights, copyright
registrations, patents, inventions, know-how, confidential
information and any other intellectual property described in the
Prospectus as being owned, licensed or used by the Company or any of
its subsidiaries or that are necessary for the conduct of their
businesses as described in the Prospectus (collectively,
"Intellectual Property") and the Company is not aware of any claim
(or of any facts that would reasonably be expected to result in any
such claim) to the contrary or any challenge by any third party to
the rights of the Company or any of its subsidiaries with respect to
any such Intellectual Property or to the validity or scope of any
such Intellectual Property and neither the Company nor any of its
subsidiaries has any claim against a third party with respect to the

<PAGE>
<PAGE> 6

infringement by such third party to any such Intellectual Property that, if
determined adversely to the Company or any of its subsidiaries, would
individually or in the aggregate have a material adverse effect on the
financial condition, business or results of operations of the Company and
its subsidiaries taken as a whole. The Company and its subsidiaries have a
good faith belief in the distinctiveness and enforceability of all
trademarks, service marks and trade names and in the validity and
enforceability of all patents comprising the Intellectual Property.

(n) The properties, assets and operations of the Company and
its subsidiaries are in compliance with all applicable federal,
state, local and foreign environmental laws, rules and regulations,
orders, decrees, judgments, permits and licenses relating to public
and worker health and safety, and to the protection and clean-up of
the natural environment and to the protection or preservation of
natural resources and of plant and animal species, and activities or
conditions related thereto, including, without limitation, those
relating to the production, extraction, processing, manufacturing,
generation, handling, disposal, transportation or release of
hazardous materials (collectively, "Environmental Laws"), except to
the extent that failure so to comply would not individually or in the
aggregate have a material adverse effect on the financial condition,
business or results of operations of the Company and its subsidiaries
taken as a whole. With respect to such properties, assets and
operations (including any previously owned, leased or operated
properties, assets or operations with respect to such prior period of
ownership or operation), there are no past, present or, to the
knowledge of the Company, reasonably anticipated future events,
conditions, circumstances, activities, practices, incidents, actions
or plans of the Company or any of its subsidiaries that may interfere
with or prevent compliance or continued compliance by the Company and
its subsidiaries with applicable Environmental Laws in a manner that
would reasonably be expected to have a material adverse effect on the
financial condition, business or results of operations of the Company
and its subsidiaries taken as a whole. Except as described in the
Prospectus, neither the Company nor any of its subsidiaries is the
subject of any federal, state, local or foreign investigation, and
neither the Company nor any of its subsidiaries has received any
notice or claim (or is aware of any facts that would reasonably be
expected to result in any such claim), nor entered into any
negotiations or agreements with any third party, relating to any
liability or potential liability or remedial action or potential
remedial action under Environmental Laws, nor are there any pending,
reasonably anticipated or, to the knowledge of the Company,
threatened actions, suits or proceedings against or affecting the
Company, any of its subsidiaries or their properties, assets or
operations, in connection with any such Environmental Laws that, if
determined adversely to the Company or any of its subsidiaries would
individually or in the aggregate have a material adverse effect on
the financial condition, business or results of operations of the
Company and its subsidiaries taken as a whole. The term "hazardous
materials" shall mean those substances that are regulated by or form
the basis for liability under any applicable Environmental Laws.

(o) Except as disclosed in the Prospectus, there are no
pending actions, suits, proceedings or investigations against or
affecting the Company, any of its subsidiaries or any of their
respective properties, assets or operations that, if determined
adversely to the Company or any of its subsidiaries, would
individually or in the aggregate have a material adverse effect on
the financial condition, business or results of operations of the
Company and its subsidiaries taken as a whole, or would materially
and adversely affect the ability of the Company to perform its
obligations under the Indenture or this Agreement, or which are

<PAGE>
<PAGE> 7

otherwise material in the context of the sale of the Securities; and no
such actions, suits, proceedings or investigations are threatened or, to
the knowledge of the Company, contemplated.

(p) The financial statements and related schedules and notes
included or incorporated by reference in each Registration Statement
and the Prospectus comply with the requirements of the Act and the
Rules and Regulations, present fairly the financial position of the
Company and its consolidated subsidiaries as of the dates shown and
their results of operations and cash flows for the periods shown, and
such financial statements have been prepared in conformity with
generally accepted accounting principles in the United States applied
on a consistent basis. The financial information and statistical
data set forth in the Prospectus under the captions "Selected
Financial Data" and "Capitalization" present fairly the information
shown therein and have been compiled on a basis consistent with that
of the audited consolidated financial statements included in the
Registration Statements.

(q) Since the dates as of which information is given in each
Registration Statement and the Prospectus, (i) neither the Company
nor any of its subsidiaries has incurred any material liability or
obligation (indirect, direct or contingent) or entered into any
material verbal or written agreement or other transaction that is not
in the ordinary course of business or that could result in a material
reduction in the future earnings of the Company or its subsidiaries;
(ii) neither the Company nor any of its subsidiaries has sustained
any material loss or interference with its business or properties
from fire, flood, windstorm, accident or other calamity (whether or
not covered by insurance); (iii) there has been no change, except as
contemplated by the Prospectus, in the indebtedness of the Company
and no change in the capital stock of the Company and no dividend or
distribution of any kind declared, paid or made by the Company on any
class of its capital stock; and (iv) there has been no material
adverse change, nor any development or event involving a prospective
material adverse change, in the condition (financial or other),
business, prospects or results of operations of the Company and its
subsidiaries taken as a whole.

(r) The Company is not and, after giving effect to the
offering and sale of the Securities and the application of the
proceeds thereof as described in the Prospectus, will not be an
"investment company" as defined in the Investment Company Act of
1940, as amended.

(s) Neither the Company nor any of its affiliates does
business with the government of Cuba or with any person or affiliate
located in Cuba within the meaning of Section 517.075, Florida
Statutes (Chapter 92-198, Laws of Florida), and the regulations
thereunder, and the Company agrees to comply with such Section if
prior to the completion of the distribution of the Securities it
commences doing such business.

(t) Each "employee benefit plan" within the meaning of the
Employee Retirement Income Security Act of 1974, as amended
("ERISA"), in which employees of the Company or any subsidiary
participate or as to which the Company or any subsidiary has any
liability (the "ERISA Plans") is in compliance in all material
respects with the applicable provisions of ERISA and the Internal
Revenue Code of 1986, as amended (the "Code"), except that no
representation as to compliance is made by the Company in respect of
those ERISA Plans that are not

<PAGE>
<PAGE> 8

sponsored by the Company. Neither the Company nor any subsidiary has any
liability with respect to the ERISA Plans under Title IV of ERISA, nor does
the Company expect that any such liability will be incurred, that would
individually or in the aggregate have a material adverse effect on the
financial condition, business or results of operations of the Company and
its subsidiaries taken as a whole. The value of the aggregate vested and
nonvested benefit liabilities under each of the ERISA Plans that is subject
to Section 412 of the Code, determined as of the end of such ERISA Plan's
most recent ended plan year on the basis of the actuarial assumptions
specified for funding purposes in such Plan's most recent actuarial
valuation report, did not exceed the aggregate current value of the assets
of such ERISA Plan allocable to such benefit liabilities. Neither the
Company nor any subsidiary has any material liability, whether or not
contingent, with respect to any ERISA Plan that provides post-retirement
welfare benefits, except as disclosed in the notes to the financial
statements included in or incorporated by reference into the Prospectus.

(u) The Company and its subsidiaries have filed all federal,
state, local and foreign tax returns required to be filed, such
returns are complete and correct, and all taxes shown by such returns
or otherwise assessed that are due and payable have been paid, except
such taxes as are being contested in good faith and as to which
adequate reserves have been provided. The charges, accruals and
reserves on the books of the Company and its subsidiaries in respect
of any tax liability for any year not finally determined are adequate
to meet any assessments or reassessments for additional taxes; and
there has been no tax deficiency asserted and the Company is not
aware of any facts that would reasonably be expected to result in the
assertion of any tax deficiency against the Company or any of its
subsidiaries that would individually or in the aggregate have a
material adverse effect on the financial condition, business or
results of operations of the Company and its subsidiaries taken as a
whole.

(v) The Company and its subsidiaries maintain a system of
internal accounting controls sufficient for purposes of the
prevention or detection of errors or irregularities in amounts that
could be expected to be material to the Company's consolidated
financial statements and the recording of transactions so as to
permit the preparation of such consolidated financial statements in
conformity with generally accepted accounting principles.

(w) Neither the Company nor any of its subsidiaries is in
violation of (i) its charter or by-laws or (ii) any applicable law,
ordinance, administrative or governmental rule or regulation, or any
order, decree or judgment of any court or governmental agency or body
having jurisdiction over the Company or any subsidiary except, with
respect to this clause (ii), for such violations that would not
individually or in the aggregate have a material adverse effect on
the financial condition, business or results of operations of the
Company and its subsidiaries taken as a whole; and except as
disclosed in the Prospectus, no event of default or event that, but
for the giving of notice or the lapse of time or both, would
constitute an event of default exists, or upon the use of proceeds
from the sale of the Securities in the manner contemplated by the
description under the caption "Use of Proceeds" contained in the
Prospectus or upon the consummation of the other transactions
contemplated by the Prospectus will exist, under any indenture,
mortgage, loan or credit agreement, note, lease, permit, license or
other agreement or instrument to which the Company or any of its
subsidiaries is a party or to which

<PAGE>
<PAGE> 9

any of the properties, assets or operations of the Company or any such
subsidiary is subject.

(x) The Company and its subsidiaries carry or are entitled to
the benefits of insurance in such amounts and covering such risks as
is generally maintained by companies of established repute engaged in
the same or similar business, and all such insurance is in full force
and effect.

(y) Except as disclosed in the Prospectus, there are no
contracts, agreements or understandings between the Company or any of
its subsidiaries and any person that would give rise to a valid claim
against the Company, any such subsidiary or any Underwriter for
brokerage commission, finder's fee or other like payment.

(z) On the date each Registration Statement was first filed
with the Commission, and at the Effective Time, the Company met the
conditions for use of Form S-3 under the Act and the Rules and
Regulations.

3. Purchase, Sale and Delivery of Securities. On the basis of
the representations, warranties and agreements herein contained, but
subject to the terms and conditions herein set forth, the Company agrees to
sell to the Underwriters, and the Underwriters agree, severally and not
jointly, to purchase from the Company, at a purchase price of ______% of
the principal amount thereof plus accrued interest from ____________ __,
1995 to the Closing Date, the respective principal amounts of Securities
set forth opposite the names of the Underwriters in Schedule A hereto.

The Company will deliver against payment of the purchase price
the Securities in the form of one or more permanent global Securities in
definitive form (the "Global Securities") deposited with the Trustee as
custodian for The Depository Trust Company ("DTC") and registered in the
name of Cede & Co., as nominee for DTC. Interests in any permanent Global
Securities will be held only in book-entry form through DTC, except in the
limited circumstances described in the Prospectus. Payment for the
Securities shall be made by the Underwriters in Federal (same day) funds by
official check or checks drawn to the order of the Company at the office of
Dewey Ballantine, 1301 Avenue of the Americas, New York, New York at 10:00
A.M., (New York time), on ____________, 1995, or at such other time not
later than seven full business days thereafter as CS First Boston
Corporation ("CS First Boston") and the Company determine, such time being
herein referred to as the "Closing Date," against delivery to the Trustee
as custodian for DTC of the Global Securities representing all of the
Securities. The Global Securities will be made available for checking at
the office of CS First Boston Corporation, Park Avenue Plaza, New York, New
York 10055 at least 24 hours prior to the Closing Date.

4. Offering by Underwriters. It is understood that the
several Underwriters propose to offer the Securities for sale to the public
as set forth in the Prospectus.

5. Certain Agreements of the Company. The Company agrees with
the several Underwriters that:

(a) If the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this Agreement,
the Company will file the Prospectus with the Commission pursuant to
and in accordance with subparagraph (1) (or, if applicable and if
consented to by CS First Boston, subparagraph (4)) of Rule 424(b) not
later than the earlier of (A) the second business day following the
execution and

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<PAGE> 10

delivery of this Agreement or (B) the fifteenth business day after the
Effective Date of the Initial Registration Statement. The Company will
advise CS First Boston promptly of any such filing pursuant to Rule 424(b).
If the Effective Time of the Initial Registration Statement is prior to the
execution and delivery of this Agreement and an additional registration
statement is necessary to register a portion of the Securities under the
Act but the Effective Time thereof has not occurred as of such execution
and delivery, the Company will file the additional registration statement
or, if filed, will file a post-effective amendment thereto with the
Commission pursuant to and in accordance with Rule 462(b) on or prior to
10:00 P.M., New York time, on the date of this Agreement or, if earlier, on
or prior to the time the Prospectus is printed and distributed to any
Underwriter, or will make such filing at such later date as shall have been
consented to by CS First Boston.

(b) The Company will advise CS First Boston promptly of any
proposal to amend or supplement the initial or any additional
registration statement as filed or the related prospectus or the
Initial Registration Statement, Additional Registration Statement (if
any) or the Prospectus and will not effect such amendment or
supplementation without CS First Boston's prior consent; and the
Company will also advise CS First Boston promptly of the
effectiveness of each Registration Statement (if its Effective Time
is subsequent to the execution and delivery of this Agreement) and of
any amendment or supplementation of a Registration Statement or the
Prospectus and of the institution by the Commission of any stop order
proceedings in respect of a Registration Statement and will use its
best efforts to prevent the issuance of any such stop order and to
obtain as soon as possible its lifting, if issued.

(c) If, at any time when a prospectus relating to the
Securities is required to be delivered under the Act in connection
with sales by any Underwriter or dealer, any event occurs or
condition exists as a result of which the Prospectus as then amended
or supplemented would include an untrue statement of a material fact
or omit to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were
made, not misleading, or if it is necessary at any time to amend the
Prospectus to comply with the Act, the Company will promptly notify
CS First Boston of such event and will promptly prepare and file with
the Commission, at its own expense, an amendment or supplement which
will correct such statement or omission or an amendment which will
effect such compliance. Neither CS First Boston's consent to, nor
the Underwriters' delivery of, any such amendment or supplement shall
constitute a waiver of any of the conditions set forth in Section 6.

(d) As soon as practicable, but not later than the
Availability Date (as defined below), the Company will make generally
available to its securityholders an earnings statement covering a
period of at least 12 months beginning after the Effective Date of
the Initial Registration Statement (or, if later, the Effective Date
of the Additional Registration Statement) which will satisfy the
provisions of Section 11(a) of the Act. For the purpose of the
preceding sentence, "Availability Date" means the 45th day after the
end of the fourth fiscal quarter following the fiscal quarter that
includes such Effective Date, except that, if such fourth fiscal
quarter is the last quarter of the Company's fiscal year,
"Availability Date" means the 90th day after the end of such fourth
fiscal quarter.

<PAGE>
<PAGE> 11

(e) The Company will furnish to the Representatives copies of
each Registration Statement (at least three of which will be signed
and will include all exhibits and a signed accountant's report of
Coopers & Lybrand), each related preliminary prospectus, and, so long
as delivery of a prospectus relating to the Securities is required to
be delivered under the Act in connection with sales by any
Underwriter or dealer, the Prospectus and all amendments and
supplements to such documents, in each case and in such quantities as
CS First Boston requests. The Prospectus shall be so furnished on or
prior to 10:00 A.M., New York time, on the business day following the
later of the execution and delivery of this Agreement or the
Effective Time of the Initial Registration Statement. All other such
documents shall be so furnished as soon as available. The Company
will pay the expenses of printing and distributing to the
Underwriters all such documents.

(f) The Company will, in cooperation with CS First Boston and
counsel for the Underwriters, arrange for the qualification of the
Securities for sale and the determination of their eligibility for
investment under the laws of such jurisdictions as CS First Boston
designates and will continue such qualifications in effect so long as
required for the distribution.

(g) During the period of five years hereafter, the Company
will furnish to the Representatives and, upon request, to each of the
other Underwriters, as soon as practicable after the end of each
fiscal year, a copy of its annual report to stockholders for such
year; and the Company will furnish to the Representatives (i) as soon
as available, a copy of each report and any definitive, proxy
statement of the Company filed with the Commission under the
Securities Exchange Act of 1934, as amended, or mailed to
stockholders and (ii) from time to time, such other information
concerning the Company as CS First Boston may reasonably request.

(h) The Company will pay all expenses incident to the
performance of its obligations under this Agreement and will
reimburse the Underwriters (if and to the extent incurred by them)
for any filing fees and other expenses (including reasonable fees and
disbursements of counsel) incurred by them in connection with the
qualification of the Securities for sale and the printing of
memoranda relating thereto, for any fees charged by investment rating
agencies for the rating of the Securities, for the filing fee and the
related fees and expenses of counsel for the Underwriters in
connection with any filings required to be made with the National
Association of Securities Dealers, Inc. relating to the Securities,
for any travel expenses of the Company's officers and employees and
any other expenses of the Company in connection with attending or
hosting meetings with prospective purchasers of the Securities and
for expenses incurred in printing and distributing preliminary
prospectuses and the Prospectus (including any amendments and
supplements thereto) to the Underwriters.

(i) The Company will apply the net proceeds of the offering
and sale of the Securities contemplated hereunder in the manner set
forth in the Prospectus under the caption "Use of Proceeds."

6. Conditions of the Obligations of the Underwriters. The
obligations of the several Underwriters to purchase and pay for the
Securities on the Closing Date will be subject to the accuracy of the
representations and warranties on the part of the Company herein, to the
accuracy of the statements of Company officers made pursuant to the
provisions hereof, to the performance by the Company of its obligations
hereunder and to the following additional conditions precedent:

<PAGE>
<PAGE> 12

(a) The Representatives shall have received a letter, dated
the date of delivery thereof (which, if the Effective Time of the
Initial Registration Statement is prior to the execution and delivery
of this Agreement, shall be on or prior to the date of this Agreement
or, if the Effective Time of the Initial Registration Statement is
subsequent to the execution and delivery of this Agreement, shall be
prior to the filing of the amendment or post-effective amendment to
the registration statement to be filed shortly prior to such
Effective Time), of Coopers & Lybrand L.L.P. confirming that they are
independent public accountants within the meaning of the Act and the
applicable published Rules and Regulations thereunder and stating to
the effect that:

(i) in their opinion the financial statements and
schedules examined by them and included in the Registration
Statements comply as to form in all material respects with the
applicable accounting requirements of the Act and the related
published Rules and Regulations;

(ii) they have performed the procedures specified by the
American Institute of Certified Public Accountants for a review
of interim financial information as described in Statement of
Auditing Standards No. 71, Interim Financial Information, on
the unaudited financial statements included in the Registration
Statements;

(iii) on the basis of the review referred to in clause
(ii) above, a reading of the latest available interim financial
statements of the Company, a reading of the minutes of all
meetings of the stockholders and directors (including each
committee thereof) of the Company and its subsidiaries,
inquiries of officials of the Company who have responsibility
for financial and accounting matters and other specified
procedures, nothing came to their attention that caused them to
believe that:

(A) the unaudited financial statements included in
the Registration Statements do not comply as to form in
all material respects with the applicable accounting
requirements of the Act and the related published Rules
and Regulations or any material modifications should be
made to such financial statements for them to be in
conformity with generally accepted accounting principles;

(B) the information set forth under the caption
"Selected Financial Information" in the Prospectus does
not agree with the amounts set forth in the financial
statements from which it was derived or was not
determined on a basis substantially consistent with that
of the corresponding amounts in the audited financial
statements included in the Registration Statements and
the Prospectus;

(C) at the date of the latest available balance
sheet read by such accountants, or at a subsequent
specified date not more than five days prior to the date
of this Agreement, there was any decrease in
stockholders' equity or change in the capital stock or
any increase in short-term indebtedness or long-term debt
of the Company and its consolidated subsidiaries or, at
the date of the latest available balance sheet read by
such accountants, there was any decrease in consolidated
net current assets or net assets, as

<PAGE>
<PAGE> 13

compared with amounts shown on the latest balance sheet included in the
Registration Statements and the Prospectus; or

(D) for the period from the closing date of the
latest income statement included in the Registration
Statements and the Prospectus to the closing date of the
latest available income statement read by such
accountants, there were any decreases, as compared with
the corresponding period of the previous year and with
the period of corresponding length ended the date of the
latest income statement included in the Registration
Statements and the Prospectus, in consolidated revenues,
or consolidated income from continuing operations or
consolidated net income or net income per share, or in
the ratio of earnings to fixed charges, or in the total
or per share amounts of net earnings, or any increases or
decreases, as the case may be, in other items specified
by the Underwriters;

except in all cases set forth in clauses (C) and (D) above for
changes, increases or decreases which the Prospectus discloses
have occurred or may occur; and

(iv) they have compared specified dollar amounts (or
percentages derived from such dollar amounts), numerical data
and other financial information contained in the Registration
Statements and the Prospectus (in each case to the extent that
such dollar amounts, percentages, numerical data and other
financial information are derived from the general accounting
records of the Company and its subsidiaries subject to the
internal controls of the Company's accounting system or are
derived directly from such records by analysis or computation)
with the results obtained from inquiries, a reading of such
general accounting records and other procedures specified in
such letter and have found such dollar amounts, percentages,
numerical data and other financial information to be in
agreement with such results.

