<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 7, 1997
REGISTRATION STATEMENT NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------
QUAKER STATE CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 25-0742820
(State of Incorporation) (I.R.S. Employer Identification No.)
225 East John Carpenter Freeway
Irving, Texas 75062
(972) 868-0400
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
--------------------
Paul E. Konney
Senior Vice President,
General Counsel and Secretary
Quaker State Corporation
225 East John Carpenter Freeway
Irving, Texas 75062
(972) 868-0400
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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Copies to:
Derek R. McClain
J. Christopher Kirk
Vinson & Elkins L.L.P.
2001 Ross Avenue, Suite 3700
Dallas, Texas 75201
(214) 220-7700
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From
time to time after the Registration Statement becomes effective.
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: [x]
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 statement 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. [x]
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=============================================================================================================================
Proposed Maximum Proposed Maximum
Title of Each Class of Securities Amount to Offering Price Aggregate Amount of
to be Registered be Registered Per Unit (1) Offering Price (2) Registration
Fee
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Debt Securities (4) . . . . . . . . . . . . . .
Capital Stock, par value $1.00 per share (5) . (3) (3) (3) (3)
Warrants (6) . . . . . . . . . . . . . . . . .
- -----------------------------------------------------------------------------------------------------------------------------
Total . . . . . $400,000,000 (7) 100% $400,000,000 (7) $121,212
=============================================================================================================================
</TABLE>
Footnotes to Table on next page
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 THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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<PAGE> 2
Footnotes from previous page
(1) The proposed maximum offering price per unit will be determined from
time to time by the registrant in connection with the issuance by the
registrant of the securities registered hereunder.
(2) The proposed maximum aggregate offering price has been estimated
solely for the purpose of calculating the registration fee pursuant to
Rule 457(o) under the Securities Act of 1933.
(3) Not applicable pursuant to General Instruction II.D. of Form S-3.
(4) Subject to note (7) below, there is being registered hereunder an
indeterminate principal amount of Debt Securities. If any Debt
Securities are issued at an original issue discount, then the offering
price shall be in such greater principal amount as shall result in an
aggregate initial offering price not to exceed $400,000,000 less the
dollar amount of any securities previously issued hereunder.
(5) Subject to note (7) below, there is being registered hereunder an
indeterminate number of shares of Capital Stock as may be sold, from
time to time, by the registrant, including the associated rights to
purchase shares of Capital Stock (the "Rights") in accordance with the
terms of the Rights Agreement dated as of September 28, 1995 between
the Company and Mellon Securities Trust Company, as Rights Agent, or
such similar rights as may be issued by the registrant from time to
time. Until the occurrence of certain prescribed events, none of
which has occurred, the Rights are not exercisable, are evidenced by
the certificates representing Capital Stock and will be transferred
along with, and only with, the Capital Stock. There are also being
registered hereunder an indeterminate number of shares of Capital
Stock as shall be issuable upon conversion or redemption of Debt
Securities registered hereunder or exercise of Rights.
(6) Subject to note (7) below, there is being registered hereunder an
indeterminate amount and number of Warrants, representing rights to
purchase Debt Securities or Capital Stock registered hereunder.
(7) In no event will the aggregate initial offering price of all
securities issued from time to time pursuant to this Registration
Statement exceed $400,000,000 or the equivalent thereof in one or
more foreign currencies, foreign currency units, or composite
currencies. The aggregate amount of Capital Stock registered
hereunder is further limited to that which is permissible under Rule
415(a)(4) under the Securities Act of 1933. The securities registered
hereunder may be sold separately or as units with other securities
registered hereunder.
<PAGE> 3
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
ITEM
NUMBER FORM S-3 CAPTION PROSPECTUS CAPTION
------ ---------------- ------------------
<S> <C> <C>
1. Forepart of Registration Statement and Outside Front Cover of Registration Statement; Outside Front
Cover Page of Prospectus Cover Page of Prospectus
2. Inside Front and Outside Back Cover Pages of Available Information; Incorporation by Reference;
Prospectus Table of Contents
3. Summary Information, Risk Factors and Ratio of Cover Page; The Company; Ratio of Earnings to Fixed Charges;
Earnings to Fixed Charges Incorporation by Reference
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Price *
6. Dilution *
7. Selling Security Holders *
8. Plan of Distribution Plan of Distribution
9. Description of Securities to be Registered Description of Debt Securities; Description of Stock;
Description of Warrants; Incorporation by Reference
10. Interests of Named Experts and Counsel Experts; Legal Matters
11. Material Changes Recent Developments; Incorporation by Reference
12. Incorporation of Certain Information by Reference Incorporation by Reference
13. Disclosure of Commission Position on Indemnification
For Securities Act Liabilities *
</TABLE>
- --------
* Not applicable
<PAGE> 4
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 AUGUST 7, 1997
PROSPECTUS
- --------------------------------------------------------------------------------
Debt Securities
Capital Stock
Warrants
QUAKER STATE CORPORATION
- --------------------------------------------------------------------------------
Quaker State Corporation (the "Company") may from time to time offer
in one or more series its (a) debt securities ("Debt Securities"), (b) warrants
to purchase Debt Securities ("Debt Warrants"), (c) Capital Stock, par value
$1.00 per share ("Capital Stock"), or (d) warrants to purchase Capital Stock
("Capital Stock Warrants"), all having an aggregate initial offering price not
to exceed $400,000,000 or the equivalent thereof in one or more foreign
currencies, foreign currency units, or composite currencies, including European
Currency Units. The Debt Warrants and the Capital Stock Warrants are
collectively referred to herein as the "Warrants." The Debt Securities,
Capital Stock and Warrants offered by the Company hereby (collectively referred
to herein as the "Offered Securities") may be offered, separately or together,
in separate series, in amounts, at prices and on terms to be set forth in a
supplement to this Prospectus (a "Prospectus Supplement").
The specific terms of the Offered Securities in respect of which this
Prospectus is being delivered will be set forth in the applicable Prospectus
Supplement and will include, where applicable: (a) in the case of Debt
Securities, the specific title, aggregate principal amount, currency, form
(which may be registered or bearer, certificated or global), authorized
denominations, maturity, rate (or manner of calculation thereof) and time of
payment of interest, terms for redemption at the option of the Company or
repayment at the option of the Holder, terms for sinking fund payments, and any
initial public offering price, (b) in the case of Capital Stock, the number of
shares and the terms of the offering and sale thereof, (c) in the case of
Warrants, the number and terms thereof, the designation and the number of
securities issuable upon exercise, the exercise price, the terms of the
offering and sale thereof, and where applicable, the duration and detachability
thereof, and (d) in the case of all Offered Securities, whether such Offered
Securities will be offered separately or as a unit with other Offered
Securities. The applicable Prospectus Supplement will also contain
information, where applicable, about certain United States federal income tax
considerations relating to, and any listing on a securities exchange of, the
Offered Securities covered by such Prospectus Supplement.
The Company may sell the Offered Securities in or outside the United
States through underwriters, brokers or dealers, directly to one or more
purchasers or through agents. If any agents or underwriters are involved in
the sale of any of the Offered Securities, their names, and any applicable
purchase price, fee, commission or discount arrangement between or among them,
will be set forth, or will be calculable from the information set forth, in the
applicable Prospectus Supplement. See "Plan of Distribution." No Offered
Securities may be sold without delivery of the applicable Prospectus Supplement
describing the method and terms of the offering of such series of Offered
Securities.
-----------------
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 ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-----------------
The date of this Prospectus is _______________, 1997.
<PAGE> 5
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, proxy statements 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 450 Fifth Street,
N.W., Washington, D.C. 20549; Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661; and 7 World Trade Center, 13th Floor, New York,
New York 10048. Copies of such material can be obtained at prescribed rates
from the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Such material can also be obtained from the
Commission's web site at http://www.sec.gov. The Company's outstanding shares
of Capital Stock are listed on the New York Stock Exchange (the "NYSE") and the
Pacific Stock Exchange (the "PSE") under the symbol "KSF", and all such
reports, proxy statements and other information filed by the Company with the
NYSE may be inspected at the NYSE's offices at 20 Broad Street, New York, New
York 10005 and at the PSE's offices at 301 Pine Street, San Francisco,
California 94104.
This Prospectus constitutes part of a registration statement on Form
S-3 (together with all amendments and exhibits thereto, the "Registration
Statement") filed by the Company with the Commission under the Securities Act
of 1933, as amended (the "Securities Act"). This Prospectus and the
accompanying Prospectus Supplement do not contain all of the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. For further
information with respect to the Company and the Offered Securities, reference
is hereby made to the Registration Statement and to the exhibits thereto.
Statements contained herein regarding the provisions of certain documents are
not necessarily complete, and in each instance, reference is made to the copy
of such document filed as an exhibit to the Registration Statement or otherwise
filed with the Commission, and each such statement is qualified in its entirety
by that reference.
INCORPORATION BY REFERENCE
There are incorporated herein by reference the following documents
heretofore filed by the Company with the Commission (File No. 1-2677):
(a) the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996;
(b) the Company's Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 1997;
(c) the Company's Current Report on Form 8-K/A-1 filed on
September 1, 1996, relating to the acquisition of Blue Coral, Inc.;
in conjunction with the audited financial statements of Blue Coral,
Inc., see footnote 2 of the consolidated financial statements of the
Company incorporated by reference in its Annual Report on Form 10-K
for the fiscal year ended December 31, 1996, describing the sale of
NicSand, Inc., to its minority stockholder;
(d) the Company's Current Report on Form 8-K filed on
October 11, 1996;
(e) the Company's Current Report on Form 8-K/A-1 filed on
December 18, 1996;
(f) the description of the Capital Stock contained in the
Company's Current Report On Form 8-K Filed On November 12, 1996; and
(g) the Company's Current Report on Form 8-K filed on
August 7, 1997.
All documents subsequently filed by the Company pursuant to Sections
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 Offered
Securities shall be deemed to be incorporated by reference in this Prospectus
and to be a part hereof from the date 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 subsequently filed document which is incorporated or deemed
to be incorporated by reference herein, modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed to constitute
a part of this Prospectus, except as so modified or superseded.
-2-
<PAGE> 6
The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon the
written or oral request of such person, a copy of any or all of the documents
incorporated herein by reference, other than exhibits to such documents (unless
such exhibits are specifically incorporated by reference into such documents).
Requests for such copies should be directed to General Counsel, Quaker State
Corporation, 225 East John Carpenter Freeway, Irving, Texas 75062, telephone
(972) 868-0400.
With the exception of historical information, the matters discussed
herein and in documents incorporated by reference are forward-looking
statements that involve risks and uncertainties, including, but not limited to,
economic conditions, product demand, competitive products and pricing,
availability of products, changes in inventory due to shifts in market demand,
environmental and trade regulations, litigation and other risks described in
other filings made by the Company with the Commission.
-3-
<PAGE> 7
As used herein the terms "Quaker State" and "Company" include Quaker State
Corporation, a Delaware corporation, and one or more of its subsidiaries, as
appropriate.
THE COMPANY
The Company is a leading producer and marketer of branded and private
label lubricants, lubricant services and consumer branded automotive afermarket
products. Its products include motor oils and other lubricants, automobile
engine and fuel treatments, automotive appearance products and air fresheners
and vehicular safety lighting equipment. The Company's lubricant services are
marketed through fast lube centers in certain areas of the United States and
Canada. The Company also operates a materials handling facility in Canada.
The Company's Lubricants and Lubricant Services segment markets and
distributes major national brand, private label and proprietary brand
lubricants and other automotive aftermarket products primarily in the United
States, Canada and Mexico and through its subsidiary, Q Lube, Inc. ("Q Lube"),
operates fast lube centers which offer consumers quick and economical oil
changes and related services for passenger vehicles. The lubricant stocks used
in the Company's lubricants are blended with additives and packaged at
manufacturing facilities operated by the Company at several locations in the
United States. The Lubricants and Lubricant Services segment also provides
collection, transportation and recycling services for used oil, antifreeze and
filters in certain regions of the United States. During the first six months
of 1997, revenues and operating profit from the Lubricants and Lubricant
Services segment comprised approximately 71% and 42% of the Company's total
revenues and operating profit, respectively.
Quaker State's goal is to continue the growth of its 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 oils and related
materials.
