<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 4, 1994
REGISTRATION NO.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
SUN COMPANY, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
PENNSYLVANIA 23-1743282
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
TEN PENN CENTER, 1801 MARKET STREET,
PHILADELPHIA, PENNSYLVANIA 19103-1699 (215) 977-3000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
RICHARD L. CARTLIDGE, SUN COMPANY, INC., TEN PENN CENTER,
1801 MARKET STREET, PHILADELPHIA, PENNSYLVANIA 19103-1699
(215) 977-3000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES TO:
JAMES D. EPSTEIN, ESQUIRE JOHN B. TEHAN, ESQUIRE
PEPPER, HAMILTON & SCHEETZ SIMPSON THACHER & BARTLETT
3000 TWO LOGAN SQUARE 425 LEXINGTON AVENUE
PHILADELPHIA, PENNSYLVANIA 19103-2799 NEW YORK, NEW YORK 10017-3954
(215) 981-4000 (212) 455-2000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
----------------
If the only securities being registered on this Form are to be 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, please check the following box. [_]
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE TO BE OFFERING PRICE OFFERING REGISTRATION
REGISTERED REGISTERED PER UNIT* PRICE* FEE
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $1 par
value per share....... 9,200,000 shares $31.563 $290,379,600 $100,132
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
* Estimated in accordance with Rule 457(c) solely for the purpose of
calculating the registration fee.
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+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 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. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PROSPECTUS (Subject to Completion)
Issued November 4, 1994
8,000,000 Shares
Sun Company, Inc.
COMMON STOCK
-----------
ALL OF THE SHARES OF COMMON STOCK OFFERED HEREBY ARE BEING OFFERED BY THE
SELLING SHAREHOLDERS. SEE "SELLING SHAREHOLDERS." THE COMPANY WILL NOT RECEIVE
ANY PROCEEDS FROM THE SALE OF THE SHARES BEING OFFERED HEREBY. THE COMPANY'S
COMMON STOCK IS TRADED ON THE NEW YORK STOCK EXCHANGE UNDER THE SYMBOL "SUN."
ON NOVEMBER 2, 1994, THE LAST SALE PRICE OF THE COMMON STOCK AS REPORTED ON THE
NEW YORK STOCK EXCHANGE WAS $31.50 PER SHARE.
-----------
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.
-----------
PRICE $ A SHARE
-----------
<TABLE>
<CAPTION>
UNDERWRITING PROCEEDS TO
PRICE TO DISCOUNTS AND SELLING
PUBLIC COMMISSIONS(1) SHAREHOLDERS(2)
-------- -------------- ---------------
<S> <C> <C> <C>
Per Share.............................. $ $ $
Total(3)............................... $ $ $
</TABLE>
- -----
(1) The Selling Shareholders and the Company have agreed to indemnify the
Underwriters against certain liabilities, including civil liabilities
under the Securities Act of 1933.
(2) Before deducting certain expenses payable by the Selling Shareholders
estimated at $130,566.
(3) The Selling Shareholders have granted to the Underwriters an option
exercisable within 30 days of the date hereof to purchase up to an
aggregate of 1,200,000 additional shares at the Price to Public less
Underwriting Discounts and Commissions for the purpose of covering over-
allotments, if any. If the Underwriters exercise such option in full,
the total Price to Public, Underwriting Discounts and Commissions and
Proceeds to Selling Shareholders will be $ , $ , and $ ,
respectively.
-----------
The shares of Common Stock are offered subject to prior sale, when, as and if
accepted by the Underwriters named herein, and subject to the approval of
certain legal matters by Simpson Thacher & Bartlett, counsel for the
Underwriters. It is expected that delivery of the shares of Common Stock will
be made on or about , 1994 at the offices of Morgan Stanley & Co.
Incorporated, New York, New York, against payment therefor in New York clearing
house funds.
-----------
MORGAN STANLEY & CO.
Incorporated
CS FIRST BOSTON
SMITH BARNEY INC.
November , 1994
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH
THE OFFERING MADE HEREBY AND, IF GIVEN OR MADE, ANY SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY, BY ANY SELLING SHAREHOLDER OR BY ANY UNDERWRITER. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM,
IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREBY SHALL, UNDER ANY CIRCUMSTANCES, IMPLY THAT
THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE
DATE HEREOF.
NO ACTION HAS BEEN OR WILL BE TAKEN IN ANY JURISDICTION BY THE COMPANY OR BY
ANY UNDERWRITER THAT WOULD PERMIT A PUBLIC OFFERING OF THE COMMON STOCK OR
POSSESSION OR DISTRIBUTION OF THIS PROSPECTUS IN ANY JURISDICTION WHERE ACTION
FOR THAT PURPOSE IS REQUIRED, OTHER THAN IN THE UNITED STATES. PERSONS INTO
WHOSE POSSESSION THIS PROSPECTUS COMES ARE REQUIRED BY THE COMPANY, THE SELLING
SHAREHOLDERS AND THE UNDERWRITERS TO INFORM THEMSELVES ABOUT, AND TO OBSERVE
ANY RESTRICTIONS AS TO, THE OFFERING OF THE COMMON STOCK AND THE DISTRIBUTION
OF THIS PROSPECTUS.
In this Prospectus, references to "dollar" and "$" are to United States
dollars, and the terms "United States" and "U.S." mean the United States of
America, its states, its territories, its possessions and all areas subject to
its jurisdiction.
----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information..................................................... 3
Incorporation of Certain Documents by Reference........................... 3
The Company............................................................... 4
Price Range and Dividends................................................. 7
Capitalization............................................................ 8
Summary of Financial Information.......................................... 8
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... 10
Selling Shareholders...................................................... 18
Capital Stock............................................................. 19
Certain United States Federal Tax Considerations for Non-U.S. Holders of
Common Stock............................................................. 20
Underwriters.............................................................. 23
Legal Opinions............................................................ 24
Experts................................................................... 24
</TABLE>
----------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
OF THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN
THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY
BE DISCONTINUED AT ANY TIME.
2
<PAGE>
AVAILABLE INFORMATION
Sun Company, Inc. (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 and at the Commission's Regional
Offices at Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661 and 7 World Trade Center, Suite 1300, New York, New
York 10048. Copies of such material can be obtained at prescribed rates from
the Commission's Public Reference Section, 450 Fifth Street, N.W., Washington,
D.C. 20549. Reports, proxy material and other information concerning the
Company also may be inspected at the offices of the New York Stock Exchange,
Inc., 20 Broad Street, New York, New York 10005 and the Philadelphia Stock
Exchange, Inc., 1900 Market Street, Philadelphia, Pennsylvania 19103.
The Company has filed with the Commission a registration statement on Form S-
3 under the Securities Act of 1933, as amended (the "Securities Act"), with
respect to the Securities offered hereby (together with all amendments and
exhibits, the "Registration Statement"). This Prospectus does 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.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated in this Prospectus by reference:
1. The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1993, as amended by the Company's reports on Form 10-K/A dated
April 28, 1994 and June 23, 1994.
2. The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1994, June 30, 1994 and September 30, 1994.
3. The Company's Current Reports on Form 8-K dated February 24, 1994 and
October 24, 1994.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering made hereunder shall be deemed to be incorporated
by reference into this Prospectus and to be a part hereof from the date of
filing of such documents. Any statement contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or
is deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
THE COMPANY WILL FURNISH WITHOUT CHARGE TO EACH PERSON, INCLUDING ANY
BENEFICIAL OWNER, TO WHOM THIS PROSPECTUS IS DELIVERED, UPON WRITTEN OR ORAL
REQUEST, 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 SHOULD BE DIRECTED TO:
SUN COMPANY, INC.
TEN PENN CENTER
1801 MARKET STREET
PHILADELPHIA, PENNSYLVANIA 19103-1699
ATTENTION: SHAREHOLDER RELATIONS
TELEPHONE: (215) 977-3000
3
<PAGE>
THE COMPANY
The Company is the largest independent U.S. refiner/marketer. It operates
five domestic refineries and is engaged in retail gasoline marketing,
principally in the northeastern U.S.; lubricants and petrochemical marketing
worldwide; and domestic pipeline and terminalling operations. The Company also
produces crude oil and natural gas internationally and is the majority owner of
Suncor Inc., a fully integrated Canadian oil company. These operations are
conducted through the Company's subsidiaries. Hereafter, the term "Sun" means
the Company and its subsidiaries.
Sun's petroleum refining and marketing operations include the manufacturing
and marketing of a full range of petroleum products, including fuels,
lubricants and petrochemicals, and the transportation of crude oil and refined
products. These operations are conducted in the United States and Canada. Sun's
oil and gas exploration and production operations consist of exploration for
and development, production and marketing of crude oil and condensate, natural
gas and natural gas liquids. Exploration activities are conducted in Canada
while development, production and marketing activities are conducted primarily
in Canada and the United Kingdom sector of the North Sea. Oil sands mining
operations, which consist of production of synthetic crude oil by mining oil
sands and upgrading the bitumen extracted from the oil sands, are conducted in
western Canada.
Sun is following a strategic plan, first announced in October 1992 (the
"Strategic Plan"), which focuses on growth in branded gasoline marketing
(primarily in the northeastern United States), lubricants, chemicals and
logistics and international oil and gas production activities (primarily in the
United Kingdom sector of the North Sea). Since the adoption of the Strategic
Plan, the following initiatives have been implemented:
. Sun has begun conversions of its existing ATLANTIC (R) gasoline outlets
to SUNOCO (R) and its SUNOCO FOOD MARKET (R) convenience stores to
APLUS (R). These conversions are expected to be completed by year-end
1995.
. Sun has acquired 23 gasoline outlets primarily in western Massachusetts
and has secured a 12-year contract to supply 21 high-volume service
stations along the Pennsylvania Turnpike.
. Sun has reconfigured its Tulsa refinery and modified its Yabucoa, Puerto
Rico refinery to emphasize lubricants manufacturing capability.
. Sun has purchased a 126-mile crude oil pipeline in Ohio and Michigan
which provides midwestern refineries, including Sun's Toledo refinery,
access to Canadian crude oil.
. Sun has essentially completed the withdrawal from oil and gas
exploration activities outside of Canada and has sold certain
exploration properties in the U.K. North Sea and production properties
in Dubai.
. Sun has acquired additional oil producing interests in the U.K. North
Sea.
. Sun has reduced its ownership interest in Suncor Inc., the Company's
Canadian petroleum subsidiary, from 68 percent to 55 percent. In
addition, Suncor has converted to a more flexible and efficient truck-
and-shovel method of mining oil sands.
. Sun has completed the sale of its western U.S. coal operations and
continues to actively pursue the sale of its remaining eastern U.S. coal
and cokemaking operations.
. Sun has significantly reduced its real estate portfolio and continues to
actively pursue a program of controlled disposition of its remaining
real estate investments.
The Company was incorporated in Pennsylvania in 1971 and it or its
predecessors have been active in the petroleum industry since 1886. Its
principal executive offices are located at Ten Penn Center, 1801 Market Street,
Philadelphia, PA 19103-1699.
4
<PAGE>
The following description summarizes Sun's principal business activities in a
general manner, is not complete and is qualified in its entirety by reference
to the descriptions contained in the documents incorporated in this Prospectus
by reference (see "Incorporation of Certain Documents by Reference").
DOMESTIC REFINING AND MARKETING
Sun manufactures and markets fuels, lubricants, and chemicals and transports
crude oil and refined products in the United States. Sun owns and operates five
domestic refineries with a total crude unit processing capacity of 777 thousand
barrels daily, including the Philadelphia refinery ("Girard Point") acquired
from Chevron U.S.A. Inc. ("Chevron") in August 1994 which has crude unit
processing capacity of 177 thousand barrels daily. Sun's domestic refining and
marketing operations are classified in the following business lines: Fuels,
Lubricants, Chemicals and Logistics.