For purposes of this subsection, (i) if the Effective Time of the Initial
Registration Statement is subsequent to the execution and delivery of this
Agreement, "Registration Statements" shall mean the initial registration
statement as proposed to be amended by the amendment or post-effective
amendment to be filed shortly prior to its Effective Time, (ii) if the
Effective Time of the Initial Registration Statement is prior to the
execution and delivery of this Agreement but the Effective Time of the
Additional Registration Statement is subsequent to such execution and
delivery, "Registration Statements" shall mean the Initial Registration
Statement and the additional registration statement as proposed to be filed
or as proposed to be amended by the post-effective amendment to be filed
shortly prior to its Effective Time, and (iii) "Prospectus" shall mean the
prospectus included in the Registration Statements. All financial
statements and schedules included in material incorporated by reference
into the Prospectus shall be deemed included in the Registration Statements
for purposes of this subsection.

(b) If the Effective Time of the Initial Registration
Statement is not prior to the execution and delivery of this
Agreement, such Effective Time shall have occurred not later than
10:00 P.M., New York time, on the date of this Agreement or such
later date as shall have been consented to by CS First Boston. If
the Effective Time of the Additional Registration Statement (if any)
is not prior to the execution and delivery of this Agreement, such
Effective Time shall have occurred not later than 10:00 P.M., New
York time, on the date of this Agreement or, if

<PAGE>
<PAGE> 14

earlier, the time the Prospectus is printed and distributed to any
Underwriter, or shall have occurred at such later date as shall have been
consented to by CS First Boston. If the Effective Time of the Initial
Registration Statement is prior to the execution and delivery of this
Agreement, the Prospectus shall have been filed with the Commission in
accordance with the Rules and Regulations and Section 5(a) of this
Agreement. Prior to such Closing Date, no stop order suspending the
effectiveness of a Registration Statement shall have been issued and no
proceedings for that purpose shall have been instituted or, to the
knowledge of the Company or the Representatives, shall be contemplated by
the Commission.

(c) Subsequent to the execution and delivery of this
Agreement, there shall not have occurred (i) any change, or any
development or any event involving a prospective change, in or
affecting the condition (financial or other), business, prospects or
results of operations of the Company or its subsidiaries which, in
the judgment of a majority in interest of the Underwriters including
the Representatives, is material and adverse and makes it impractical
or inadvisable to proceed with completion of the public offering or
the sale of and payment for the Securities; (ii) any downgrading in
the rating of any debt securities of the Company by any "nationally
recognized statistical rating organization" (as defined for purposes
of Rule 436(g) under the Act), or any public announcement that any
such organization has under surveillance or review its rating of any
debt securities of the Company (other than an announcement with
positive implications of a possible upgrading, and no implications of
a possible downgrading, of such rating); (iii) any suspension or
limitation of trading in securities generally on the New York Stock
Exchange, or any setting of minimum prices for trading on such
exchange, or any suspension of trading of any securities of the
Company on any exchange or in the over-the-counter market; (iv) any
banking moratorium declared by U.S. Federal or New York authorities;
or (v) any outbreak or escalation of major hostilities in which the
United States is involved, any declaration of war by Congress or any
other substantial national or international calamity or emergency if,
in the judgment of a majority in interest of the Underwriters
including the Representatives, the effect of any such outbreak,
escalation, declaration, calamity or emergency makes it impractical
or inadvisable to proceed with completion of the public offering or
the sale of and payment for the Securities.

(d) The Representatives shall have received the opinion, dated
the Closing Date, of Sullivan & Cromwell, special counsel for the
Company, to the effect of the matters set forth on Exhibit II hereto.

(e) The Representatives shall have received the opinion,
dated the Closing Date, of Paul E. Konney, Esq., Vice President,
General Counsel and Secretary of the Company, to the effect of the
matters set forth on Exhibit III hereto.

(f) The Representatives shall have received from Dewey
Ballantine, counsel for the Underwriters, such opinion or opinions,
dated the Closing Date, with respect to the validity of the
Securities delivered on the Closing Date, the Registration
Statements, the Prospectus and other related matters as the
Representatives may require, and the Company shall have furnished to
such counsel such documents or certificates as they request for the
purpose of enabling them to pass upon such matters.

<PAGE>
<PAGE> 15

(g) The Representatives shall have received a certificate,
dated the Closing Date, of the President or any Vice President and a
principal financial or accounting officer of the Company in which
such officers, to the best of their knowledge after reasonable
investigation, shall state that: (i) the representations and
warranties of the Company in this Agreement are true and correct;
(ii) the Company has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied hereunder at or
prior to the Closing Date; (iii) no stop order suspending the
effectiveness of any Registration Statement has been issued and no
proceedings for that purpose have been instituted or are contemplated
by the Commission; (iv) the Additional Registration Statement (if
any) satisfying the requirements of subparagraphs (1) and (3) of Rule
462(b) was filed pursuant to Rule 462(b), including payment of the
applicable filing fee in accordance with Rule 111(a) or (b) under the
Act, prior to the time the Prospectus was printed and distributed to
any Underwriter; (v) subsequent to the dates as of which information
is given in the Registration Statements and the Prospectus, there has
been no material adverse change, nor any development that would
individually or in the aggregate result in a material adverse change,
in the condition (financial or other), business, prospects or results
of operations of the Company and its subsidiaries taken as a whole;
and (vi) they have carefully examined the Registration Statements and
the Prospectus and neither any Registration Statement nor the
Prospectus or any amendment or supplement thereto, as of their
respective effective or issue dates, contained any untrue statement
of a material fact or omitted to state any material fact required to
be stated therein or necessary to make the statements therein not
misleading.

(h) The Representatives shall have received a letter, dated
the Closing Date, of Coopers & Lybrand L.L.P. which meets the
requirements of subsection (a) of this Section, except that the
specified date referred to in such subsection will be a date not more
than five days prior to the Closing Date for the purposes of this
subsection.

(i) The transactions described in the Prospectus under the
caption "Management's Discussion and Analysis of the Financial
Condition and Results of Operations -- Liquidity and Financial
Condition" relating to the obtaining of waivers with respect to
certain covenants under the Company's Note Agreement dated as of
September 1, 1992, as amended, the termination of the Company's
$45.0 million bank credit facility due 1998 and the obtaining of a
new $45.0 million bank credit facility due 1996 shall have been duly
authorized by the Company and consummated; all of the waivers or
amendments required to consummate such transactions shall have been
duly obtained; and no event shall occur that would adversely affect
the consummation of such transactions or validity of such waivers or
amendments.

(j) The Representatives shall have received such other
opinions, certificates, letters and other documents from and on
behalf of the Company as the Representatives reasonably request.

All such opinions, certificates, letters and other documents
will be in compliance with the provisions hereof only if they are
reasonably satisfactory in form and substance to CS First Boston and
counsel for the Underwriters. The Company will furnish the Representatives
with such conformed copies of such opinions, certificates, letters and
documents as the Representatives reasonably request. CS First Boston may
in its sole discretion waive on behalf of the Underwriters compliance with
any conditions to the obligations of the Underwriters hereunder.

<PAGE>
<PAGE> 16

7. Indemnification and Contribution. (a) The Company will
indemnify and hold harmless each Underwriter against any losses, claims,
damages or liabilities, joint or several, to which such Underwriter may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any material
fact contained in any Registration Statement, the Prospectus, or any
amendment or supplement thereto, or any related preliminary prospectus, or
arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and will reimburse each Underwriter
for any legal or other expenses reasonably incurred by such Underwriter in
connection with investigating or defending any such loss, claim, damage,
liability or action as such expenses are incurred; provided, however, that
the Company will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement in or omission or alleged omission
from any of such documents in reliance upon and in conformity with written
information furnished to the Company by any Underwriter through the
Representatives specifically for use therein, it being understood and
agreed that the only such information furnished by any Underwriter consists
of the information described as such in subsection (b) below.

(b) Each Underwriter will severally and not jointly indemnify
and hold harmless the Company against any losses, claims, damages or
liabilities to which the Company may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in any
Registration Statement, the Prospectus, or any amendment or supplement
thereto, or any related preliminary prospectus, or arise out of or are
based upon the omission or the alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent,
that such untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with written
information furnished to the Company by such Underwriter through the
Representatives specifically for use therein, and will reimburse any legal
or other expenses reasonably incurred by the Company in connection with
investigating or defending any such loss, claim, damage, liability or
action as such expenses are incurred, it being understood and agreed that
the only such information furnished by any Underwriter consists of (i) the
legend concerning stabilization appearing on the inside front cover page of
the preliminary prospectus and the Prospectus, (ii) the list of the names
of the Underwriters and number of Securities to be purchased by each
Underwriter appearing in the preliminary prospectus and the Prospectus
under the caption "Underwriting," and (iii) concession and reallowance
figures appearing in the preliminary prospectus and the Prospectus in the
third paragraph under the caption "Underwriting."

(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying
party under subsection (a) or (b) above, notify the indemnifying party of
the commencement thereof; but the omission so to notify the indemnifying
party will not relieve it from any liability which it may have to any
indemnified party otherwise than under subsection (a) or (b) above. In
case any such action is brought against any indemnified party and it
notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to the
extent that it may wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel
satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying

<PAGE>
<PAGE> 17

party), and after notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof, the indemnifying
party will not be liable to such indemnified party under this Section for
any legal or other expenses subsequently incurred by such indemnified party
in connection with the defense thereof other than reasonable costs of
investigation. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened action in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party unless such settlement includes an unconditional release
of such indemnified party from all liability on any claims that are the
subject matter of such action.

(d) If the indemnification provided for in this Section is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall contribute
to the amount paid or payable by such indemnified party as a result of the
losses, claims, damages or liabilities referred to in subsection (a) or (b)
above (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Underwriters on
the other from the offering of the Securities or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company
on the one hand and the Underwriters on the other in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and the
Underwriters on the other shall be deemed to be in the same proportion as
the total net proceeds from the offering (before deducting expenses)
received by the Company bear to the total underwriting discounts and
commissions received by the Underwriters. The relative fault shall be
determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Company or the Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such untrue
statement or omission. The amount paid by an indemnified party as a result
of the losses, claims, damages or liabilities referred to in the first
sentence of this subsection (d) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection
with investigating or defending any action or claim which is the subject of
this subsection (d). Notwithstanding the provisions of this subsection
(d), no Underwriter shall be required to contribute any amount in excess of
the amount by which the total price at which the Securities underwritten by
it and distributed to the public were offered to the public exceeds the
amount of any damages which such Underwriter has otherwise been required to
pay by reason of such untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation.
The Underwriters' obligations in this subsection (d) to contribute are
several in proportion to their respective underwriting obligations and not
joint.

(e) The obligations of the Company under this Section shall be
in addition to any liability which the Company may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who
controls any Underwriter within the meaning of the Act; and the obligations
of the Underwriters under this Section shall be in addition to any
liability which the respective Underwriters may otherwise have and shall
extend, upon the same terms and conditions, to each director of the
Company, to each officer of the Company who has signed a Registration
Statement and to each person, if any, who controls the Company within the
meaning of the Act.

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<PAGE> 18

8. Default of Underwriters. If any Underwriter or
Underwriters default in their obligations to purchase Securities hereunder
on the Closing Date and the aggregate principal amount of Securities that
such defaulting Underwriter or Underwriters agreed but failed to purchase
does not exceed 10% of the total principal amount of Securities that the
Underwriters are obligated to purchase on the Closing Date, CS First Boston
may make arrangements satisfactory to the Company for the purchase of such
Securities by other persons, including any of the Underwriters, but if no
such arrangements are made by the Closing Date, the non-defaulting
Underwriters shall be obligated severally, in proportion to their
respective commitments hereunder, to purchase the Securities that such
defaulting Underwriters agreed but failed to purchase on the Closing Date.
If any Underwriter or Underwriters so default and the aggregate principal
amount of Securities with respect to which such default or defaults occur
exceeds 10% of the total principal amount of Securities that the
Underwriters are obligated to purchase on the Closing Date and arrangements
satisfactory to CS First Boston and the Company for the purchase of such
Securities by other persons are not made within 36 hours after such
default, this Agreement will terminate without liability on the part of any
non-defaulting Underwriter or the Company, except as provided in Section 9.
As used in this Agreement, the term "Underwriter" includes any person
substituted for an Underwriter under this Section. Nothing herein will
relieve a defaulting Underwriter from liability for its default.

9. Survival of Certain Representations and Obligations. The
respective indemnities, agreements, representations, warranties and other
statements of the Company or its officers and of the several Underwriters
set forth in or made pursuant to this Agreement will remain in full force
and effect, regardless of any investigation, or statement as to the results
thereof, made by or on behalf of any Underwriter, the Company or any of
their respective representatives, officers or directors or any controlling
person, and will survive delivery of and payment for the Securities. If
this Agreement is terminated pursuant to Section 8 or if for any reason the
purchase of the Securities by the Underwriters is not consummated, the
Company shall remain responsible for the expenses to be paid or reimbursed
by it pursuant to Section 5 and the respective obligations of the Company
and the Underwriters under Section 7 shall remain in effect, and if any
Securities have been purchased hereunder the representations and warranties
in Section 2 and all obligations under Section 5 shall also remain in
effect. If the purchase of the Securities by the Underwriters is not
consummated for any reason other than solely because of the termination of
this Agreement pursuant to Section 8 or the occurrence of any event
specified in clause (iii), (iv) or (v) of Section 6(c), the Company will
reimburse the Underwriters for all out-of-pocket expenses (including fees
and disbursements of counsel) reasonably incurred by them in connection
with the offering of the Securities.

10. Notices. All communications hereunder will be in writing
and, if sent to the Underwriters, will be mailed, delivered or telegraphed
and confirmed to the Representatives, c/o CS First Boston Corporation, Park
Avenue Plaza, New York, N.Y. 10055, Attention: Investment Banking
Department - Transactions Advisory Group, or, if sent to the Company, will
be mailed, delivered or telegraphed and confirmed to it at Quaker State
Corporation, 255 Elm Street, Oil City, Pennsylvania 16301, Attention: Paul
E. Konney, Esq., Vice President, General Counsel and Secretary; provided,
however, that any notice to an Underwriter pursuant to Section 7 will be
mailed, delivered or telegraphed and confirmed to such Underwriter.

11. Successors. This Agreement will inure to the benefit of
and be binding upon the parties hereto and their respective successors and
the officers and directors and controlling persons referred to in Section
7, and no other person will have any right or obligation hereunder.

<PAGE>
<PAGE> 19

12. Representation of Underwriters. The Representatives will
act for the several Underwriters in connection with this financing, and any
action under this Agreement taken by the Representatives jointly or by CS
First Boston will be binding upon all the Underwriters.

13. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original,
but all such counterparts shall together constitute one and the same
Agreement.

14. Applicable Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York, without
regard to principles of conflicts of laws.

The Company hereby submits to the non-exclusive jurisdiction of
the Federal and state courts in the Borough of Manhattan in The City of New
York in any suit or proceeding arising out of or relating to this Agreement
or the transactions contemplated hereby.

<PAGE>
<PAGE> 20

If the foregoing is in accordance with the Representatives'
understanding of our agreement, kindly sign and return to the Company one
of the counterparts hereof, whereupon it will become a binding agreement
between the Company and the several Underwriters in accordance with its
terms.

Very truly yours,

QUAKER STATE CORPORATION

By ______________________________
Name:
Title:

The foregoing Underwriting Agreement
is hereby confirmed and accepted as
of the date first above written.

CS FIRST BOSTON CORPORATION
J.P. MORGAN SECURITIES INC.

Acting on behalf of themselves and as the
Representatives of the several Underwriters.

By CS FIRST BOSTON CORPORATION

By _____________________________
Name:
Title:

<PAGE>
<PAGE> 21

SCHEDULE A

<S> <C>
Principal Amount
Underwriter of Securities

CS First Boston Corporation . . . . . . . . . . . . . . . . . . . . . . . . $

J.P. Morgan Securities Inc. . . . . . . . . . . . . . . . . . . . . . . . .

Chemical Securities Inc. . . . . . . . . . . . . . . . . . . . . . . . . .

NationsBanc Capital Markets, Inc. . . . . . . . . . . . . . . . . . . . . .

Total . . . . . . . . . . . . . . . . . . . . . . . . . . $100,000,000
===========

</TABLE>

<PAGE>
<PAGE> 22

EXHIBIT I

LIST OF MATERIAL SUBSIDIARIES

All of the following material subsidiaries are 100% by Quaker
State Corporation unless otherwise indicated:

<S> <S>

Jurisdiction
Name of Material Subsidiary of Incorporation

McQuik's Oilube, Inc.(1) Delaware
Q Lube, Inc.(1) Delaware
Lubeco, Inc.(2) Delaware
Truck-Lite Co., Inc.(1) New York
T-L Automotive Industries, Inc.(3) Delaware
Truck-Lite International, Inc.(3) Delaware
Specialty Oil Company, Inc. Delaware
Tye Distributing Co., Inc. Texas
Westland Oil Company, Inc. Louisiana
___________________
<FN>
(1) 100% owned by Quaker State Investment Corporation
(2) 100% owned by Q Lube, Inc.
(3) 100% owned by Truck-Lite Co., Inc.
</FN>
</TABLE>

<PAGE>
<PAGE> 23

EXHIBIT II

OPINION OF SULLIVAN & CROMWELL

<PAGE>
<PAGE> 24

EXHIBIT III

OPINION OF PAUL E. KONNEY

<PAGE>
S&C Draft of October 9, 1995

QUAKER STATE CORPORATION

CHEMICAL BANK
Trustee

________________

Indenture

Dated as of ..........., 1995

________________

$100,000,000

....% Notes Due 2005

<PAGE>
<PAGE> i

QUAKER STATE CORPORATION

Certain Sections of this Indenture relating to
Sections 310 through 318 of the
Trust Indenture Act of 1939:

Trust Indenture Indenture
Act Section Section

sec. 310(a)(1) . . . . . . . . . . . . . . . . . 609
(a)(2) . . . . . . . . . . . . . . . . . 609
(a)(3) . . . . . . . . . . . . . . . . . Not
. . . . . . . . . . . . . . . . . Applicable
(a)(4) . . . . . . . . . . . . . . . . . Not
Applicable
(b) . . . . . . . . . . . . . . . . . 608
610
sec. 311(a) . . . . . . . . . . . . . . . . . 613
(b) . . . . . . . . . . . . . . . . . 613
sec. 312(a) . . . . . . . . . . . . . . . . . 701
702(a)
(b) . . . . . . . . . . . . . . . . . 702(b)
(c) . . . . . . . . . . . . . . . . . 702(c)
sec. 313(a) . . . . . . . . . . . . . . . . . 703(a)
(a)(4) . . . . . . . . . . . . . . . . . 101
1004
(b) . . . . . . . . . . . . . . . . . 703(a)
(c) . . . . . . . . . . . . . . . . . 703(a)
(d) . . . . . . . . . . . . . . . . . 703(b)
sec. 314(a) . . . . . . . . . . . . . . . . . 704
(b) . . . . . . . . . . . . . . . . . Not
Applicable
(c)(1) . . . . . . . . . . . . . . . . . 102
(c)(2) . . . . . . . . . . . . . . . . . 102
(c)(3) . . . . . . . . . . . . . . . . . Not
Applicable
(d) . . . . . . . . . . . . . . . . . Not
Applicable
(e) . . . . . . . . . . . . . . . . . 102
sec. 315(a) . . . . . . . . . . . . . . . . . 601
(b) . . . . . . . . . . . . . . . . . 602
(c) . . . . . . . . . . . . . . . . . 601
(d) . . . . . . . . . . . . . . . . . 601
(e) . . . . . . . . . . . . . . . . . 514