The Company's Consumer Products segment, which was formed in 1996, is
comprised of Slick 50, Inc. ("Slick 50"), Blue Coral, Inc. ("Blue Coral"), and
Medo Industries, Inc. and its affiliated companies (collectively, "Medo"). In
July 1995, the Company acquired Slick 50, a producer of automotive engine
treatments and related automotive chemicals. In June 1996, the Company
acquired Blue Coral, a manufacturer and marketer of automobile appearance
products, commercial and industrial cleaning products and, through its Blue
Coral Systems division, commercial car wash products. In October 1996, the
Company acquired Medo. Medo is engaged in the design, manufacture and
marketing of air fresheners primarily for use in automobiles. During the first
six months of 1997, revenues and operating profit from the Consumer Products
segment compromised approximately 22% and 50% of the Company's total revenues
and operating profit, respectively. The Company plans to expand its Consumer
Products segment by internal growith and by acquiring new companies which
capitalize on the Company's strong sales, distribution and customer service
capabilities in the automotive aftermarket.
The Company's subsidiary, Truck-Lite Co., Inc. ("Truck-Lite")
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 1997, revenues and operating profit from Truck-Lite
comprised approximately 7% and 8% of the Company's total revenues and operating
profit, respectively.
Quaker State believes that acquisitions will be an important aspect of
its corporate strategy. However, there can be no assurance that the Company
will be successful in finding other suitable acquisition or expansion
opportunities.
The Company, a Delaware corporation formed in 1931, has its principal
executive offices at 225 E. John Carpenter Freeway, Irving, Texas 75062. Its
telephone number is (972) 868-0400.
RECENT DEVELOPMENTS
On May 14, 1997, a purported class action lawsuit was filed in the
United States District Court for the Northern District of Illinois. The action
was filed by John A. Garner and Steven G. Grant on their own behalf and on
behalf of a class of persons who purchased wax, polish or protectant products
sold by defendants. The action names as defendants a number of car wax
manufacturers including Blue Coral, a subsidiary of the Company, and certain of
its present and former officers. The complaint alleges that the defendants
falsely advertised and marketed such products and seeks treble damages,
attorneys' fees and costs for the class for alleged violations of the federal
RICO statute and compensatory damages for the alleged violations of the Ohio
Consumer Sales Practices Act as well as for common law breach of express
warranty. The defendants have until August 31, 1997 to answer or otherwise
plead to the complaint. The Company intends to contest the action vigorously.
There can be no assurance, however, that the plaintiffs will not be awarded
damages, some or all of which may be payable by the Company.
On May 16, 1997, Hot Wax, Inc. filed a suit in the United States
District Court for the Northern District of Illinois. Plaintiff purports to be
a Wisconsin corporation that manufactures a wax product called "Hot Wax"
designed for use in automated car washes. The complaint names Blue Coral, among
others, as a defendant. The case is brought under the federal trademark
statute, the Lanham Act, and the complaint alleges that Blue Coral falsely
represented certain products it marketed, advertised and sold to consumers and
retailers. Plaintiff seeks an injunction against Blue Coral and also seeks to
recover money damages, attorneys' fees and costs. The Company intends to
contest the action vigorously. There can be no assurance, however, that the
plaintiffs will not be awarded injunctive relief and/or money damages, some or
all of which may be payable by the Company.
On July 21, 1997, Dura Lube Corporation, et al. filed a suit in the
United States District Court for the District of Delaware. The complaint names
the Company and its subsidiary Slick 50 as defendants and asserts claims under
the Sherman Act and the Clayton Act and for tortious interference with business
relations and civil conspiracy. Plaintiff alleges that the Company has
attempted and conspired to monopolize the market for engine treatment products
through, among other things, alleged exclusive dealing arrangements with major
automotive parts retailers around the country. Plaintiff seeks treble damages,
punitive damages, attorneys' fees and costs as well as injunctive relief. The
Company intends to contest the action vigorously. There can be no assurance,
however, that the plaintiffs will not be awarded injunctive relief and/or money
damages, some or all of which may be payable by the Company.
On July 18, 1997, Quaker State concluded the sale of the assets of its
Congo, West Virginia refinery and its crude oil pipeline division to Ergon-West
Virginia, Inc. for a purchase price of $20,000,000 in cash and $5,000,000 in
the form of a note. The sale also included certain inventories for additional
consideration of approximately $14,000,000.
On August 1, 1997, Quaker State concluded the purchase of certain
assets of Auto-Shade, L.L.C. and its affiliated companies ("Auto-Shade").
Auto-Shade was a leading marketer of automobile sunshades and other automobile
accessories. The purchase included inventory, equipment, receivables and
intellectual property, for a purchase price of $51,000,000 (subject to certain
post-closing adjustments) and the assumption of certain liabilities of
Auto-Shade.
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<PAGE> 8
USE OF PROCEEDS
Unless otherwise described in the applicable Prospectus Supplement,
the net proceeds from the sale of the Offered Securities will be used for
general corporate purposes, which may include repayment of indebtedness,
redemption or repurchase of securities of the Company or any subsidiary,
additions to working capital and capital expenditures.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the Company's consolidated ratios of
earnings to fixed charges for the three months ended March 31, 1997 and each of
the years ended December 31, 1996, 1995, 1994, 1993 and 1992.
<TABLE>
<CAPTION>
Three Months
Ended March 31, Year Ended December 31,
--------------- -------------------------------------------
1997 1996 1995 1994 1993 1992
------- ------- ------- ------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges (a) 2.3 2.1 1.3 2.3 1.8 1.1
-------
</TABLE>
- -------------------
(a) For purposes of computing such ratio, earnings consist of income
before income taxes plus fixed charges net of interest capitalized,
and fixed charges consist of interest expense, interest capitalized,
amortization of debt expense and discount or premium relating to any
indebtedness, and the portion of rental expense attributable to
interest.
-5-
<PAGE> 9
DESCRIPTION OF DEBT SECURITIES
The following description of the terms of the Debt Securities sets
forth certain general terms and provisions of the Debt Securities to which any
Prospectus Supplement may relate. The particular terms of the Debt Securities
offered by any Prospectus Supplement and the extent, if any, to which such
general provisions may apply to the Debt Securities so offered will be
described in the Prospectus Supplement relating to such Debt Securities.
Accordingly, for a description of the terms of a particular issue of Debt
Securities, reference must be made to both the Prospectus Supplement relating
thereto and to the following description.
The Debt Securities will be general obligations of the Company and may
be subordinated to Senior Indebtedness (as defined below) of the Company to the
extent set forth in the Prospectus Supplement relating thereto. See
"Description of Debt Securities -- Subordination." Debt Securities will be
issued under an Indenture (the "Indenture") to be entered into between the
Company and one or more commercial banks to be selected as trustees
(collectively, the "Trustee"). A copy of the form of Indenture has been filed
as an exhibit to the Registration Statement filed with the SEC. The following
discussion of certain provisions of the Indenture is a summary only and does
not purport to be a complete description of the terms and provisions of the
Indenture. Accordingly, the following discussion is qualified in its entirety
by reference to the provisions of the Indenture, including the definition
therein of terms used below with their initial letters capitalized.
GENERAL
The Indenture does not limit the aggregate principal amount of Debt
Securities that can be issued thereunder. The Debt Securities may be issued in
one or more series as may be authorized from time to time by the Company.
Reference is made to the applicable Prospectus Supplement for the following
terms of the Debt Securities of the series with respect to which such
Prospectus Supplement is being delivered:
(a) The title of the Debt Securities of the series;
(b) Any limit on the aggregate principal amount of the
Debt Securities of the series that may be authenticated and delivered
under the Indenture;
(c) The date or dates on which the principal and premium
with respect to the Debt Securities of the series are payable;
(d) The rate or rates (which may be fixed or variable) at
which the Debt Securities of the series shall bear interest (if any)
or the method of determining such rate or rates, the date or dates
from which such interest shall accrue, the dates on which such
interest shall be payable or the method by which such dates will be
determined, the record dates for the determination of holders thereof
to whom such interest is payable (in the case of Registered
Securities), and the basis upon which such interest will be calculated
if other than that of a 360-day year of twelve 30-day months;
(e) The place or places, if any, in addition to or
instead of the corporate trust office of the Trustee (in the case of
Registered Securities) or the principal London office of the Trustee
(in the case of Bearer Securities), where the principal, premium and
interest with respect to Debt Securities of the series shall be
payable;
(f) The price or prices at which, the period or periods
within which, and the terms and conditions upon which Debt Securities
of the series may be redeemed, in whole or in part, at the option of
the Company or otherwise;
(g) Whether Debt Securities of the series are to be
issued as Registered Securities or Bearer Securities or both and, if
Bearer Securities are to be issued, whether coupons will be attached
thereto, whether Bearer Securities of the series may be exchanged for
Registered Securities of the series, and the circumstances under which
and the places at which any such exchanges, if permitted, may be made;
-6-
<PAGE> 10
(h) If any Debt Securities of the series are to be issued
as Bearer Securities or as one or more Global Securities representing
individual Bearer Securities of the series, whether certain provisions
for the payment of additional interest or tax redemptions shall apply;
whether interest with respect to any portion of a temporary Bearer
Security of the series payable with respect to any interest payment
date prior to the exchange of such temporary Bearer Security for
definitive Bearer Securities of the series shall be paid to any
clearing organization with respect to the portion of such temporary
Bearer Security held for its account and, in such event, the terms and
conditions (including any certification requirements) upon which any
such interest payment received by a clearing organization will be
credited to the persons entitled to interest payable on such interest
payment date; and the terms upon which a temporary Bearer Security may
be exchanged for one or more definitive Bearer Securities of the
series;
(i) The obligation, if any, of the Company to redeem,
purchase, or repay Debt Securities of the series pursuant to any
sinking fund or analogous provisions or at the option of a holder
thereof and the price or prices at which, the period or periods within
which, and the terms and conditions upon which Debt Securities of the
series shall be redeemed, purchased or repaid, in whole or in part,
pursuant to such obligations;
(j) The terms, if any, upon which the Debt Securities of
the series may be convertible into or exchanged for Capital Stock,
other Debt Securities, or warrants for Capital Stock or indebtedness
or other securities of any kind of the Company or any other issuer or
obligor and the terms and conditions upon which such conversion or
exchange shall be effected, including the initial conversion or
exchange price or rate, the conversion or exchange period, and any
other additional provisions;
(k) If other than denominations of $1,000 or any integral
multiple thereof, the denominations in which Debt Securities of the
series shall be issuable;
(l) If the amount of principal, premium, or interest with
respect to the Debt Securities of the series may be determined with
reference to an index or pursuant to a formula, the manner in which
such amounts will be determined;
(m) If the principal amount payable at the stated
maturity of Debt Securities of the series will not be determinable as
of any one or more dates prior to such stated maturity, the amount
that will be deemed to be such principal amount as of any such date
for any purpose, including the principal amount thereof which will be
due and payable upon any maturity other than the stated maturity or
which will be deemed to be outstanding as of any such date (or, in any
such case, the manner in which such deemed principal amount is to be
determined), and if necessary, the manner of determining the
equivalent thereof in United States currency;
(n) Any changes or additions to the provisions of the
Indenture dealing with defeasance, including the addition of covenants
that may be subject to the Company's covenant defeasance option;
(o) If other than such coin or currency of the United
States at the time of payment is legal tender for payment of public
and private debts, the coin or currency or currencies or units of two
or more currencies in which payment of the principal, premium and
interest with respect to Debt Securities of the series shall be
payable;
(p) If other than the principal amount thereof, the
portion of the principal amount of Debt Securities of the series that
shall be payable upon declaration of acceleration of the maturity
thereof or provable in bankruptcy;
(q) The terms, if any, of the transfer, mortgage, pledge
or assignment as security for the Debt Securities of the series of any
properties, assets, monies, proceeds, securities or other collateral,
including whether certain provisions of the Trust Indenture Act are
applicable and any corresponding changes to provisions of the
Indenture as then in effect;
(r) Any addition to or change in the Events of Default
with respect to the Debt Securities of the series and any change in
the right of the Trustee or the holders to declare the principal,
premium and interest with respect to such Debt Securities due and
payable;
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<PAGE> 11
(s) If the Debt Securities of the series shall be issued
in whole or in part in the form of a Global Security, the terms and
conditions, if any, upon which such Global Security may be exchanged
in whole or in part for other individual Debt Securities in definitive
registered form, the Depositary for such Global Security, and the form
of any legend or legends to be borne by any such Global Security in
addition to or in lieu of the legend referred to in the Indenture;
(t) Any Trustee, authenticating or paying agents,
transfer agents or registrars;
(u) The applicability of, and any addition to or change
in, the covenants and definitions then set forth in the Indenture or
in the terms then set forth in the Indenture relating to permitted
consolidations, mergers or sales of assets, including conditioning any
merger, conveyance, transfer or lease permitted by the Indenture upon
the satisfaction of an indebtedness coverage standard by the Company
and any successor to the Company;
(v) The terms, if any, of any guarantee of the payment of
principal, premium and interest with respect to Debt Securities of the
series and any corresponding changes to the provisions of the
Indenture as then in effect;
(w) The subordination, if any, of the Debt Securities of
the series pursuant to the Indenture and any changes or additions to
the provisions of the Indenture relating to subordination;
(x) With regard to Debt Securities of the series that do
not bear interest, the dates for certain required reports to the
Trustee; and
(y) Any other terms of the Debt Securities of the series
(which terms shall not be prohibited by the provisions of the
Indenture).