Fuels
Sun manufactures and sells petroleum products, including gasoline,
distillates, jet fuel, residual fuel oil and asphalt to retail, wholesale,
commercial and industrial customers and to the United States government.
The refining operations of Sun's Fuels business are conducted at its Marcus
Hook, Pennsylvania, Philadelphia, Pennsylvania (two adjacent facilities), and
Toledo, Ohio refineries. Fuels are also produced at Sun's Tulsa, Oklahoma and
Yabucoa, Puerto Rico refineries; however, those refineries emphasize the
production of lubricants.
Sun's U.S. branded fuels marketing operations consist of the sale of gasoline
and middle distillates. Sun markets a full slate of retail gasoline products,
including high-octane premium gasoline represented by Sunoco's ULTRA(R)94 and
Atlantic's OPTIMA(R)93 grades, as well as several lower octane grades.
Sun sells fuels (principally gasoline) through SUNOCO(R) and ATLANTIC(R)
service stations and convenience stores. Virtually all of these stations are
independently operated. The SUNOCO(R) outlets are located largely within an 18-
state area in the Northeast and northern Midwest, with the greatest
concentration in Connecticut, New Jersey, New York, Massachusetts,
Pennsylvania, Rhode Island, Ohio and Michigan. The ATLANTIC(R) outlets are
located principally in New York and Pennsylvania. As of December 31, 1993, Sun
sold fuels through 4,442 service stations in the U.S. It is a leading supplier
of fuels in the geographic area in which it operates. Sun is the sole service
station operator on the New Jersey Turnpike, supplies 16 outlets on the New
York Thruway, 16 outlets on the Ohio Turnpike, and 21 stations on the
Pennsylvania Turnpike. Sun also sells branded fuels through its owned and
operated SUNOCO FOOD MARKET(R) and APLUS(R) convenience stores.
Sun is converting its ATLANTIC(R) stations to SUNOCO(R) stations and its
SUNOCO FOOD MARKET(R) stores to APLUS(R) stores. Some of the ATLANTIC(R)
locations are being converted to ULTRA SERVICE CENTER(R) stations. This
strategy focuses Sun's market presence and capitalizes on the individual
strengths of the SUNOCO(R), APLUS(R), and ULTRA SERVICE CENTERSM operations. As
of September 30, 1994, approximately one-third of the planned 465 ATLANTIC(R)
to SUNOCO(R) service station conversions and nearly half of the planned
conversions of SUNOCO FOOD MARKET(R) to APLUS(R) have been completed.
Lubricants
Sun manufactures and markets a complete line of automotive and industrial
lubricants, waxes and aromatic extracts. These lubricants are marketed directly
to end-users and, through distributors, to a wide variety of domestic and
foreign customers.
As part of its Strategic Plan, Sun refocused its Tulsa and Yabucoa refineries
toward the production of high-margin lubricants resulting in upgraded product
yields. Lubricants are manufactured at the Tulsa and Puerto Rico refineries and
are marketed under the SUNOCO (R) brand, as well as formulated
5
<PAGE>
and packaged for sale by other branded marketers under their labels. Sun has
lube service centers located in the Marcus Hook and Tulsa refineries. These
centers, supplied with base oils from the Puerto Rico and Tulsa refineries,
blend and package lubricants for Sun and other branded marketers.
Base lube oils manufactured by Sun are also sold to domestic or international
third parties who manufacture their own finished automotive and industrial
lubricants. In addition, Sun sells a line of specialty lube products such as
horticultural and agricultural oils, aromatic and paraffinic rubbers oils,
paper defoamers, asphalt recycling extracts, ink oils, textile oils and
finished waxes.
Chemicals
Sun manufactures, distributes, and markets base and intermediate commodity
petrochemicals, primarily light olefins (ethylene and propylene) and aromatics
(benzene, toluene and xylenes). Petrochemicals are manufactured at Sun's Marcus
Hook, Philadelphia, and Toledo refineries and at an ethylene oxide facility in
Brandenburg, Kentucky. Since 1992, Sun's ethylene oxide production capacity has
doubled to more than 200 million pounds per year. Sun is also a one-third
partner in a joint venture formed to construct, own and operate an MTBE
production facility in Mt. Belvieu, Texas. The construction of this facility,
which has a designed capacity of 12,600 barrels of MTBE, is essentially
completed and sustained start-up tests are underway.
Sun's petrochemical products are distributed and sold on a worldwide basis.
The majority of these sales are to manufacturers of intermediate products used
in the production of rubber, plastics, detergents, agricultural chemicals and
fibers. Significant volumes are also marketed to the solvents and fuels
industries.
Logistics
Sun transports crude oil and refined petroleum products by pipeline to
fifteen states in the eastern half of the United States. As of December 31,
1993, Sun had an interest in approximately 10,000 miles of pipeline which
transport either crude oil or refined products. It also conducts terminalling
operations in Nederland, Texas.
Sun's crude oil systems, concentrated in the Midwest, transport crude oil
gathered in Oklahoma, Texas, and Louisiana (as well as foreign crude from the
Gulf Coast and Canada) to refiners or to local trade points. The refined
product systems, located primarily in the Northeast, transport gasoline, jet
fuel, diesel fuel, home heating oil and other products to customers ranging
from Sun's fuels businesses to integrated petroleum companies, independent
marketers and distributors.
Sun's Nederland terminal provides in excess of ten million barrels of storage
and daily throughput terminalling capacity of in excess of one million barrels.
Its Gulf Coast location provides local and midwestern refiners access to
foreign crude oil. The facility is a key link in the distribution system for
United States government purchases and sales of crude oil for the Strategic
Petroleum Reserve storage facilities in Texas and Louisiana.
INTERNATIONAL PRODUCTION
Sun's production operations outside North America are focused on the
production of existing proved reserves and on the acquisition of currently
producing or near-term development assets primarily in the United Kingdom
Sector of the North Sea.
Sun has actively withdrawn from international exploration activities outside
of Canada pursuant to the Strategic Plan. The withdrawal from exploration
activities internationally has enabled Sun to enhance its operating profits in
the near term, to reduce significantly its investment risk profile, and to
position itself to make investments in currently producing properties and near-
term development projects in the future as financially attractive opportunities
are identified.
6
<PAGE>
As of December 31, 1993, outside North America, Sun had estimated proved
reserves of approximately 30 million barrels of crude oil and condensate and
approximately 109 billion cubic feet of natural gas. Outside North America,
Sun's 1993 crude oil and condensate production averaged 27,200 barrels per day
and its natural gas production averaged 56 million cubic feet per day.
CANADA (SUNCOR)
Suncor Inc. ("Suncor") is Sun's 55 percent owned, vertically integrated
Canadian petroleum subsidiary. Its operations consist of the exploration,
production and marketing of conventional crude oil and natural gas, the
production and marketing of synthetic crude oil from oil sands, and petroleum
refining and marketing.
Suncor's conventional crude oil and natural gas exploration and production
activities are concentrated in western Canada, with increasing emphasis on
natural gas. As of December 31, 1993, Suncor had approximately 30 million
barrels of estimated proved reserves of conventional crude oil and condensate
and approximately 492 billion cubic feet of estimated proved reserves of
natural gas.
Suncor produces synthetic crude oil by mining the Athabasca oil sands and
upgrading the extracted bitumen at its plant located near Fort McMurray in
northeastern Alberta. As of December 31, 1993, Suncor had approximately 231
million barrels of proved synthetic crude oil reserves.
Suncor owns and operates a 70,000 barrel-per-day refinery located in Sarnia,
Ontario which processes both synthetic and conventional crude oils. Gasoline,
distillates, jet fuel, residual fuel oil, propane and asphalt are generally
marketed under the SUNOCO (R) brand to retail, commercial and industrial
customers primarily in Ontario and Quebec. Suncor also supplies these products
to independent marketers. In addition, Suncor markets toluene, mixed xylenes
and orthoxylenes in Canada, the United States and Europe through a
petrochemicals marketing partnership with another Sun subsidiary.
PRICE RANGE AND DIVIDENDS
The Company's Common Stock is prinicipally traded on the New York Stock
Exchange, Inc. under the symbol "SUN." The following table shows the high and
low sales prices of the Common Stock, as reported in the New York Stock
Exchange Composite Transactions quotations, as well as the cash dividends paid
per share for the periods indicated.
<TABLE>
<CAPTION>
HIGH LOW DIVIDEND
------- ------- --------
<S> <C> <C> <C>
1994
Third Quarter....................................... $29 1/4 $25 7/8 $.45
Second Quarter...................................... 34 3/8 25 1/8 .45
First Quarter....................................... 35 1/4 29 3/8 .45
1993
Fourth Quarter...................................... 32 3/4 28 1/2 .45
Third Quarter....................................... 28 7/8 23 7/8 .45
Second Quarter...................................... 27 1/8 22 1/4 .45
First Quarter....................................... 30 1/4 24 1/2 .45
1992
Fourth Quarter...................................... 28 1/2 22 1/2 .45
Third Quarter....................................... 26 1/2 24 1/8 .45
Second Quarter...................................... 29 1/2 25 .45
First Quarter....................................... 30 3/4 26 3/4 .45
</TABLE>
On November 2, 1994, the last reported sale price for the Common Stock, as
reported in the New York Stock Exchange Composite Transactions quotations, was
$31.50.
7
<PAGE>
The Company has paid cash dividends on a regular basis for many years. On
October 6, 1994, the Company declared a dividend of $.45 per share of Common
Stock, payable on December 9, 1994, to shareholders of record on November 10,
1994. The Company expects to continue to sustain the quarterly cash dividend at
its current level.
At September 30, 1994, there were approximately 53,000 record holders of the
Common Stock.
CAPITALIZATION
The following table sets forth the capitalization of Sun as of September 30,
1994. The capitalization table should be read in conjunction with the financial
statements of the Company and its consolidated subsidiaries including the notes
thereto, included in the Corporation's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1994, which is incorporated by reference herein.
<TABLE>
<CAPTION>
AT SEPTEMBER 30, 1994
---------------------
(MILLIONS OF DOLLARS)
<S> <C>
Short-Term Borrowings and Current Portion of Long-Term
Debt.................................................... $ 529
======
Long-Term Debt........................................... $ 984*
------
Stockholders' Equity
Common Stock, $1 par value per share (Issued--
129,458,083 shares)................................... 129
Capital in excess of par value......................... 1,308
Cumulative foreign currency translation adjustment..... (70)
Earnings employed in the business...................... 1,579
Less common stock held in treasury, at cost (22,581,809
shares)............................................... (1,021)
------
Total Stockholders' Equity............................. 1,925
------
Total Stockholders' Equity and Long-Term Debt............ $2,909
======
</TABLE>
- --------
* On November 1, 1994, the Company issued $150 million of 8 1/8 percent 5-year
notes and $100 million of 9 percent 30-year debentures. The proceeds from
these borrowings will be used to repay commercial paper as it matures.
Accordingly, $250 million of commercial paper was classified as long-term
debt at September 30, 1994.
SUMMARY OF FINANCIAL INFORMATION
The following table represents selected financial data of Sun for the nine
months ended September 30, 1994 and 1993 and for each of the last five years.
Reference is made to the detailed information and financial statements
available in the documents described above under "Incorporation of Certain
Documents by Reference." The financial information for the nine months ended
September 30, 1994 and 1993 and as of those dates is unaudited but, in the
opinion of the Company, all adjustments necessary for a fair presentation have
been made. All such adjustments are of a normal recurring nature except for the
cumulative effect of changes in accounting principles discussed below. The
results of operations for the nine months ended September 30, 1994 are not
necessarily indicative of the results for the full year 1994.