<PAGE>
<PAGE> ii

Trust Indenture Indenture
Act Section Section

sec. 316(a) . . . . . . . . . . . . . . . . . 101
(a)(1)(A) . . . . . . . . . . . . . . . . . 502
512
(a)(1)(B) . . . . . . . . . . . . . . . . . 513
(a)(2) . . . . . . . . . . . . . . . . . Not
Applicable
(b) . . . . . . . . . . . . . . . . . 508
(c) . . . . . . . . . . . . . . . . . 104(c)
sec. 317(a)(1) . . . . . . . . . . . . . . . . . 503
(a)(2) . . . . . . . . . . . . . . . . . 504
(b) . . . . . . . . . . . . . . . . . 1003
sec. 318(a) . . . . . . . . . . . . . . . . . 107

______________

Note: This reconciliation and tie shall not, for any purpose, be
deemed to be a part of the Indenture.
<PAGE>
<PAGE> i TABLE OF CONTENTS

Page

Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Recitals of the Company . . . . . . . . . . . . . . . . . . . . 1

ARTICLE ONE

Definitions and Other Provisions of
General Application

SECTION 101. Definitions . . . . . . . . . . . . . . . . . . 1

Act . . . . . . . . . . . . . . . . . . . . . . 2
Affiliate; control . . . . . . . . . . . . . . . 2
Attributable Debt . . . . . . . . . . . . . . . 2
Authenticating Agent . . . . . . . . . . . . . . 3
Authorized Newspaper . . . . . . . . . . . . . . 3
Board of Directors . . . . . . . . . . . . . . . 3
Board Resolution . . . . . . . . . . . . . . . . 3
Business Day . . . . . . . . . . . . . . . . . . 3
Commission . . . . . . . . . . . . . . . . . . . 3
Company . . . . . . . . . . . . . . . . . . . . 3
Company Request; Company Order . . . . . . . . . 4
Comparable Treasury Issue . . . . . . . . . . . 4
Comparable Treasury Price . . . . . . . . . . . 4
Consolidated . . . . . . . . . . . . . . . . . . 4
Corporate Trust Office . . . . . . . . . . . . . 4
corporation . . . . . . . . . . . . . . . . . . 4
Covenant Defeasance . . . . . . . . . . . . . . 4
Defaulted Interest . . . . . . . . . . . . . . . 4
Defeasance . . . . . . . . . . . . . . . . . . . 5
Depositary . . . . . . . . . . . . . . . . . . . 5
Event of Default . . . . . . . . . . . . . . . . 5
Exchange Act . . . . . . . . . . . . . . . . . . 5
Funded Debt . . . . . . . . . . . . . . . . . . 5
GAAP . . . . . . . . . . . . . . . . . . . . . . 5
Global Security . . . . . . . . . . . . . . . . 5
Holder . . . . . . . . . . . . . . . . . . . . . 5
Indebtedness . . . . . . . . . . . . . . . . . . 5
Indenture . . . . . . . . . . . . . . . . . . . 6
Interest Payment Date . . . . . . . . . . . . . 6
Lien . . . . . . . . . . . . . . . . . . . . . . 6
Maturity . . . . . . . . . . . . . . . . . . . . 6
Net Tangible Assets . . . . . . . . . . . . . . 6
Officers' Certificate . . . . . . . . . . . . . 6

________________

Note: This table of contents shall not, for any purpose, be deemed
to be a part of the Indenture.
<PAGE>
<PAGE> ii

Opinion of Counsel . . . . . . . . . . . . . . . 7
Outstanding . . . . . . . . . . . . . . . . . . 7
Paying Agent . . . . . . . . . . . . . . . . . . 8
Person . . . . . . . . . . . . . . . . . . . . . 8
Predecessor Security . . . . . . . . . . . . . . 8
Principal Property . . . . . . . . . . . . . . . 8
Redemption Date . . . . . . . . . . . . . . . . 8
Redemption Price . . . . . . . . . . . . . . . . 8
Reference Treasury Dealer . . . . . . . . . . . 8
Regular Record Date . . . . . . . . . . . . . . 9
Responsible Officer . . . . . . . . . . . . . . 9
Restricted Subsidiary . . . . . . . . . . . . . 9
Securities . . . . . . . . . . . . . . . . . . . 9
Security Register;
Security Registrar . . . . . . . . . . . . . . 9
Senior Funded Debt . . . . . . . . . . . . . . . 9
Special Record Date . . . . . . . . . . . . . . 9
Stated Maturity . . . . . . . . . . . . . . . . 9
Subsidiary . . . . . . . . . . . . . . . . . . . 9
Treasury Yield . . . . . . . . . . . . . . . . . 10
Trustee . . . . . . . . . . . . . . . . . . . . 10
Trust Indenture Act . . . . . . . . . . . . . . 10
Vice President . . . . . . . . . . . . . . . . . 10

SECTION 102. Compliance Certificates and
Opinions . . . . . . . . . . . . . . . . . . . 10

SECTION 103. Form of Documents
Delivered to Trustee . . . . . . . . . . . . . 11

SECTION 104. Acts of Holders; Record Dates . . . . . . . . . 12

SECTION 105. Notices, Etc., to Trustee and
Company . . . . . . . . . . . . . . . . . . . 13

SECTION 106. Notice to Holders; Waiver . . . . . . . . . . . 13

SECTION 107. Conflict with Trust Indenture Act . . . . . . . 14

SECTION 108. Effect of Headings and
Table of Contents . . . . . . . . . . . . . . 14

SECTION 109. Successors and Assigns . . . . . . . . . . . . . 14

SECTION 110. Separability Clause . . . . . . . . . . . . . . 15

SECTION 111. Benefits of Indenture . . . . . . . . . . . . . 15

<PAGE>
<PAGE> iii

SECTION 112. Governing Law . . . . . . . . . . . . . . . . . 15

SECTION 113. Legal Holidays . . . . . . . . . . . . . . . . . 15

ARTICLE TWO

Security Forms

SECTION 201. Forms Generally . . . . . . . . . . . . . . . . 15

SECTION 202. Form of Face of Security . . . . . . . . . . . . 16

SECTION 203. Form of Reverse of Security . . . . . . . . . . 19

SECTION 204. Form of Trustee's
Certificate of Authentication . . . . . . . . 21

SECTION 205. Global Securities . . . . . . . . . . . . . . . 21

ARTICLE THREE

The Securities

SECTION 301. Title and Terms . . . . . . . . . . . . . . . . 22

SECTION 302. Denominations . . . . . . . . . . . . . . . . . 23

SECTION 303. Execution, Authentication,
Delivery and Dating . . . . . . . . . . . . . 23

SECTION 304. Temporary Securities . . . . . . . . . . . . . . 24

SECTION 305. Registration, Registration of
Transfer and Exchange . . . . . . . . . . . . 24

SECTION 306. Mutilated, Destroyed,
Lost and Stolen Securities . . . . . . . . . . 27

SECTION 307. Payment of Interest;
Interest Rights Preserved . . . . . . . . . . 28

SECTION 308. Persons Deemed Owners . . . . . . . . . . . . . 29
<PAGE>
<PAGE> iv

SECTION 309. Cancellation . . . . . . . . . . . . . . . . . . 30

SECTION 310. Computation of Interest . . . . . . . . . . . . 30

ARTICLE FOUR

Satisfaction and Discharge

SECTION 401. Satisfaction and
Discharge of Indenture . . . . . . . . . . . . 30

SECTION 402. Application of Trust Money . . . . . . . . . . . 32

ARTICLE FIVE

Remedies

SECTION 501. Events of Default . . . . . . . . . . . . . . . 32

SECTION 502. Acceleration of Maturity;
Rescission and Annulment . . . . . . . . . . . 35

SECTION 503. Collection of Indebtedness and
Suits for Enforcement by
Trustee . . . . . . . . . . . . . . . . . . . 36

SECTION 504. Trustee May File Proofs of Claim . . . . . . . . 37

SECTION 505. Trustee May Enforce Claims
Without Possession of
Securities . . . . . . . . . . . . . . . . . . 37

SECTION 506. Application of Money Collected . . . . . . . . . 38

SECTION 507. Limitation on Suits . . . . . . . . . . . . . . 38

SECTION 508. Unconditional Right of Holders to
Receive Principal, Premium and
Interest . . . . . . . . . . . . . . . . . . . 39

SECTION 509. Restoration of Rights and Remedies . . . . . . . 40
<PAGE>
<PAGE> v

SECTION 510. Rights and Remedies Cumulative . . . . . . . . . 40

SECTION 511. Delay or Omission Not Waiver . . . . . . . . . . 40

SECTION 512. Control by Holders . . . . . . . . . . . . . . . 40

SECTION 513. Waiver of Past Defaults . . . . . . . . . . . . 41

SECTION 514. Undertaking for Costs . . . . . . . . . . . . . 41

SECTION 515. Waiver of Stay or Extension Laws . . . . . . . . 41

ARTICLE SIX

The Trustee

SECTION 601. Certain Duties and
Responsibilities . . . . . . . . . . . . . . . 42

SECTION 602. Notice of Defaults . . . . . . . . . . . . . . . 42

SECTION 603. Certain Rights of Trustee . . . . . . . . . . . 43

SECTION 604. Not Responsible for Recitals
or Issuance of Securities . . . . . . . . . . 44

SECTION 605. May Hold Securities . . . . . . . . . . . . . . 44

SECTION 606. Money Held in Trust . . . . . . . . . . . . . . 45

SECTION 607. Compensation and Reimbursement . . . . . . . . . 45

SECTION 608. Disqualification; Conflicting
Interests . . . . . . . . . . . . . . . . . . 46

SECTION 609. Corporate Trustee Required;
Eligibility . . . . . . . . . . . . . . . . . 46

SECTION 610. Resignation and Removal;
Appointment of Successor . . . . . . . . . . . 46

SECTION 611. Acceptance of Appointment by
Successor . . . . . . . . . . . . . . . . . . 48
<PAGE>
<PAGE> vi

SECTION 612. Merger, Conversion, Consolidation
or Succession to Business . . . . . . . . . . 48

SECTION 613. Preferential Collection of
Claims Against Company . . . . . . . . . . . . 49

SECTION 614. Appointment of Authenticating
Agent . . . . . . . . . . . . . . . . . . . . 49

ARTICLE SEVEN

Holders' Lists and Reports by Trustee and Company

SECTION 701. Company to Furnish Trustee Names
and Addresses of Holders . . . . . . . . . . . 51

SECTION 702. Preservation of Information;
Communications to Holders . . . . . . . . . . 52

SECTION 703. Reports by Trustee . . . . . . . . . . . . . . . 52

SECTION 704. Reports by Company . . . . . . . . . . . . . . . 52

ARTICLE EIGHT

Consolidation, Merger, Conveyance, Transfer or Lease

SECTION 801. Company May Consolidate, Etc.,
Only on Certain Terms . . . . . . . . . . . . 53

SECTION 802. Successor Substituted . . . . . . . . . . . . . 54

ARTICLE NINE

Supplemental Indentures

SECTION 901. Supplemental Indentures Without
Consent of Holders . . . . . . . . . . . . . . 55

SECTION 902. Supplemental Indentures with
Consent of Holders . . . . . . . . . . . . . . 55
<PAGE>
<PAGE> vii

SECTION 903. Execution of Supplemental Indentures . . . . . . 56

SECTION 904. Effect of Supplemental Indentures . . . . . . . 57

SECTION 905. Conformity with Trust Indenture Act . . . . . . 57

SECTION 906. Reference in Securities to
Supplemental Indentures . . . . . . . . . . . 57

ARTICLE TEN

Covenants

SECTION 1001. Payment of Principal, Premium
and Interest . . . . . . . . . . . . . . . . . 57

SECTION 1002. Maintenance of Office or Agency . . . . . . . . 58

SECTION 1003. Money for Security Payments to
Be Held in Trust . . . . . . . . . . . . . . . 58

SECTION 1004. Statement by Officers as to
Default . . . . . . . . . . . . . . . . . . . 60

SECTION 1005. Existence . . . . . . . . . . . . . . . . . . . 60

SECTION 1006. Maintenance of Properties . . . . . . . . . . . 60

SECTION 1007. Payment of Taxes and Other Claims . . . . . . . 61

SECTION 1008. Restrictions on Liens . . . . . . . . . . . . . 61

SECTION 1009. Restrictions on Sale and Leaseback Transactions 62

SECTION 1010. Waiver of Certain Covenants . . . . . . . . . . . 63
<PAGE>
<PAGE> viii

ARTICLE ELEVEN

Defeasance and Covenant Defeasance

SECTION 1101. Company's Option to Effect Defeasance
or Covenant Defeasance . . . . . . . . . . . . 63

SECTION 1102. Defeasance and Discharge . . . . . . . . . . . . 64

SECTION 1103. Covenant Defeasance . . . . . . . . . . . . . . 64

SECTION 1104. Conditions to Defeasance or
Covenant Defeasance . . . . . . . . . . . . . 65

SECTION 1105. Deposited Money and U.S. Government
Obligations to be Held in Trust;
Miscellaneous Provisions . . . . . . . . . . . 67

SECTION 1106. Reinstatement . . . . . . . . . . . . . . . . . 68

ARTICLE TWELVE

Redemption of Securities

SECTION 1201. Right of Redemption . . . . . . . . . . . . . . 69

SECTION 1202. Applicability of Article . . . . . . . . . . . . 69

SECTION 1203. Election to Redeem; Notice
to Trustee . . . . . . . . . . . . . . . . . . 69

SECTION 1204. Selection by Trustee of
Securities to Be Redeemed . . . . . . . . . . 69

SECTION 1205. Notice of Redemption . . . . . . . . . . . . . . 70

SECTION 1206. Deposit of Redemption Price . . . . . . . . . . 71

SECTI ON 1207.Securities Payable on
Redemption Date . . . . . . . . . . . . . . . 71

SECTION 1208. Securities Redeemed in Part . . . . . . . . . . 71
<PAGE>
<PAGE> ix

TESTIMONIUM . . . . . . . . . . . . . . . . . . . . . . . . 72

SIGNATURES AND SEALS . . . . . . . . . . . . . . . . . . . . . 72

ACKNOWLEDGMENTS . . . . . . . . . . . . . . . . . . . . . . . . 73

<PAGE>
<PAGE> 1

INDENTURE, dated as of _________________________, between
QUAKER STATE CORPORATION, a corporation duly organized and existing under
the laws of the State of Delaware (herein called the "Company"), having its
principal office at 255 Elm Street, Oil City, Pennsylvania 16301, and
CHEMICAL BANK, a banking corporation duly organized and existing under the
laws of the State of New York, as Trustee (herein called the "Trustee").

RECITALS OF THE COMPANY

The Company has duly authorized the creation of an issue of its
____% Notes Due 2005 (herein called the "Securities") of substantially the
tenor and amount hereinafter set forth, and to provide therefor the Company
has duly authorized the execution and delivery of this Indenture.

All things necessary to make the Securities, when executed by
the Company and authenticated and delivered hereunder and duly issued by
the Company, the valid obligations of the Company, and to make this
Indenture a valid agreement of the Company, in accordance with their and
its terms, have been done.

NOW, THEREFORE, THIS INDENTURE WITNESSETH:

For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually agreed, for the equal and
proportionate benefit of all Holders of the Securities, as follows:

ARTICLE ONE

Definitions and Other Provisions
of General Application

SECTION 101. Definitions.

For all purposes of this Indenture, except as otherwise
expressly provided or unless the context otherwise requires:

(1) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well as
the singular;
<PAGE>
<PAGE> 2

(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the
meanings assigned to them therein;

(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted
accounting principles, and, except as otherwise herein expressly
provided, the term "generally accepted accounting principles" with
respect to any computation required or permitted hereunder shall mean
such accounting principles as are generally accepted at the date of
this instrument; and

(4) the words "herein", "hereof" and "hereunder" and other
words of similar import refer to this Indenture as a whole and not to
any particular Article, Section or other subdivision.

"Act", when used with respect to any Holder, has the meaning
specified in Section 104.

"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person. For the purposes of
this definition, "control" when used with respect to any specified Person
means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities,
by contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.

"Attributable Debt" in respect of a Sale and Leaseback
Transaction means, at the time of determination, the then present value
(discounted at the actual rate of interest of such transaction) of the
obligation of the lessee for net rental payments during the remaining term
of the lease included in such Sale and Leaseback Transaction (including any
period for which such lease has been extended or may, at the option of the
lessor, be extended).

"Authenticating Agent" means any Person authorized by the
Trustee pursuant to Section 614 to act on behalf of the Trustee to
authenticate Securities.

"Authorized Newspaper" means a newspaper of general circulation
in the relevant area, printed in the
<PAGE>
<PAGE> 3

English language and customarily published on each Business Day, whether or
not published on Saturdays, Sundays or holidays. Whenever successive
weekly publications in an Authorized Newspaper are required hereunder they
may be made (unless otherwise expressly provided herein) on the same or
different days of the week and in the same or in different Authorized
Newspapers.

"Board of Directors" means either the board of directors of the
Company or any duly authorized committee of that board to which the powers
of that board have been lawfully delegated.

"Board Resolution" means a copy of a resolution certified by
the Secretary or an Assistant Secretary of the Company to have been duly
adopted by the Board of Directors and to be in full force and effect on the
date of such certification, and delivered to the Trustee.

"Business Day" means each Monday, Tuesday, Wednesday, Thursday
and Friday which is not a day on which banking institutions in The Borough
of Manhattan, The City of New York are authorized or obligated by law,
regulation or executive order to close.

"Commission" means the Securities and Exchange Commission, as
from time to time constituted, created under the Securities Exchange Act of
1934, or, if at any time after the execution of this instrument such
Commission is not existing and performing the duties now assigned to it
under the Trust Indenture Act, then the body performing such duties at such
time.

"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor Person shall have become
such pursuant to the applicable provisions of this Indenture, and
thereafter "Company" shall mean such successor Person.

"Company Request" or "Company Order" means a written request or
order signed in the name of the Company by its Chairman of the Board, its
Vice Chairman of the Board, its President or a Vice President, and by its
Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary,
and delivered to the Trustee.

financial practice, in pricing new issues of corporate debt securities of
comparable maturity to the remaining term of the Securities. "Independent
Investment Banker" means CS First Boston Corporation or, if such firm is
unwilling or unable to select the Comparable Treasury Issue, an independent
investment banking institution of national standing appointed by the
Trustee.

"Comparable Treasury Price" means, with respect to any
redemption date, (i) the average of the bid and asked prices for the
Comparable Treasury Issue (expressed in each case as a percentage of its
principal amount) on the third business day preceding such redemption date,
as set forth in the daily statistical release (or any successor release)
published by the Federal Reserve Bank of New York and designated "Composite
3:30 p.m. Quotations for U.S. Government Securities" or (ii) if such
release (or any successor release) is not published or does not contain
such prices on such business day, (A) the average of the Reference Treasury
Dealer Quotations for such redemption date, after excluding the highest and
lowest such Reference Treasury Dealer Quotations, or (B) if the Trustee
obtains fewer than four such Reference Treasury Dealer Quotations, the
average of all such Quotations. "Reference Treasury Dealer Quotations"
means, with respect to each reference Treasury Dealer and any redemption
date, the average, as determined by the Trustee, of the bid and asked
prices for the Comparable Treasury Issue (expressed in each case as a
percentage of its principal amount) quoted in writing to the Trustee by
such Reference Treasury Dealer at 5:00 p.m. on the third business day
preceding such redemption date.

"Consolidated" when used with respect to any of the terms
defined in this Indenture, refers to such terms as reflected in a
consolidation of the accounts of the Company and its Subsidiaries in
accordance with GAAP.

"Corporate Trust Office" means the principal office of the
Trustee in The Borough of Manhattan, The City of New York at which at any
particular time its corporate trust business shall be administered.

"corporation" means a corporation, association, company, joint-
stock company or business trust.

"Covenant Defeasance" has the meaning specified in
Section 1103.

"Defaulted Interest" has the meaning specified in Section 307.
<PAGE>
<PAGE> 5

"Defeasance" has the meaning specified in Section 1102.