The Prospectus Supplement will also describe any material United
States federal income tax consequences or other special considerations
applicable to the series of Debt Securities to which such Prospectus Supplement
relates, including those applicable to (a) Bearer Securities, (b) Debt
Securities with respect to which payments of principal, premium or interest are
determined with reference to an index or formula (including changes in prices
of particular securities, currencies or commodities), (c) Debt Securities with
respect to which principal, premium or interest is payable in a foreign or
composite currency, (d) Debt Securities that are issued at a discount below
their stated principal amount, bearing no interest or interest at a rate that
at the time of issuance is below market rates ("Original Issue Discount Debt
Securities"), and (e) variable rate Debt Securities that are exchangeable for
fixed rate Debt Securities.
Payments of interest on Registered Securities may be made at the
option of the Company by check mailed to the registered holders thereof or, if
so provided in the applicable Prospectus Supplement, at the option of a holder
by wire transfer to an account designated by such holder. Except as otherwise
provided in the applicable Prospectus Supplement, no payment on a Bearer
Security will be made by mail to an address in the United States or by wire
transfer to an account in the United States.
Unless otherwise provided in the applicable Prospectus Supplement,
Registered Securities may be transferred or exchanged at the office of the
Trustee at which its corporate trust business is principally administered in
the United States or at the office of the Trustee or the Trustee's agent in the
Borough of Manhattan, the City and State of New York, at which its corporate
agency business is conducted, subject to the limitations provided in the
Indenture, without the payment of any service charge, other than any tax or
governmental charge payable in connection therewith. Bearer Securities will be
transferable only by delivery. Provisions with respect to the exchange of
Bearer Securities will be described in the Prospectus Supplement relating to
such Bearer Securities.
All funds paid by the Company to a paying agent for the payment of
principal, premium or interest with respect to any Debt Securities that remain
unclaimed at the end of two years after such principal, premium or interest
shall have become due and payable will be repaid to the Company, and the
holders of such Debt Securities or any coupons appertaining thereto will
thereafter look only to the Company for payment thereof.
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<PAGE> 12
GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in part in
the form of one or more Global Securities. A Global Security is a Debt
Security that represents, and is denominated in an amount equal to the
aggregate principal amount of, all outstanding Debt Securities of a series, or
any portion thereof, in either case having the same terms, including the same
original issue date, date or dates on which principal and interest are due, and
interest rate or method of determining interest. A Global Security will be
deposited with, or on behalf of, a Depositary, which will be identified in the
Prospectus Supplement relating to such Debt Securities. Global Securities may
be issued in either registered or bearer form and in either temporary or
definitive form. Unless and until it is exchanged in whole or in part for the
individual Debt Securities represented thereby, a Global Security may not be
transferred except as a whole by the Depositary to a nominee of the Depositary,
by a nominee of the Depositary to the Depositary or another nominee of the
Depositary, or by the Depositary or any nominee of the Depositary to a
successor Depositary or any nominee of such successor.
The specific terms of the depositary arrangement with respect to a
series of Debt Securities will be described in the Prospectus Supplement
relating to such Debt Securities. The Company anticipates that the following
provisions will generally apply to depositary arrangements.
Upon the issuance of a Global Security, the Depositary for such Global
Security will credit, on its book-entry registration and transfer system, the
respective principal amounts of the individual Debt Securities represented by
such Global Security to the accounts of persons that have accounts with the
Depositary ("participants"). Such accounts shall be designated by the dealers
or underwriters with respect to such Debt Securities or, if such Debt
Securities are offered and sold directly by the Company or through one or more
agents, by the Company or such agents. Ownership of beneficial interests in a
Global Security will be limited to participants or persons that hold beneficial
interests through participants. Ownership of beneficial interests in such
Global Security will be shown on, and the transfer of that ownership will be
effected only through, records maintained by the Depositary (with respect to
interests of participants) or records maintained by participants (with respect
to interests of persons other than participants). The laws of some states
require that certain purchasers of securities take physical delivery of such
securities in definitive form. Such limitations and laws may impair the
ability to transfer beneficial interests in a Global Security.
So long as the Depositary for a Global Security, or its nominee, is
the registered owner or holder of such Global Security, such Depositary or
nominee, as the case may be, will be considered the sole owner or holder of the
individual Debt Securities represented by such Global Security for all purposes
under the Indenture. Except as provided below, owners of beneficial interests
in a Global Security will not be entitled to have any of the individual Debt
Securities represented by such Global Security registered in their names, will
not receive or be entitled to receive physical delivery of any of such Debt
Securities in definitive form, and will not be considered the owners or holders
thereof under the Indenture.
Subject to the restrictions described under "Description of Debt
Securities -- Limitations on Issuance of Bearer Securities," payments of
principal, premium and interest with respect to individual Debt Securities
represented by a Global Security will be made to the Depositary or its nominee,
as the case may be, as the registered owner or holder of such Global Security.
Neither the Company, the Trustee, any paying agent or registrar for such Debt
Securities, or any agent of the Company or the Trustee will have any
responsibility or liability for (a) any aspect of the records relating to or
payments made by the Depositary, its nominee or any participants on account of
beneficial interests in the Global Security or for maintaining, supervising, or
reviewing any records relating to such beneficial interests, (b) the payment to
the owners of beneficial interests in the Global Security of amounts paid to
the Depositary or its nominee, or (c) any other matter relating to the actions
and practices of the Depositary, its nominee or its participants. Neither the
Company, the Trustee, any paying agent or registrar for such Debt Securities,
or any agent of the Company or the Trustee will be liable for any delay by the
Depositary, its nominee or any of its participants in identifying the owners of
beneficial interests in the Global Security, and the Company and the Trustee
may conclusively rely on, and will be protected in relying on, instructions
from the Depositary or its nominee for all purposes.
The Company expects that the Depositary for a series of Debt
Securities or its nominee, upon receipt of any payment of principal, premium or
interest with respect to a definitive Global Security representing any of such
Debt Securities, will immediately credit participants' accounts with payments
in amounts proportionate to their respective beneficial interests in the
principal amount of such Global Security, as shown on the records of the
Depositary or its
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<PAGE> 13
nominee. The Company also expects that payments by participants to owners of
beneficial interests in such Global Security 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 and registered in
street name. Such payments will be the responsibility of such participants.
Receipt by owners of beneficial interests in a temporary Global Security of
payments of principal, premium or interest with respect thereto will be subject
to the restrictions described under "Description of Debt Securities --
Limitations on Issuance of Bearer Securities."
If the Depositary for a series of Debt Securities is at any time
unwilling, unable or ineligible to continue as depositary, the Company shall
appoint a successor depositary. If a successor depositary is not appointed by
the Company within 90 days, the Company will issue individual Debt Securities
of such series in exchange for the Global Security representing such series of
Debt Securities. In addition, the Company may at any time and in its sole
discretion, subject to any limitations described in the Prospectus Supplement
relating to such Debt Securities, determine no longer to have Debt Securities
of a series represented by a Global Security and, in such event, will issue
individual Debt Securities of such series in exchange for the Global Security
representing such series of Debt Securities. Furthermore, if the Company so
specifies with respect to the Debt Securities of a series, an owner of a
beneficial interest in a Global Security representing Debt Securities of such
series may, on terms acceptable to the Company, the Trustee and the Depositary
for such Global Security, receive individual Debt Securities of such series in
exchange for such beneficial interests, subject to any limitations described in
the Prospectus Supplement relating to such Debt Securities. In any such
instance, an owner of a beneficial interest in a Global Security will be
entitled to physical delivery of individual Debt Securities of the series
represented by such Global Security equal in principal amount to such
beneficial interest and to have such Debt Securities registered in its name (if
the Debt Securities are issuable as Registered Securities). Individual Debt
Securities of such series so issued will be issued (a) as Registered Securities
in denominations, unless otherwise specified by the Company, of $1,000 and
integral multiples thereof if the Debt Securities are issuable as Registered
Securities, (b) as Bearer Securities in the denomination or denominations
specified by the Company if the Debt Securities are issuable as Bearer
Securities, or (c) as either Registered Securities or Bearer Securities as
described above if the Debt Securities are issuable in either form. See,
however, "Description of Debt Securities -- Limitations on Issuance of Bearer
Securities" for a description of certain restrictions on the issuance of
individual Bearer Securities in exchange for beneficial interests in a bearer
Global Security.
LIMITATIONS ON ISSUANCE OF BEARER SECURITIES
The Debt Securities of a series may be issued as Registered Securities
(which will be registered as to principal and interest in the register
maintained by the registrar for such Debt Securities) or Bearer Securities
(which will be transferable only by delivery). If such Debt Securities are
issuable as Bearer Securities, certain special limitations and considerations
will apply.
In compliance with United States federal income tax laws and
regulations, the Company and any underwriter, agent or dealer participating in
an offering of Bearer Securities will agree that, in connection with the
original issuance of such Bearer Securities and during the period ending 40
days after the issue date, they will not offer, sell or deliver any such Bearer
Security, directly or indirectly, to a United States Person (as defined below)
or to any person within the United States, except to the extent permitted under
United States Treasury regulations.
Bearer Securities will bear a legend to the following effect: "Any
United States Person who holds this obligation will be subject to limitations
under the United States federal income tax laws, including the limitations
provided in Sections 165(j) and 1287(a) of the Internal Revenue Code." The
sections referred to in the legend provide that, with certain exceptions, a
United States taxpayer who holds Bearer Securities will not be allowed to
deduct any loss with respect to, and will not be eligible for capital gain
treatment with respect to any gain realized on the sale, exchange, redemption,
or other disposition of, such Bearer Securities.
For this purpose, "United States" includes the United States of
America and its possessions, and "United States Person" means a citizen or
resident of the United States, a corporation, partnership, or other entity
created or organized in or under the laws of the United States, or an estate or
trust the income of which is subject to United States federal income taxation
regardless of its source.
Pending the availability of a definitive Global Security or individual
Bearer Securities, as the case may be, Debt Securities that are issuable as
Bearer Securities may initially be represented by a single temporary Global
Security,
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<PAGE> 14
without interest coupons, to be deposited with a common depositary in London
for Morgan Guaranty Trust Company of New York, Brussels office, as operator of
the Euroclear System ("Euroclear"), or Centrale de Livraison de Valeurs
Mobilieres S.A. ("CEDEL") for credit to the accounts designated by or on behalf
of the purchasers thereof. Following the availability of a definitive Global
Security in bearer form, without coupons attached, or individual Bearer
Securities, and subject to any further limitations described in the applicable
Prospectus Supplement, the temporary Global Security will be exchangeable for
interests in such definitive Global Security or for such individual Bearer
Securities, respectively, only upon receipt of a "Certificate of Non-U.S.
Beneficial Ownership," which is a certificate to the effect that a beneficial
interest in a temporary Global Security is owned by a person that is not a
United States Person or is owned by or through a financial institution in
compliance with applicable United States Treasury regulations. No Bearer
Security will be delivered in or to the United States. If so specified in the
applicable Prospectus Supplement, interest on a temporary Global Security will
be paid to each of Euroclear and CEDEL with respect to that portion of such
temporary Global Security held for its account, but only upon receipt as of the
relevant interest payment date of a Certificate of Non-U.S. Beneficial
Ownership.
SUBORDINATION
Debt Securities of a series may be subordinated ("Subordinated Debt
Securities") to Senior Indebtedness (as defined below) to the extent set forth
in the Prospectus Supplement relating thereto. The Company currently conducts
certain of its operations through subsidiaries, and the holders of Debt
Securities (whether or not Subordinated Debt Securities) will be structurally
subordinated to the creditors of the Company's subsidiaries.