Prior to the fourth quarter of 1993, Sun Coal Company and Elk River
Resources, Inc. and its subsidiaries (collectively, "Sun Coal") and Radnor
Corporation ("Radnor") had been classified as discontinued operations in Sun's
consolidated statements of income. In accordance therewith, results of
operations of Sun Coal and Radnor subsequent to their measurement dates of
December 31, 1992 and September 30, 1991, respectively, had been excluded from
the consolidated statements of income. In November 1993, the Commission issued
Staff Accounting Bulletin No. 93 which requires discontinued operations that
have not been divested within one year of their measurement dates to be
accounted for prospectively as investments held for sale. As a result, the
results of operations for Sun Coal and Radnor for the fourth quarter of 1993
and subsequent periods have been included in income from continuing operations.
In addition, the net assets and liabilities
8
<PAGE>
relating to Sun Coal and Radnor have been segregated on the consolidated
balance sheets to separately identify them as investments in operations held
for sale. The following financial data reflects this method of presentation (in
millions of dollars, except per share amounts):
<TABLE>
<CAPTION>
NINE
MONTHS ENDED
SEPTEMBER 30 YEAR ENDED DECEMBER 31
------------------ -------------------------------------------------
1994 1993 1993 1992 1991 1990 1989
------- ------- ------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Sales and other
operating revenue
(including consumer
excise taxes).......... $ 6,973 $ 6,918 $9,180 $10,445 $11,493 $12,573 $10,494
Income (loss) from
continuing operations
before provision
(credit) for income
taxes and cumulative
effect of change in
accounting
principle(1)........... $ 123(2) $ 335(3) $ 426(4) $ (432)(5) $ (108)(6) $ 393 $ 236
Net income (loss)
(1)(7)(8).............. $ 87(2) $ 224(3) $ 288(4) $ (559)(5) $ (387)(6) $ 229 $ 98
Net income (loss) per
share.................. $ .81 $ 2.10 $ 2.70 $ (5.26) $ (3.65) $ 2.14 $ .92
Capital expenditures.... $ 518(9) $ 372 $ 612 $ 530 $ 615 $ 637 $ 599
<CAPTION>
AT SEPTEMBER 30 AT DECEMBER 31
------------------ -------------------------------------------------
1994 1993 1993 1992 1991 1990 1989
------- ------- ------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Total assets............ $ 6,635 $ 5,869 $5,900 $ 6,071 $ 7,017 $ 7,852 $ 7,647
Long-term debt.......... $ 984 $ 785 $ 726 $ 792 $ 852 $ 832 $ 887
Stockholders' equity.... $ 1,925 $ 1,958 $1,984 $ 1,896 $ 2,696 $ 3,274 $ 3,254
Common stockholders'
equity per share....... $ 18.01 $ 18.37 $18.60 $ 17.82 $ 25.41 $ 30.81 $ 30.46
</TABLE>
- --------
(1) Includes impact of provisions for write-down of assets and other matters of
$39 million ($22 million after tax) in the nine months ended September 30,
1994, $23 million ($12 million after tax) in the nine months ended September
30, 1993 and in the full year 1993, $745 million ($456 million after tax) in
1992, $156 million ($103 million after tax) in 1991 and $162 million ($103
million after tax) in 1989. (See Note 6 to the Consolidated Financial
Statements in the Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1994 and Note 2 to the Consolidated Financial Statements
in the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1993, as amended, incorporated by reference herein.)
(2) Includes impact of gain on divestments of $49 million ($37 million after
tax).
(3) Includes impact of gain on divestments of $148 million ($101 million after
tax).
(4) Includes impact of gain on divestments of $174 million ($121 million after
tax).
(5) Includes impact of gain on Iranian litigation settlement of $178 million
($117 million after tax).
(6) Includes impact of provision for environmental remediation work at various
domestic refining and marketing sites of $118 million ($78 million after
tax).
(7) Includes income (loss) from operations held for sale of $10 million for the
nine months ended September 30, 1994 and $3, $19, $(257), $9 and $(12)
million in 1993, 1992, 1991, 1990 and 1989, respectively. (See Note 4 to the
Consolidated Financial Statements in the Company's Quarterly Report on Form
10-Q for the quarter ended September 30, 1994 and Note 2 to the Consolidated
Financial Statements in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1993, as amended, incorporated by reference
herein.)
(8) Includes impact of the cumulative effect of a change: in the method of
accounting for postemployment benefits in the nine months ended September
30, 1994 ($7 million after tax charge); in the method of accounting for
income taxes in the nine months ended September 30, 1993 and in the full
year 1993 ($5 million tax benefit); in the method of accounting for
postretirement health care and life insurance benefits in 1992 ($261 million
after-tax charge); and in the method of accounting for refinery turnaround
costs in 1990 ($30 million after-tax benefit). (See Note 7 to the
Consolidated Financial Statements in the Company's Quarterly Report on Form
10-Q for the quarter ended September 30, 1994 and in the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1993, as amended,
incorporated by reference herein.)
(9) Excludes $151 million attributable to the purchase of the Girard Point
refinery in Philadelphia and related inventory.
9
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS--NINE MONTHS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30
EARNINGS PROFILE OF SUN BUSINESSES (AFTER TAX) ------------------
1994 1993 VARIANCE
-------- -------- --------
(MILLIONS OF DOLLARS)
<S> <C> <C> <C>
Fuels:
Wholesale fuels................................. $ (56) $ (34) $ (22)
Branded marketing............................... 38 61 (23)
Lubricants:
Lubes........................................... 50 42 8
Related fuels................................... (25) (30) 5
Chemicals......................................... 9 12 (3)
Logistics......................................... 35 34 1
International production.......................... 38 55 (17)
Canada (Suncor):*
Exploration and production...................... 4 4 --
Oil sands....................................... 23 25 (2)
Refining and marketing.......................... 7 7 --
Corporate expenses**............................ (4) (5) 1
Net financing expenses.......................... (3) (2) (1)
-------- -------- -----
Total Canada (Suncor)......................... 27 29 (2)
Corporate:
Corporate expenses.............................. (16) (12) (4)
Net financing expenses.......................... (22) (19) (3)
Income from operations held for sale:***
Coal............................................ 8 -- 8
Real estate..................................... 2 -- 2
-------- -------- -----
88 138 (50)
Gain on sale of Suncor stock...................... -- 19 (19)
Gain on divestment of exploration and production
properties....................................... 28 74 (46)
Provision for write-down of assets and other mat-
ters............................................. (22) (12) (10)
Cumulative effect of change in accounting princi-
ple+............................................. (7) 5 (12)
-------- -------- -----
Consolidated net income........................... $ 87 $ 224 $(137)
======== ======== =====
</TABLE>
- --------
* Sun reduced its ownership interest in Suncor from approximately 68 percent
to 55 percent in May 1993.
** Includes consolidation adjustments.
*** Effective in the fourth quarter of 1993, coal and real estate operations
are accounted for as investments held for sale. During the first nine
months of 1993, as discontinued operations, earnings from these businesses
were excluded from Sun's consolidated results of operations.
+ Consists of the impact of the cumulative effect of a change in the method of
accounting for postemployment benefits in 1994 and a change in the method of
accounting for income taxes in 1993.
ANALYSIS OF EARNINGS PROFILE OF SUN BUSINESSES
In the nine-month period ended September 30, 1994, Sun earned $87 million, or
$.81 per share of common stock, compared with earnings of $224 million, or
$2.10 per share for the first nine months of 1993. Excluding the special items
shown separately in the Earnings Profile of Sun Businesses, Sun earned $88
million during the first nine months of 1994 compared to $138 million during
the first nine months of 1993.
10
<PAGE>
Fuels--Results from Sun's domestic Fuels business, comprised primarily of
the manufacturing and marketing of petroleum products in the northeastern
U.S., declined from earnings of $27 million in the first nine months of 1993
to a loss of $18 million in the first nine months of 1994. Losses from Sun's
northeastern U.S. Wholesale Fuels operations increased from $34 million in the
first nine months of 1993 to $56 million in the first nine months of 1994.
Income from Branded Marketing operations decreased from $61 million in the
year-ago nine month period to $38 million in the first nine months of 1994.
On August 4, 1994, the Company completed the acquisition of the 177,000
barrel-per-day Girard Point refinery and related inventory in Philadelphia
from Chevron. (See Note 2 to the condensed consolidated financial statements
in the Company's Quarterly Report on Form 10-Q for the quarter ended September
30, 1994, incorporated by reference herein.) This refinery, which manufactures
primarily gasoline, distillates and petrochemicals for distribution to
wholesale and industrial customers, contributed $1 million in earnings to
Wholesale Fuels results in the 1994 third quarter. (See also Chemicals below).
Excluding activity from the Girard Point refinery, Wholesale Fuels results
declined $23 million primarily due to higher refinery operating expenses ($12
million) caused largely by severe winter weather conditions in the
northeastern United States during the first quarter of 1994, lower sales
volumes ($6 million) and lower average wholesale fuels product margins ($9
million). Partially offsetting this decrease was a $5 million after-tax gain
recognized in connection with the settlement of various inventory hedge
contracts.
In Branded Marketing, the $23 million decline was caused largely by higher
operating and administrative expenses ($15 million), due in part to severe
weather conditions in the 1994 first quarter, and to increased expenses
related to the ongoing conversion of the ATLANTIC(R) brand to SUNOCO(R) and
the upgrading of the SUNOCO(R) image. A three percent decline in branded
gasoline sales volumes also contributed to the decrease in Branded Marketing
earnings. The volume decline was caused primarily by the elimination of some
marginal distributor accounts, Sun's 1993 withdrawal from areas supplied by
the Tulsa Refinery and the severe wintertime driving conditions which reduced
gasoline sales.
Lubricants--Results from Sun's Lubricants business, comprised of the
manufacturing, packaging and marketing of lubricants and specialty oil
products as well as the related manufacturing and wholesale marketing of fuels
produced at Sun's Tulsa and Puerto Rico refineries, increased $13 million over
the first nine months of 1993. Income from sales of lubricant products was $50
million in the current nine-month period compared with $42 million in the
first nine months of 1993. The favorable impact of 16 percent higher
lubricants sales volumes ($24 million) was partially offset by lower average
margins ($11 million), particularly for base oils, and higher operating
expenses ($6 million) resulting primarily from increased refinery production
levels. Losses from Related Fuels operations were $25 million during the first
nine months of 1994, representing a $5 million improvement from the $30
million loss in the year-ago period. The improvement was due to higher margins
on wholesale fuels products ($6 million) and higher sales volumes ($4
million), partially offset by higher operating expenses ($5 million) resulting
primarily from increased refinery production levels.
Chemicals--Income from Sun's domestic Chemicals business was $9 million in
the first nine months of 1994 versus $12 million in the prior year period. The
$3 million decrease in Chemicals results was due to lower sales volumes ($8
million) and higher operating expenses ($6 million) during the first nine
months of 1994. Production curtailments at the Company's northeastern
refineries during the first half of 1994 were largely responsible for the
decline in sales volumes. Partially offsetting these negative factors were
higher margins ($7 million) and a $4 million income contribution from the sale
of petrochemicals produced at the Girard Point refinery.
Logistics--Logistics (pipeline transportation and petroleum terminalling
operations) income was $35 million in the first nine months of 1994 compared
to $34 million in the year-ago period. The $1 million increase was due
principally to improved operating performance.