"Depositary" means, with respect to Securities issuable or
issued in whole or in part in the form of one or more Global Securities, a
clearing agency registered under the Exchange Act that is designated to act
as Depositary for such Securities, which such Depositary initially shall be
The Depository Trust Company, a limited-purpose trust company organized
under the New York Banking Law ("DTC").

"Event of Default" has the meaning specified in Section 501.

"Exchange Act" means the United States Securities Exchange Act
of 1934, as amended.

"Funded Debt" means Indebtedness of the Company and its
Restricted Subsidiaries, whether incurred, assumed or guaranteed, which by
its terms matures more than one year from the date of creation thereof, or
which is extendable or renewable at the sole option of the obligor so that
it may become payable more than one year from such date.

"GAAP" means, unless otherwise specified in this Indenture,
such accounting principles as are generally accepted in the United States
as of the date of the relevant calculation.

"Global Security" means a Security that evidences all or part
of the Securities, is registered in the name of the Depositary or its
nominee and bears the legend set forth in Section 205.

"Holder" means a Person in whose name a Security is registered
in the Security Register.

"Indebtedness" of any person means, without duplication, notes,
bonds, debentures or other evidences of indebtedness for borrowed money and
all indebtedness under purchase money mortgages or other purchase money
liens or conditional sales or similar title retention agreements, in each
case where such indebtedness has been created, incurred, assumed or
guaranteed by such person or where such person is otherwise liable
therefor, and indebtedness for borrowed money secured by any mortgage,
pledge or other lien or encumbrance upon property owned by such person even
though such person has not assumed or become liable for the payment of such
indebtedness.
<PAGE>
<PAGE> 6

"Indenture" means this instrument as originally executed or as
it may from time to time be supplemented or amended by one or more
indentures supplemental hereto entered into pursuant to the applicable
provisions hereof, including, for all purposes of this instrument and any
such supplemental indenture, the provisions of the Trust Indenture Act that
are deemed to be a part of and govern this instrument and any such
supplemental indenture, respectively.

"Interest Payment Date" means the Stated Maturity of an
installment of interest on the Securities.

"Lien" means any mortgage, pledge, hypothecation, charge,
assignment, deposit arrangement, encumbrance, security interest, lien
(statutory or other), or preference, priority, or other security or similar
agreement or preferential arrangement of any kind or nature whatsoever
(including, without limitation, any agreement to give or grant a Lien or
any lease, conditional sale or other title retention agreement having
substantially the same economic effect as any of the foregoing).

"Maturity", when used with respect to any Security, means the
date on which the principal of such Security becomes due and payable as
therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, call for redemption or otherwise.

"Net Tangible Assets" means the total amounts of assets (less
depreciation and valuation reserves and other reserves and items deductible
from gross book value of specific asset accounts under generally accepted
accounting principles) which under GAAP would be included on a balance
sheet after deducting therefrom (a) all liability items except Funded Debt
and stockholders' equity and (b) all goodwill, trade names, trademarks,
patents, unamortized debt discount and expense and other like intangibles,
which in each such case would be so included on such balance sheet.

"Officers' Certificate" means a certificate signed by the
Chairman of the Board, a Vice Chairman of the Board, the President or a
Vice President, and by the Treasurer, an Assistant Treasurer, the Secretary
or an Assistant Secretary, of the Company, and delivered to the Trustee.
One of the officers signing an Officers' Certificate given pursuant to
Section 1004 shall be the principal executive, financial or accounting
officer of the Company.
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<PAGE> 7

"Opinion of Counsel" means a written opinion of counsel, who
may be counsel for the Company, and who shall be acceptable to the Trustee.

"Outstanding", when used with respect to Securities, means, as
of the date of determination, all Securities theretofore authenticated and
delivered under this Indenture, except:

(i) Securities theretofore cancelled by the Trustee
or delivered to the Trustee for cancellation;

(ii) Securities for whose payment or redemption money
in the necessary amount has been theretofore deposited with the
Trustee or any Paying Agent (other than the Company) in trust
or set aside and segregated in trust by the Company (if the
Company shall act as its own Paying Agent) for the Holders of
such Securities; provided that, if such Securities are to be
redeemed, notice of such redemption has been duly given
pursuant to this Indenture or provision therefor satisfactory
to the Trustee has been made;

(iii) Securities as to which Defeasance has been
effected pursuant to Section 1102; and

(iv) Securities which have been paid pursuant to
Section 306 or in exchange for or in lieu of which other
Securities have been authenticated and delivered pursuant to
this Indenture, other than any such Securities in respect of
which there shall have been presented to the Trustee proof
satisfactory to it that such Securities are held by a bona fide
purchaser in whose hands such Securities are valid obligations
of the Company;

provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request,
demand, authorization, direction, notice, consent or waiver hereunder,
Securities owned by the Company or any other obligor upon the Securities or
any Affiliate of the Company or of such other obligor shall be disregarded
and deemed not to be Outstanding, except that, in determining whether the
Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Securities which
a Responsible Officer of the Trustee knows to be so owned shall be so
disregarded. Securities so owned
<PAGE>
<PAGE> 8

which have been pledged in good faith may be regarded as Outstanding if the
pledgee establishes to the satisfaction of the Trustee the pledgee's right
so to act with respect to such Securities and that the pledgee is not the
Company or any other obligor upon the Securities or any Affiliate of the
Company or of such other obligor.

"Paying Agent" means any Person authorized by the Company to
pay the principal of (and premium, if any) or interest on any Securities on
behalf of the Company.

"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.

"Predecessor Security" of any particular Security means every
previous Security evidencing all or a portion of the same debt as that
evidenced by such particular Security; and, for the purposes of this
definition, any Security authenticated and delivered under Section 306 in
exchange for or in lieu of a mutilated, destroyed, lost or stolen Security
shall be deemed to evidence the same debt as the mutilated, destroyed, lost
or stolen Security.

"Principal Property" means any refinery, processing or
manufacturing plant (together with any pipeline, terminal or other facility
related to such refinery or processing or manufacturing plant and necessary
for its economic operation), blending, packaging or bulk materials handling
facility, distribution center, service center or store located in the
United States or Canada, and owned or leased by the Company or a Subsidiary
or any interest of the Company or any Subsidiary in such property (in each
case including the real estate related thereto), except any such property
which the Company's Board of Directors, in its good faith opinion,
reasonably determines not to be of material importance to the business of
the Company and its Subsidiaries, as evidenced by a Board resolution.

"Redemption Date", when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.

"Redemption Price", when used with respect to any Security to
be redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.

"Reference Treasury Dealer" means each of CS First Boston
Corporation and J.P. Morgan Securities Inc. and their
<PAGE>
<PAGE> 9

respective successors; provided, however, that if any of the foregoing
shall cease to be a primary U.S. Government securities dealer in New York
City (a "Primary Treasury Dealer"), the Company shall substitute therefor
another Primary Treasury Dealer.

"Regular Record Date" for the interest payable on any Interest
Payment Date means the __________ or _____________ (whether or not a
Business Day), as the case may be, next preceding such Interest Payment
Date.

"Responsible Officer", when used with respect to the Trustee,
means any officer of the Trustee with direct responsibility for the
administration of this Indenture and also means, with respect to a
particular corporate trust matter, any other officer to whom such matter is
referred because of his knowledge of and familiarity with the particular
subject.

"Restricted Subsidiary" means any Subsidiary that owns or
leases any Principal Property.

"Securities" means the ___% Notes Due 2005 of the Company
authenticated and delivered under this Indenture.

"Security Register" and "Security Registrar" have the
respective meanings specified in Section 305.

"Senior Funded Debt" means all Funded Debt, except Funded Debt
the payment of which is subordinated to the payment of the Securities.

"Special Record Date" for the payment of any Defaulted Interest
means a date fixed by the Trustee pursuant to Section 307.

"Stated Maturity", when used with respect to any Security or
any installment of interest thereon, means the date specified in such
Security as the fixed date on which the principal of such Security or such
installment of interest is due and payable.

"Subsidiary" means a corporation, partnership or other business
entity of which more than 50% of the outstanding voting stock of which is
owned, directly or indirectly, by the Company or by one or more other
Subsidiaries, or by the Company and one or more other Subsidiaries. For the
purposes of this definition, "voting stock" means stock which ordinarily
has voting power for the election of directors, managers or trustees,
whether at all
<PAGE>
<PAGE> 10

times or only so long as no senior class of stock has such voting power by
reason of any contingency.

"Treasury Yield" means, with respect to any redemption date,
the rate per annum equal to the semiannual equivalent yield to maturity of
the Comparable Treasury Issue, assuming a price for the Comparable Treasury
Issue (expressed as a percentage of its principal amount) equal to the
Comparable Treasury Price for such redemption date.

"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become
such pursuant to the applicable provisions of this Indenture, and
thereafter "Trustee" shall mean such successor Trustee.

"Trust Indenture Act" means the Trust Indenture Act of 1939 as
in force at the date as of which this instrument was executed; provided,
however, that in the event the Trust Indenture Act of 1939 is amended after
such date, "Trust Indenture Act" means, to the extent required by any such
amendment, the Trust Indenture Act of 1939 as so amended.

"Vice President", when used with respect to the Company or the
Trustee, means any vice president, whether or not designated by a number or
a word or words added before or after the title "vice president".

SECTION 102. Compliance Certificates and Opinions.

Upon any application or request by the Company to the Trustee
to take any action under any provision of this Indenture, the Company shall
furnish to the Trustee such certificates and opinions as may be required
under the Trust Indenture Act. Each such certificate or opinion shall be
given in the form of an Officers' Certificate, if to be given by an officer
of the Company, or an Opinion of Counsel, if to be given by counsel, and
shall comply with the requirements of the Trust Indenture Act and any other
requirement set forth in this Indenture.

Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:

(1) a statement that each individual signing such certificate
or opinion has read such covenant or condition and the definitions
herein relating thereto;
<PAGE>
<PAGE> 11

(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;

(3) a statement that, in the opinion of each such individual,
he has made such examination or investigation as is necessary to
enable him to express an informed opinion as to whether or not such
covenant or condition has been complied with; and

(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.

SECTION 103. Form of Documents Delivered to Trustee.

In any case where several matters are required to be certified
by, or covered by an opinion of, any specified Person, it is not necessary
that all such matters be certified by, or covered by the opinion of, only
one such Person, or that they be so certified or covered by only one
document, but one such Person may certify or give an opinion with respect
to some matters and one or more other such Persons as to other matters, and
any such Person may certify or give an opinion as to such matters in one or
several documents.

Any certificate or opinion of an officer of the Company may be
based, insofar as it relates to legal matters, upon a certificate or
opinion of, or representations by, counsel, unless such officer knows, or
in the exercise of reasonable care should know, that the certificate or
opinion or representations with respect to the matters upon which his
certificate or opinion is based are erroneous. Any such certificate or
opinion of counsel may be based, insofar as it relates to factual matters,
upon a certificate or opinion of, or representations by, an officer or
officers of the Company stating that the information with respect to such
factual matters is in the possession of the Company, unless such counsel
knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to such matters are
erroneous.

Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions
or other instruments
<PAGE>
<PAGE> 12

under this Indenture, they may, but need not, be consolidated and form one
instrument.

SECTION 104. Acts of Holders; Record Dates.

(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be given or
taken by Holders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Holders in person
or by agent duly appointed in writing; and, except as herein otherwise
expressly provided, such action shall become effective when such instrument
or instruments are delivered to the Trustee and, where it is hereby
expressly required, to the Company. Such instrument or instruments (and
the action embodied therein and evidenced thereby) are herein sometimes
referred to as the "Act" of the Holders signing such instrument or
instruments. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 601) conclusive in favor of the Trustee
and the Company, if made in the manner provided in this Section.

(b) The fact and date of the execution of any such instrument
or writing, or the authority of the Person executing the same, may be
proved in any manner which the Trustee deems sufficient.

[(c) The Company may, in the circumstances permitted by the
Trust Indenture Act, fix any day as the record date for the purpose of
determining the Holders entitled to give or take any request, demand,
authorization, direction, notice, consent, waiver or other action, or to
vote on any action, authorized or permitted to be given or taken by
Holders. If not set by the Company prior to the first solicitation of a
Holder made by any Person in respect of any such action, or, in the case of
any such vote, prior to such vote, the record date for any such action or
vote shall be the 30th day (or, if later, the date of the most recent list
of Holders required to be provided pursuant to Section 701) prior to such
first solicitation or vote, as the case may be. With regard to any record
date, only the Holders on such date (or their duly designated proxies)
shall be entitled to give or take, or vote on, the relevant action.]

(d) The ownership of Securities shall be proved by the
Security Register.
<PAGE>
<PAGE> 13

(e) Any request, demand, authorization, direction, notice,
consent, waiver or other Act of the Holder of any Security shall bind every
future Holder of the same Security and the Holder of every Security issued
upon the registration of transfer thereof or in exchange therefor or in
lieu thereof in respect of anything done, omitted or suffered to be done by
the Trustee or the Company in reliance thereon, whether or not notation of
such action is made upon such Security.

SECTION 105. Notices, Etc., to Trustee and Company.

Any request, demand, authorization, direction, notice, consent,
waiver or Act of Holders or other document provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with,

(1) the Trustee by any Holder or by the Company shall be sufficient
for every purpose hereunder if made, given, furnished or filed in writing
to or with the Trustee at its Corporate Trust Office, Attention: Corporate
Trustee Administration Department, or

(2) the Company by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided) if
in writing and mailed, first-class postage prepaid, to the Company
addressed to it at the address of its principal office specified in the
first paragraph of this instrument or at any other address previously
furnished in writing to the Trustee by the Company.

SECTION 106. Notice to Holders; Waiver.

Where this Indenture provides for notice to Holders of any
event, such notice shall be sufficiently given (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage prepaid,
to each Holder affected by such event, at his address as it appears in the
Security Register, not later than the latest date (if any), and not earlier
than the earliest date (if any), prescribed for the giving of such notice.
In any case where notice to Holders is given by mail, neither the failure
to mail such notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such notice with respect
to other Holders. Where this Indenture
<PAGE>
<PAGE> 14

provides for notice in any manner, such notice may be waived in writing by
the Person entitled to receive such notice, either before or after the
event, and such waiver shall be the equivalent of such notice. Waivers of
notice by Holders shall be filed with the Trustee, but such filing shall
not be a condition precedent to the validity of any action taken in
reliance upon such waiver.

In case by reason of the suspension of regular mail service or
by reason of any other cause it shall be impracticable to give such notice
by mail, then such notification as shall be made with the approval of the
Trustee shall constitute a sufficient notification for every purpose
hereunder.

In case, by reason of suspension of publication of any
Authorized Newspaper, or by reason of any other cause, it shall be
impossible to make publication of any notice in an Authorized Newspaper or
Authorized Newspapers as required by this Indenture, then such method of
publication or notification as shall be made with the approval of the
Trustee shall constitute a sufficient publication of such notice.

SECTION 107. Conflict with Trust Indenture Act.

If any provision hereof limits, qualifies or conflicts with a
provision of the Trust Indenture Act that is required under such Act to be
a part of and govern this Indenture, the latter provision shall control.
If any provision of this Indenture modifies or excludes any provision of
the Trust Indenture Act that may be so modified or excluded, the latter
provision shall be deemed to apply to this Indenture as so modified or to
be excluded, as the case may be.

SECTION 108. Effect of Headings and Table of Contents.

The Article and Section headings herein and the Table of
Contents are for convenience only and shall not affect the construction
hereof.

SECTION 109. Successors and Assigns.

All covenants and agreements in this Indenture by the Company
shall bind its successors and assigns, whether so expressed or not.
<PAGE>
<PAGE> 15

SECTION 110. Separability Clause.

In case any provision in this Indenture or in the Securities
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.

SECTION 111. Benefits of Indenture.

Nothing in this Indenture or in the Securities, express or
implied, shall give to any Person, other than the parties hereto and their
successors hereunder and the Holders of Securities, any benefit or any
legal or equitable right, remedy or claim under this Indenture.

SECTION 112. Governing Law.

This Indenture and the Securities shall be governed by and
construed in accordance with the laws of the State of New York, without
regard to principles of conflicts of laws as applied in such state.

SECTION 113. Legal Holidays.

In any case where any Interest Payment Date, Redemption Date or
Stated Maturity of any Security shall not be a Business Day, then
(notwithstanding any other provision of this Indenture or of the
Securities) payment of interest or principal (and premium, if any) need not
be made on such date, but may be made on the next succeeding Business Day
with the same force and effect as if made on the Interest Payment Date or
Redemption Date, or at the Stated Maturity, provided that no interest shall
accrue for the period from and after such Interest Payment Date, Redemption
Date or Stated Maturity, as the case may be.

ARTICLE TWO

Security Forms

SECTION 201. Forms Generally.

The Securities and the Trustee's certificates of authentication
shall be in substantially the forms set forth in this Article, with such
appropriate insertions,
<PAGE>
<PAGE> 16

omissions, substitutions and other variations as are required or permitted
by this Indenture, and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange or as may,
consistently herewith, be determined by the officers executing such
Securities, as evidenced by their execution of the Securities.

The definitive Securities shall be printed, lithographed or
engraved or produced by any combination of these methods on steel engraved
borders or may be produced in any other manner permitted by the rules of
any securities exchange on which the Securities may be listed, all as
determined by the officers executing such Securities, as evidenced by
their execution of such Securities.

SECTION 202. Form of Face of Security.

The form of the face of the Global Securities shall be as set
forth below (if a Security is issued in definitive form, the form of such
definitive security will be identical to the form of the face of the Global
Security, except that the legend(s) set forth in Section 205 shall be
omitted):

QUAKER STATE CORPORATION

_____% Notes Due 2005

No. __________ $________
CUSIP No. ___________

QUAKER STATE CORPORATION, a corporation duly organized and
existing under the laws of the State of Delaware (herein called the
"Company", which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
__________________, or registered assigns, the principal sum of
_____________________ Dollars on ____________, 2005 and to pay interest
thereon from _____________ or from the most recent Interest Payment Date to
which interest has been paid or duly provided for, semi-annually on
____________ and ___________ in each year, commencing ___________, at the
rate of ___% per annum, until the principal hereof is paid or made
available for payment. The interest so payable, and punctually paid or
duly provided for, on any Interest Payment Date will, as provided in such
Indenture, be paid to the Person in whose name this Security (or one or
more Predecessor Securities) is registered at the close of
<PAGE>
<PAGE> 17

business on the Regular Record Date for such interest, which shall be the
_________ or __________ (whether or not a Business Day), as the case may
be, next preceding such Interest Payment Date. Any such interest not so
punctually paid or duly provided for will forthwith cease to be payable to
the Holder on such Regular Record Date and may either be paid to the Person
in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on a Special Record Date for the
payment of such Defaulted Interest to be fixed by the Trustee, notice
whereof shall be given to Holders of Securities not less than 10 days prior
to such Special Record Date, or be paid at any time in any other lawful
manner not inconsistent with the requirements of any securities exchange on
which the Securities may be listed, and upon such notice as may be required
by such exchange, all as more fully provided in said Indenture.

Payment of the principal of (and premium, if any) and interest
on this Security will be made at the office or agency of the Company
maintained for that purpose in The Borough of Manhattan, The City of New
York, in such coin or currency of the United States of America as at the
time of payment is legal tender for payment of public and private debts;
provided, however, that at the option of the Company payment of interest
may be made by check mailed to the address of the Person entitled thereto
as such address shall appear in the Security Register.

Reference is hereby made to the further provisions of this
Security set forth on the reverse hereof, which further provisions shall
for all purposes have the same effect as if set forth at this place.

Unless the certificate of authentication hereon has been
executed by the Trustee referred to on the reverse hereof by manual
signature, this Security shall not be
<PAGE>
<PAGE> 18

entitled to any benefit under the Indenture or be valid or obligatory for
any purpose.

IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed under its corporate seal.

Dated:

QUAKER STATE CORPORATION

By_______________________

Attest:

______________________________
<PAGE>
<PAGE> 19

SECTION 203. Form of Reverse of Security.

The form of the reverse of the Securities shall be as set forth
below:

This Security is one of a duly authorized issue of securities
of the Company designated as its __% Notes Due 2005 (herein called the
"Securities"), limited in aggregate principal amount to $100,000,000,
issued and to be issued under an Indenture, dated as of ________ 1995
(herein called the "Indenture"), between the Company and CHEMICAL BANK, as
Trustee (herein called the "Trustee", which term includes any successor
trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder
of the Company, the Trustee and the Holders of the Securities and of the
terms upon which the Securities are, and are to be, authenticated and
delivered.