Subordinated Debt Securities of a series and any coupons appertaining
thereto will be subordinate in right of payment, to the extent and in the
manner set forth in the Indenture and the Prospectus Supplement relating to
such Subordinated Debt Securities, to the prior payment of all indebtedness of
the Company that is designated as "Senior Indebtedness" with respect to such
series. "Senior Indebtedness," with respect to any series of Subordinated Debt
Securities, will consist of (a) any and all amounts payable under or with
respect to the Company's "Bank Indebtedness" (defined as the Credit Agreement,
dated as of June 12, 1997, between Quaker State and Morgan Guaranty Trust
Company Of New York , As Agent), and (b) any other indebtedness of the Company
that is designated in a resolution of the Company's Board of Directors (the
"Board") or the supplemental Indenture establishing such series as Senior
Indebtedness with respect to such series.
Upon any payment or distribution of assets of the Company to creditors
or upon a total or partial liquidation or dissolution of the Company or in a
bankruptcy, receivership or similar proceeding relating to the Company or its
property, holders of Senior Indebtedness shall be entitled to receive payment
in full in cash of the Senior Indebtedness before holders of Subordinated Debt
Securities shall be entitled to receive any payment of principal, premium or
interest with respect to the Subordinated Debt Securities, and until the Senior
Indebtedness is paid in full, any distribution to which holders of Subordinated
Debt Securities would otherwise be entitled shall be made to the holders of
Senior Indebtedness (except that such holders may receive shares of stock and
any debt securities that are subordinated to Senior Indebtedness to at least
the same extent as the Subordinated Debt Securities).
The Company may not make any payments of principal, premium or
interest with respect to Subordinated Debt Securities, make any deposit for the
purpose of defeasance of such Subordinated Debt Securities, or repurchase,
redeem or otherwise retire (except, in the case of Subordinated Debt Securities
that provide for a mandatory sinking fund, by the delivery of Subordinated Debt
Securities by the Company to the Trustee in satisfaction of the Company's
sinking fund obligation) any Subordinated Debt Securities if (a) any principal,
premium or interest with respect to Senior Indebtedness is not paid within any
applicable grace period (including at maturity) or (b) any other default on
Senior Indebtedness occurs and the maturity of such Senior Indebtedness is
accelerated in accordance with its terms, unless, in either case, the default
has been cured or waived and such acceleration has been rescinded, such Senior
Indebtedness has been paid in full in cash, or the Company and the Trustee
receive written notice approving such payment from the representatives of each
issue of "Designated Senior Indebtedness" (which will include the Bank
Indebtedness and any other specified issue of Senior Indebtedness of at least $
[100] million). During the continuance of any default (other than a default
described in clause (a) or (b) above) with respect to any Senior Indebtedness
pursuant to which the maturity thereof may be accelerated immediately without
further notice (except such notice as may be required to effect such
acceleration) or the expiration of any applicable grace periods, the Company
may not pay the Subordinated Debt Securities for a period (the "Payment
Blockage Period") commencing on the receipt by the Company and the Trustee of
written notice of such default from the representative of any Designated Senior
Indebtedness specifying an election to effect a Payment
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<PAGE> 15
Blockage Period (a "Blockage Notice"). The Payment Blockage Period may be
terminated before its expiration by written notice to the Trustee and the
Company from the person who gave the Blockage Notice, by repayment in full in
cash of the Senior Indebtedness with respect to which the Blockage Notice was
given, or because the default giving rise to the Payment Blockage Period is no
longer continuing. Unless the holders of such Senior Indebtedness shall have
accelerated the maturity thereof, the Company may resume payments on the
Subordinated Debt Securities after the expiration of the Payment Blockage
Period. Not more than one Blockage Notice may be given in any period of 360
consecutive days unless the first Blockage Notice within such 360-day period is
given by or on behalf of holders of Designated Senior Indebtedness other than
the Bank Indebtedness, in which case, the representative of the Bank
Indebtedness may give another Blockage Notice within such period. In no event,
however, may the total number of days during which any Payment Blockage Period
or Periods is in effect exceed 179 days in the aggregate during any period of
360 consecutive days. After all Senior Indebtedness is paid in full and until
the Subordinated Debt Securities are paid in full, holders of the Subordinated
Debt Securities shall be subrogated to the rights of holders of Senior
Indebtedness to receive distributions applicable to Senior Indebtedness.
By reason of such subordination, in the event of insolvency, creditors
of the Company who are holders of Senior Indebtedness, as well as certain
general creditors of the Company, may recover more, ratably, than the holders
of the Subordinated Debt Securities.
EVENTS OF DEFAULT AND REMEDIES
The following events are defined in the Indenture as "Events of
Default" with respect to a series of Debt Securities:
(a) Default in the payment of any installment of interest
on any Debt Securities of that series or any payment with respect to
the related coupons, if any, as and when the same shall become due and
payable (whether or not, in the case of Subordinated Debt Securities,
such payment shall be prohibited by reason of the subordination
provisions described above) and continuance of such default for a
period of 30 days;
(b) Default in the payment of principal or premium with
respect to any Debt Securities of that series as and when the same
shall become due and payable, whether at maturity, upon redemption, by
declaration, upon required repurchase, or otherwise (whether or not,
in the case of Subordinated Debt Securities, such payment shall be
prohibited by reason of the subordination provisions described above);
(c) Default in the payment of any sinking fund payment
with respect to any Debt Securities of that series as and when the
same shall become due and payable;
(d) Failure on the part of the Company to comply with the
provisions of the Indenture relating to consolidations, mergers and
sales of assets;
(e) Failure on the part of the Company duly to observe or
perform any other of the covenants or agreements on the part of the
Company in the Debt Securities of that series, in any resolution of
the Board authorizing the issuance of that series of Debt Securities,
in the Indenture with respect to such series, or in any supplemental
Indenture with respect to such series (other than a covenant a default
in the performance of which is otherwise specifically dealt with)
continuing for a period of 60 days after the date on which written
notice specifying such failure and requiring the Company to remedy the
same shall have been given to the Company by the Trustee or to the
Company and the Trustee by the holders of at least 25% in aggregate
principal amount of the Debt Securities of that series at the time
outstanding;
(f) Indebtedness of the Company or any subsidiary of the
Company is not paid within any applicable grace period after final
maturity or is accelerated by the holders thereof because of a
default, the total amount of such Indebtedness unpaid or accelerated
exceeds $20 million or the United States dollar equivalent thereof
at the time, and such default remains uncured or such acceleration is
not rescinded for 10 days after the date on which written notice
specifying such failure and requiring the Company to remedy the same
shall have been given to the Company by the Trustee or to the Company
and the Trustee by the holders of at least 25% in aggregate principal
amount of the Debt Securities of that series at the time outstanding;
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<PAGE> 16
(g) The Company or any of its "Significant Subsidiaries"
(defined as any subsidiary of the Company that would be a "significant
subsidiary" as defined in Rule 405 under the Securities Act as in
effect on the date of the Indenture) shall (1) voluntarily commence
any proceeding or file any petition seeking relief under the United
States Bankruptcy Code or other federal or state bankruptcy,
insolvency or similar law, (2) consent to the institution of, or fail
to controvert within the time and in the manner prescribed by law, any
such proceeding or the filing of any such petition, (3) apply for or
consent to the appointment of a receiver, trustee, custodian,
sequestrator or similar official for the Company or any such
Significant Subsidiary or for a substantial part of its property, (4)
file an answer admitting the material allegations of a petition filed
against it in any such proceeding, (5) make a general assignment for
the benefit of creditors, (6) admit in writing its inability or fail
generally to pay its debts as they become due, (7) take corporate
action for the purpose of effecting any of the foregoing, or (8) take
any comparable action under any foreign laws relating to insolvency;
(h) The entry of an order or decree by a court having
competent jurisdiction for (1) relief with respect to the Company or
any of its Significant Subsidiaries or a substantial part of any of
their property under the United States Bankruptcy Code or any other
federal or state bankruptcy, insolvency, or similar law, (2) the
appointment of a receiver, trustee, custodian, sequestrator, or
similar official for the Company or any such Significant Subsidiary or
for a substantial part of any of their property (except any decree or
order appointing such official of any Significant Subsidiary pursuant
to a plan under which the assets and operations of such Significant
Subsidiary are transferred to or combined with another Significant
Subsidiary or Subsidiaries of the Company or to the Company), or (3)
the winding-up or liquidation of the Company or any such Significant
Subsidiary (except any decree or order approving or ordering the
winding-up or liquidation of the affairs of a Significant Subsidiary
pursuant to a plan under which the assets and operations of such
Significant Subsidiary are transferred to or combined with another
Significant Subsidiary or Subsidiaries of the Company or to the
Company), and such order or decree shall continue unstayed and in
effect for 60 consecutive days, or any similar relief is granted under
any foreign laws and the order or decree stays in effect for 60
consecutive days;
(i) Any judgment or decree for the payment of money in
excess of $20 million or the United States dollar equivalent thereof
at the time is entered against the Company or any Subsidiary of the
Company by a court of competent jurisdiction, which judgment is not
covered by insurance, and is not discharged and either (1) an
enforcement proceeding has been commenced by any creditor upon such
judgment or decree or (2) there is a period of 60 days following the
entry of such judgment or decree during which such judgment or decree
is not discharged or waived or the execution thereof stayed and, in
either case, such default continues for 10 days after the date on
which written notice specifying such failure and requiring the Company
to remedy the same shall have been given to the Company by the Trustee
or to the Company and the Trustee by the holders of at least 25% in
aggregate principal amount of the Debt Securities of that series at
the time outstanding; and
(j) Any other Event of Default provided with respect to
Debt Securities of that series.
An Event of Default with respect to one series of Debt Securities is not
necessarily an Event of Default for another series.
If an Event of Default described in clause (a), (b), (c), (d), (e),
(f), (i) or (j) above occurs and is continuing with respect to any series of
Debt Securities, unless the principal and interest with respect to all the Debt
Securities of such series shall have already become due and payable, either the
Trustee or the holders of not less than 25% in aggregate principal amount of
the Debt Securities of such series then outstanding may declare the principal
amount (or, if Original Issue Discount Debt Securities, such portion of the
principal amount as may be specified in such series) of and interest on all the
Debt Securities of such series due and payable immediately. If an Event of
Default described in clause (g) or (h) above occurs, unless the principal and
interest with respect to all the Debt Securities of all series shall have
become due and payable, the principal amount (or, if any series are Original
Issue Discount Debt Securities, such portion of the principal amount as may be
specified in such series) of and interest on all Debt Securities of all series
then outstanding shall become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any holder of Debt
Securities.
If an Event of Default occurs and is continuing, the Trustee shall be
entitled and empowered to institute any action or proceeding for the collection
of the sums so due and unpaid or to enforce the performance of any provision of
the Debt Securities of the affected series or the Indenture, to prosecute any
such action or proceeding to judgment or final decree, and to enforce any such
judgment or final decree against the Company or any other obligor on the Debt
Securities
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<PAGE> 17
of such series. In addition, if there shall be pending proceedings for the
bankruptcy or reorganization of the Company or any other obligor on the Debt
Securities, or if a receiver, trustee, or similar official shall have been
appointed for its property, the Trustee shall be entitled and empowered to file
and prove a claim for the whole amount of principal, premium, and interest (or,
in the case of Original Issue Discount Debt Securities, such portion of the
principal amount as may be specified in the terms of such series) owing and
unpaid with respect to the Debt Securities. No holder of any Debt Security or
coupon of any series shall have any right to institute any action or proceeding
upon or under or with respect to the Indenture, for the appointment of a
receiver or trustee, or for any other remedy, unless (a) such holder previously
shall have given to the Trustee written notice of an Event of Default with
respect to Debt Securities of that series and of the continuance thereof, (b)
the holders of not less than 25% in aggregate principal amount of the
outstanding Debt Securities of that series shall have made written request to
the Trustee to institute such action or proceeding with respect to such Event
of Default and shall have offered to the Trustee such reasonable indemnity as
it may require against the costs, expenses, and liabilities to be incurred
therein or thereby, and (c) the Trustee, for 60 days after its receipt of such
notice, request, and offer of indemnity shall have failed to institute such
action or proceeding and no direction inconsistent with such written request
shall have been given to the Trustee pursuant to the provisions of the
Indenture.
Prior to the acceleration of the maturity of the Debt Securities of
any series, the holders of a majority in aggregate principal amount of the Debt
Securities of that series at the time outstanding may, on behalf of the holders
of all Debt Securities and any related coupons of that series, waive any past
default or Event of Default and its consequences for that series, except (a) a
default in the payment of the principal, premium or interest with respect to
such Debt Securities or (b) a default with respect to a provision of the
Indenture that cannot be amended without the consent of each holder affected
thereby. In case of any such waiver, such default shall cease to exist, any
Event of Default arising therefrom shall be deemed to have been cured for all
purposes, and the Company, the Trustee and the holders of the Debt Securities
of that series shall be restored to their former positions and rights under the
Indenture.