11
<PAGE>
International Production--International Production earnings were $38 million
in the first nine months of 1994 versus $55 million in the first nine months of
1993. The $17 million decline was due largely to lower crude oil prices ($9
million) and natural gas volumes ($5 million) and an increase in after-tax
foreign exchange translation losses ($5 million). Partially offsetting these
negative factors were a $2 million after-tax gain recognized on the
redetermination of the Pickerill field in the U.K. North Sea and $2 million of
after-tax income attributable to the acquisition of a 45 percent interest in
Block 3/8A (Ninian and Columba fields) finalized in the 1994 third quarter. The
favorable impact of higher North Sea crude oil production volumes, resulting in
part from the Block 3/8A acquisition, was essentially offset by higher
depreciation and cost and operating expenses.
The average price received for Sun's international crude oil production was
$15.50 per barrel in the first nine months of 1994 compared to $17.16 per
barrel for the first nine months of 1993. Sun's average net production of crude
oil was 26.7 thousand barrels daily during the first nine months of 1994
compared to average net production of 27.0 thousand barrels daily for the first
nine months of 1993. The production decline is the result of the absence of
volumes from properties located in Dubai which were sold in April 1993.
Excluding the Dubai volumes, crude production increased 25 percent from the
prior year first nine months due to improved operations, increased ownership
interests in the Balmoral and Stirling fields in the U.K. North Sea and the
added production from the Ninian field acquired in the 1994 third quarter.
The average price received for Sun's international natural gas production was
$2.95 per thousand cubic feet for the current nine-month period compared to
$2.97 per thousand cubic feet in the first nine months of 1993. Sun's average
net production of natural gas was 46 million cubic feet daily in the first nine
months of 1994 compared to 55 million cubic feet daily in the 1993 period. The
production decline was largely due to maintenance activities in the Thames and
Hewett fields in the U.K. North Sea during 1994.
Canada (Suncor)--Canadian exploration and production results were flat versus
the year-ago nine-month period as lower operating and administrative expenses
($1 million) and higher natural gas prices ($2 million) were offset by lower
crude oil prices ($1 million) and higher income tax expense ($2 million). Oil
sands results decreased $2 million due to the absence of a $7 million after-tax
gain from an insurance settlement recorded in the 1993 second quarter.
Operationally, the favorable impact of higher synthetic crude oil production
volumes ($14 million) was partially offset by a 7-percent decline in synthetic
crude oil prices to $15.96 per barrel ($6 million). Synthetic crude oil
production volumes increased 18 percent from 58.5 thousand barrels daily during
the 1993 first nine months to 69.2 thousand barrels daily during the first nine
months of 1994. The increase in production was due, in part, to modifications
made to the oil sands plant's upgrader in 1993 and to a planned maintenance
shutdown in April 1993, resulting in the stoppage of production until late May
1993. Canadian refining and marketing income was flat versus the year-ago nine
month period as higher refined product volumes and margins were offset by
higher administrative and tax expenses.
Corporate--Corporate expenses increased $4 million in part due to higher
administrative expenses. Net financing expenses were up $3 million versus the
year-ago period due to the absence of a $3 million after-tax gain on the sale
of an equity investment recognized in the first quarter of 1993.
Income from Operations Held for Sale--For a discussion of Sun's coal and real
estate operations held for sale, see Note 4 to the condensed consolidated
financial statements in the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1994, incorporated by reference herein.
Gain on Sale of Suncor Stock--In the second quarter of 1993, Sun recognized a
$19 million after-tax gain, or $.18 per share of common stock, on the sale of
6.8 million shares of Suncor common stock. This sale reduced Sun's ownership
interest in Suncor from approximately 68 percent to 55 percent.
Gain on Divestment of Exploration and Production Properties--During the first
nine months of 1994, Sun disposed of its interest in a North Sea exploration
block and also sold its remaining interest in a Colombian oil field. An after-
tax gain of $28 million, or $.26 per share of common stock, was recognized in
12
<PAGE>
connection with these sales. During the prior year nine-month period, Sun
disposed of certain oil and gas producing properties located in Dubai and
Canada and certain exploration properties located in the U.K. North Sea which
previously were identified for divestment as part of the Company's 1992
restructuring plan. An after-tax gain of $74 million, or $.69 per share of
common stock, was recognized in connection with these sales.
Provision for Write-down of Assets and Other Matters--During the third
quarter of 1994, Sun recorded a $22 million after-tax charge primarily
attributable to a write-down to estimated net realizable value of its
investment in coal operations held for sale. During the third quarter of 1993,
Sun recorded a $12 million after-tax provision which included a $7 million
after-tax charge associated with the restructuring of Suncor's refining and
marketing business and a $5 million after-tax loss accrual related to the
recoverability of the Company's remaining leasing and secured lending
portfolio.
Cumulative Effect of Change in Accounting Principle--For information
concerning changes in accounting principles, see Note 7 to the condensed
consolidated financial statements in the Company's Quarterly Report on Form 10-
Q for the quarter ended September 30, 1994, incorporated by reference herein.
ANALYSIS OF CONSOLIDATED STATEMENTS OF INCOME
Sales and other operating revenue increased $55 million, or 1 percent,
principally due to higher refined product sales volumes ($305 million) and an
increase in consumer excise taxes ($199 million), partially offset by lower
refined product sales prices ($286 million) and lower revenues from resales of
purchased oil and refined products ($145 million). The $99 million decrease in
gain on divestments is primarily due to the absence of pretax gains recognized
in 1993 on the sales of Suncor stock ($30 million), oil and gas properties
located in Dubai ($11 million) and Canada ($14 million), and certain
exploration blocks in the U.K. North Sea ($80 million), partially offset by a
$15 million pretax gain on the sale of Sun's interest in Block 16/12a in the
U.K. North Sea recognized in the third quarter of 1994 and a $20 million pretax
gain on the sale of Sun's remaining interest in a Colombian oil field
recognized during the second quarter of 1994. Other income decreased $30
million primarily as a result of the absence of $23 million of pretax gains
from insurance and litigation settlements recorded by Suncor in 1993.
Cost of products sold and operating expenses decreased $126 million, or 3
percent, primarily due to lower resales of purchased oil and refined products
($147 million) and lower domestic crude oil and refined product acquisition
costs ($20 million), partially offset by higher refinery operating expenses
($54 million). The increase in refinery operating expenses was primarily due to
the severe winter weather conditions in the northeastern United States during
the first quarter of 1994 and to operating expenses attributable to the Girard
Point refinery acquired on August 4, 1994. Selling, general and administrative
expenses increased $47 million, or 10 percent, primarily due to higher expenses
in Sun's domestic refining and marketing operations ($37 million). This
increase was due in part to higher distribution and operating expenses caused
by the severe winter weather in the northeastern United States during 1994 and
to increased expenses associated with the conversion of the Atlantic brand to
Sunoco and the upgrading of the Sunoco image. Taxes, other than income taxes
increased $191 million, or 13 percent, due to higher consumer excise taxes
($199 million). Depreciation, depletion and amortization increased $5 million,
or 2 percent, primarily as a result of increased crude oil production in the
U.K. North Sea. For a discussion of the provision for write-down of assets and
other matters recorded in 1994 and 1993, see Note 6 to the condensed
consolidated financial statements in the Company's Quarterly Report on Form 10-
Q for the quarter ended September 30, 1994, incorporated by reference herein.
Interest cost and debt expense increased $4 million, or 6 percent, due to
higher average short-term borrowings, partially offset by a lower borrowing
position at Helios Capital Corporation, Sun's leasing subsidiary. For a
discussion of the cumulative effect of change in accounting principle, see Note
7 to the condensed consolidated financial statements in the Company's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1994, incorporated by
reference herein.
13
<PAGE>
RESULTS OF OPERATIONS--THREE MONTHS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30
EARNINGS PROFILE OF SUN BUSINESSES (AFTER TAX) --------------------
1994 1993 VARIANCE
--------- --------- --------
(MILLIONS OF DOLLARS)
<S> <C> <C> <C>
Fuels:
Wholesale fuels............................... $ (23) $ (3) $(20)
Branded marketing............................. 25 29 (4)
Lubricants:
Lubes......................................... 19 9 10
Related fuels................................. (10) (9) (1)
Chemicals....................................... 10 3 7
Logistics....................................... 12 10 2
International production........................ 16 19 (3)
Canada (Suncor):
Exploration and production.................... 1 2 (1)
Oil sands..................................... 14 13 1
Refining and marketing........................ 3 4 (1)
Corporate expenses*........................... (2) (2) --
Net financing expenses........................ (1) (1) --
--------- --------- ----
Total Canada (Suncor)....................... 15 16 (1)
Corporate:
Corporate expenses............................ (7) (4) (3)
Net financing expenses........................ (8) (9) 1
Income from operations held for sale:**
Coal.......................................... 6 -- 6
Real estate................................... -- -- --
--------- --------- ----
55 61 (6)
Gain on divestment of exploration and production
properties..................................... 15 65 (50)
Provision for write-down of assets and other
matters........................................ (22) (12) (10)
--------- --------- ----
Consolidated net income......................... $ 48 $ 114 $(66)
========= ========= ====
</TABLE>
- --------
* Includes consolidation adjustments.
** Effective in the fourth quarter of 1993, coal and real estate operations are
accounted for as investments held for sale. During the first nine months of
1993, as discontinued operations, earnings from these businesses were
excluded from Sun's consolidated results of operations.
ANALYSIS OF EARNINGS PROFILE OF SUN BUSINESSES
In the three-month period ended September 30, 1994, Sun earned $48 million,
or $.45 per share of common stock, compared with earnings of $114 million, or
$1.07 per share for the third quarter of 1993. Excluding the special items
shown separately in the Earnings Profile of Sun Businesses, Sun earned $55
million during the third quarter of 1994 compared to income of $61 million
during the third quarter of 1993.
Fuels--Sun's domestic Fuels business recorded income of $2 million in the
third quarter of 1994 versus income of $26 million in the third quarter of
1993. Losses from Wholesale Fuels operations were $23 million in the current
quarter compared with a loss of $3 million in the third quarter of 1993. Income
from Branded Marketing operations decreased from $29 million in the year-ago
quarter to $25 million in the third quarter of 1994.
Wholesale Fuels results for the current quarter include $1 million of after-
tax income from operations at Sun's Girard Point refinery acquired from Chevron
on August 4, 1994 (see Chemicals below and Note 2 to
14
<PAGE>
the condensed consolidated financial statements in the Company's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1994, incorporated by
reference herein).
Excluding results of operations from the Girard Point refinery, Wholesale
Fuels results declined due to lower margins ($20 million) across most products,
particularly wholesale gasoline, middle distillates and asphalt, and lower
sales volumes ($3 million). Partially offsetting this decrease was a $5 million
after-tax gain recognized in connection with the settlement of various
inventory hedge contracts.
In Branded Marketing, the $4 million decline was caused largely by higher
selling, general and administrative expenses ($5 million). Branded gasoline
sales volumes declined four percent versus the year-ago quarter due primarily
to Sun's strategy of eliminating marginal distributor accounts. The impact of
these lower volumes on net income was minimal.
Lubricants--Results from Sun's Lubricants business increased $9 million from
the 1993 third quarter. Income from sales of lubricant products was $19 million
in the current quarter, an increase of $10 million from the year-ago quarter.
The improvement was due to 16 percent higher sales volumes ($15 million),
particularly for base oils, partially offset by lower margins ($2 million).
Lubes production at Sun's Tulsa and Puerto Rico refineries averaged 20,700
barrels a day, an increase of nearly 60 percent from the 1993 third quarter,
when there was a scheduled maintenance shutdown at Puerto Rico. Losses from
Related Fuels operations were $10 million during the third quarter of 1994,
representing a $1 million increase in the 1993 third quarter loss of $9
million. A decline in margins on middle distillates was largely offset by
improved refinery operations at Sun's Puerto Rico and Tulsa refineries.