This Security will be redeemable in whole or in part, at the
option of the Company at any time, at a Redemption Price equal to the
greater of (i) 100% of the principal amount on the Redemption Date and
(ii) the sum of the present values of the remaining scheduled payments of
principal and interest hereon discounted, on a semiannual basis, at the
Treasury Yield plus 15 basis points, together with accrued interest to the
Redemption Date. Interest shall be calculated on the basis of a 360-day
year consisting of twelve 30-day months.

In the event of redemption of this Security in part only, a new
Security or Securities for the unredeemed portion hereof will be issued in
the name of the Holder hereof upon the cancellation hereof.

The Indenture contains provisions for defeasance of (a) the
entire indebtedness of this Security and (b) certain restrictive covenants
and Events of Default, with respect to this Security, in each case upon
compliance by the Company with certain conditions set forth in the
Indenture.

If an Event of Default shall occur and be continuing, the
principal of (premium, if any) and interest on all the Securities may be
declared due and payable in the manner and with the effect provided in the
Indenture.

The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights
<PAGE>
<PAGE> 20

of the Holders of the Securities under the Indenture at any time by the
Company and the Trustee with the consent of the Holders of a majority in
aggregate principal amount of the Securities at the time Outstanding. The
Indenture also contains provisions permitting the Holders of specified
percentages in aggregate principal amount of the Securities at the time
Outstanding, on behalf of the Holders of all the Securities, to waive
compliance by the Company with certain provisions of the Indenture and
certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the Holder of this Security shall be conclusive and
binding upon such Holder and upon all future Holders of this Security and
of any Security issued upon the registration of transfer hereof or in
exchange herefor or in lieu hereof, whether or not notation of such consent
or waiver is made upon this Security.

No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of (and
premium, if any) and interest on this Security at the times, place and
rate, and in the coin or currency, herein prescribed.

As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable in the
Security Register, upon surrender of this Security for registration of
transfer at the office or agency of the Company in The Borough of
Manhattan, The City of New York, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Securities, of
authorized denominations and for the same aggregate principal amount, will
be issued to the designated transferee or transferees.

The Securities are issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations therein set
forth, Securities are exchangeable for a like aggregate principal amount of
Securities of a different authorized denomination, as requested by the
Holder surrendering the same.

No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in
connection therewith.
<PAGE>
<PAGE> 21

Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name this Security is registered as
the owner hereof for all purposes, whether or not this Security be overdue,
and neither the Company, the Trustee nor any such agent shall be affected
by notice to the contrary.

All terms used in this Security which are defined in the
Indenture shall have the meanings assigned to them in the Indenture.

SECTION 204. Form of Trustee's Certificate of
Authentication.

This is one of the Securities referred to in the within-
mentioned Indenture.

CHEMICAL BANK,
as Trustee

By _______________________
Authorized Officer

SECTION 205. Global Securities.

Except as provided in Section 305, the Securities shall be
issued in the form of one or more Global Securities. Every Global Security
authenticated and delivered hereunder shall bear a legend in substantially
the following form, in capital letters and bold-face type:

THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A
DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED
IN WHOLE OR IN PART FOR A SECURITY REGISTERED, AND NO TRANSFER OF
THIS SECURITY IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF
ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN
THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.

If the Depository is the Depository Trust Company, the Global
Security authenticated and delivered hereunder shall also bear a legend in
substantially the following form, in capital letters and bold-face type:
<PAGE>
<PAGE> 22

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY ("DTC") TO THE COMPANY OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
(AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS
AN INTEREST HEREIN.

ARTICLE THREE

The Securities

SECTION 301. Title and Terms.

The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is limited to
$100,000,000, except for Securities authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other
Securities pursuant to Section 304, 305, 306 or 906.

The Securities shall be known and designated as the "__% Notes
Due 2005" of the Company. Their Stated Maturity shall be __________, 2005
and they shall bear interest at the rate of ____% per annum, from
__________ 1995 or from the most recent Interest Payment Date to which
interest has been paid or duly provided for, as the case may be, payable
semi-annually on _____________ and ________, commencing ___________, to the
Person in whose name the Security or any Predecessor Security is registered
at the close of business on the _____________ or the _____________ next
preceding such Interest Payment Date, until the principal thereof is paid
or made available for payment.

The principal of (and premium, if any) and interest on the
Securities shall be payable at the office or agency of the Company in The
Borough of Manhattan, The City of New York maintained for such purpose and
at any other office or agency maintained by the Company for such purpose;
provided, however, that at the option of the Company payment of interest
may be made by check mailed to the address of the Person entitled thereto
as such address shall appear in the Security Register.
<PAGE>
<PAGE> 23

The Securities, in whole or any specified part, shall be
defeasible pursuant to Section 1302 or Section 1303 or both such Sections.

The Securities shall be issuable in the form of one or more
Global Securities, shall bear the legend specified in Section 205 and shall
be registered in the name of The Depository Trust Company or its nominee,
as Depositary.

SECTION 302. Denominations.

Upon the occurrence of an event specified in Section 305(2),
Securities shall be issuable only in registered form without coupons and
only in denominations of $1,000 and any integral multiple thereof.

SECTION 303. Execution, Authentication, Delivery
and Dating.

The Securities shall be executed on behalf of the Company by
[its Chairman of the Board,] [its Vice Chairman of the Board,] [its
President] or [one of its Vice Presidents,] under its corporate seal
reproduced thereon attested by [its Secretary] [one of its Assistant
Secretaries.] The signature of any of these officers on the Securities may
be manual or facsimile.

Securities bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall
bind the Company, notwithstanding that such individuals or any of them have
ceased to hold such offices prior to the authentication and delivery of
such Securities or did not hold such offices at the date of such
Securities.

At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Securities executed by
the Company to the Trustee for authentication, together with a Company
Order for the authentication and delivery of such Securities; and the
Trustee in accordance with such Company Order shall authenticate and
deliver such Securities for original issue in an aggregate principal amount
of up to $100,000,000 as provided in this Indenture and not otherwise.

Each Security shall be dated the date of its authentication.
<PAGE>
<PAGE> 24

No Security shall be entitled to any benefit under this
Indenture or be valid or obligatory for any purpose unless there appears on
such Security a certificate of authentication substantially in the form
provided for herein executed by the Trustee by manual signature, and such
certificate upon any Security shall be conclusive evidence, and the only
evidence, that such Security has been duly authenticated and delivered
hereunder.

SECTION 304. Temporary Securities.

Pending the preparation of definitive Securities or a permanent
Global Security, the Company may execute, and upon Company Order the
Trustee shall authenticate and deliver, temporary Securities which are
printed, lithographed, typewritten, mimeographed or otherwise produced, in
any authorized denomination, substantially of the tenor of the definitive
Securities or a permanent Global Security in lieu of which they are issued
and with such appropriate insertions, omissions, substitutions and other
variations as the officers executing such Securities may determine, as
evidenced by their execution of such Securities.

If temporary Securities are issued, the Company will cause
definitive Securities to be prepared without unreasonable delay. After the
preparation of definitive Securities, the temporary Securities may be
exchangeable for definitive Securities or beneficial interests in a
permanent Global Security, as the case may be, upon surrender of the
temporary Securities at any office or agency of the Company designated
pursuant to Section 1002, without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Securities the Company shall
execute and the Trustee shall authenticate and deliver in exchange therefor
a like principal amount of definitive Securities of authorized
denominations. Until so exchanged the temporary Securities shall in all
respects be entitled to the same benefits under this Indenture as
definitive Securities or beneficial interests in a permanent Global
Security, as the case may be.

SECTION 305. Registration, Registration of Transfer and
Exchange.

The Company shall cause to be kept at the Corporate Trust
Office of the Trustee a register (the register maintained in such office
and in any other office or agency designated pursuant to Section 1002 being
herein sometimes collectively referred to as the "Security
<PAGE>
<PAGE> 25

Register") in which, subject to such reasonable regulations as it may
prescribe, the Company shall provide for the registration of Securities and
of transfers of Securities. The Trustee is hereby appointed "Security
Registrar" for the purpose of registering Securities and transfers of
Securities as herein provided.

Upon surrender for registration of transfer of any Security at
an office or agency of the Company designated pursuant to Section 1002 for
such purpose, the Company shall execute, and the Trustee shall authenticate
and deliver, in the name of the designated transferee or transferees, one
or more new Securities of any authorized denominations and of a like
aggregate principal amount.

At the option of the Holder, Securities (except Global
Securities) may be exchanged for other Securities of any authorized
denominations and of a like aggregate principal amount and of a like Stated
Maturity and with like terms and conditions, upon surrender of the
Securities to be exchanged at such office or agency. Whenever any
Securities are so surrendered for exchange, the Company shall execute, and
the Trustee shall authenticate and deliver, the Securities which the Holder
making the exchange is entitled to receive.

All Securities issued upon any registration of transfer or
exchange of Securities shall be the valid obligations of the Company,
evidencing the same debt, and entitled to the same benefits under this
Indenture, as the Securities surrendered upon such registration of transfer
or exchange.

Every Security presented or surrendered for registration of
transfer or for exchange shall (if so required by the Company or the
Trustee) be duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Company and the Security Registrar
duly executed, by the Holder thereof or his attorney duly authorized in
writing.

No service charge shall be made for any registration of
transfer or exchange of Securities, but the Company may require payment of
a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any registration of transfer or exchange of
Securities, other than exchanges pursuant to Section 304 or 906 not
involving any transfer.

The Company shall not be required (i) to issue, register the
transfer of or exchange any Security during a
<PAGE>
<PAGE> 26

period beginning at the opening of business 15 days before the day of the
mailing of a notice of redemption of Securities selected for redemption
under Section 1104 and ending at the close of business on the day of such
mailing, or (ii) to register the transfer of or exchange any Security so
selected for redemption in whole or in part, except the unredeemed portion
of any Security being redeemed in part.

The provisions of Clauses (1), (2), (3) and (4) below shall
apply only to Global Securities:

(1) Each Global Security authenticated under this Indenture
shall be registered in the name of the Depositary designated for such
Global Security or a nominee thereof and delivered to such Depositary
or a nominee thereof or custodian therefor, and each such Global
Security shall constitute a single Security for all purposes of this
Indenture.

(2) Notwithstanding any other provision in this Indenture, no
Global Security may be exchanged in whole or in part for Securities
registered, and no transfer of a Global Security in whole or in part
may be registered, in the name of any Person other than the
Depositary for such Global Security or a nominee thereof unless
(A) such Depositary (i) has notified the Company that it is unwilling
or unable to continue as Depositary for such Global Security and is
not replaced by a successor Depositary approved by the Trustee or
(ii) at any time has ceased to be a clearing agency registered under
the Exchange Act, or (B) the Company in its sole discretion
determines not to have all of the Securities represented by a Global
Security and notifies the Trustee thereof or (C) there shall have
occurred and be continuing an Event of Default with respect to such
Global Security.

(3) Subject to Clause (2) above, any exchange of a Global
Security for other Securities may be made in whole or in part, and
all Securities issued in exchange for a Global Security or any
portion thereof shall be registered in such names as the Depositary
for such Global Security shall direct.

(4) Every Security authenticated and delivered upon
registration of transfer of, or in exchange for or in lieu of, a
Global Security or any portion thereof, whether pursuant to this
Section, Section 304, 306 or 906 or otherwise, shall be authenticated
and delivered in the form of, and shall be, a Global Security, unless
such Security is registered in the name of a Person
<PAGE>
<PAGE> 27

other than the Depositary for such Global Security or a nominee
thereof.

SECTION 306. Mutilated, Destroyed, Lost and
Stolen Securities.

If any mutilated Security is surrendered to the Trustee, the
Company shall execute and the Trustee shall authenticate and deliver in
exchange therefor a new Security of like tenor and principal amount and
bearing a number not contemporaneously outstanding.

If there shall be delivered to the Company and the Trustee
(i) evidence to their satisfaction of the destruction, loss or theft of any
Security and (ii) such security or indemnity as may be required by them to
save each of them and any agent of either of them harmless, then, in the
absence of notice to the Company or the Trustee that such Security has been
acquired by a bona fide purchaser, the Company shall execute and the
Trustee shall authenticate and deliver, in lieu of any such destroyed, lost
or stolen Security, a new Security of like tenor and principal amount and
bearing a number not contemporaneously outstanding.

In case any such mutilated, destroyed, lost or stolen Security
has become or is about to become due and payable, the Company in its
discretion may, instead of issuing a new Security, pay such Security.

Upon the issuance of any new Security under this Section, the
Company may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto and any
other expenses (including the fees and expenses of the Trustee) connected
therewith.

Every new Security issued pursuant to this Section in lieu of
any destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, whether or not the
destroyed, lost or stolen Security shall be at any time enforceable by
anyone, and shall be entitled to all the benefits of this Indenture equally
and proportionately with any and all other Securities duly issued
hereunder.

The provisions of this Section are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Securities.
<PAGE>
<PAGE> 28

SECTION 307. Payment of Interest; Interest
Rights Preserved.

Interest on any Security which is payable, and is punctually
paid or duly provided for, on any Interest Payment Date shall be paid to
the Person in whose name that Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record
Date for such interest.

Any interest on any Security which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date (herein
called "Defaulted Interest") shall forthwith cease to be payable to the
Holder on the relevant Regular Record Date by virtue of having been such
Holder, and such Defaulted Interest may be paid by the Company, at its
election in each case, as provided in Clause (1) or (2) below:

(1) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Securities (or their
respective Predecessor Securities) are registered at the close of
business on a Special Record Date for the payment of such Defaulted
Interest, which shall be fixed in the following manner. The Company
shall notify the Trustee in writing of the amount of Defaulted
Interest proposed to be paid on each Security and the date of the
proposed payment, and at the same time the Company shall deposit with
the Trustee an amount of money equal to the aggregate amount proposed
to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit prior to
the date of the proposed payment, such money when deposited to be
held in trust for the benefit of the Persons entitled to such
Defaulted Interest as in this Clause provided. Thereupon the Trustee
shall fix a Special Record Date for the payment of such Defaulted
Interest which shall be not more than 15 days and not less than
10 days prior to the date of the proposed payment and not less than
10 days after the receipt by the Trustee of the notice of the
proposed payment. The Trustee shall promptly notify the Company of
such Special Record Date and, in the name and at the expense of the
Company, shall cause notice of the proposed
<PAGE>
<PAGE> 29

payment of such Defaulted Interest and the Special Record Date
therefor to be mailed, first-class postage prepaid, to each Holder at
his address as it appears in the Security Register, not less than
10 days prior to such Special Record Date. Notice of the proposed
payment of such Defaulted Interest and the Special Record Date
therefor having been so mailed, such Defaulted Interest shall be paid
to the Persons in whose names the Securities (or their respective
Predecessor Securities) are registered at the close of business on
such Special Record Date and shall no longer be payable pursuant to
the following Clause (2).

(2) The Company may make payment of any Defaulted Interest in
any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities may be listed, and upon
such notice as may be required by such exchange, if, after notice
given by the Company to the Trustee of the proposed payment pursuant
to this Clause, such manner of payment shall be deemed practicable by
the Trustee.

Subject to the foregoing provisions of this Section, each
Security delivered under this Indenture upon registration of transfer of or
in exchange for or in lieu of any other Security shall carry the rights to
interest accrued and unpaid, and to accrue, which were carried by such
other Security.

SECTION 308. Persons Deemed Owners.

Prior to due presentment of a Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name such Security is registered as
the owner of such Security for the purpose of receiving payment of
principal of (and premium, if any) and (subject to Section 307) interest on
such Security and for all other purposes whatsoever, whether or not such
Security be overdue, and neither the Company, the Trustee nor any agent of
the Company or the Trustee shall be affected by notice to the contrary.
<PAGE>
<PAGE> 30

SECTION 309. Cancellation.

All Securities surrendered for payment, redemption,
registration of transfer or exchange shall, if surrendered to any Person
other than the Trustee, be delivered to the Trustee and shall be promptly
cancelled by it. The Company may at any time deliver to the Trustee for
cancellation any Securities previously authenticated and delivered
hereunder which the Company may have acquired in any manner whatsoever, and
all Securities so delivered shall be promptly cancelled by the Trustee. No
Securities shall be authenticated in lieu of or in exchange for any
Securities cancelled as provided in this Section, except as expressly
permitted by this Indenture. All cancelled Securities held by the Trustee
shall be destroyed by the Trustee and a certificate of such destruction
delivered to the Company unless the Trustee is otherwise directed by a
Company Order.

SECTION 310. Computation of Interest.

Interest on the Securities shall be computed on the basis of a
360-day year of twelve 30-day months.

ARTICLE FOUR

Satisfaction and Discharge

SECTION 401. Satisfaction and Discharge of Indenture.

This Indenture shall cease to be of further effect (except as
to any surviving rights of registration of transfer or exchange of
Securities herein expressly provided for), and the Trustee, on demand of
and at the expense of the Company, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture, when

(1) either

(A) all Securities theretofore authenticated
and delivered (other than (i) Securities which have
been destroyed, lost or stolen and which have been
replaced or paid as provided in Section 306 and
(ii) Securities for whose payment money has
theretofore been deposited in trust or segregated
and held in trust by the Company and
<PAGE>
<PAGE> 31

thereafter repaid to the Company or discharged from
such trust, as provided in Section 1003) have been
delivered to the Trustee for cancellation; or

(B) all such Securities not theretofore
delivered to the Trustee for cancellation

(i) have become due and payable,
or

(ii) will become due and payable at
their Stated Maturity within one year,
or

(iii) are to be called for redemp-
tion within one year under arrangements
satisfactory to the Trustee for the
giving of notice of redemption by the
Trustee in the name, and at the
expense, of the Company,

and the Company, in the case of (i), (ii) or (iii)
above, has deposited or caused to be deposited with
the Trustee as trust funds in trust for the purpose
an amount sufficient to pay and discharge the
entire indebtedness on such Securities not
theretofore delivered to the Trustee for
cancellation, for principal (and premium, if any)
and interest to the date of such deposit (in the
case of Securities which have become due and
payable) or to the Stated Maturity or Redemption
Date, as the case may be;

(2) the Company has paid or caused to be paid all other sums
payable hereunder by the Company; and

(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all
conditions precedent herein provided for relating to the satisfaction
and discharge of this Indenture have been complied with.

Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee
<PAGE>
<PAGE> 32

under Section 607, the obligations of the Trustee to any Authenticating
Agent under Section 614 and, if money shall have been deposited with the
Trustee pursuant to subclause (B) of Clause (1) of this Section or if money
or obligations have been deposited with the Trustee pursuant to Sections
1102 or 1103, the obligations of the Trustee under Section 402 and the last
paragraph of Section 1003 shall survive.

SECTION 402. Application of Trust Money.

Subject to the provisions of the last paragraph of
Section 1003, all money deposited with the Trustee pursuant to Section 401,
all money and U.S. Government Obligations deposited with the Trustee
pursuant to Section 1102 or 1103 and all money received by the Trustee in
respect of U.S. Government Obligations deposited with the Trustee pursuant
to Section 1102 or 1103, shall be held in trust and applied by it, in
accordance with the provisions of the Securities and this Indenture, to the
payment, either directly or through any Paying Agent (including the Company
acting as its own Paying Agent) as the Trustee may determine, to the
Persons entitled thereto, of the principal (and premium, if any) and
interest for whose payment such money has been deposited with or received
by the Trustee.

ARTICLE FIVE

Remedies

SECTION 501. Events of Default.