The Trustee shall, within 90 days after the occurrence of a default
known to it with respect to a series of Debt Securities, give to the holders of
the Debt Securities of such series notice of all uncured defaults with respect
to such series known to it, unless such defaults shall have been cured or
waived before the giving of such notice; provided, however, that except in the
case of default in the payment of principal, premium or interest with respect
to the Debt Securities of such series or in the making of any sinking fund
payment with respect to the Debt Securities of such series, the Trustee shall
be protected in withholding such notice if it in good faith determines that the
withholding of such notice is in the interest of the holders of such Debt
Securities.
MODIFICATION OF THE INDENTURE
The Company and the Trustee may enter into supplemental Indentures
without the consent of the holders of Debt Securities for one or more of the
following purposes:
(a) To evidence the succession of another person to the
Company pursuant to the provisions of the Indenture relating to
consolidations, mergers, and sales of assets and the assumption by
such successor of the covenants, agreements, and obligations of the
Company in the Indenture and in the Debt Securities;
(b) To surrender any right or power conferred upon the
Company by the Indenture, to add to the covenants of the Company such
further covenants, restrictions, conditions or provisions for the
protection of the holders of all or any series of Debt Securities as
the Board shall consider to be for the protection of the holders of
such Debt Securities, and to make the occurrence, or the occurrence
and continuance, of a default in any of such additional covenants,
restrictions, conditions, or provisions a default or an Event of
Default under the Indenture (provided, however, that with respect to
any such additional covenant, restriction, condition or provision,
such supplemental Indenture may provide for a period of grace after
default, which may be shorter or longer than that allowed in the case
of other defaults, may provide for an immediate enforcement upon such
default, may limit the remedies available to the Trustee upon such
default, or may limit the right of holders of a majority in aggregate
principal amount of any or all series of Debt Securities to waive such
default);
(c) To cure any ambiguity or to correct or supplement any
provision contained in the Indenture, in any supplemental Indenture,
or in any Debt Securities that may be defective or inconsistent with
any other provision contained therein, to convey, transfer, assign,
mortgage or pledge any property to or with the Trustee,
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or to make such other provisions in regard to matters or questions
arising under the Indenture as shall not adversely affect the
interests of any holders of Debt Securities of any series;
(d) To modify or amend the Indenture in such a manner as
to permit the qualification of the Indenture or any supplemental
Indenture under the Trust Indenture Act as then in effect;
(e) To add to or change any of the provisions of the
Indenture to provide that Bearer Securities may be registerable as to
principal, to change or eliminate any restrictions on the payment of
principal or premium with respect to Registered Securities or of
principal, premium or interest with respect to Bearer Securities, or
to permit Registered Securities to be exchanged for Bearer Securities,
so long as any such action does not adversely affect the interests of
the holders of Debt Securities or any coupons of any series in any
material respect or permit or facilitate the issuance of Debt
Securities of any series in uncertificated form;
(f) To comply with the provisions of the Indenture
relating to consolidations, mergers and sales of assets;
(g) In the case of Subordinated Debt Securities, to make
any change in the provisions of the Indenture relating to
subordination that would limit or terminate the benefits available to
any holder of Senior Indebtedness under such provisions (but only if
such holder of Senior Indebtedness consents to such change);
(h) To add guarantees with respect to the Debt Securities
or to secure the Debt Securities;
(i) To make any change that does not adversely affect the
rights of any holder;
(j) To add to, change or eliminate any of the provisions
of the Indenture with respect to one or more series of Debt
Securities, so long as any such addition, change or elimination not
otherwise permitted under the Indenture shall (1) neither apply to any
Debt Security of any series created prior to the execution of such
supplemental Indenture and entitled to the benefit of such provision
nor modify the rights of the holders of any such Debt Security with
respect to such provision or (2) become effective only when there is
no such Debt Security outstanding;
(k) To evidence and provide for the acceptance of
appointment by a successor or separate Trustee with respect to the
Debt Securities of one or more series and to add to or change any of
the provisions of the Indenture as shall be necessary to provide for
or facilitate the administration of the Indenture by more than one
Trustee; and
(l) To establish the form or terms of Debt Securities and
coupons of any series, as described above under "Description of Debt
Securities -- General."
With the consent of the holders of a majority in aggregate principal
amount of the outstanding Debt Securities of each series affected thereby, the
Company and the Trustee may from time to time and at any time enter into a
supplemental Indenture for the purpose of adding any provisions to, changing in
any manner, or eliminating any of the provisions of the Indenture or of any
supplemental Indenture or modifying in any manner the rights of the holders of
the Debt Securities of such series; provided, however, that without the consent
of the holders of each Debt Security so affected, no such supplemental
Indenture shall (a) reduce the percentage in principal amount of Debt
Securities of any series whose holders must consent to an amendment, (b) reduce
the rate of or extend the time for payment of interest on any Debt Security or
coupon or reduce the amount of any payment to be made with respect to any
coupon, (c) reduce the principal of or extend the stated maturity of any Debt
Security, (d) reduce the premium payable upon the redemption of any Debt
Security or change the time at which any Debt Security may or shall be
redeemed, (e) make any Debt Security payable in a currency other than that
stated in the Debt Security, (f) in the case of any Subordinated Debt Security
or coupons appertaining thereto, make any change in the provisions of the
Indenture relating to subordination that adversely affects the rights of any
holder under such provisions, (g) release any security that may have been
granted with respect to the Debt Securities, (h) make any change in the
provisions of the Indenture relating to waivers of defaults or amendments that
require unanimous consent, (i) change any obligation of the Company provided
for in the Indenture to pay additional interest with respect to Bearer
Securities, or (j) limit the obligation of the Company to maintain a paying
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agency outside the United States for payment on Bearer Securities or limit the
obligation of the Company to redeem certain Bearer Securities.
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Company may not consolidate with or merge with or into any person,
or convey, transfer or lease all or substantially all of its assets, unless the
following conditions have been satisfied:
(a) Either (1) the Company shall be the continuing person
in the case of a merger or (2) the resulting, surviving or transferee
person, if other than the Company (the "Successor Company"), shall be
a corporation organized and existing under the laws of the United
States, any State or the District of Columbia and shall expressly
assume all of the obligations of the Company under the Debt Securities
and coupons and the Indenture;
(b) Immediately after giving effect to such transaction
(and treating any indebtedness that becomes an obligation of the
Successor Company or any subsidiary of the Company as a result of such
transaction as having been incurred by the Successor Company or such
subsidiary at the time of such transaction), no Default or Event of
Default would occur or be continuing;
(c) The Successor Company waives any right to redeem any
Bearer Security under circumstances in which the Successor Company
would be entitled to redeem such Bearer Security but the Company would
not have been so entitled to redeem if the consolidation, merger,
conveyance, transfer, or lease had not occurred; and
(d) The Company shall have delivered to the Trustee an
officers' certificate and an opinion of counsel, each stating that
such consolidation, merger or transfer complies with the Indenture.
SATISFACTION AND DISCHARGE OF THE INDENTURE; DEFEASANCE
The Indenture shall generally cease to be of any further effect with
respect to a series of Debt Securities if (a) the Company has delivered to the
Trustee for cancellation all Debt Securities of such series (with certain
limited exceptions) or (b) all Debt Securities and coupons of such series not
theretofore delivered to the Trustee for cancellation shall have become due and
payable, or are by their terms to become due and payable within one year or are
to be called for redemption within one year, and the Company shall have
deposited with the Trustee as trust funds the entire amount sufficient to pay
at maturity or upon redemption all such Debt Securities and coupons (and, in
either case, the Company shall also pay or cause to be paid all other sums
payable under the Indenture by the Company).
In addition, the Company shall have a "legal defeasance option"
(pursuant to which it may terminate, with respect to the Debt Securities of a
particular series, all of its obligations under such Debt Securities and the
Indenture with respect to such Debt Securities) and a "covenant defeasance
option" (pursuant to which it may terminate, with respect to the Debt
Securities of a particular series, its obligations with respect to such Debt
Securities under certain specified covenants contained in the Indenture). If
the Company exercises its legal defeasance option with respect to a series of
Debt Securities, payment of such Debt Securities may not be accelerated because
of an Event of Default. If the Company exercises its covenant defeasance
option with respect to a series of Debt Securities, payment of such Debt
Securities may not be accelerated because of an Event of Default related to the
specified covenants.
The Company may exercise its legal defeasance option or its covenant
defeasance option with respect to the Debt Securities of a series only if (a)
the Company irrevocably deposits in trust with the Trustee cash or U.S.
Government Obligations (as defined in the Indenture) for the payment of
principal, premium and interest with respect to such Debt Securities to
maturity or redemption, as the case may be, (b) the Company delivers to the
Trustee a certificate from a nationally recognized firm of independent
accountants expressing their opinion that the payments of principal and
interest when due and without reinvestment on the deposited U.S. Government
Obligations plus any deposited money without investment will provide cash at
such times and in such amounts as will be sufficient to pay the principal,
premium and interest when due with respect to all the Debt Securities of such
series to maturity or redemption, as the case may be, (c) 123 days pass after
the deposit is made and during the 123-day period no default described in
clause (g) or (h) under "Description of Debt Securities -- Events of Default
and Remedies" with respect to the Company occurs that is
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continuing at the end of such period, (d) no Default has occurred and is
continuing on the date of such deposit and after giving effect thereto, (e) the
deposit does not constitute a default under any other agreement binding on the
Company and, in the case of Subordinated Debt Securities, is not prohibited by
the provisions of the Indenture relating to subordination, (f) the Company
delivers to the Trustee an opinion of counsel to the effect that the trust
resulting from the deposit does not constitute, or is qualified as, a regulated
investment company under the Investment Company Act of 1940, (g) the Company
shall have delivered to the Trustee an opinion of counsel addressing certain
federal income tax matters relating to the defeasance, and (h) the Company
delivers to the Trustee an officers' certificate and an opinion of counsel,
each stating that all conditions precedent to the defeasance and discharge of
the Debt Securities of such series as contemplated by the Indenture have been
complied with.
The Trustee shall hold in trust cash or U.S. Government Obligations
deposited with it as described above and shall apply the deposited cash and the
proceeds from deposited U.S. Government Obligations to the payment of
principal, premium and interest with respect to the Debt Securities and coupons
of the defeased series. In the case of Subordinated Debt Securities and
coupons related thereto, the money and U.S. Government Obligations so held in
trust will not be subject to the subordination provisions of the Indenture.
THE TRUSTEE
The Company may appoint a separate Trustee for any series of Debt
Securities. As used herein in the description of a series of Debt Securities,
the term "Trustee" refers to the Trustee appointed with respect to such series
of Debt Securities.
The Company may maintain banking and other commercial relationships
with the Trustee and its affiliates in the ordinary course of business, and the
Trustee may own Debt Securities.
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DESCRIPTION OF STOCK
The following is a summary of certain features of the Company's stock
and certain provisions of the Company's Certificate of Incorporation, as
amended (the "Certificate of Incorporation") and Bylaws, as amended (the
"Bylaws"), and the Rights Agreement (defined below). This summary does not
purport to be complete and is subject to and is qualified in its entirety by
reference to the Certificate of Incorporation, Bylaws and the Rights Agreement,
copies of which are exhibits to the Registration Statement of which this
Prospectus is a part. See "Available Information."
CAPITAL STOCK
The Capital Stock, par value $1.00 per share, is the only class of
capital stock authorized to be issued by the Company. Holders of Capital Stock
are entitled to receive dividends when, as and if declared by the Board out of
any funds legally available therefor and are entitled to one vote per share
held on all matters voted upon by stockholders. Holders of the Capital stock
are entitled upon liquidation to share ratably in the net assets of the Company
and have no preemptive or other rights to subscribe for any other shares or
securities. The Capital Stock is not convertible into any other class of
stock, and there are no redemption or sinking fund provisions with respect to
the Capital Stock.
SUPER-MAJORITY VOTE PROVISION
The Company's Certificate of Incorporation provides that, except as
provided below, the affirmative vote of the holders of 95% of all shares of
stock entitled to be voted in an election of directors is required to authorize
a business combination with any other entity which has become the beneficial
owner, directly or indirectly, of more than 30% of the outstanding shares of
such stock. The term "business combination" includes (i) any merger or
consolidation of the Company with or into such other entity, (ii) any sale or
lease of all or any substantial part of the assets of the Company to such other
entity or (iii) any sale or lease by such other entity to the Company or any
subsidiary in exchange for securities of the Company of assets having an
aggregate fair market value of $5,000,000 or more. The term "other
entity"includes any person, any "affiliate" or "associate" of such person (as
these terms are defined in Rule 12b-2, promulgated by the Commission under the
Exchange Act, as in effect on July 1, 1979) and any other person with which
such person or any "affiliate" or "associate" of such person has any agreement,
arrangement or understanding, directly or indirectly, for the purpose of
acquiring, holding, voting or disposing of the Company's stock. Except as
provided below, the 95% stockholder vote is required even if the other entity
ceases to be a 30% beneficial owner so long as the other entity continues to be
an "affiliate" of the Company.