Chemicals--Sun's domestic Chemicals business earned $10 million in the 1994
third quarter, compared with income of $3 million in the third quarter of 1993.
Higher aromatics and propylene margins ($8 million) were partially offset by
lower sales volumes ($3 million) and higher operating expenses ($3 million).
New chemicals production resulting from the acquisition of the Girard Point
refinery also contributed $4 million to the improved earnings.
Logistics--Logistics income was $12 million, an increase of $2 million versus
the year-ago quarter, due principally to improved operating performance.
International Production--International Production earnings were $16 million
in the current quarter versus $19 million in the third quarter of 1993. The $3
million decline in earnings was due largely to lower natural gas prices and
volumes ($2 million), the absence of certain tax benefits recorded in the prior
year third quarter ($5 million) and an increase in after-tax foreign exchange
translation losses ($2 million). Partially offsetting these negative factors
were a $2 million after-tax gain from the redetermination of the Pickerill
field in the U.K. North Sea and $2 million of after-tax income from the Ninian
field recognized in the third quarter of 1994.
The average price received for Sun's international crude oil production was
$16.96 per barrel in the third quarter of 1994 compared to $16.89 per barrel
for the third quarter of 1993. Sun's average net production of crude oil was
29.9 thousand barrels daily during the third quarter of 1994 compared to
average net production of 25.2 thousand barrels daily for the third quarter of
1993. This increase reflects the added production from the Ninian field which
averaged approximately eight thousand net barrels daily during the quarter.
When fully developed, production from the acquired block is expected to exceed
11 thousand net barrels of crude oil per day. Production declines at the
Balmoral field due to scheduled maintenance partially offset the added volumes
associated with the Ninian field.
The average price received for Sun's international natural gas production was
$3.16 per thousand cubic feet for the current quarter compared to $3.67 per
thousand cubic feet in the 1993 third quarter. Sun's average net production of
natural gas was 31 million cubic feet daily in the current quarter of 1994
compared to 35 million cubic feet daily in the third quarter of 1993.
15
<PAGE>
Canada (Suncor)--Canadian exploration and production results decreased $1
million, as higher income tax expense ($2 million) was partially offset by an
increase in natural gas production volumes ($1 million). Oil sands results
increased $1 million as the impact of higher synthetic crude oil prices ($3
million) and production volumes ($2 million) was largely offset by the absence
of a $3 million after-tax gain from an insurance settlement received in the
third quarter of 1993. Synthetic crude oil production volumes increased 2
percent to 72.7 thousand barrels daily during the third quarter of 1994.
Canadian refining and marketing income decreased $1 million, as higher refined
product sales volumes ($1 million) were more than offset by increased
administrative ($1 million) and tax ($1 million) expenses.
Income from Operations Held for Sale--For a discussion of Sun's coal and real
estate operations held for sale, see Note 4 to the condensed consolidated
financial statements in the Company's Quarterly report on Form 10-Q for the
quarter ended September 30, 1994, incorporated by reference herein.
Gain on Divestment of Exploration and Production Properties--During the third
quarter of 1994, Sun disposed of its interest in U.K. North Sea exploration
Block 16/12a which resulted in an after-tax gain of $15 million, or $.14 per
share of common stock. During the third quarter of 1993, Sun completed the
sales of certain exploration properties in the U.K. North Sea and crude oil
producing properties in Canada. In connection with these sales, Sun recognized
an after-tax gain of $65 million, or $.61 per share of common stock.
Provision for Write-down of Assets and Other Matters--See "Analysis of
Earnings Profile of Sun Businesses--Provision for Write-down of Assets and
Other Matters" under "Results of Operations--Nine Months" for a discussion of
the $22 and $12 million after-tax provisions for write-down of assets and other
matters recorded in the third quarters of 1994 and 1993, respectively.
ANALYSIS OF CONSOLIDATED STATEMENTS OF INCOME
Sales and other operating revenue increased $426 million, or 19 percent,
principally due to higher refined product sales volumes ($251 million) and
prices ($55 million), an increase in consumer excise taxes ($72 million) and
higher revenues from resales of purchased oil and refined products ($26
million). The $67 million decrease in gain on divestments is primarily due to
the absence of a pretax gain recognized in 1993 on the sale of certain
exploration blocks in the U.K. North Sea ($80 million), partially offset by a
pretax gain recognized in 1994 on the sale of exploration Block 16/12a in the
U.K. North Sea ($15 million). Other income decreased $18 million in part due to
the absence of various insurance and litigation settlements recorded by Suncor
in the 1993 third quarter.
Cost of products sold and operating expenses increased $329 million, or 24
percent, primarily due to higher domestic crude oil and refined product
acquisition costs ($264 million), higher refinery operating expenses ($27
million) and higher resales of purchased oil and refined products ($23
million). The increase in product acquisition costs and refinery operating
expenses was primarily attributable to the acquisition of the Girard Point
refinery on August 4, 1994. Selling, general and administrative expenses
increased $16 million, or 10 percent, primarily due to higher expenses in Sun's
domestic refining and marketing operations ($18 million). Taxes, other than
income taxes increased $82 million, or 16 percent, primarily due to higher
consumer excise taxes ($72 million). Interest cost and debt expense increased
$6 million, or 32 percent, due to higher average short-term borrowings.
FINANCIAL CONDITION
CASH AND WORKING CAPITAL
At September 30, 1994, Sun had cash and cash equivalents of $142 million
compared to $118 million at December 31, 1993 and had a working capital deficit
of $265 million versus a working capital deficit of $228 million at December
31, 1993. Sun's working capital position is considerably stronger than
indicated because
16
<PAGE>
of the relatively low historical costs assigned under the LIFO method of
accounting to a significant portion
of the inventories reflected in the condensed consolidated balance sheet. The
current replacement cost of all such inventories exceeds the carrying value at
September 30, 1994, by approximately $425 million. Inventories valued at LIFO,
which consist of crude oil and refined products, are readily marketable at
their current replacement values. Management believes that the current levels
of Sun's cash and working capital provide adequate support for its ongoing
operations.
CASH GENERATION AND FINANCIAL CAPACITY
In the first nine months of 1994, Sun's net cash provided by operating
activities ("cash generation") was $85 million compared to $168 million in the
first nine months of 1993. The $83 million decrease in cash generation is
largely due to a $50 million decline in income before special items and a $44
million increase in working capital uses pertaining to operating activities.
Divestment activities also have enhanced Sun's cash flow and liquidity. During
the first nine months of 1994 and 1993, proceeds from divestments totalled $65
and $317 million, respectively.
Management believes that cash generation will be sufficient to satisfy Sun's
future ongoing cash requirements to sustain the current cash dividend, pursue
its capital program and fulfill its financing obligations. However, from time
to time, the Company's short-term cash requirements may exceed its cash
generation due to various factors including volatility in crude and refined
product markets and increases in capital spending and working capital levels.
During those periods, the Company may supplement its cash generation with
proceeds from divestment and financing activities. In addition, Sun's capital
spending levels may be adjusted in response to changes in cash generation as a
portion of capital spending is discretionary in nature.
In the event that cash generation is insufficient to satisfy near-term cash
requirements, the Company has access to $500 million of short-term financing
for operations in the form of commercial paper and revolving credit agreements
from commercial banks. The Company also has access to short-term financing
under non-committed money market facilities and a $50 million confirmed line of
credit. In addition, Suncor has a revolving term credit facility available for
its own use aggregating $298 million.
The following table sets forth Sun's total borrowings (in millions of
dollars) at:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1994 1993
------------- ------------
<S> <C> <C>
Short-term borrowings:
Commercial paper................................ $ 200 $ 50
Confirmed line of credit........................ 50 --
Non-committed money market facilities........... 180 60
------ ----
430 110
------ ----
Current portion of long-term debt................. 99 26
------ ----
Long-term debt:
Commercial paper................................ 250* --
Suncor revolving term credit.................... 3 91
Other........................................... 731 635
------ ----
984 726
------ ----
Total borrowings.................................. $1,513 $862
====== ====
</TABLE>
- --------
* On November 1, 1994, the Company issued $150 million of 8 1/8 percent 5-year
notes and $100 million of 9 percent 30-year debentures. The proceeds from
these borrowings will be used to repay commercial paper as it matures.
Accordingly, $250 million of commercial paper was classified as long-term
debt at September 30, 1994.
17
<PAGE>
The $651 million increase in total borrowings was largely used to fund a
portion of Sun's significant capital program ($669 million, including $151
million attributable to the acquisition of the Girard Point refinery) and the
increase in inventory levels during the first nine months of 1994. Sun expects
to reduce its inventory levels during the fourth quarter of 1994.
As of September 30, 1994, Sun's long-term debt to long-term capitalization
ratio was 33.8 percent. As indicated by this ratio, management believes that
Sun has substantial long-term borrowing capacity which is available to pursue
strategic and other operational investment opportunities as they arise.
SELLING SHAREHOLDERS
The following table sets forth (a) the number and percentage of outstanding
shares of Common Stock (i) owned by each of the Selling Shareholders
immediately prior to this offering, and (ii) to be owned by the Selling
Shareholders assuming completion of this offering, and (b) the number of shares
of Common Stock to be sold by the Selling Shareholders pursuant to this
offering:
<TABLE>
<CAPTION>
BENEFICIAL BENEFICIAL
OWNERSHIP PRIOR SHARES TO OWNERSHIP AFTER
TO OFFERING BE SOLD (3) OFFERING (3)
NAME AND ADDRESS OF ---------------- ----------- ---------------
BENEFICIAL OWNER (1) SHARES %(2) SHARES %(2)
-------------------- ---------- ----- ---------- ----
<S> <C> <C> <C> <C> <C>
The Pew Memorial Trust......................... 15,326,747 14.34 5,192,000 10,134,747 9.48
The J. Howard Pew Freedom Trust................ 3,611,942 3.38 1,224,000 2,387,942 2.23
The Mabel Pew Myrin Trust...................... 2,056,581 1.92 696,000 1,360,581 1.27
The J. N. Pew, Jr. Charitable Trust............ 1,831,825 1.71 624,000 1,207,825 1.13
The Medical Trust (4).......................... 790,649 0.74 264,000 526,649 0.49
</TABLE>
- --------
(1)The Glenmede Trust Company, a trust company without banking powers,
organized under the laws of the Commonwealth of Pennsylvania and located at
One Liberty Place, 12th Floor, 1650 Market Street, Philadelphia,
Pennsylvania 19103 ("Glenmede"), in its fiduciary capacity as trustee or co-
trustee, is the beneficial owner of all of the Common Stock owned by the
Selling Shareholders. As of October 31, 1994, Glenmede, in its fiduciary
capacity for other trusts and estates, is the beneficial owner of additional
shares of Common Stock, none of which are being sold in this offering
(Glenmede owns no shares of Common Stock for its own account). Of such
additional shares of Common Stock, Glenmede has sole voting power as to
237,092 shares (constituting 0.22% of the outstanding shares of Common
Stock), shared voting power as to 520,638 shares (constituting 0.49% of the
outstanding shares of Common Stock), sole investment power as to 103,317
shares (constituting 0.10% of the outstanding shares of Common Stock) and
shared investment power as to 703,371 shares (constituting 0.66% of the
outstanding shares of Common Stock). The foregoing percentages assume
106,876,274 shares of outstanding Common Stock.
(2)Assumes 106,876,274 shares of outstanding Common Stock.