"Event of Default", wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether
it shall be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment, decree or order of any court or any order, rule
or regulation of any administrative or governmental body):

(1) default in the payment of any interest upon any
Security when it becomes due and payable, and continuance of
such default for a period of 30 days; or

(2) default in the payment of the principal of (or
premium, if any, on) any Security at its Stated Maturity; or
<PAGE>
<PAGE> 33

(3) default in the performance, or breach, of any
covenant or warranty of the Company in this Indenture (other
than a covenant or warranty a default in whose performance or
whose breach is elsewhere in this Section specifically dealt
with), and continuance of such default or breach for a period
of 60 days after there has been given, by registered or
certified mail, to the Company by the Trustee or to the Company
and the Trustee by the Holders of at least 10% in principal
amount of the Outstanding Securities a written notice
specifying such default or breach and requiring it to be
remedied and stating that such notice is a "Notice of Default"
hereunder; or

(4) a default in the payment of principal at Maturity
(subject to any applicable grace period) of any Indebtedness
for money borrowed by the Company or any Subsidiary that has
an outstanding principal balance of $15,000,000 or more, whether
such Indebtedness now exists or shall hereafter be created, or
the acceleration of such Indebtedness without such acceleration
having been rescinded or annulled within a period of 10 days after
there shall have been given, by registered or certified mail, to
the Company by the Trustee or to the Company and the Trustee by
the Holders of at least 10% in principal amount of the Outstanding
Securities a written notice specifying such default and
requiring the Company to cause such acceleration to be
rescinded or annulled and stating that such notice is a "Notice
of Default" hereunder; provided, however, that, subject to the
provisions of Sections 601 and 602, the Trustee shall not be
deemed to have knowledge of such default unless either (A) a
Responsible Officer of the Trustee shall have actual knowledge
of such default or (B) the Trustee shall have received written
notice thereof from the Company, from any Holder, from the
holder of any such Indebtedness or
<PAGE>
<PAGE> 34

from the trustee under any such mortgage, indenture or other
instrument; or

(5) the entry by a court having jurisdiction in the
premises of (A) a decree or order for relief in respect of the
Company in an involuntary case or proceeding under any
applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or (B) a decree or order
adjudging the Company a bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization, arrangement,
adjustment or composition of or in respect of the Company under
any applicable Federal or State law, or appointing a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other
similar official of the Company or of any substantial part of
its property, or ordering the winding up or liquidation of its
affairs, and the continuance of any such decree or order for
relief or any such other decree or order unstayed and in effect
for a period of 60 consecutive days; or

(6) the commencement by the Company of a voluntary case
or proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or of any other
case or proceeding to be adjudicated a bankrupt or insolvent,
or the consent by it to the entry of a decree or order for
relief in respect of the Company in an involuntary case or
proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or to the
commencement of any bankruptcy or insolvency case or proceeding
against it, or the filing by it of a petition or answer or
consent seeking reorganization or relief under any applicable
Federal or State law, or the consent by it to the filing of
such petition or to the appointment of or taking possession by
a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company or of any
substantial part of its property, or the making by it of an
assignment for the benefit of creditors, or the admission by it
in writing of its inability to pay its debts generally as they
become due, or the taking
<PAGE>
<PAGE> 35

of corporate action by the Company in furtherance of any such
action.

SECTION 502. Acceleration of Maturity; Rescission
and Annulment.

If an Event of Default (other than an Event of Default
specified in Section 501(5) or 501(6)) occurs and is continuing, then and
in every such case the Trustee or the Holders of not less than 25% in
principal amount of the Outstanding Securities may declare the principal of
all the Securities to be due and payable immediately, by a notice in
writing to the Company (and to the Trustee if given by Holders), and upon
any such declaration such principal shall become immediately due and
payable. If an Event of Default specified in Section 501(5) or 501(6)
occurs, the principal amount of all the Securities shall automatically, and
without any declaration or other action on the part of the Trustee or any
Holder, become immediately due and payable.

At any time after such a declaration of acceleration has been
made and before a judgment or decree for payment of the money due has been
obtained by the Trustee as hereinafter in this Article provided, the
Holders of a majority in principal amount of the Outstanding Securities, by
written notice to the Company and the Trustee, may rescind and annul such
declaration and its consequences if

(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay

(A) all overdue interest on all Securities,

(B) the principal of (and premium, if any,
on) any Securities which have become due otherwise
than by such declaration of acceleration and
interest thereon at the rate borne by the
Securities,

(C) to the extent that payment of such
interest is lawful, interest upon overdue interest
at the rate borne by the Securities, and

(D) all sums paid or advanced by the Trustee
hereunder and the reasonable compensation,
expenses, disbursements
<PAGE>
<PAGE> 36

and advances of the Trustee, its agents and counsel
and all other amounts due the Trustee under Section
607;

and

(2) all Events of Default, other than the non-payment of
the principal of Securities which have become due solely by
such declaration of acceleration, have been cured or waived as
provided in Section 513.

No such rescission shall affect any subsequent default or impair any right
consequent thereon.

SECTION 503. Collection of Indebtedness and Suits
for Enforcement by Trustee.

The Company covenants that if

(1) default is made in the payment of any interest on
any Security when such interest becomes due and payable and
such default continues for a period of 30 days, or

(2) default is made in the payment of the principal of
(or premium, if any, on) any Security at the Stated Maturity
thereof,

the Company will, upon demand of the Trustee, pay to it, for the benefit of
the Holders of such Securities, the whole amount then due and payable on
such Securities for principal (and premium, if any) and interest, and, to
the extent that payment of such interest shall be legally enforceable,
interest on any overdue principal (and premium, if any) and on any overdue
interest, at the rate borne by the Securities, and, in addition thereto,
such further amount as shall be sufficient to cover the costs and expenses
of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.

If an Event of Default occurs and is continuing, the Trustee
may in its discretion proceed to protect and enforce its rights and the
rights of the Holders by such appropriate judicial proceedings as the
Trustee shall deem most effectual to protect and enforce any such rights,
whether for the specific enforcement of any covenant or agreement in this
Indenture or in aid of the exercise of any power granted herein, or to
enforce any other proper remedy.
<PAGE>
<PAGE> 37

SECTION 504. Trustee May File Proofs of Claim.

In case of any judicial proceeding relative to the Company (or
any other obligor upon the Securities), its property or its creditors, the
Trustee shall be entitled and empowered, by intervention in such proceeding
or otherwise, to take any and all actions authorized under the Trust
Indenture Act in order to have claims of the Holders and the Trustee
allowed in any such proceeding. In particular, the Trustee shall be
authorized to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same; and any
custodian, receiver, assignee, trustee, liquidator, sequestrator or other
similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel, and any other amounts due the Trustee under
Section 607.

No provision of this Indenture shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any
Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Securities or the rights of any Holder thereof or to
authorize the Trustee to vote in respect of the claim of any Holder in any
such proceeding.

SECTION 505. Trustee May Enforce Claims
Without Possession of Securities.

All rights of action and claims under this Indenture or the
Securities may be prosecuted and enforced by the Trustee without the
possession of any of the Securities or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the
Trustee shall be brought in its own name as trustee of an express trust,
and any recovery of judgment shall, after provision for the payment of the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and all other amounts due the Trustee
under Section 607, be for the ratable benefit of the Holders of the
Securities in respect of which such judgment has been recovered.
<PAGE>
<PAGE> 38

SECTION 506. Application of Money Collected.

Any money collected by the Trustee pursuant to this Article
shall be applied in the following order, at the date or dates fixed by the
Trustee and, in case of the distribution of such money on account of
principal (or premium, if any) or interest, upon presentation of the
Securities and the notation thereon of the payment if only partially paid
and upon surrender thereof if fully paid:

FIRST: To the payment of all amounts due the Trustee
under Section 607; and

SECOND: To the payment of the amounts then due and
unpaid for principal of (and premium, if any) and interest on
the Securities in respect of which or for the benefit of which
such money has been collected, ratably, without preference or
priority of any kind, according to the amounts due and payable
on such Securities for principal (and premium, if any) and
interest, respectively; and

THIRD: To the Company any remaining amounts.

SECTION 507. Limitation on Suits.

No Holder of any Security shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for
the appointment of a receiver or trustee, or for any other remedy
hereunder, unless

(1) such Holder has previously given written notice to
the Trustee of a continuing Event of Default;

(2) the Holders of not less than 25% in principal amount
of the Outstanding Securities shall have made written request
to the Trustee to institute proceedings in respect of such
Event of Default in its own name as Trustee hereunder;

(3) such Holder or Holders have offered to the Trustee
reasonable indemnity against
<PAGE>
<PAGE> 39

the costs, expenses and liabilities to be incurred in
compliance with such request;

(4) the Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to institute
any such proceeding; and

(5) no direction inconsistent with such written request
has been given to the Trustee during such 60-day period by the
Holders of a majority in principal amount of the Outstanding
Securities;

it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other
Holders, or to obtain or to seek to obtain priority or preference over any
other Holders or to enforce any right under this Indenture, except in the
manner herein provided and for the equal and ratable benefit of all the
Holders.

SECTION 508. Unconditional Right of Holders to
Receive Principal, Premium and Interest.

Notwithstanding any other provision in this Indenture, the
Holder of any Security shall have the right, which is absolute and
unconditional, to receive payment of the principal of (and premium, if any)
and (subject to Section 307) interest on such Security on the respective
Stated Maturities expressed in such Security (or, in the case of
redemption, on the Redemption Date) and to institute suit for the
enforcement of any such payment, and such rights shall not be impaired
without the consent of such Holder.

SECTION 509. Restoration of Rights and Remedies.

If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has
been discontinued or abandoned for any reason, or has been determined
adversely to the Trustee or to such Holder, then and in every such case,
subject to any determination in such proceeding, the Company, the Trustee
and the Holders shall be restored severally and respectively to their
former positions hereunder and thereafter all rights and remedies of the
<PAGE>
<PAGE> 40

Trustee and the Holders shall continue as though no such proceeding had
been instituted.

SECTION 510. Rights and Remedies Cumulative.

Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities in the last
paragraph of Section 306, no right or remedy herein conferred upon or
reserved to the Trustee or to the Holders is intended to be exclusive of
any other right or remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder,
or otherwise, shall not prevent the concurrent assertion or employment of
any other appropriate right or remedy.

SECTION 511. Delay or Omission Not Waiver.

No delay or omission of the Trustee or of any Holder of any
Security to exercise any right or remedy accruing upon any Event of Default
shall impair any such right or remedy or constitute a waiver of any such
Event of Default or an acquiescence therein. Every right and remedy given
by this Article or by law to the Trustee or to the Holders may be exercised
from time to time, and as often as may be deemed expedient, by the Trustee
or by the Holders, as the case may be.

SECTION 512. Control by Holders.

The Holders of a majority in principal amount of the
Outstanding Securities shall have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee
or exercising any trust or power conferred on the Trustee, provided that

(1) such direction shall not be in conflict with any
rule of law or with this Indenture, be unduly prejudicial to
any other Holders of Securities or involve the Trustee in any
personal liability, and

(2) the Trustee may take any other action deemed proper
by the Trustee which is not inconsistent with such direction.
<PAGE>
<PAGE> 41

SECTION 513. Waiver of Past Defaults.

The Holders of at least a majority in principal amount of the
Outstanding Securities may on behalf of the Holders of all the Securities
waive any past default hereunder and its consequences, except a default

(1) in the payment of the principal of (or premium, if
any) or interest on any Security, or

(2) in respect of a covenant or provision hereof which
under Article Nine cannot be modified or amended without the
consent of the Holder of each Outstanding Security affected.

Upon any such waiver, such default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been cured,
for every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other default or impair any right consequent thereon.

SECTION 514. Undertaking for Costs.

In any suit for the enforcement of any right or remedy under
this Indenture, or in any suit against the Trustee for any action taken,
suffered or omitted by it as Trustee, a court may require any party
litigant in such suit to file an undertaking to pay the costs of such suit,
and may assess costs against any such party litigant, in the manner and to
the extent provided in the Trust Indenture Act; provided, that neither this
Section nor the Trust Indenture Act shall be deemed to authorize any court
to require such an undertaking or to make such an assessment in any suit
instituted by the Company; and provided further, that the provisions of
this Section shall not apply to any suit instituted by the Trustee, to any
suit instituted by any Holder, or group of Holders, holding in the
aggregate more than 10% in principal amount of the Outstanding Securities,
or to any suit instituted by any Holder for the enforcement of the payment
of the principal of or interest on any Security on or after the Stated
Maturities expressed in such Security.

SECTION 515. Waiver of Stay or Extension Laws.

The Company covenants (to the extent that it may lawfully do
so) that it will not at any time insist upon, or
<PAGE>
<PAGE> 42

plead, or in any manner whatsoever claim or take the benefit or advantage
of, any stay or extension law wherever enacted, now or at any time
hereafter in force, which may affect the covenants or the performance of
this Indenture; and the Company (to the extent that it may lawfully do so)
hereby expressly waives all benefit or advantage of any such law and
covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the
execution of every such power as though no such law had been enacted.

ARTICLE SIX

The Trustee

SECTION 601. Certain Duties and Responsibilities.

The duties and responsibilities of the Trustee shall be as
provided by the Trust Indenture Act. Notwithstanding the foregoing, no
provision of this Indenture shall require the Trustee to expend or risk its
own funds or otherwise incur any financial liability in the performance of
any of its duties hereunder, or in the exercise of any of its rights or
powers, if it shall have reasonable grounds for believing that repayment of
such funds or adequate indemnity against such risk or liability is not
reasonably assured to it. Whether or not therein expressly so provided,
every provision of this Indenture relating to the conduct or affecting the
liability of or affording protection to the Trustee shall be subject to the
provisions of this Section.

SECTION 602. Notice of Defaults.

The Trustee shall give the Holders notice of any default
hereunder as and to the extent provided by the Trust Indenture Act;
provided, however, that in the case of any default of the character
specified in Section 501(3), no such notice to Holders shall be given until
at least 60 days after the occurrence thereof. For the purpose of this
Section, the term "default" means any event which is, or after notice or
lapse of time or both would become, an Event of Default.
<PAGE>
<PAGE> 43

SECTION 603. Certain Rights of Trustee.

Subject to the provisions of Section 601:

(a) the Trustee may rely and shall be protected in
acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document
believed by it to be genuine and to have been signed or
presented by the proper party or parties;

(b) any request or direction of the Company mentioned
herein shall be sufficiently evidenced by a Company Request or
Company Order and any resolution of the Board of Directors may
be sufficiently evidenced by a Board Resolution;

(c) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or
established prior to taking, suffering or omitting any action
hereunder, the Trustee (unless other evidence be herein
specifically prescribed) may, in the absence of bad faith on
its part, rely upon an Officers' Certificate;

(d) the Trustee may consult with counsel and the written
advice of such counsel or any Opinion of Counsel shall be full
and complete authorization and protection in respect of any
action taken, suffered or omitted by it hereunder in good faith
and in reliance thereon;

(e) the Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Indenture at
the request or direction of any of the Holders pursuant to this
Indenture, unless such Holders shall have offered to the
Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in
compliance with such request or direction;

(f) the Trustee shall not be bound to make any
investigation into the facts or
<PAGE>
<PAGE> 44

matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Trustee, in
its discretion, may make such further inquiry or investigation
into such facts or matters as it may see fit, and, if the
Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books,
records and premises of the Company, personally or by agent or
attorney; and

(g) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by
or through agents or attorneys and the Trustee shall not be
responsible for any misconduct or negligence on the part of any
agent or attorney appointed with due care by it hereunder.

SECTION 604. Not Responsible for Recitals
or Issuance of Securities.

The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the statements
of the Company, and the Trustee or any Authenticating Agent assumes no
responsibility for their correctness. The Trustee makes no representations
as to the validity or sufficiency of this Indenture or of the Securities.
The Trustee or any Authenticating Agent shall not be accountable for the
use or application by the Company of Securities or the proceeds thereof.

SECTION 605. May Hold Securities.

The Trustee, any Authenticating Agent, any Paying Agent, any
Security Registrar or any other agent of the Company, in its individual or
any other capacity, may become the owner or pledgee of Securities and,
subject to Sections 608 and 613, may otherwise deal with the Company with
the same rights it would have if it were not Trustee, Authenticating Agent,
Paying Agent, Security Registrar or such other agent.
<PAGE>
<PAGE> 45

SECTION 606. Money Held in Trust.

Money held by the Trustee in trust hereunder need not be
segregated from other funds except to the extent required by law. The
Trustee shall be under no liability for interest on any money received by
it hereunder except as otherwise agreed in writing with the Company.

SECTION 607. Compensation and Reimbursement.

The Company agrees

(1) to pay to the Trustee from time to time reasonable
compensation for all services rendered by it hereunder (which
compensation shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust);

(2) except as otherwise expressly provided herein, to
reimburse the Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by the
Trustee in accordance with any provision of this Indenture
(including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such
expense, disbursement or advance as may be attributable to its
negligence or bad faith; and

(3) to indemnify the Trustee for, and to hold it
harmless against, any loss, liability or expense incurred
without negligence or bad faith on its part, arising out of or
in connection with the acceptance or administration of this
trust, including the costs and expenses of defending itself
against any claim or liability in connection with the exercise
or performance of any of its powers or duties hereunder.

As security for the performance of the obligations of the
Company under this Section the Trustee shall have a lien prior to the
Securities upon all property and funds held or collected by the Trustee as
such, except funds held in trust for the payment of principal of (and
premium, if any) or interest on particular Securities.
<PAGE>
<PAGE> 46

When the Trustee incurs expenses or renders services in
connection with an Event of Default specified in Section 501(5) or (6), the
expenses and the compensation for the services are intended to constitute
expenses of administration under any bankruptcy law.

SECTION 608. Disqualification; Conflicting Interests.

If the Trustee has or shall acquire a conflicting interest
within the meaning of the Trust Indenture Act, the Trustee shall either
eliminate such interest or resign, to the extent and in the manner provided
by, and subject to the provisions of, the Trust Indenture Act and this
Indenture.

SECTION 609. Corporate Trustee Required; Eligibility.

There shall at all times be a Trustee hereunder which shall be
a Person that is eligible pursuant to the Trust Indenture Act to act as
such and has a combined capital and surplus of at least $50,000,000 and its
Corporate Trust Office in The Borough of Manhattan, The City of New York.
If such Person publishes reports of condition at least annually, pursuant
to law or to the requirements of said supervising or examining authority,
then for the purposes of this Section, the combined capital and surplus of
such Person shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published. The Company may
not, nor may any Person directly or indirectly controlling, controlled by,
or under common control with the Company, serve as Trustee. If at any time
the Trustee shall cease to be eligible in accordance with the provisions of
this Section, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article.

SECTION 610. Resignation and Removal;
Appointment of Successor.

(a) No resignation or removal of the Trustee and no
appointment of a successor Trustee pursuant to this Article shall become
effective until the acceptance of appointment by the successor Trustee
under Section 611.

(b) The Trustee may resign at any time by giving written
notice thereof to the Company. If an instrument of acceptance by a
successor Trustee shall not have been delivered to the Trustee within
30 days after the giving of such notice of resignation, the resigning
Trustee may
<PAGE>
<PAGE> 47

petition any court of competent jurisdiction for the appointment of a
successor Trustee.

(c) The Trustee may be removed at any time by Act of the
Holders of a majority in principal amount of the Outstanding Securities,
delivered to the Trustee and to the Company.

(d) If at any time:

(1) the Trustee shall fail to comply with Section 608
after written request therefor by the Company or by any Holder
who has been a bona fide Holder of a Security for at least six
months, or

(2) the Trustee shall cease to be eligible under
Section 609 and shall fail to resign after written request
therefor by the Company or by any such Holder, or

(3) the Trustee shall become incapable of acting or
shall be adjudged a bankrupt or insolvent or a receiver of the
Trustee or of its property shall be appointed or any public
officer shall take charge or control of the Trustee or of its
property or affairs for the purpose of rehabilitation,
conservation or liquidation,

then, in any such case, (i) the Company by a Board Resolution may remove
the Trustee, or (ii) subject to Section 514, any Holder who has been a bona
fide Holder of a Security for at least six months may, on behalf of himself
and all others similarly situated, petition any court of competent juris-
diction for the removal of the Trustee and the appointment of a successor
Trustee.

(e) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of Trustee
for any cause, the Company, by a Board Resolution, shall promptly appoint a
successor Trustee and shall comply with the applicable requirements of
Section 611. If, within one year after such resignation, removal or
incapability, or the occurrence of such vacancy, a successor Trustee shall
be appointed by Act of the Holders of a majority in principal amount of the
Outstanding Securities delivered to the Company and the retiring Trustee,
the successor Trustee so appointed shall, forthwith upon its acceptance of
such appointment in accordance with the applicable requirements of Section
611, become the successor
<PAGE>
<PAGE> 48

Trustee and supersede the successor Trustee appointed by the Company. If
no successor Trustee shall have been so appointed by the Company or the
Holders and accepted appointment in the manner required by Section 611, any
Holder who has been a bona fide Holder of a Security for at least six
months may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the appointment of a
successor Trustee.

(f) The Company shall give notice of each resignation and
each removal of the Trustee and each appointment of a successor Trustee to
all Holders in the manner provided in Section 106. Each notice shall
include the name of the successor Trustee and the address of its Corporate
Trust Office.