The 95% stockholder vote for a business combination with such other
entity is not required if certain minimum price and other requirements are
satisfied. The minimum price provisions require that the consideration per
share received by the Company stockholders in the business combination (i) bear
the same or a greater percentage relationship to the market price of the
Capital Stock immediately prior to the announcement of the business combination
as the highest per share price which such other entity paid for any shares of
the Capital Stock already owned by it bears to the market price of the Capital
Stock immediately prior to the commencement of acquisition of the Capital Stock
by such other entity, (ii) be not less than the highest per share price paid
for any shares of the Capital Stock by such other entity and (iii) be not less
than the earnings per share of the Capital Stock for the four prior fiscal
quarters multiplied by the then price/earnings multiple (if any) of such other
entity as customarily computed and reported in the financial community. In the
event the Company is the surviving corporation in the business combination, the
consideration per share received by the stockholders in the business
combination is considered to be the market price of the Capital Stock.
The other requirements that must be satisfied to avoid the
95% stockholder vote are as follows: First, the other entity must not have
received the benefit, directly or indirectly, of any loans, advances,
guarantees, pledges or other financial assistance or tax credits provided by
the Company or, without the unanimous approval of the Board, must not have made
any major change in the Company's business or equity capital structure.
Second, after having acquired a 30% interest, the other entity (i) must have
taken steps to ensure continued representation on the Board by "Continuing
Directors" (as defined below) proportionate to the stockholdings of the
Company's public stockholders not affiliated with the other entity, (ii) must
have made no reduction in the rate of dividends payable on the Capital Stock,
except as necessary to insure that a quarterly dividend payment does not exceed
12.5% of the Company's net income for the four prior fiscal quarters or except
as may have been approved by a unanimous vote of the Board, (iii) must not have
acquired any newly issued shares of stock, directly or indirectly, from the
Company (except upon conversion of convertible securities acquired by it prior
to obtaining a 30% interest or as a result of a pro rata stock dividend or
stock split) and
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<PAGE> 22
(iv) must not have acquired any additional shares of outstanding Capital Stock
or securities convertible into Capital stock except as part of the transaction
which results in such other entity acquiring its 30% interest. Third, the
business combination must be approved at a meeting of the Company stockholders
from whom proxies are solicited in accordance with the rules of the Commission.
If the minimum price and other requirements are satisfied, the vote
required for authorization of the business combination would be the affirmative
vote of the holders of a majority of the outstanding shares of Capital Stock or
of a majority of the shares of Capital Stock represented at the meeting,
depending upon the nature of the particular business combination and the
requirements of Delaware law applicable to the business combination. No
amendment of the Certificate of Incorporation may change or repeal the
super-majority vote provision without a 95% stockholder vote unless such
amendment would be unanimously recommended to the Company's stockholders by all
of the members of the Board who are "Continuing Directors", in which event the
amendment could be adopted upon the affirmative vote of the holders of a
majority of the outstanding shares of the Capital Stock. "Continuing
Directors" are those members of the Board who were elected by the public
stockholders prior to the time the other entity became a 10% beneficial owner
or who were recommended to succeed a Continuing Director by a majority of the
Continuing Directors.
The super-majority vote provision described above is contained in
Article Fourteenth of the Company's Certificate of Incorporation. The
description is subject in all respects to the provisions of Article Fourteenth.
STOCKHOLDER RIGHTS PLAN
On September 28, 1995, the Board declared a dividend distribution of
one Capital Stock Purchase Right (a "Right") for each outstanding share of
Capital Stock. The Rights were issued on October 18, 1995 to stockholders of
record on that date. When exercisable, each Right entitles the registered
holder to purchase from the Company one share of Capital Stock at a price of
$50 per share of Capital Stock, subject to adjustment in certain circumstances
(the "Purchase Price"). The description and terms of the Rights are set forth
in a Rights Agreement, dated as of September 28, 1995 (the"Rights Agreement"),
between the Company and Mellon Securities Trust Company, as Rights Agent (the
"Rights Agent"). The following summary is subject in all respects to the
provisions of the Rights Agreement.
Transfer and Detachment. Until the "Distribution Date", which is the
earlier to occur of (i) ten business days following the time (the "Stock
Acquisition Time") of a public announcement or notice to the Company that a
person or group of affiliated or associated persons (an "Acquiring Person") has
acquired, or obtained the right to acquire, beneficial ownership (as defined in
the Rights Agreement) of 15% or more of the outstanding shares of Capital
Stock, and (ii) ten business days, or such later date as may be determined by
the Board of Directors, after the date of the commencement or announcement by a
person of an intention to make a tender offer or exchange offer for an amount
of Capital Stock which, together with the shares of such stock already owned by
such person, constitutes 15% or more of the outstanding shares of the Capital
Stock, the Rights will be evidenced, with respect to any Capital Stock
certificate outstanding as of October 18, 1995, by such Capital Stock
certificate with a copy of a Summary of Rights attached thereto. The Rights
Agreement provides that, until the Distribution Date, the Rights will be
transferred with and only with the Capital Stock. Until the Distribution Date
(or earlier redemption or expiration of the Rights), new Capital Stock
certificates issued after October 18, 1995, upon the transfer or issuance of
new shares of Capital Stock, will contain a notation incorporating the Rights
Agreement by reference. Until the Distribution Date (or earlier redemption or
expiration of the Rights), the surrender for transfer of any of the Capital
Stock certificates outstanding as of October 18, 1995, even without a copy of
the Summary of Rights attached thereto, will also constitute the transfer of
the Rights associated with the shares of Capital Stock represented by such
certificate. As long as the Rights are attached to the shares of Capital
Stock, the Company will issue one Right with each share of Capital Stock it
issues so that all shares have attached Rights.
As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Right Certificates") will be mailed to
holders of record of the Capital Stock as of the close of business on the
Distribution Date, and such separate Right Certificates alone will evidence the
Rights.
Exercisability. The Rights are not exercisable until the Distribution
Date. The Rights will expire on September 28, 2005 unless earlier redeemed by
the Company.
Right to Acquire Stock at Half Price. In the event that after the
Stock Acquisition Time, the Company is acquired in a merger or other business
combination transaction or 50% or more of the Company's assets, cash flow or
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earning power are sold or otherwise transferred, the Rights Agreement provides
that proper provision shall be made so that each holder of a Right, upon the
exercise thereof at the then current exercise price of the Right, shall
thereafter be entitled to receive that number of shares of common stock of the
acquiring company which at the time of such transaction would have a market
value (as defined in the Rights Agreement) of two times the exercise price of
the Right. In the event that the Company is the surviving corporation of a
merger and the Capital Stock is changed or exchanged, proper provision shall be
made so that each holder of a Right will thereafter have the right to receive
upon exercise that number of shares of common stock of the other party to the
transaction having a market value of two times the exercise price of the Right.
In the event that a person or group becomes an Acquiring
Person(otherwise than pursuant to a tender offer or exchange offer for all
outstanding shares of the Capital Stock at a price and on terms which are
determined to be fair and in the best interests of the Company and its
stockholders by a majority of the members of the Board who are not Acquiring
Persons or representatives or nominees of or affiliated or associated with an
Acquiring Person), proper provision shall be made so that each holder of a
Right, other than Rights that were beneficially owned by the Acquiring Person,
which will thereafter be void, will thereafter have the right to receive upon
exercise that number of shares of Capital Stock having a market value (as
defined in the Rights Agreement) of two times the exercise price of the Right.
A person or group will not be deemed to be an Acquiring Person if the Board
determines that such person or group became an Acquiring Person inadvertently
and such person or group promptly divests itself of a sufficient number of
shares of Capital Stock so that such person or group is no longer an Acquiring
Person.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the
right to vote or to receive dividends.
Adjustments. The Purchase Price payable and the number of shares of
Capital Stock or other securities or property issuable upon the exercise of the
Rights are subject to adjustment from time to time to prevent dilution (i) in
the event of a stock dividend on or a subdivision, combination or
reclassification of the shares of Capital Stock, (ii) upon the fixing of a
record date for the issuance to holders of Capital Stock of certain rights,
options or warrants to subscribe for shares of Capital Stock or convertible
securities at less than the current market price of shares of Capital Stock or
(iii) upon the fixing of a record date for the making of a distribution to
holders of shares of Capital Stock of evidences of indebtedness or assets
(excluding regular periodic cash dividends not exceeding 125% of the last
regular periodic cash dividend or dividends payable in shares of Capital Stock)
or of subscription rights or warrants (other than those referred to above).
The number of Rights and the number of shares of Capital Stock issuable upon
exercise of each Right are also subject to adjustment in the case of a stock
split, combination or stock dividend on the shares of Capital Stock prior to
the Distribution Date.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
the Purchase Price. No fractional shares of Capital Stock will be issued and,
in lieu thereof, an adjustment in cash will be made based on the market value
of shares of Capital Stock on the last trading date prior to the date of
exercise.
Redemption or Exchange. At any time prior to the earlier of (i) the
Stock Acquisition Time and (ii) September 28, 2005, the Company, by resolution
of the Board, may redeem the Rights in whole, but not in part, at a price of
$.01 per Right (the "Redemption Price"). Immediately upon the action by the
Board to elect to redeem the Rights, the right to exercise the Rights will
terminate and the only right of the holders of Rights will be to receive the
Redemption Price.
At any time after a person becomes an Acquiring Person and prior to
the acquisition by such person of 50% or more of the outstanding Capital Stock,
the Board may exchange the Rights (other than Rights beneficially owned by such
person which have become void), in whole or in part, for Capital Stock at an
exchange ratio of one share of Capital Stock per Right (subject to adjustment).
The Company may at its option substitute shares of any substantially similar
equity security of the Company for some or all of the shares of Capital Stock
exchangeable for Rights, at an exchange ratio of one share of such equity
security for each share of Capital Stock to be exchanged.
Amendment. The Rights and the Rights Agreement can be amended by the
Board in any respect (including, without limitation, any extension of the
period in which the Right Certificates may be redeemed) at any time prior to
the Stock Acquisition Time. From and after such time, without the approval of
the Company's stockholders or the holders
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<PAGE> 24
of the Rights, the Board may only supplement or amend the Rights Agreement in
order (i) to cure any ambiguity, (ii) to correct or supplement any provision
contained in the Rights Agreement which may be defective or inconsistent with
any other provision in the Rights Agreement, (iii) to shorten or lengthen any
time period under the Rights Agreement or (iv) to make any changes or
supplements which the Company may deem necessary or desirable which shall not
adversely affect the interests of the holders of Right Certificates (other than
an Acquiring Person or an affiliate or associate of any such person), provided
that any such action by the Board must have the concurrence of a majority of
the Continuing Directors (as defined in the Rights Agreement) and provided that
the Continuing Directors constitute a majority of directors then in office, and
provided that the Rights Agreement may not be supplemented or amended to
lengthen (A) a time period relating to when the Rights may be redeemed or to
modify the ability (or inability) of the Board to redeem the Rights, in either
case at such time as the Rights are not then redeemable or (B) any other time
period unless such lengthening is for the purpose of protecting, enhancing or
clarifying the rights of or the benefits to the holders of Rights (other than
an Acquiring Person or an affiliate or associate of any such person).
SECTION 203 OF DELAWARE GENERAL CORPORATION LAW
The super-majority vote provision and the stockholder rights plan
described above may be considered as having an antitakeover effect. Effective
February 2, 1988, a new Section 203 of the Delaware General Corporation Law
entitled "Business Combinations with Interested Stockholders" was enacted which
also could be considered as having such an effect. However, the Company, by an
amendment to the Company's Bylaws adopted by its Board of Directors on March
31, 1988, elected not to be governed by the new Section 203.