(3)Does not give effect to the possible exercise of the Underwriters' over-
allotment option. Pursuant to such over-allotment option, if exercised in
full, the Selling Shareholders will sell an aggregate of 1,200,000
additional shares of Common Stock to be allocated amongst the various
Selling Shareholders ratably in proportion to the number of shares of Common
Stock set forth opposite their respective names in the above table under the
caption "Shares to be Sold."
(4)Francis M. Richards, Jr. is the co-trustee with Glenmede and, as a result,
has shared voting and investment power along with Glenmede with respect to
the shares of Common Stock owned by The Medical Trust.
Upon the completion of the offering (without giving effect to the possible
exercise of the Underwriters' over-allotment option), the Selling Shareholders
will retain ownership of 15,617,744 shares of Common Stock (the "Retained
Shares"), all of which will be deemed to be "restricted" securities (as defined
in Rule 144 promulgated under the Act) if they are held by an affiliate of the
Company. Glenmede, who is currently an affiliate of the Company, is deemed to
be the beneficial owner of the Retained Shares and, accordingly, the
18
<PAGE>
Retained Shares are restricted securities. All of the Retained Shares may be
sold publicly in the future only if such shares of Common Stock are sold
pursuant to an effective registration statement under the Act or in compliance
with Rule 144. In general, Rule 144 provides that any person, including an
"affiliate," as that term is defined below, who has owned shares beneficially
for at least two years is entitled to sell, within any three-month period, a
number of shares that does not exceed the greater of (i) the average weekly
trading volume of such class of securities during the four calendar weeks
immediately preceding such sale, and (ii) one percent of the number of
outstanding shares of such class, provided that certain other conditions are
met, including the availability of current public information concerning the
Company and the filing of a notice of sale. A person (or persons whose shares
are aggregated) who is not an "affiliate" of the Company, and who has
beneficially owned shares for at least three years, is entitled to sell such
shares under Rule 144 without regard to the volume limitations described above.
As defined in Rule 144, an "affiliate" of an issuer is a person that directly,
or indirectly through the use of one or more intermediaries, controls, or is
controlled by, or is under the common control with, such issuer.
Notwithstanding the foregoing, the Selling Shareholders have agreed that they
will not, without the prior consent of Morgan Stanley & Co. Incorporated, sell,
contract to sell, or otherwise dispose of any Retained Shares for a period of
90 days after the date of this Prospectus (the "Lock-up Period"). In addition,
the Selling Shareholders have advised the Company that they have no current
plan to sell or dispose of any of the Retained Shares upon the expiration of
the Lock-up Period. However, Glenmede, in the exercise of its fiduciary duties
as trustee or co-trustee of each of the Selling Shareholders, will evaluate and
determine, from time to time, whether to continue to hold or sell any or all of
the Retained Shares after expiration of the Lock-up Period. Such determination
will be made based upon the needs of a particular Selling Shareholder and the
market conditions existing at the time.
CAPITAL STOCK
The authorized capital stock of the Company consists of 200,000,000 shares of
Common Stock, $1 par value, of which 106,876,274 shares were outstanding on
September 30, 1994 and 15,000,000 shares of Cumulative Preference Stock without
par value, none of which are outstanding.
COMMON STOCK
All shares of Common Stock presently outstanding are duly authorized, fully
paid and nonassessable. Holders of the Common Stock are entitled to one vote
per share on any matter submitted to the stockholders and do not have
cumulative voting rights. The Common Stock is not redeemable or convertible and
the holders of Common Stock do not have any pre-emptive right to purchase
securities of the Company. Upon dissolution of the Company, the holders of
Common Stock are entitled to receive ratably all of the assets, if any, which
remain legally available for distribution to the Company's stockholders after
the liquidation preferences of the Company's Preference Stock, if any, have
been satisfied in full. Subject to the prior dividend rights of the holders of
any Preference Stock, the holders of the Common Stock outstanding from time to
time are entitled to receive dividends as and when declared by the Board of
Directors of the Company out of funds legally available therefor.
PREFERENCE STOCK
The Board of Directors of the Company is authorized without further
stockholder action to provide for the issuance of up to 15,000,000 shares of
Preference Stock in one or more series and to determine the designations,
preferences, dividend rates, liquidation rights, voting rights, conversion
rights, redemption rights, sinking funds, stated value and such other
provisions as may be determined by the Board of Directors pursuant to
Pennsylvania law. However, each share of Preference Stock may not be converted
into more than one share of Common Stock (as adjusted pursuant to certain
events) or entitle the holder thereof to more than one vote.
The Company's Articles of Incorporation provide that all shares of the same
series of Preference Stock shall be identical with each other share of such
series in all respects except that shares of any one series issued
19
<PAGE>
at different times may differ as to the date from which dividends shall be
cumulative. Holders of any shares of Preference Stock shall rank in priority to
holders of Common Stock or any other junior class or classes of stock with
respect to the receipt of cash dividends, and no dividends shall be paid to any
other such holder before the Preference Stock holders have received any cash
dividends to which they may be entitled. In the event of any liquidation,
dissolution or winding up of the Company, Preference Stock shall rank in
priority to Common Stock or any other capital stock of the Company.
Absent the approval of 66 2/3% of the number of shares of outstanding
Preference Stock, the Company may not create a prior class of stock, or take
certain actions which would alter or change the preferences, special rights or
powers, or the number of authorized shares of Preference Stock. The Company
retains the right to redeem any series of Preference Stock in whole or in part,
at the option of the Board of Directors subject to certain conditions set forth
in the Company's Articles of Incorporation, and upon any such redemption, such
shares have the status of authorized and unissued shares.
PROCEDURES WITH RESPECT TO CERTAIN BUSINESS COMBINATIONS
Under the Company's Articles of Incorporation, a business combination or
other specified transaction entered into with a holder (with certain
exceptions) of more than 10% of the voting stock of the Company (a "Related
Person") must either (i) be approved by a vote of the holders of not less than
75% of the outstanding shares of the Company's voting stock held by
stockholders other than the Related Person; (ii) be approved by two-thirds of
the members of the Board of Directors not affiliated with the Related Person;
or (iii) satisfy certain minimum price criteria and procedural requirements
with respect to the remaining stockholders.
QUALIFYING SHAREHOLDER STATUS
Glenmede, as a "qualifying shareholder" under the Pennsylvania General
Associations Act of 1988, has the right to call a special meeting of the
Company's shareholders and the right to propose amendments to the Company's
Articles of Incorporation. Upon the completion of this offering, Glenmede will
no longer be a "qualifying shareholder" under the Pennsylvania General
Associations Act of 1988 and neither Glenmede nor any other shareholder of the
Company shall be entitled to exercise the rights referred to in this paragraph.
The Company's Board of Directors has approved for submission to the Company's
shareholders at the Company's next regular annual meeting of shareholders an
amendment to the Company's Articles of Incorporation that would provide these
rights to any holder of 10% or more of the Company's outstanding voting stock.
Following the completion of the offering, Glenmede will beneficially own in
excess of 10% of the Company's outstanding voting stock.
CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS
FOR NON-U.S. HOLDERS OF COMMON STOCK
The following discussion concerns the material United States federal income
and estate tax consequences of the ownership and disposition of shares of
Common Stock applicable to Non-U.S. Holders of such shares of Common Stock. In
general, a "Non-U.S. Holder" is any holder other than (i) a citizen or
resident, as specifically defined for U.S. federal income and estate tax
purposes, of the United States, (ii) a corporation, partnership or any entity
treated as a corporation or partnership for U.S. federal income tax purposes
created or organized in the United States or under the laws of the United
States or of any State, or (iii) an estate or trust whose income is includible
in gross income for United States federal income tax purposes regardless of its
source. The discussion is based on current law, which is subject to change
retroactively or prospectively, and is for general information only. The
discussion does not address all aspects of federal income and estate taxation
and does not address any aspects of state, local or foreign tax laws. The
discussion does not consider any specific facts or circumstances that may apply
to a particular Non-U.S. Holder (including the fact that in the case of a Non-
U.S. Holder that is a partnership, the United States tax consequences of
holding and disposing of shares of Common Stock may be affected by certain
determinations made at the partner level).
20
<PAGE>
Accordingly, prospective investors are urged to consult their tax advisors
regarding the United States federal, state, local and non-U.S. income and other
tax consequences of holding and disposing of shares of Common Stock.
Dividends. In general, dividends paid to a Non-U.S. Holder will be subject to
United States withholding tax at a 30% rate (or a lower rate as may be
prescribed by an applicable tax treaty) unless the dividends are either (i)
effectively connected with a trade or business carried on by the Non-U.S.
Holder within the United States, or (ii) if a tax treaty applies, attributable
to a United States permanent establishment maintained by the Non-U.S. Holder.
Dividends effectively connected with such a trade or business or attributable
to such permanent establishment (if a tax treaty applies) and so treated as
effectively connected income will generally not be subject to withholding (if
the Non-U.S. Holder files certain forms annually with the payor of the
dividend) and will generally be subject to United States federal income tax on
a net income basis at the applicable graduated individual or corporate rates.
In the case of a Non-U.S. Holder which is a corporation, such effectively
connected income also may be subject to the 30 percent branch profits tax
(which is generally imposed on a foreign corporation on the repatriation from
the United States of effectively connected earnings and profits except to the
extent an applicable tax treaty otherwise provides). The branch profits tax may
not apply if the recipient is a qualified resident of certain countries with
which the United States has an income tax treaty.
To determine the applicability of a tax treaty providing for a lower rate of
withholding, dividends paid to an address in a foreign country are presumed
under current Treasury Regulations to be paid to a resident of that country,
unless the payor has definite knowledge that such presumption is not warranted
or an applicable tax treaty (or United States Treasury Regulations thereunder)
requires some other method for determining a Non-U.S. Holder's residence.
Treasury Regulations proposed in 1984, if finally adopted, however, would
require Non-U.S. Holders to file certain forms to obtain the benefit of any
applicable tax treaty providing for a lower rate of withholding tax on
dividends. Such forms would be required to contain the holder's name, address
and other pertinent information subject to a de minimis payment exception and
an official statement by the competent authority in the foreign country (as
designated in the applicable tax treaty) attesting to the holder's status as a
resident thereof. Under current regulations, the Company must report annually
to the Internal Revenue Service and to each Non-U.S. Holder the amount of
dividends paid to, and the tax withheld with respect to, each Non-U.S. Holder.
These information reporting requirements apply regardless of whether
withholding was reduced or eliminated by an applicable tax treaty. Copies of
these reports also may be made available under the provisions of a specific
treaty or agreement with the tax authorities in the country in which the Non-
U.S. Holder resides.
Sale or Exchange of Common Stock. Generally, a Non-U.S. Holder will not be
subject to United States federal income tax on any gain realized upon the
disposition of such holder's shares of Common Stock unless (i) the gain is
effectively connected with a trade or business carried on by the Non-U.S.
Holder within the United States or, if a tax treaty applies, attributable to a
permanent establishment maintained by the Non-U.S. Holder in the United States;
(ii) the Non-U.S. Holder is an individual who holds the shares of Common Stock
as a capital asset and is present in the United States for 183 days or more in
the taxable year of the disposition, and either (a) such Non-U.S. Holder has a
"tax home" (as specifically defined for U.S. federal income tax purposes) in
the United States (unless the gain from the disposition is attributable to an
office or other fixed place of business maintained by such Non-U.S. Holder in a
foreign country and such gain has been subject to a foreign tax equal to at
least 10%), or (b) the gain from the disposition is attributable to an office
or fixed place of business maintained by such Non-U.S. Holder in the United
States; (iii) the Non-U.S. Holder is subject to tax pursuant to the provisions
of U.S. tax law applicable to certain United States expatriates; or (iv) the
Company is or has been during certain periods a "U.S. real property holding
corporation" as defined for U.S. federal income tax purposes and the Non-U.S.