SECTION 611. Acceptance of Appointment by Successor.

Every successor Trustee appointed hereunder shall execute,
acknowledge and deliver to the Company and to the retiring Trustee an
instrument accepting such appointment, and thereupon the resignation or
removal of the retiring Trustee shall become effective and such successor
Trustee, without any further act, deed or conveyance, shall become vested
with all the rights, powers, trusts and duties of the retiring Trustee;
but, on request of the Company or the successor Trustee, such retiring
Trustee shall, upon payment of its charges, execute and deliver an
instrument transferring to such successor Trustee all the rights, powers
and trusts of the retiring Trustee and shall duly assign, transfer and
deliver to such successor Trustee all property and money held by such
retiring Trustee hereunder. Upon request of any such successor Trustee,
the Company shall execute any and all instruments for more fully and
certainly vesting in and confirming to such successor Trustee all such
rights, powers and trusts.

No successor Trustee shall accept its appointment unless at the
time of such acceptance such successor Trustee shall be qualified and
eligible under this Article.

SECTION 612. Merger, Conversion, Consolidation
or Succession to Business.

Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Trustee
shall be a party, or any corporation succeeding to all or substantially all
the cor-
<PAGE>
<PAGE> 49

porate trust business of the Trustee, shall be the successor of the Trustee
hereunder, provided such corporation shall be otherwise qualified and
eligible under this Article, without the execution or filing of any paper
or any further act on the part of any of the parties hereto. In case any
Securities shall have been authenticated, but not delivered, by the Trustee
then in office, any successor by merger, conversion or consolidation to
such authenticating Trustee may adopt such authentication and deliver the
Securities so authenticated with the same effect as if such successor
Trustee had itself authenticated such Securities.

SECTION 613. Preferential Collection
of Claims Against Company.

If and when the Trustee shall be or become a creditor of the
Company (or any other obligor upon the Securities), the Trustee shall be
subject to the provisions of the Trust Indenture Act regarding the
collection of claims against the Company (or any such other obligor).

SECTION 614. Appointment of Authenticating Agent.

The Trustee may appoint an Authenticating Agent or Agents which
shall be authorized to act on behalf of the Trustee to authenticate
Securities issued upon original issue and upon exchange, registration of
transfer or partial redemption or pursuant to Section 306, and Securities
so authenticated shall be entitled to the benefits of this Indenture and
shall be valid and obligatory for all purposes as if authenticated by the
Trustee hereunder. Wherever reference is made in this Indenture to the
authentication and delivery of Securities by the Trustee or the Trustee's
certificate of authentication, such reference shall be deemed to include
authentication and delivery on behalf of the Trustee by an Authenticating
Agent and a certificate of authentication executed on behalf of the Trustee
by an Authenticating Agent. Each Authenticating Agent shall be acceptable
to the Company and shall at all times be a corporation organized and doing
business under the laws of the United States of America, any State thereof
or the District of Columbia, authorized under such laws to act as
Authenticating Agent, having a combined capital and surplus of not less
than $50,000,000 and subject to supervision or examination by Federal or
State authority. If such Authenticating Agent publishes reports of
condition at least annually, pursuant to law or to the requirements of said
supervising or examining authority, then for the purposes of this Section,
the combined capital and surplus of such
<PAGE>
<PAGE> 50

Authenticating Agent shall be deemed to be its combined capital and surplus
as set forth in its most recent report of condition so published. If at
any time an Authenticating Agent shall cease to be eligible in accordance
with the provisions of this Section, such Authenticating Agent shall resign
immediately in the manner and with the effect specified in this Section.

Any corporation into which an Authenticating Agent may be
merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or consolidation to which
such Authenticating Agent shall be a party, or any corporation succeeding
to the corporate agency or corporate trust business of an Authenticating
Agent, shall continue to be an Authenticating Agent, provided such
corporation shall be otherwise eligible under this Section, without the
execution or filing of any paper or any further act on the part of the
Trustee or the Authenticating Agent.

An Authenticating Agent may resign at any time by giving
written notice thereof to the Trustee and to the Company. The Trustee may
at any time terminate the agency of an Authenticating Agent by giving
written notice thereof to such Authenticating Agent and to the Company.
Upon receiving such a notice of resignation or upon such a termination, or
in case at any time such Authenticating Agent shall cease to be eligible in
accordance with the provisions of this Section, the Trustee may appoint a
successor Authenticating Agent which shall be acceptable to the Company and
shall mail written notice of such appointment by first-class mail, postage
prepaid, to all Holders as their names and addresses appear in the Security
Register. Any successor Authenticating Agent upon acceptance of its
appointment hereunder shall become vested with all the rights, powers and
duties of its predecessor hereunder, with like effect as if originally
named as an Authenticating Agent. No successor Authenticating Agent shall
be appointed unless eligible under the provisions of this Section.

The Trustee agrees to pay to each Authenticating Agent from
time to time reasonable compensation for its services under this Section,
and the Trustee shall be entitled to be reimbursed for such payments,
subject to the provisions of Section 607.

If an appointment is made pursuant to this Section, the
Securities may have endorsed thereon, in addition to the Trustee's
certificate of authentication, an alternative certificate of authentication
in the following form:
<PAGE>
<PAGE> 51

This is one of the Securities described in the within-mentioned
Indenture.

CHEMICAL BANK,
As Trustee

By___________________________,
As Authenticating Agent

By____________________________
Authorized Officer

ARTICLE SEVEN

Holders' Lists and Reports by Trustee and Company

SECTION 701. Company to Furnish Trustee
Names and Addresses of Holders.

The Company will furnish or cause to be furnished to the
Trustee

(a) semi-annually, not more than 15 days after each Regular Record
Date, a list, in such form as the Trustee may reasonably require, of the
names and addresses of the Holders as of such Regular Record Date, and

(b) at such other times as the Trustee may request in writing,
within 30 days after the receipt by the Company of any such request, a list
of similar form and content as of a date not more than 15 days prior to the
time such list is furnished;

provided, however, that if and so long as the Trustee shall be the Security
Registrar for the Securities, no such list need be finished.
<PAGE>
<PAGE> 52

SECTION 702. Preservation of Information;
Communications to Holders.

(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Holders contained in the
most recent list furnished to the Trustee as provided in Section 701 and
the names and addresses of Holders received by the Trustee in its capacity
as Security Registrar. The Trustee may destroy any list furnished to it as
provided in Section 701 upon receipt of a new list so furnished.

(b) The rights of Holders to communicate with other Holders
with respect to their rights under this Indenture or under the Securities,
and the corresponding rights and duties of the Trustee, shall be as
provided by the Trust Indenture Act.

(c) Every Holder of Securities, by receiving and holding the
same, agrees with the Company and the Trustee that neither the Company nor
the Trustee nor any agent of either of them shall be held accountable by
reason of any disclosure of information as to names and addresses of
Holders made pursuant to the Trust Indenture Act.

SECTION 703. Reports by Trustee.

(a) Within 60 days of the reporting date in each year,
commencing in 1996, the Trustee shall transmit to Holders such reports
concerning the Trustee and its actions under this Indenture as may be
required pursuant to the Trust Indenture Act at the times and in the manner
provided pursuant thereto. The term "reporting date" as used in this
Section means May 15.

(b) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each stock exchange
upon which the Securities are listed, with the Commission and with the
Company. The Company will notify the Trustee when the Securities are
listed on any stock exchange.

SECTION 704. Reports by Company.

The Company shall file with the Trustee and the Commission, and
transmit to Holders, such information, documents and other reports, and
such summaries thereof, as may be required pursuant to the Trust Indenture
Act at the times and in the manner provided pursuant to such Act; provided
<PAGE>
<PAGE> 53

that any such information, documents or reports required to be filed with
the Commission pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 shall be filed with the Trustee within 15 days after the same
is so required to be filed with the Commission.

ARTICLE EIGHT

Consolidation, Merger, Conveyance, Transfer or Lease

SECTION 801. Company May Consolidate, Etc.,
Only on Certain Terms.

The Company shall not consolidate with or merge into any other
Person or convey, transfer or lease its properties and assets substantially
as an entirety to any Person, and the Company shall not permit any Person
to consolidate with or merge into the Company or convey, transfer or lease
its properties and assets substantially as an entirety to the Company,
unless:

(1) in case the Company shall consolidate with or merge
into another Person or convey, transfer or lease its properties
and assets substantially as an entirety to any Person, the
Person formed by such consolidation or into which the Company
is merged or the Person which acquires by conveyance or
transfer, or which leases, the properties and assets of the
Company substantially as an entirety shall be a corporation,
partnership or trust, shall be organized and validly existing
under the laws of the United States of America, any State
thereof or the District of Columbia and shall expressly assume,
by an indenture supplemental hereto, executed and delivered to
the Trustee, in form satisfactory to the Trustee, the due and
punctual payment of the principal of (and premium, if any) and
interest on all the Securities and the performance or
observance of every covenant of this Indenture on the part of
the Company to be performed or observed;

(2) immediately after giving effect to such transaction,
no Event of Default, and no event which, after notice or lapse
of time or both, would become an Event of Default, shall have
happened and be continuing;
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<PAGE> 54

(3) if, as a result of any such consolidation or merger
or such conveyance, transfer or lease, properties or assets of
the Company would become subject to a mortgage, pledge, lien,
security interest or other encumbrance which would not be per-
mitted by Section 1008, the Company or such successor Person,
as the case may be, shall take such steps as shall be necessary
effectively to secure the Securities equally and ratably with
(or prior to) all indebtedness secured thereby; and

(4) the Company has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating
that such consolidation, merger, conveyance, transfer or lease
and, if a supplemental indenture is required in connection with
such transaction, such supplemental indenture comply with this
Article and that all conditions precedent herein provided for
relating to such transaction have been complied with.

SECTION 802. Successor Substituted.

Upon any consolidation of the Company with, or merger of the
Company into, any other Person or any conveyance, transfer or lease of the
properties and assets of the Company substantially as an entirety in
accordance with Section 801, the successor Person formed by such consolida-
tion or into which the Company is merged or to which such conveyance,
transfer or lease is made shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under this Indenture with
the same effect as if such successor Person had been named as the Company
herein, and thereafter, except in the case of a lease, the predecessor
Person shall be relieved of all obligations and covenants under this
Indenture and the Securities.
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<PAGE> 55

ARTICLE NINE

Supplemental Indentures

SECTION 901. Supplemental Indentures
Without Consent of Holders.

Without the consent of any Holders, the Company, when
authorized by a Board Resolution, and the Trustee, at any time and from
time to time, may enter into one or more indentures supplemental hereto, in
form satisfactory to the Trustee, for any of the following purposes:

(1) to evidence the succession of another Person to the
Company and the assumption by any such successor of the
covenants of the Company herein and in the Securities; or

(2) to add to the covenants of the Company for the
benefit of the Holders, or to surrender any right or power
herein conferred upon the Company; or

(3) to cure any defect or ambiguity, to correct or
supplement any provision herein which may be defective or
inconsistent with any other provision herein, or to make any
other provisions with respect to matters or questions arising
under this Indenture which shall not be inconsistent with the
provisions of this Indenture, provided that such action
pursuant to this Clause (3) shall not adversely affect the
interests of the Holders in any material respect.

SECTION 902. Supplemental Indentures
with Consent of Holders.

With the consent of the Holders of a majority in principal
amount of the Outstanding Securities, by Act of said Holders delivered to
the Company and the Trustee, the Company, when authorized by a Board
Resolution, and the Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing
in any manner or eliminating any of the provisions of this Indenture or of
modifying in any manner the rights of the Holders under this Indenture;
provided, however, that
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<PAGE> 56

no such supplemental indenture shall, without the consent of the Holder of
each Outstanding Security affected thereby,

(1) change the Stated Maturity of the principal of, or
any installment of interest on, any Security, or reduce the
principal amount thereof or premium, if any, or the rate of
interest thereon, or change the place of payment where, or the
coin or currency in which, any Security or any premium or
interest thereon is payable, or impair the right to institute
suit for the enforcement of any such payment on or after the
Stated Maturity thereof (or, in the case of redemption, on or
after the Redemption Date), or

(2) reduce the percentage in principal amount of the
Outstanding Securities, the consent of whose Holders is
required for any such supplemental indenture, or the consent of
whose Holders is required for any waiver (of compliance with
certain provisions of this Indenture or certain defaults
hereunder and their consequences) provided for in this
Indenture, or

(3) modify any of the provisions of this Section,
Section 513 or Section 1010, except to increase any such
percentage or to provide that certain other provisions of this
Indenture cannot be modified or waived without the consent of
the Holder of each Outstanding Security affected thereby.

It shall not be necessary for any Act of Holders under this
Section to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such Act shall approve the
substance thereof.

SECTION 903. Execution of Supplemental Indentures.

In executing, or accepting the additional trusts created by,
any supplemental indenture permitted by this Article or the modifications
thereby of the trusts created by this Indenture, the Trustee shall be
entitled to receive, and (subject to Section 601) shall be fully protected
in relying upon, in addition to the Officer's Certificate and Opinion of
Counsel required by Section 102, an Opinion of Counsel stating that the
execution of such supplemental
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<PAGE> 57

indenture is authorized or permitted by this Indenture. The Trustee may,
but shall not be obligated to, enter into any such supplemental indenture
which affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise.

SECTION 904. Effect of Supplemental Indentures.

Upon the execution of any supplemental indenture under this
Article, this Indenture shall be modified in accordance therewith, and such
supplemental indenture shall form a part of this Indenture for all
purposes; and every Holder of Securities theretofore or thereafter
authenticated and delivered hereunder shall be bound thereby.

SECTION 905. Conformity with Trust Indenture Act.

Every supplemental indenture executed pursuant to this Article
shall conform to the requirements of the Trust Indenture Act.

SECTION 906. Reference in Securities
to Supplemental Indentures.

Securities authenticated and delivered after the execution of
any supplemental indenture pursuant to this Article may, and shall if
required by the Trustee, bear a notation in form approved by the Trustee as
to any matter provided for in such supplemental indenture. If the Company
shall so determine, new Securities so modified as to conform, in the
opinion of the Trustee and the Company, to any such supplemental indenture
may be prepared and executed by the Company and authenticated and delivered
by the Trustee in exchange for Outstanding Securities.

ARTICLE TEN

Covenants

SECTION 1001. Payment of Principal, Premium and Interest.

The Company will duly and punctually pay the principal of (and
premium, if any) and interest on the Securities in accordance with the
terms of the Securities and this Indenture.
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<PAGE> 58

SECTION 1002. Maintenance of Office or Agency.

The Company will maintain in The Borough of Manhattan, The City
of New York an office or agency where Securities may be presented or sur-
rendered for payment, where Securities may be surrendered for registration
of transfer or exchange and where notices and demands to or upon the
Company in respect of the Securities and this Indenture may be served. The
Company will give prompt written notice to the Trustee of the location, and
any change in the location, of such office or agency. If at any time the
Company shall fail to maintain any such required office or agency or shall
fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate
Trust Office of the Trustee, and the Company hereby appoints the Trustee as
its agent to receive all such presentations, surrenders, notices and
demands.

The Company may also from time to time designate one or more
other offices or agencies (in or outside The Borough of Manhattan, The City
of New York) where the Securities may be presented or surrendered for any
or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any
manner relieve the Company of its obligation to maintain an office or
agency in The Borough of Manhattan, State of New York for such purposes.
The Company will give prompt written notice to the Trustee of any such
designation or rescission and of any change in the location of any such
other office or agency.

SECTION 1003. Money for Security
Payments to Be Held in Trust.

If the Company shall at any time act as its own Paying Agent,
it will, on or before each due date of the principal of (and premium, if
any) or interest on any of the Securities, segregate and hold in trust for
the benefit of the Persons entitled thereto a sum sufficient to pay the
principal (and premium, if any) or interest so becoming due until such sums
shall be paid to such Persons or otherwise disposed of as herein provided
and will promptly notify the Trustee of its action or failure so to act.

Whenever the Company shall have one or more Paying Agents, it
will, prior to each due date of the principal of (and premium, if any) or
interest on any Securities, deposit with a Paying Agent a sum sufficient to
pay such amount, such sum to be held as provided by the Trust Indenture
Act,
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<PAGE> 59

and (unless such Paying Agent is the Trustee) the Company will promptly
notify the Trustee of its action or failure so to act.

The Company will cause each Paying Agent other than the Trustee
to execute and deliver to the Trustee an instrument in which such Paying
Agent shall agree with the Trustee, subject to the provisions of this
Section, that such Paying Agent will (i) comply with the provisions of the
Trust Indenture Act applicable to it as a Paying Agent and (ii) during the
continuance of any default by the Company (or any other obligor upon the
Securities) in the making of any payment in respect of the Securities, upon
the written request of the Trustee, forthwith pay to the Trustee all sums
held in trust by such Paying Agent as such.

The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay,
or by Company Order direct any Paying Agent to pay, to the Trustee all sums
held in trust by the Company or such Paying Agent, such sums to be held by
the Trustee upon the same trusts as those upon which such sums were held by
the Company or such Paying Agent; and, upon such payment by any Paying
Agent to the Trustee, such Paying Agent shall be released from all further
liability with respect to such money.

Any money deposited with the Trustee or any Paying Agent, or
then held by the Company, in trust for the payment of the principal of (and
premium, if any) or interest on any Security and remaining unclaimed for
two years after such principal (and premium, if any) or interest has become
due and payable shall be paid to the Company on Company Request, or (if
then held by the Company) shall be discharged from such trust; and the
Holder of such Security shall thereafter, as an unsecured general creditor,
look only to the Company for payment thereof, and all liability of the
Trustee or such Paying Agent with respect to such trust money, and all
liability of the Company as trustee thereof, shall thereupon cease;
provided, however, that the Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of the Company
cause to be published once, in an Authorized Newspaper in The City of New
York, notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of
such publication, any unclaimed balance of such money then remaining will
be repaid to the Company.
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<PAGE> 60

SECTION 1004. Statement by Officers as to Default.

The Company will deliver to the Trustee, within 120 days after
the end of each fiscal year of the Company ending after the date hereof, an
Officers' Certificate, stating whether or not to the best knowledge of the
signers thereof the Company is in default in the performance and observance
of any of the terms, provisions and conditions of this Indenture (without
regard to any period of grace or requirement of notice provided hereunder)
and, if the Company shall be in default, specifying all such defaults and
the nature and status thereof of which they may have knowledge.

The Company shall promptly, and in any event within 10 days of
the occurrence thereof, give notice to the Trustee of any default or Event
of Default hereunder.

SECTION 1005. Existence.

Subject to Article Eight, the Company will do or cause to be
done all things necessary to preserve and keep in full force and effect its
existence, rights (charter and statutory) and franchises; provided,
however, that the Company shall not be required to preserve any such right
or franchise if the Board of Directors shall determine that the
preservation thereof is no longer desirable in the conduct of the business
of the Company and that the loss thereof is not disadvantageous in any
material respect to the Holders.

SECTION 1006. Maintenance of Properties.

The Company will cause all properties used or useful in the
conduct of its business or the business of any Subsidiary to be maintained
and kept in good condition, repair and working order and supplied with all
necessary equipment and will cause to be made all necessary repairs,
renewals, replacements, betterments and improvements thereof, all as in the
judgment of the Company may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted at all
times; provided, however, that nothing in this Section shall prevent the
Company from discontinuing the operation or maintenance of any of such
properties if such discontinuance is, in the judgment of the Company,
desirable in the conduct of its business or the business of any Subsidiary
and not disadvantageous in any material respect to the Holders.
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<PAGE> 61

SECTION 1007. Payment of Taxes and Other Claims.

The Company will pay or discharge or cause to be paid or
discharged, before the same shall become delinquent, (1) all taxes,
assessments and governmental charges levied or imposed upon the Company or
any Subsidiary or upon the income, profits or property of the Company or
any Subsidiary, and (2) all lawful claims for labor, materials and supplies
which, if unpaid, might by law become a lien upon the property of the
Company or any Subsidiary; provided, however, that the Company shall not be
required to pay or discharge or cause to be paid or discharged any such
tax, assessment, charge or claim whose amount, applicability or validity is
being contested in good faith by appropriate proceedings.

SECTION 1008. Restrictions on Liens.