DESCRIPTION OF WARRANTS
The Company may issue Warrants for the purchase of Debt Securities or
Capital Stock. Warrants may be issued independently or together with Debt
Securities or Capital Stock offered by any Prospectus Supplement and may be
attached to or separate from any such Offered Securities. Each series of
Warrants will be issued under a separate warrant agreement (a "Warrant
Agreement") to be entered into between the Company and a bank or trust company,
as warrant agent (the "Warrant Agent"). The Warrant Agent will act solely as
an agent of the Company in connection with the Warrants and will not assume any
obligation or relationship of agency or trust for or with any holders or
beneficial owners of Warrants. The following summary of certain provisions of
the Warrants does not purport to be complete and is subject to, and qualified
in its entirety by reference to, the provisions of the Warrant Agreement that
will be filed with the SEC in connection with the offering of such Warrants.
DEBT WARRANTS
The Prospectus Supplement relating to a particular issue of Debt
Warrants will describe the terms of such Debt Warrants, including the
following: (a) the title of such Debt Warrants; (b) the offering price of such
Debt Warrants, if any; (c) the aggregate number of such Debt Warrants; (d) the
designation and terms of the Debt Securities purchasable upon exercise of such
Debt Warrants; (e) if applicable, the designation and terms of the Debt
Securities with which such Debt Warrants are issued and the number of such Debt
Warrants issued with each such Debt Security; (f) if applicable, the date from
and after which such Debt Warrants and any Debt Securities issued therewith
will be separately transferable; (g) the principal amount of Debt Securities
purchasable upon exercise of a Debt Warrant and the price at which such
principal amount of Debt Securities may be purchased upon exercise (which price
may be payable in cash, securities, or other property); (h) the date on which
the right to exercise such Debt Warrants shall commence and the date on which
such right shall expire; (i) if applicable, the minimum or maximum amount of
such Debt Warrants that may be exercised at any one time; (j) whether the Debt
Warrants represented by the Debt Warrant certificates or Debt Securities that
may be issued upon exercise of the Debt Warrants will be issued in registered
or bearer form; (k) information with respect to book-entry procedures, if any;
(l) the currency or currency units in which the offering price, if any, and the
exercise price are payable; (m) if applicable, a discussion of material United
States federal income tax considerations; (n) the antidilution provisions of
such Debt Warrants, if any; (o) the redemption or call provisions, if any,
applicable to such Debt Warrants; and (p) any additional terms of the Debt
Warrants, including terms, procedures, and limitations relating to the exchange
and exercise of such Debt Warrants.
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CAPITAL STOCK WARRANTS
The Prospectus Supplement relating to any particular issue of Capital
Stock Warrants will describe the terms of such Warrants, including the
following: (a) the title of such Warrants; (b) the offering price for such
Warrants, if any; (c) the aggregate number of such Warrants; (d) the
designation and terms of the Capital Stock purchasable upon exercise of such
Warrants; (e) if applicable, the designation and terms of the Offered
Securities with which such Warrants are issued and the number of such Warrants
issued with each such Offered Security; (f) if applicable, the date from and
after which such Warrants and any Offered Securities issued therewith will be
separately transferable; (g) the number of shares of Capital Stock purchasable
upon exercise of a Warrant and the price at which such shares may be purchased
upon exercise (which price may be payable in cash, securities, or other
property); (h) the date on which the right to exercise such Warrants shall
commence and the date on which such right shall expire; (i) if applicable, the
minimum or maximum amount of such Warrants that may be exercised at any one
time; (j) the currency or currency units in which the offering price, if any,
and the exercise price are payable; (k) if applicable, a discussion of material
United States federal income tax considerations; (l) the antidilution
provisions of such Warrants, if any; (m) the redemption or call provisions, if
any, applicable to such Warrants; and (n) any additional terms of the Warrants,
including terms, procedures, and limitations relating to he exchange and
exercise of such Warrants.
PLAN OF DISTRIBUTION
The Company may sell the Offered Securities in or outside the United
States through underwriters, brokers or dealers, directly to one or more
purchasers, or through agents. The Prospectus Supplement with respect to the
Offered Securities will set forth the terms of the offering of the Offered
Securities, including the name or names of any underwriters, dealers or agents,
the purchase price of the Offered Securities and the proceeds to the Company
from such sale, any delayed delivery arrangements, any underwriting discounts
and other items constituting underwriters' compensation, the initial public
offering price, any discounts or concessions allowed or reallowed or paid to
dealers, and any securities exchanges on which the Offered Securities may be
listed.
If underwriters are used in the sale, the Offered Securities will be
acquired by the underwriters for their own account and may be resold from time
to time in one or more transactions, including negotiated transactions, at a
fixed public offering price or at varying prices determined at the time of
sale. The Offered Securities may be offered to the public either through
underwriting syndicates represented by one or more managing underwriters or
directly by one or more firms acting as underwriters. The underwriter or
underwriters with respect to a particular underwritten offering of Offered
Securities will be named in the Prospectus Supplement relating to such
offering, and if an underwriting syndicate is used, the managing underwriter or
underwriters will be set forth on the cover of such Prospectus Supplement.
Unless otherwise set forth in the Prospectus Supplement relating thereto, the
obligations of the underwriters or agents to purchase the Offered Securities
will be subject to conditions precedent and the underwriters will be obligated
to purchase all the Offered Securities if any are purchased. The initial
public offering price and any discounts or concessions allowed or reallowed or
paid to dealers may be changed from time to time.
During and after a sale, the underwriters may purchase and sell the
Offered Securities in the open market. These transactions may include
over-allotment and stabilizing transactions and purchases to cover syndicate
short positions created in connection with the sale. The underwriters may also
impose a penalty bid, whereby selling concessions allowed to syndicate members
or other broker-dealers in respect of the Offered Securities sold in the sale
for their account may be reclaimed by the syndicate if such Offered Securities
are repurchased by the syndicate in stabilizing or covering transactions.
These activities may stabilize, maintain or otherwise affect the market price
of the Offered Securities, which may be higher than the price that might
otherwise prevail in the open market, and, if commenced, may be discontinued at
any time.
The Company may also sell the Offered Securities pursuant to one or
more standby agreements with one or more underwriters in connection with the
call for redemption of a specified class or series of any securities of the
Company or any subsidiary of the Company. In such a standby agreement, the
underwriter or underwriters would agree either (a) to purchase from the Company
up to the number of shares of Capital Stock that would be issuable upon
conversion of all of the shares of such class or series of securities of the
Company or its subsidiary at an agreed price per share of Capital Stock or (b)
to purchase from the Company up to a specified dollar amount of Offered
Securities at an agreed price per Offered Security which price may be fixed or
may be established by formula or other method and which may or may not
-22-
<PAGE> 26
relate to market prices of the Capital Stock or any other security of the
Company then outstanding. The underwriter or underwriters would also agree, if
applicable, to convert into Capital Stock or other security of the Company any
securities of such class or series held or purchased by the underwriter or
underwriters. The underwriter or underwriters may assist in the solicitation
of conversions by holders of such class or series of securities.
If dealers are used in the sale of Offered Securities with respect to
which this Prospectus is delivered, the Company will sell such Offered
Securities to the dealers as principals. The dealers may then resell such
Offered Securities to the public at varying prices to be determined by such
dealers at the time of resale. The name of the dealers and the terms of the
transaction will be set forth in the Prospectus Supplement relating thereto.
Offered Securities may be sold directly by the Company or through
agents designated by the Company from time to time at fixed prices, which may
be changed, or at varying prices determined at the time of sale. Any agent
involved in the offer or sale of the Offered Securities with respect to which
this Prospectus is delivered will be named, and any commissions payable by the
Company to such agent will be set forth, in the Prospectus Supplement relating
thereto. Unless otherwise indicated in the Prospectus Supplement, any such
agent will be acting on a best efforts basis for the period of its appointment.
In connection with the sale of the Offered Securities, underwriters or
agents may receive compensation from the Company or from purchasers of Offered
Securities for whom they may act as agents in the form of discounts,
concessions, or commissions. Underwriters, agents and dealers participating in
the distribution of the Offered Securities may be deemed to be underwriters,
and any discounts or commissions received by them from the Company and any
profit on the resale of the Offered Securities by them may be deemed to be
underwriting discounts or commissions under the Securities Act.
If so indicated in the Prospectus Supplement, the Company will
authorize agents, underwriters or dealers to solicit offers from certain types
of institutions to purchase Offered Securities from the Company at the public
offering price set forth in the Prospectus Supplement pursuant to delayed
delivery contracts providing for payment and delivery on a specified date in
the future. Such contracts will be subject only to those conditions set forth
in the Prospectus Supplement, and the Prospectus Supplement will set forth the
commission payable for solicitation of such contracts.
Agents, dealers and underwriters may be entitled under agreements
entered into with the Company to indemnification by the Company against certain
civil liabilities, including liabilities under the Securities Act, or to
contribution with respect to payments that such agents, dealers, or
underwriters may be required to make with respect thereto. Agents, dealers,
and underwriters may be customers of, engage in transactions with, or perform
services for the Company in the ordinary course of business.
The Offered Securities may or may not be listed on a national
securities exchange. No assurances can be given that there will be a market
for the Offered Securities.
EXPERTS
The consolidated financial statements and related schedule of the
Company included in the Company's annual report on Form 10-K for the year
ended December 31, 1996 incorporated by reference herein and in the
Registration Statement have been audited by Coopers & Lybrand L.L.P.,
independent accountants, to the extent and for the periods indicated in their
reports, and have been incorporated by reference herein and in the Registration
Statement in reliance upon the authority of that firm as experts in accounting
and auditing.
The Combined Balance Sheets of Blue Coral and subsidiaries as of
October 31, 1995 and 1994 and the related Combined Statements of Income,
Stockholders' Equity and Cash Flows for each of the three years in the period
ended October 31, 1995, incorporated by reference in this Prospectus and
elsewhere in the Registration Statement, have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their report with respect
thereto, and are incorporated by reference herein in reliance upon the
authority of said firm as experts in accounting and auditing in giving said
Report. Reference is made to said report, which includes an explanatory
paragraph with respect to the change in the method of accounting for income
taxes effective November 1, 1993, as discussed in Note 6 to the combined
financial statements noted above.
-23-
<PAGE> 27
The Combined Financial Statements of Medo Industries, Inc., Medo
Manufacturing Corp. and Medo Industries Canada, Ltd. at December 31, 1995 and
1994 and for each of the three years in the period ended December 31, 1995,
included in the Current Report on Form 8-K (File No. 1-2677) have been audited
by Ernst & Young LLP, independent auditors, as set forth in their reports
thereon included therein and incorporated herein by reference. Such Combined
Financial Statements are incorporated herein by reference in reliance upon such
reports given upon the authority of such firm as experts in accounting and
auditing.
LEGAL MATTERS
The legality of the Offered Securities will be passed upon for the
Company by Vinson & Elkins L.L.P., Dallas, Texas, or by such other firm as may
be named in the Prospectus Supplement relating to a particular issue of Offered
Securities, and for any underwriters or agents by a firm named in the
Prospectus Supplement relating to a particular issue of Offered Securities.
-24-
<PAGE> 28
================================================================================
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS OR IN A
PROSPECTUS SUPPLEMENT IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY OTHER PERSON. NEITHER THIS
PROSPECTUS NOR ANY PROSPECTUS SUPPLEMENT CONSTITUTES AN OFFER TO SELL OR A
SOLICITATION OF ANY OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF
ANY OFFER TO BUY SUCH SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL
TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY PROSPECTUS SUPPLEMENT NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT ANY INFORMATION CONTAINED
HEREIN OR THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
-------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Incorporation by Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
The Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Recent Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Ratio of Earnings to Fixed Charges . . . . . . . . . . . . . . . . . . . . . . . . 5
Description of Debt Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Description of Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Certain Provisions of the Charter and Bylaws
and of Delaware Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Description of Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
</TABLE>
================================================================================
================================================================================
Debt Securities
Capital Stock
Warrants
----------------
PROSPECTUS
----------------
_________, 1997
================================================================================
<PAGE> 29
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated expenses in connection
with the issuance and distribution of the securities registered hereby, which
will be borne by the Company:
<TABLE>
<S> <C>
SEC registration fee . . . . . . . . . . . . . . . . . . . $121,212
Printing, engraving and duplicating expenses . . . . . . . 20,000
Legal fees and expenses . . . . . . . . . . . . . . . . . . 12,000
Blue sky fees and expenses (including legal fees) . . . . . *
Accounting fees and expenses . . . . . . . . . . . . . . . 25,000
Rating agency fees . . . . . . . . . . . . . . . . . . . . *
Trustee and transfer agent fees (including legal fees). . . *
Miscellaneous expenses (including listing fees,
if applicable) . . . . . . . . . . . . . . . . . . . . . 20,000
--------
Total . . . . . . . . . . . . . . . . . . . . . . . $198,212
========
</TABLE>
- ---------------
* Not applicable.