Holder held, at any time during the five year period ending on the date of
disposition (or such shorter period that such shares were held), directly or
indirectly, more than five percent of the Common Stock (assuming that the
Common Stock is regularly traded on an established securities market). The
Company believes that it may be a U.S. real property holding corporation.
21
<PAGE>
Estate Tax. Shares of Common Stock owned or treated as owned by an individual
who is not a citizen or resident (as defined for United States federal estate
tax purposes) of the United States at the time of death will be includible in
such individual's gross estate for United States federal estate tax purposes,
unless an applicable tax treaty provides otherwise, and may be subject to
United States federal estate tax.
Backup Withholding and Information Reporting. Under current United States
federal income tax law, backup withholding (which generally is a withholding
tax imposed at the rate of 31 percent on certain payments to persons that fail
to furnish the information required under the U.S. information reporting
requirements) and information reporting requirements apply to payments of
actual and certain constructive dividends. Backup withholding and information
reporting requirements will generally not apply to dividends paid on Common
Stock to Non-U.S. Holders to which the Company is required to withhold at a 30
percent rate or, if applicable, a lower treaty rate, as described under "--
Dividends."
The payment of the proceeds from the disposition of shares of Common Stock to
or through the United States office of a broker will be subject to information
reporting and backup withholding unless the holder or beneficial owner
certifies, under penalties of perjury, among other things, as to its status as
a Non-U.S. Holder, or otherwise establishes an exemption. Generally, the
payment of the proceeds from the disposition of shares of Common Stock to or
through a non-U.S. office of a broker will not be subject to backup withholding
and will not be subject to information reporting. In the case of the payment of
proceeds from the disposition of shares of Common Stock to or through a non-
U.S. office of a broker that is a U.S. person or a "U.S.-related person,"
existing regulations require information reporting on the payment unless the
broker receives a statement from the owner, signed under penalties of perjury,
certifying, among other things, its status as a Non-U.S. Holder, or the broker
has documentary evidence in its files that the owner is a Non-U.S. Holder and
the broker has no actual knowledge to the contrary. For this purpose, a "U.S.-
related person is (i) a "controlled foreign corporation" for United States
federal income tax purposes or (ii) a foreign person 50% or more of whose gross
income from all sources for the three year period ending with the close of its
taxable year preceding the payment (or for such part of the period that the
broker has been in existence) is derived from activities that are effectively
connected with the conduct of a United States trade or business. The backup
withholding and information reporting rules are currently under review by the
United States Treasury Department and Internal Revenue Service, and their
application to the shares of Common Stock is subject to change. Non-U.S.
Holders should consult their tax advisors regarding the application of these
rules to their particular situations, the availability of an exemption
therefrom, and the procedure for obtaining such an exemption, if available.
A Non-U.S. Holder generally may obtain a refund of any excess amounts
withheld by filing the appropriate claim for refund with the IRS.
22
<PAGE>
UNDERWRITERS
Under the terms and subject to the conditions contained in the Underwriting
Agreement dated the date hereof, the Underwriters named below have severally
agreed to purchase, and the Selling Shareholders have agreed to sell to them,
the number of shares of Common Stock set forth opposite the names of each
Underwriter below.
<TABLE>
<CAPTION>
NUMBER
NAME OF SHARES
---- ---------
<S> <C>
Morgan Stanley & Co. Incorporated.............................
CS First Boston Corporation...................................
Smith Barney Inc. ............................................
---------
Total....................................................... 8,000,000
=========
</TABLE>
The Underwriting Agreement provides that the obligations of the several
Underwriters to pay for and accept delivery of the shares of Common Stock
offered hereby are subject to the approval of certain legal matters by their
counsel and to certain other conditions. The Underwriters are obligated to take
and pay for all the shares of Common Stock offered hereby (other than those
covered by the over-allotment option described below) if any such shares are
taken.
The Underwriters propose to offer part of the shares of Common Stock directly
to the public at the public offering price set forth on the cover page hereof
and part to certain dealers at a price which represents a concession of not in
excess of $ per share below the public offering price. The Underwriters may
allow, and such dealers may reallow, a concession not in excess of $ per share
to other Underwriters or to certain dealers.
Pursuant to the Underwriting Agreement, the Selling Shareholders have granted
the Underwriters an option, exercisable for 30 days from the date of this
Prospectus, to purchase up to 1,200,000 additional shares of Common Stock at
the public offering price set forth on the cover page hereof, less underwriting
discounts and commissions. The Underwriters may exercise such option solely for
the purpose of covering over-allotments, if any, made in connection with the
offering of the shares of Common Stock offered hereby. To the extent such
option is exercised, each Underwriter will become obligated, subject to certain
conditions, to purchase approximately the same percentage of such additional
shares as the number set forth next to such Underwriter's name in the preceding
table bears to the total number of shares of Common Stock offered by the
Underwriters hereby.
Except with respect to the United States, no action has been taken by the
Company, the Selling Shareholders or the Underwriters that would permit a
public offering of the Common Stock in any country or jurisdiction where action
for that purpose is required. Accordingly, the Common Stock may not be offered,
sold or delivered, directly or indirectly, and neither this document or other
offering material may be distributed or published in any other such country or
jurisdiction except under circumstances that will result in compliance with any
applicable laws and regulations and the Underwriters have represented that all
offers, sales and deliveries by them will be made on these terms.
The Company has agreed that, without the prior written consent of Morgan
Stanley & Co. Incorporated, it will not offer, sell, contract to sell or
otherwise dispose of any shares of Common Stock or any securities convertible
into or exercisable or exchangeable for Common Stock for a period of 90 days
after the date of this Prospectus, other than (i) any shares of Common Stock
issuable pursuant to the exercise of stock options, warrants or other
convertible securities and outstanding on the date of this Prospectus, (ii)
options and similar instruments granted to employees of the Company to acquire
Common Stock and other interests in shares of
23
<PAGE>
Common Stock, in each case granted pursuant to the Company's employee benefit
plans or (iii) shares issued pursuant to the Company's Dividend Reinvestment
Plan. The Selling Shareholders, as holders of 14,417,744 shares of Common Stock
(after the consummation of this offering and assuming the exercise of the over-
allotment option by the Underwriters) have agreed not to offer, sell, contract
to sell or otherwise dispose of any shares of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock for a period
of 90 days after the date of this Prospectus without the prior consent of
Morgan Stanley & Co. Incorporated.
The Company, the Selling Shareholders, and the Underwriters have agreed to
indemnify each other against certain liabilities, including civil liabilities
under the Federal securities laws. In the view of the Commission,
indemnification for liabilities arising under the Federal securities laws is
against public policy and is, therefore, unenforceable.
The Underwriters and /or their affiliates have in the past and may in the
future provide investment and commercial banking and other related services to
the Company in the ordinary course of business for which the Underwriters
and/or their affiliates have received or may receive customary fees and
reimbursement of their out-of-pocket expenses.
LEGAL OPINIONS
The validity of the Common Stock offered hereby will be passed upon for the
Company by Jack L. Foltz, Esq., Vice President and General Counsel of the
Company or Jonathan C. Waller, Esq., Assistant General Counsel of the Company;
certain legal matters will be passed on for the Selling Shareholders by Pepper,
Hamilton & Scheetz, Philadelphia, Pennsylvania; and certain matters will be
passed on for the Underwriters by Simpson Thacher & Bartlett (a partnership
which includes professional corporations), New York, New York. Simpson Thacher
& Bartlett will rely upon the opinion of Mr. Foltz or Mr. Waller, as the case
may be, as to all matters of Pennsylvania law. Mr. Foltz and Mr. Waller, in
their respective capacities as Vice President and General Counsel and Assistant
General Counsel of the Company, participate in various employee benefit plans
offered by the Company and in connection with certain of such benefit plans
receive Common Stock and options to purchase Common Stock. Pepper, Hamilton &
Scheetz from time to time has provided legal services to the Company. Richard
C. Sorlein, Esq., "of counsel" to Pepper, Hamilton & Scheetz, is a stockholder
of the parent corporation of Glenmede.
EXPERTS
The consolidated balance sheets of Sun at December 31, 1993 and 1992, the
consolidated statements of income, changes in stockholders' equity and cash
flows for each of the three years in the period ended December 31, 1993, and
the financial statement schedules included in the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1993, as amended, incorporated
by reference in this Prospectus, have been incorporated herein in reliance upon
the reports (which include an explanatory paragraph regarding the Company's
change in method of accounting for income taxes in 1993, the Company's change
in method of accounting for the cost of postretirement health care and life
insurance benefits in 1992 and the Company's change in method of accounting for
the cost of crude oil and refined product inventories of Suncor Inc., the
Company's Canadian subsidiary in 1991) of Coopers & Lybrand L.L.P., independent
accountants, given on the authority of that firm as experts in auditing and
accounting.
24
<PAGE>
[LOGO OF SUNOCO APPEARS HERE]
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The Registrant estimates that the expenses of the distribution of the
securities being registered, other than underwriting discounts and commissions,
will be:
<TABLE>
<S> <C>
Registration Fee--Securities and Exchange Commission................ $100,132
Legal Fees and Expenses of Counsel to Registrant.................... 15,000
Legal Fees and Expenses of Counsel to Selling Shareholders.......... 25,000
Accounting Fees and Expenses........................................ 6,000
Printing Expenses................................................... 75,000
Blue Sky Fees and Expenses (including counsel fees)................. 15,000
Miscellaneous....................................................... 15,000
--------
Total............................................................. $251,132
========
</TABLE>
The Selling Shareholders have agreed to reimburse the Registrant for 50
percent of the fees and expenses incurred by the Registrant in connection with
the offering other than (i) legal fees and expenses of counsel to the
Registrant, as to which the Registrant shall be solely responsible, and (ii)
legal fees and expenses of counsel to the Selling Shareholders, as to which the
Selling Shareholders shall be solely responsible.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Pennsylvania Business Corporation Law variously empowers or requires Sun
Company, Inc. ("Corporation") under specified circumstances, to indemnify
officers, directors and other persons against expenses incurred in connection
with any action, suit or proceeding, civil or criminal, to which such person is
a party or is threatened to be made a party.
Article VII of the Corporation's Bylaws provides as follows:
ARTICLE VII: INDEMNIFICATION
GENERAL
Section 1. The Corporation shall pay on behalf of any individual who is
or was a Director, officer, employee or agent of the Corporation or who is
or was serving at the request of the Corporation as Director, officer,
trustee, fiduciary, employee or agent of any other domestic or foreign
corporation or partnership, joint venture, sole proprietorship, trust or
other enterprise, or who is or was serving as a fiduciary with respect to
any employee benefit plan as a result of his employment by, or service as a
Director of, the Corporation ("Indemnified Person") all expenses, including
attorneys' fees and disbursements, incurred by such person in the defense
or settlement of any civil, criminal, administrative or arbitrative
proceeding pending, threatened or completed against such person by reason
of his being or having been such Indemnified Person, and shall indemnify
such person against amounts paid or incurred by him in satisfaction of
settlements, judgments, fines, and penalties in connection with any such
proceeding, including any proceeding by or in the right of the Corporation,
except where such indemnification is expressly prohibited by applicable law
or where the acts or failures to act of the Indemnified Person constitute
willful misconduct, self-dealing or recklessness. The foregoing right to
payment and to indemnification shall not be exclusive of other rights to
which such person may be entitled as a matter of law or otherwise.