So long as any of the Securities are Outstanding, the Company
will not, and will not permit any Restricted Subsidiary to, issue, assume,
incur or guarantee any Indebtedness secured by a Lien on or with respect to
any Principal Property of the Company or any Restricted Subsidiary, or upon
any shares of capital stock or Indebtedness of any Restricted Subsidiary,
whether now owned or leased or hereafter acquired, without in any such case
effectively providing that the Securities shall be secured equally and
ratably with (or prior to) such Indebtedness, except that the foregoing
restrictions shall not apply to: (a) Liens existing as of the date of this
Indenture, (b) Liens to secure the payment of all or any part of the
purchase price or cost of construction or improvements in respect of
property or properties acquired by the Company or a Restricted Subsidiary
after the date of this Indenture securing Indebtedness incurred prior to,
at the time of, or within 270 days after, the acquisition of any such
property or the completion of any such construction or improvements and
which secure indebtedness not in excess of the amount expended in the
acquisition of, or construction or improvements on, such properties, (c)
Liens upon any property owned or leased by any Restricted Subsidiary when
it becomes a Restricted Subsidiary, (d) Liens existing on any property at
the time of its acquisition by the Company or a Restricted Subsidiary
(including acquisition through merger or consolidation), (e) Liens securing
Indebtedness of a Restricted Subsidiary to the Company or to another
Restricted Subsidiary and (f) the extension, renewal or replacement (or
successive extensions, renewals or replacements), in whole or in part, of
any Lien referred to in the foregoing clauses (a) through (e), or of any
Indebtedness secured thereby, but only if the principal
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<PAGE> 62

amount of Indebtedness secured by the Lien immediately prior thereto is not
increased and the Lien is not extended to other property. Notwithstanding
the foregoing, the Company or any Restricted Subsidiary may issue, assume,
incur or guarantee Indebtedness secured by Liens which otherwise would be
subject to the foregoing restrictions, in an aggregate amount which,
together with all other such Indebtedness outstanding secured by Liens as
provided above (not including Indebtedness excluded as provided in clauses
(a) through (f) above) and all Attributable Debt in respect of Sale and
Leaseback Transactions which would not be permitted by either clause (a),
(b) or (c) under in Section 1009, does not exceed 15% of Consolidated Net
Tangible Assets.

SECTION 1009. Restrictions on Sale
and Leaseback Transactions.

So long as any of the Securities are Outstanding, the Company
will not, nor will it permit any Restricted Subsidiary to, enter into any
arrangement with any Person (other than the Company or a Restricted
Subsidiary) providing for the leasing by the Company or any Restricted
Subsidiary of any Principal Property, whether now owned or hereafter
acquired, which has been or is to be sold or transferred by the Company or
such Restricted Subsidiary to such Persons with the intention of taking
back a lease on such property (a "Sale and Leaseback Transaction") unless
(a) such transaction involves a lease or right to possession or use for a
temporary period not to exceed three years following such sale, by the end
of which it is intended that the use of such property by the lessee will be
discontinued, (b) the Company or such Restricted Subsidiary would, on the
effective date of such transaction, be entitled to issue, assume or
guarantee Indebtedness secured by a Lien on such property at least equal in
an amount to the Attributable Debt in respect thereof, without equally and
ratably securing the Securities as set forth in this Indenture, or (c) if
the proceeds of such sale (i) are equal to or greater than the fair market
value (as determined by the Board of Directors of the Company) of such
property and (ii) are applied within 270 days after the receipt of the
proceeds of sale or transfer to either the purchase or acquisition of fixed
assets or equipment used in the operation of the business or the
construction of fixed improvements on real property or to the repayment of
Securities or Senior Funded Debt of the Company or any Restricted
Subsidiary. The preceding restrictions shall not apply to any Sale and
Leaseback Transaction between the Company and a Restricted Subsidiary or
between Restricted Subsidiaries.
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<PAGE> 63

Notwithstanding the foregoing, the Company or any Restricted Subsidiary may
enter into Sale and Leaseback Transactions in addition to any permitted by
the two immediately preceding sentences and without any obligation to
retire any Securities or other Indebtedness, provided that, at the time of
entering into such Sale and Leaseback Transactions, and after giving effect
thereto, the amount of Attributable Debt in respect of such Sale and
Leaseback Transaction, together with all such other Attributable Debt
outstanding and all Indebtedness outstanding secured by Liens (not
including Indebtedness excluded as provided in clauses (a) through (f) in
Section 1008), does not exceed 15% of Consolidated Net Tangible Assets.

SECTION 1010. Waiver of Certain Covenants.

The Company may omit in any particular instance to comply with
any covenant or condition set forth in Sections 10___ to 10___, inclusive,
if before the time for such compliance the Holders of at least a majority
in principal amount of the Outstanding Securities shall, by Act of such
Holders, either waive such compliance in such instance or generally waive
compliance with such covenant or condition, but no such waiver shall extend
to or affect such covenant or condition except to the extent so expressly
waived, and, until such waiver shall become effective, the obligations of
the Company and the duties of the Trustee in respect of any such covenant
or condition shall remain in full force and effect.

ARTICLE ELEVEN

Defeasance and Covenant Defeasance

SECTION 1101. Company's Option to Effect Defeasance or
Covenant Defeasance.

The Company may elect, at its option at any time, to have
Section 1102 or Section 1103 applied to any Securities designated pursuant
to Section 301 as being defeasible pursuant to such Section 1102 or 1103,
in accordance with any applicable requirements provided pursuant to
Section 301 and upon compliance with the conditions set forth below in this
Article. Any such election shall be evidenced by a Board Resolution or in
another manner specified as contemplated by Section 301 for such
Securities.
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<PAGE> 64

SECTION 1102. Defeasance and Discharge.

Upon the Company's exercise of its option (if any) to have this
Section applied to any Securities the Company shall be deemed to have been
discharged from its obligations with respect to such Securities as provided
in this Section on and after the date the conditions set forth in
Section 1104 are satisfied (hereinafter called "Defeasance"). For this
purpose, such Defeasance means that the Company shall be deemed to have
paid and discharged the entire indebtedness represented by such Securities
and to have satisfied all its other obligations under such Securities and
this Indenture insofar as such Securities are concerned (and the Trustee,
at the expense of the Company, shall execute proper instruments
acknowledging the same), subject to the following which shall survive until
otherwise terminated or discharged hereunder: (1) the rights of Holders of
such Securities to receive, solely from the trust fund described in
Section 1104 and as more fully set forth in such Section, payments in
respect of the principal and any premium and interest on such Securities
when payments are due, (2) the Company's obligations with respect to such
Securities under Sections 304, 305, 306, 1002 and 1003, (3) the rights,
powers, trusts, duties and immunities of the Trustee hereunder and (4) this
Article. Subject to compliance with this Article, the Company may exercise
its option (if any) to have this Section applied to any Securities
notwithstanding the prior exercise of its option (if any) to have
Section 1103 applied to such Securities.

SECTION 1103. Covenant Defeasance.

Upon the Company's exercise of its option (if any) to have this
Section applied to any Securities (1) the Company shall be released from
its obligations under Section 801(3), Sections 1006 through 1010,
inclusive, and any covenant provided pursuant to Section 901(2) for the
benefit of the Holders of such Securities and (2) the occurrence of any
event specified in Sections 501(3) (with respect to any of Section 801(3),
Sections 1006 through 1010, inclusive, and any such covenants provided
pursuant to Section 901(2) and 501(4) shall be deemed not to be or result
in an Event of Default, in each case with respect to such Securities as
provided in this Section on and after the date the conditions set forth in
Section 1104 are satisfied (hereinafter called "Covenant Defeasance"). For
this purpose, such Covenant Defeasance means that, with respect to such
Securities, the Company may omit to comply with and shall have no liability
in respect of any term, condition or limitation set forth in any such
specified Section (to the
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<PAGE> 65

extent so specified in the case of Section 501(3)), whether directly or
indirectly by reason of any reference elsewhere herein to any such Section
or by reason of any reference in any such Section to any other provision
herein or in any other document, but the remainder of this Indenture and
such Securities shall be unaffected thereby.

SECTION 1104. Conditions to Defeasance or Covenant
Defeasance.

The following shall be the conditions to the application of
Section 1102 or Section 1103 to any Securities:

(1) The Company shall irrevocably have deposited or caused to
be deposited with the Trustee (or another trustee which satisfies the
requirements contemplated by Section 609 and agrees to comply with
the provisions of this Article applicable to it) as trust funds in
trust for the purpose of making the following payments, specifically
pledged as security for, and dedicated solely to, the benefits of the
Holders of such Securities, (A) money in an amount, or (B) U.S.
Government Obligations which through the scheduled payment of
principal and interest in respect thereof in accordance with their
terms will provide, not later than one day before the due date of any
payment, money in an amount, or (C) a combination thereof, in each
case sufficient, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification
thereof delivered to the Trustee, to pay and discharge, and which
shall be applied by the Trustee (or any such other qualifying
trustee) to pay and discharge, the principal and any premium and
interest on such Securities on the respective Stated Maturities, in
accordance with the terms of this Indenture and such Securities. As
used herein, "U.S. Government Obligation" means (x) any security
which is (i) a direct obligation of the United States of America for
the payment of which the full faith and credit of the United States
of America is pledged or (ii) an obligation of a Person controlled or
supervised by and acting as an agency or instrumentality of the
United States of America the payment of which is unconditionally
guaranteed as a full faith and credit obligation by the United States
of America, which, in either case (i) or (ii), is not callable or
redeemable at the option of the issuer thereof, and (y) any
depositary receipt issued by a bank (as defined in Section 3(a)(2) of
the Securities
<PAGE>
<PAGE> 66

Act) as custodian with respect to any U.S. Government Obligation
which is specified in Clause (x) above and held by such bank for the
account of the holder of such depositary receipt, or with respect to
any specific payment of principal of or interest on any U.S.
Government Obligation which is so specified and held, provided that
(except as required by law) such custodian is not authorized to make
any deduction from the amount payable to the holder of such
depositary receipt from any amount received by the custodian in
respect of the U.S. Government Obligation or the specific payment of
principal or interest evidenced by such depositary receipt.

(2) In the event of an election to have Section 1102 apply to
any Securities the Company shall have delivered to the Trustee an
Opinion of Counsel stating that (A) the Company has received from, or
there has been published by, the Internal Revenue Service a ruling or
(B) since the date of this instrument, there has been a change in the
applicable Federal income tax law, in either case (A) or (B) to the
effect that, and based thereon such opinion shall confirm that, the
Holders of such Securities will not recognize gain or loss for
Federal income tax purposes as a result of the deposit, Defeasance
and discharge to be effected with respect to such Securities and will
be subject to Federal income tax on the same amount, in the same
manner and at the same times as would be the case if such deposit,
Defeasance and discharge were not to occur.

(3) In the event of an election to have Section 1103 apply to
any Securities the Company shall have delivered to the Trustee an
Opinion of Counsel to the effect that the Holders of such Securities
will not recognize gain or loss for Federal income tax purposes as a
result of the deposit and Covenant Defeasance to be effected with
respect to such Securities and will be subject to Federal income tax
on the same amount, in the same manner and at the same times as would
be the case if such deposit and Covenant Defeasance were not to
occur.

(4) The Company shall have delivered to the Trustee an
Officer's Certificate to the effect that such Securities, if then
listed on any securities exchange, will not be delisted as a result
of such deposit.
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<PAGE> 67

(5) No event which is, or after notice or lapse of time or
both would become, an Event of Default with respect to such
Securities or any other Securities shall have occurred and be
continuing at the time of such deposit or, with regard to any such
event specified in Sections 501(5) and (6), at any time on or prior
to the 90th day after the date of such deposit (it being understood
that this condition shall not be deemed satisfied until after such
90th day).

(6) Such Defeasance or Covenant Defeasance shall not cause
the Trustee to have a conflicting interest within the meaning of the
Trust Indenture Act (assuming all Securities are in default within
the meaning of such Act).

(7) Such Defeasance or Covenant Defeasance shall not result
in a breach or violation of, or constitute a default under, any other
agreement or instrument to which the Company is a party or by which
it is bound.

(8) Such Defeasance or Covenant Defeasance shall not result
in the trust arising from such deposit constituting an investment
company within the meaning of the Investment Company Act unless such
trust shall be registered under such Act or exempt from registration
thereunder.

(9) The Company shall have delivered to the Trustee an
Officer's Certificate and an Opinion of Counsel, each stating that
all conditions precedent with respect to such Defeasance or Covenant
Defeasance have been complied with.

SECTION 1105. Deposited Money and U.S. Government
Obligations to Be Held in Trust;
Miscellaneous Provisions.

Subject to the provisions of the last paragraph of
Section 1003, all money and U.S. Government Obligations (including the
proceeds thereof) deposited with the Trustee or other qualifying trustee
(solely for purposes of this Section and Section 1106, the Trustee and any
such other trustee are referred to collectively as the "Trustee") pursuant
to Section 1104 in respect of any Securities shall be held in trust and
applied by the Trustee, in accordance with the provisions of such
Securities and this Indenture, to the payment, either directly or through
any such Paying Agent (including the Company acting as its own Paying
Agent) as the Trustee may determine, to the Holders of such
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<PAGE> 68

Securities, of all sums due and to become due thereon in respect of
principal and any premium and interest, but money so held in trust need not
be segregated from other funds except to the extent required by law.

The Company shall pay and indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against the U.S. Government
Obligations deposited pursuant to Section 1104 or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of Outstanding
Securities.

Anything in this Article to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon Company
Request any money or U.S. Government Obligations held by it as provided in
Section 1104 with respect to any Securities which, in the opinion of a
nationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee, are in excess of
the amount thereof which would then be required to be deposited to effect
the Defeasance or Covenant Defeasance, as the case may be, with respect to
such Securities.

SECTION 1106. Reinstatement.

If the Trustee or the Paying Agent is unable to apply any money
in accordance with this Article with respect to any Securities by reason of
any order or judgment of any court or governmental authority enjoining,
restraining or otherwise prohibiting such application, then the obligations
under this Indenture and such Securities from which the Company has been
discharged or released pursuant to Section 1102 or 1103 shall be revived
and reinstated as though no deposit had occurred pursuant to this Article
with respect to such Securities, until such time as the Trustee or Paying
Agent is permitted to apply all money held in trust pursuant to
Section 1105 with respect to such Securities in accordance with this
Article; provided, however, that if the Company makes any payment of
principal of or any premium or interest on any such Security following such
reinstatement of its obligations, the Company shall be subrogated to the
rights (if any) of the Holders of such Securities to receive such payment
from the money so held in trust.
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<PAGE> 69

ARTICLE TWELVE

Redemption of Securities

SECTION 1201. Right of Redemption.

The Securities may be redeemed at the election of the Company,
as a whole or from time to time in part, at any time, at the Redemption
Price specified in the form of Security hereinbefore set forth, together
with accrued interest to the Redemption Date.

SECTION 1202. Applicability of Article.

Redemption of Securities at the election of the Company, as
permitted by any provision of this Indenture, shall be made in accordance
with such provision and this Article.

SECTION 1203. Election to Redeem; Notice to Trustee.

The election of the Company to redeem any Securities as
permitted by any provision of this Indenture shall be evidenced by a Board
Resolution. In case of any redemption at the election of the Company of
less than all the Securities, the Company shall, at least 60 days prior to
the Redemption Date fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee of such Redemption Date
and of the principal amount of Securities to be redeemed.

SECTION 1204. Selection by Trustee of Securities to Be
Redeemed.

If less than all the Securities are to be redeemed, the
particular Securities to be redeemed shall be selected not more than
60 days prior to the Redemption Date by the Trustee, from the Outstanding
Securities not previously called for redemption, by such method as the
Trustee shall deem fair and appropriate and which may provide for the
selection for redemption of portions (equal to $1,000 or any integral
multiple thereof) of the principal amount of Securities of a denomination
larger than $1,000.

The Trustee shall promptly notify the Company and each Security
Registrar in writing of the Securities selected for redemption and, in the
case of any Securities
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<PAGE> 70

selected for partial redemption, the principal amount thereof to be
redeemed.

For all purposes of this Indenture, unless the context
otherwise requires, all provisions relating to the redemption of Securities
shall relate, in the case of any Securities redeemed or to be redeemed only
in part, to the portion of the principal amount of such Securities which
has been or is to be redeemed.

SECTION 1205. Notice of Redemption.

Notice of redemption shall be given by first-class mail,
postage prepaid, mailed not less than 30 nor more than 60 days prior to the
Redemption Date, to each Holder of Securities to be redeemed, at his
address appearing in the Security Register.

All notices of redemption shall state:

(1) the Redemption Date,

(2) the Redemption Price,

(3) if less than all the Outstanding Securities are to
be redeemed, the identification (and, in the case of partial
redemption of any Securities, the principal amounts) of the
particular Securities to be redeemed,

(4) that on the Redemption Date the Redemption Price
will become due and payable upon each such Security to be
redeemed and that interest thereon will cease to accrue on and
after said date, and

(5) the place or places where such Securities are to be
surrendered for payment of the Redemption Price.

Notice of redemption of Securities to be redeemed at the
election of the Company shall be given by the Company or, at the Company's
request, by the Trustee in the name and at the expense of the Company.
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<PAGE> 71

SECTION 1206. Deposit of Redemption Price.

Prior to any Redemption Date, the Company shall deposit with
the Trustee or with a Paying Agent (or, if the Company is acting as its own
Paying Agent, segregate and hold in trust as provided in Section 1003) an
amount of money sufficient to pay the Redemption Price of, and (except if
the Redemption Date shall be an Interest Payment Date) accrued interest on,
all the Securities which are to be redeemed on that date.

SECTION 1207. Securities Payable on Redemption Date.

Notice of redemption having been given as aforesaid, the
Securities so to be redeemed shall, on the Redemption Date, become due and
payable at the Redemption Price therein specified, and from and after such
date (unless the Company shall default in the payment of the Redemption
Price and accrued interest) such Securities shall cease to bear interest.
Upon surrender of any such Security for redemption in accordance with said
notice, such Security shall be paid by the Company at the Redemption Price,
together with accrued interest to the Redemption Date; provided, however,
that installments of interest whose Stated Maturity is on or prior to the
Redemption Date shall be payable to the Holders of such Securities, or one
or more Predecessor Securities, registered as such at the close of business
on the relevant Record Dates according to their terms and the provisions of
Section 307.

If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal and any premium shall,
until paid, bear interest from the Redemption Date at the rate borne by the
Security.

SECTION 1208. Securities Redeemed in Part.

Any Security which is to be redeemed only in part shall be
surrendered at an office or agency of the Company designated for that
purpose pursuant to Section 1002 (with, if the Company or the Trustee so
requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the Holder
thereof or his attorney duly authorized in writing), and the Company shall
execute, and the Trustee shall authenticate and deliver to the Holder of
such Security without service charge, a new Security or Securities, of any
authorized denomination as requested by such Holder, in aggregate principal
amount equal to and in exchange for the unredeemed

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<PAGE> 72

portion of the principal of the Security so surrendered. If a Global
Security is so surrendered, such new Security so issued shall be a new
Global Security.

This instrument may be executed in any number of counterparts,
each of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.

IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, and their respective corporate seals to be
hereunto affixed and attested, all as of the day and year first above
written.

QUAKER STATE CORPORATION

By
Name:
Title:
Attest:

__________________________
Name:
Title:

CHEMICAL BANK

By
Name:
Title: Vice President

Attest:

___________________________
Name:
Title: Assistant Secretary
<PAGE>
<PAGE> 73

STATE OF NEW YORK ) ss.:
COUNTY OF NEW YORK )

On the _____ day of __________, 1995, before me personally came
___________________________, to me known, who, being by me duly sworn, did
depose and say that [he--she] is
___________________________________________________ of Quaker State
Corporation, one of the corporations described in and which executed the
foregoing instrument; that [he -- she] knows the seal of said corporation;
that the seal affixed to said instrument is such corporate seal; that it
was so affixed by authority of the Board of Directors of said corporation,
and that [he -- she] signed [his -- her] name thereto by like authority.

______________________________

STATE OF NEW YORK ) ss.:
COUNTY OF NEW YORK )

On the _____ day of __________, 1995, before me personally came
___________________________, to me known, who, being by me duly sworn, did
depose and say that [he --she] is
___________________________________________________ of
___________________________, one of the corporations described in and which
executed the foregoing instrument; that [he -- she] knows the seal of said
corporation; that the seal affixed to said instrument is such corporate
seal; that it was so affixed by authority of the Board of Directors of said
corporation, and that [he -- she] signed [his -- her] name thereto by like
authority.

______________________________