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 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 (i) for any breach of a
director's duty of loyalty to the corporation or its stockholders, (ii) for
acts or omissions that are not in good faith or involve intentional misconduct
or a knowing violation of the law, (iii) under Section 174 of the DGCL or (iv)
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 or she is
involved by reason of the fact the he or she is or was a director or officer if
he or she acted in good faith and in a manner that he or she 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 or she had no
reasonable cause to believe that his or her 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 or she shall have been adjudged to be liable for negligence or
misconduct in the performance of his or her 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.
II-1
<PAGE> 30
The Company has entered into an Indemnification and Insurance
Agreement with each of its directors (the "Indemnification and Insurance
Agreements"). These agreements provide that the Company must, within [30] days
of a request, indemnify an officer or director for liabilities incurred to the
fullest extent permitted by the DGCL. The Company must, within two days of a
request, indemnify an officer or director for expenses incurred in the defense
of a claim or other proceeding. The obligation of the Company to provide the
indemnification does not apply if, before the date on which the Company must
provide the indemnification, the Company's board of directors, or a
representative chosen by the board of directors, concludes that indemnification
would be improper under the DGCL. It is the position of the Commission that
indemnification of directors and officers for liability under the Securities
Act is against public policy and unenforceable pursuant to Section 14 of the
Securities Act.
The preceding discussion of the registrant's Certificate of
Incorporation, Section 145 of the DGCL, and the Indemnification and Insurance
Agreements is not intended to be exhaustive and is qualified in its entirety by
the Certificate of Incorporation, Section 145 of the DGCL and the
Indemnification and Insurance Agreements.
II-2
<PAGE> 31
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
--------- -------
<S> <C>
1.1* -- Underwriting Agreement.
3.1 -- Composite Certificate of Incorporation (filed as Exhibit 3(i) to
the Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1995, and incorporated herein by reference).
3.2 -- Bylaws, as amended to July 25, 1996 (filed as Exhibit 3 to the
Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1996, and incorporated herein by reference).
4.1 -- Rights Agreement, dated as of September 28, 1995, between the
Company and Mellon Securities Trust Company, as Rights Agent
(filed as Exhibit 1 to the Company's Current Report on Form 8-K
dated October 20, 1995, and incorporated herein by reference).
4.2* -- Form of Certificate of Capital Stock, par value $1.00 per share,
of the Company.
4.3* -- Form of Indenture.
4.4* -- Form of Senior Debt Security.
4.5* -- Form of Subordinated Debt Security.
4.6* -- Form of Warrant Agreement.
4.7* -- Form of Warrant Certificate.
5* -- Opinion of Vinson & Elkins L.L.P.
12** -- Statement re Computation of Ratio of Earnings to Fixed Charges
23.1** -- Consent of Coopers & Lybrand L.L.P.
23.2** -- Consent of Arthur Andersen LLP
23.3** -- Consent of Ernst & Young LLP
23.4* -- Consent of Vinson & Elkins L.L.P. (to be included in the opinion
to be filed as Exhibit 5)
24.0 -- Power of Attorney of directors and officers (included in the
signature pages to this Registration Statement).
25.0* -- Form T-1 Statement of Eligibility under the Trust Indenture Act of
1939 of trustee.
</TABLE>
- -------------
*To be filed.
**Filed herewith.
II-3
<PAGE> 32
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(a) To file, during any period in which offers or sales
are being made, a post-effective amendment to this Registration
Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or
events arising after the effective date of the Registration
Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the
Registration Statement. Notwithstanding the foregoing, any
increase or decrease in the volume of securities offered (if
the total dollar value of securities offered would not exceed
that which was registered) and any deviation from the low or
high and of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20 percent change in
the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
Registration Statement;
(iii) To include any material information with
respect to the plan of distribution not previously disclosed
in the Registration Statement or any material change to such
information in the Registration Statement;
Provided, however, that paragraphs (a)(i) and (a)(ii) do not apply if
the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed by the
registrant pursuant to Section 13 or 15(d) of the Exchange Act that
are incorporated by reference in the Registration Statement.
(b) That, for the purpose of determining any liability
under the Securities Act, each such post-effective amendment 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.
(c) To remove from registration by means of a
post-effective amendment any of the securities being registered which
remain unsold at the termination of the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act 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.
The undersigned Registrant hereby undertakes to supplement the
prospectus, after the expiration of the subscription period, to set forth the
results of the subscription offer, the transactions by the underwriters during
the subscription period, the amount of unsubscribed securities to be purchased
by the underwriters, and the terms of any subsequent reoffering thereof. If
any public offering by the underwriters is to be made on terms differing from
those set forth on the cover page of the prospectus, a post-effective amendment
will be filed to set forth the terms of such offering.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the provisions set forth or described in Item 15
of this Registration Statement, 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 Securities 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,
II-4
<PAGE> 33
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes to file an application
for the purpose of determining the eligibility of the trustee to act under
subsection (a) of Section 310 of the Trust Indenture Act ( the "Trust Indenture
Act") in accordance with the rules and regulations prescribed by the Commission
under Section 305(b)(2) of the Trust Indenture Act.
II-5
<PAGE> 34
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the city of Irving, Texas, on the 7th day of August, 1997.
QUAKER STATE CORPORATION
By: /s/ Herbert M. Baum
--------------------------------
Herbert M. Baum
Chairman of the Board and
Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each of Quaker State Corporation,
a Delaware corporation, and each of the undersigned directors and officers of
Quaker State Corporation, hereby constitutes and appoints Herbert M. Baum,
Conrad A. Conrad and Paul E. Konney and each of them its or his true and lawful
attorneys-in-fact and agents, for it or him and in its or his name, place and
stead, in any and all capacities (unless revoked in writing), with full power
to act alone, to sign any and all amendments to this registration statement
(including post-effective amendments thereto, and other documents in connection
therewith) and any registration statement to register additional securities
pursuant to Rule 462 under the Securities Act, and to file the same, with all
exhibits thereto, with the Securities and Exchange Commission, hereby granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform any and all acts and things requisite and necessary
to be done in and about the premises, as fully and to all intents and purposes
as it or he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or any of them, may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
--------- -------- ----
<S> <C> <C>
/s/ Herbert M. Baum Chairman of the Board, Chief August 7, 1997
---------------------------------- Executive Officer and Director
Herbert M. Baum (Principal Executive Officer)
/s/ Conrad A. Conrad Vice Chairman, Chief Financial August 7, 1997
---------------------------------- Officer and Director (Principal
Conrad A. Conrad Financial Officer)
/s/ Keith S. Krzeminski Vice President and Controller August 7, 1997
---------------------------------- (Principal Accounting Officer)
Keith S. Krzeminski
/s/ John D. Barr Director August 7, 1997
----------------------------------
John D. Barr
/s/ Leonard M. Carroll Director August 7, 1997
----------------------------------
Leonard M. Carroll
</TABLE>
<PAGE> 35
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
--------- -------- ----
<S> <C> <C>
/s/ J. Taylor Crandall Director August 7, 1997
----------------------------------
J. Taylor Crandall
/s/ Laurel Cutler Director August 7, 1997
----------------------------------
Laurel Cutler
/s/ C. Frederick Fetterolf Director August 7, 1997
----------------------------------
C. Frederick Fetterolf
/s/ Thomas A. Gardner Director August 7, 1997
----------------------------------
Thomas A. Gardner
/s/ F. William Grube Director August 7, 1997
----------------------------------
F. William Grube
/s/ Forrest R. Haselton Director August 7, 1997
----------------------------------
Forrest R. Haselton
/s/ L. David Myatt Director August 7, 1997
----------------------------------
L. David Myatt
/s/ Raymond A. Ross, Jr. Director August 7, 1997
----------------------------------
Raymond A. Ross, Jr.
/s/ Lorne R. Waxlax Director August 7, 1997
----------------------------------
Lorne R. Waxlax
</TABLE>
<PAGE> 36
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
--------- ------- -------------
<S> <C>
1.1* -- Underwriting Agreement.
3.1 -- Composite Certificate of Incorporation (filed as Exhibit 3(i) to
the Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1995, and incorporated herein by reference).
3.2 -- Bylaws, as amended to July 25, 1996 (filed as Exhibit 3 to the
Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1996, and incorporated herein by reference).
4.1 -- Rights Agreement, dated as of September 28, 1995, between the
Company and Mellon Securities Trust Company, as Rights Agent
(filed as Exhibit 1 to the Company's Current Report on Form 8-K
dated October 20, 1995, and incorporated herein by reference).
4.2* -- Form of Certificate of Capital Stock, par value $1.00 per share,
of the Company.
4.3* -- Form of Indenture.
4.4* -- Form of Senior Debt Security.
4.5* -- Form of Subordinated Debt Security.
4.6* -- Form of Warrant Agreement.
4.7* -- Form of Warrant Certificate.
5* -- Opinion of Vinson & Elkins L.L.P.
12** -- Statement re Computation of Ratio of Earnings to Fixed Charges
23.1** -- Consent of Coopers & Lybrand L.L.P.
23.2** -- Consent of Arthur Andersen LLP
23.3** -- Consent of Ernst & Young LLP
23.4* -- Consent of Vinson & Elkins L.L.P. (to be included in the opinion
to be filed as Exhibit 5)
24.0 -- Power of Attorney of directors and officers (included in the
signature pages to this Registration Statement).
25.0* -- Form T-1 Statement of Eligibility under the Trust Indenture Act of
1939 of trustee.
</TABLE>
- ---------------
*To be filed.
**Filed herewith.
<PAGE> 1
Statement re Computation of Ratio of Earnings to Fixed Charges Exhibit 12
Quaker State Corporation and Subsidiaries
(in thousands)
<TABLE>
<CAPTION>
March 31, Year ended December 31,
1997 1996 1995 1994 1993 1992
=========================================================
<S> <C> <C> <C> <C> <C> <C>
Interest expense 6,331 12,838 7,301 5,159 5,765 4,794
Interest factor of rental expense (1) 2,324 9,120 8,311 6,973 6,908 6,705
---------------------------------------------------------
Total fixed charges $ 8,655 $21,958 $15,612 $12,132 $12,673 $11,499
=========================================================
Income from continuing operations
before income taxes $11,565 $24,223 $ 4,050 $15,668 $ 9,525 $ 901
Fixed charges 8,655 21,958 15,612 12,132 12,673 11,499
---------------------------------------------------------
Total earnings $20,220 $46,181 $19,662 $27,800 $22,198 $12,400
=========================================================
Ratio of earnings to fixed charges 2.3 2.1 1.3 2.3 1.8 1.1
=========================================================
</TABLE>
(1) Interest factor of rental expense computed based on; (a) average interest
factor from a sample of leases for operations representing in excess of
50% of rentals from continuing operations, and (b) one-third factor of
rentals for other operations.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Registration
Statement of Quaker State Corporation on Form S-3 of our reports dated January
28, 1997, on our audits of the consolidated financial statements and financial
statement schedule of Quaker State Corporation and Subsidiaries as of December
31, 1996 and 1995 for each of the three years in the period ended December 31,
1996, which reports are incorporated by reference in the Quaker State
Corporation Annual Report on Form 10-K for the year ended December 31, 1996.
We also consent to the reference to our firm under the caption "Experts."
/s/ Coopers & Lybrand L.L.P.
Dallas, Texas
August 7, 1997
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this Registration Statement of Quaker State
Corporation on Form S-3 of our report dated August 21, 1996, on the combined
financial statements of Blue Coral, Inc. and subsidiaries as of October 31,
1995 and 1994, and for each of the three years in the period ended October 31,
1995, included in Quaker State Corporation's current report on Form 8-K/A-1
filed on September 11, 1996, and to all references to our Firm included in this
Registration Statement.
/s/ Arthur Andersen LLP
Toledo, Ohio
August 7, 1997
<PAGE> 1
EXHIBIT 23.3
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts"
in the Registration Statement (Form S-3, No. 333-________) and related Prospect
us of Quaker State Corporation for the Registration of Debt Securities,
Warrants to purchase Debt Securities, Capital Stock and Warrants to purchase
Capital Stock and to the incorporation by reference therein of our reports
dated March 22, 1996 and March 24, 1995, with respect to the Combined Financial
Statements of Medo Industries, Inc., Medo Manufacturing Corp. and Medo
Industries Canada, Ltd. for each of the three years in the period ended
December 31, 1995, included in the Current Report (Form 8-K No. 1 - 2677) of
Quaker State Corporation dated October 11, 1996, filed with the Securities and
Exchange Commission.
/s/ Ernst & Young LLP
White Plains, New York
August 7, 1997