AGREEMENTS FOR INDEMNIFICATION AND FUNDING
Section 2. The Corporation is authorized, but not required, to enter into
agreements for indemnification with any Indemnified Person, however,
failure to enter into such agreements shall not
II-1
<PAGE>
in any way limit the rights of such Indemnified Persons hereunder. The
Corporation may, in addition to the foregoing, create a fund of any nature,
which may, but need not be, under the control of a trustee, or otherwise
secure or insure in any manner its indemnification obligations.
EXPENSES
Section 3. Expenses incurred by a Director, officer, employee or agent in
defending a civil or criminal action, suit or proceeding shall be paid by
the Corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of such person to
repay such amount if it shall ultimately be determined that he is not
entitled to be indemnified by the Corporation.
DISPUTES
Section 4. Any dispute related to the right to indemnification of or
advancement of expenses to Indemnified Persons as provided under this
Article, except with respect to indemnification for liabilities arising
under the Securities Act of 1933 which the Corporation has undertaken to
submit to a court for adjudication, shall be decided only by arbitration in
accordance with the commercial arbitration rules then in effect of the
American Arbitration Association.
The Corporation has obtained Executive Liability Coverage and Executive
Indemnification Coverage covering all claims during the policy period in an
aggregate amount up to $100,000,000. The Executive Liability portion of this
policy protects all directors and officers of the Corporation and its
subsidiaries. This section of the policy provides protection for losses arising
from any error, misstatement, misleading statement, act, omission, neglect, or
breach of duty committed, attempted or allegedly committed or attempted by such
persons in the discharge or their duties as directors and officers for which
the director or officer is not indemnified by the Corporation. The Executive
Indemnification portion of the policy protects the Corporation (subject to
several limitations and exceptions) against losses for which it grants
indemnification as permitted or required by law.
ITEM 16. EXHIBITS
<TABLE>
<C> <S>
1 Form of Underwriting Agreement.
4.1 Articles of Incorporation of Sun Company, Inc., as restated and amended
(incorporated by reference to Exhibit 4.5 to Registrant's Registration
Statement on Form S-3 (Registration No. 33-53717)).
4.2 Sun Company, Inc. Bylaws, as restated and amended (incorporated by
reference to Exhibit 4.6 to Registrant's Registration Statement on Form
S-3 (Registration No. 33-53717)).
5 Opinion of Jack L. Foltz, Esq., Vice President and General Counsel of the
Company or Jonathan C. Waller, Esq., Assistant General Counsel of the
Company (to be filed by amendment).
11 Statements re Sun Company, Inc. and Subsidiaries Computation of Per Share
Earnings for the Nine Months Ended September 30, 1994 and 1993 and for
the Years Ended December 31, 1993, 1992, 1991, 1990 and 1989
(incorporated by reference to Exhibit 11 to Registrant's Quarterly Report
on Form 10-Q for the quarter ended September 30, 1994 and to Exhibit 11
to Registrant's Annual Reports on Form 10-K for the fiscal years ended
December 31, 1993 and 1991).
23.1 Consent of Jack L. Foltz, Esq.
23.2 Consent of Jonathan C. Waller, Esq., Assistant General Counsel of the
Company.
23.3 Consent of Independent Accountants.
24 Power of Attorney.
</TABLE>
II-2
<PAGE>
ITEM 17. UNDERTAKINGS
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(h) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than payment by the registrant
of expenses incurred or paid by a director, officer or controlling person of
the registrant in the successful defense of any action, suit, or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
II-3
<PAGE>
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 PHILADELPHIA AND COMMONWEALTH OF PENNSYLVANIA ON
THIS 3RD DAY OF NOVEMBER, 1994.
Sun Company, Inc.
/s/ Robert M. Aiken, Jr.
By __________________________________
ROBERT M. AIKEN, JR.
SENIOR VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BY OR ON BEHALF OF THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED ON THIS 3RD DAY OF NOVEMBER, 1994.
SIGNATURES TITLES
---------- ------
Robert M. Aiken, Jr. Senior Vice President and Chief
- ------------------------------------- Financial Officer (Principal Financial
ROBERT M. AIKEN, JR. Officer)
Robert H. Campbell* Chairman, Chief Executive Officer,
- ------------------------------------- President and Director (Principal
ROBERT H. CAMPBELL Executive Officer)
Raymond E. Cartledge* Director
- -------------------------------------
RAYMOND E. CARTLEDGE
Richard L. Cartlidge* Comptroller (Principal Accounting
- ------------------------------------- Officer)
RICHARD L. CARTLIDGE
Robert E. Cawthorn* Director
- -------------------------------------
ROBERT E. CAWTHORN
Mary J. Evans* Director
- -------------------------------------
MARY J. EVANS
Thomas P. Gerrity* Director
- -------------------------------------
THOMAS P. GERRITY
II-4
<PAGE>
SIGNATURES TITLES
---------- ------
James G. Kaiser* Director
- -------------------------------------
JAMES G. KAISER
Thomas W. Langfitt* Director
- -------------------------------------
THOMAS W. LANGFITT
R. Anderson Pew* Director
- -------------------------------------
R. ANDERSON PEW
Albert E. Piscopo* Director
- -------------------------------------
ALBERT E. PISCOPO
William F. Pounds* Director
- -------------------------------------
WILLIAM F. POUNDS
Director
- -------------------------------------
ALEXANDER B. TROWBRIDGE
*By /s/ Robert M. Aiken, Jr. Individually and as Attorney-in-Fact
-------------------------
ROBERT M. AIKEN, JR.
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
------- -------
<C> <S>
1 Form of Underwriting Agreement.
4.1 Articles of Incorporation of Sun Company, Inc., as restated and
amended (incorporated by reference to Exhibit 4.5 to Registrant's
Registration Statement on Form S-3 (Registration No. 33-53717)).
4.2 Sun Company, Inc. Bylaws, as restated and amended (incorporated by
reference to Exhibit 4.6 to Registrant's Registration Statement on
Form S-3 (Registration No. 33-53717)).
5 Opinion of Jack L. Foltz, Esq., Vice President and General Counsel of
the Company or Jonathan C. Waller, Esq., Assistant General Counsel of
the Company (to be filed by amendment).
11 Statements re Sun Company, Inc. and Subsidiaries Computation of Per
Share Earnings for the Nine Months Ended September 30, 1994 and 1993
and for the Years Ended December 31, 1993, 1992, 1991, 1990 and 1989
(incorporated by reference to Exhibit 11 to Registrant's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1994 and to
Exhibit 11 to Registrant's Annual Reports on Form 10-K for the fiscal
years ended December 31, 1993 and 1991).
23.1 Consent of Jack L. Foltz, Esq.
23.2 Consent of Jonathan C. Waller, Esq., Assistant General Counsel of the
Company.
23.3 Consent of Independent Accountants.
24 Power of Attorney.
</TABLE>
II-6
<PAGE>
8,000,000 Shares
SUN COMPANY, INC.
Common Stock, par value $1.00, per share
UNDERWRITING AGREEMENT
_____________, 1994
<PAGE>
_____________, 1994
Morgan Stanley & Co.
Incorporated
CS First Boston Corporation
Smith Barney Inc.
c/o Morgan Stanley & Co.
Incorporated
1251 Avenue of the Americas
New York, New York 10020
Dear Sirs:
The Glenmede Trust Company, as trustee and not in its individual
capacity (the "Trustee") for certain shareholders of Sun Company, Inc., a
Pennsylvania corporation (the "Company"), named in Schedule I (the "Charitable
Trusts") hereto, on behalf of the Charitable Trusts, severally with respect to
each Charitable Trust proposes to sell to the several Underwriters named in
Schedule II hereto (the "Underwriters") an aggregate of 8,000,000 shares of the
Common
<PAGE>
Morgan Stanley & Co.
Incorporated
-2- __________, 1994
Stock, par value $1.00 per share, of the Company (the "Firm Shares"), each
Charitable Trust selling the amount set forth opposite such Charitable Trust's
name in Schedule I hereto. Morgan Stanley & Co. Incorporated shall act as
representative (the "Representative") of the several Underwriters.
The Trustee, on behalf of the Charitable Trusts, severally with respect
to each Charitable Trust proposes to sell to the several Underwriters not
more than an additional 1,200,000 shares (the "Additional Shares") of Common
Stock, par value $1.00, of the Company, if and to the extent that the
Representative shall have determined to exercise, on behalf of the
Underwriters, the right to purchase such shares of Common Stock granted to the
Underwriters in Article I hereof. The Firm Shares and the Additional Shares are
hereinafter collectively referred to as the "Shares." The shares of Common
Stock, par value $1.00, of the Company to be outstanding after giving effect to
the sales contemplated hereby are hereinafter referred to as the "Common Stock".
The Trustee and Charitable Trusts are hereinafter sometimes collectively
referred to as the "Sellers".
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement, including a prospectus, relating to the
Shares. The registration statement, including the exhibits thereto and the
documents incorporated by reference therein, as amended at the time it becomes
effective, including the information (if
<PAGE>
Morgan Stanley & Co.
Incorporated
-3- __________, 1994
any) deemed to be part of the registration statement at the time of
effectiveness pursuant to Rule 430A under the Securities Act of 1933, as amended
(the "Securities Act"), is hereinafter referred to as the "Registration
Statement"; the prospectus in the form first used to confirm sales of Shares is
hereinafter referred to as the "Prospectus".
I.
Subject to the terms and conditions hereof, the Trustee, on behalf of
each Charitable Trust, severally with respect to each Charitable Trust and not
jointly, hereby agrees to sell to the several Underwriters, and each
Underwriter, upon the basis of the representations and warranties herein
contained, but subject to the conditions hereinafter stated, agrees, severally
and not jointly, to purchase from the Trustee, on behalf of each Charitable
Trust, at $_________ a share - the purchase price - the number of Firm Shares
(subject to such adjustments to eliminate fractional shares as the
Representative may determine) that bears the same proportion to the number of
Firm Shares to be sold by such Charitable Trust as the number of Firm Shares set
forth opposite the name of such Underwriter in Schedule II hereto bears to the
total number of Firm Shares.
Subject to the terms and conditions hereof, the Trustee, on behalf of
each Charitable Trust, severally with respect to each Charitable Trust and not
jointly, hereby agrees to sell to the Underwriters the Additional Shares, and
the Underwriters shall have a one-time right to purchase from the Trustee,
severally and not jointly, the Additional Shares at the purchase price. The
Additional Shares may be purchased as provided in Article III hereof solely for
the purpose of covering over-allotments made in connection with the offering of
the Firm Shares. If any Additional Shares are to be
<PAGE>
Morgan Stanley & Co.
Incorporated
-4- __________, 1994
purchased, each Underwriter agrees, severally and not jointly, to purchase
the number of Additional Shares (subject to such adjustments to eliminate
fractional shares as you may determine) that bears the same proportion to the
total number of Additional Shares to be purchased as the number of Firm Shares
set forth in Schedule II hereto opposite the name of such Underwriter bears
to the total number of Firm Shares.
Each of the Company and the Charitable Trusts hereby agrees that,
without your prior written consent, it will not offer, sell, contract to sell or
otherwise dispose of any shares of Common Stock of the Company or any securities
convertible into or exercisable or exchangeable for such Common Stock for a
period of 90 days after the date of this Agreement, other than (i) any Common
Stock issuable pursuant to the exercise of stock options, warrants or other
convertible securities issued and outstanding on the date hereof, (ii) options
and similar instruments granted to employees of the Company to acquire Common
Stock and other interests in shares of Common Stock, in each case granted
pursuant to the Company's employee benefit plans or (iii) any Common Stock
issuable pursuant to the Sun Company, Inc. Dividend Reinvestment Plan; provided,
however, that it is understood and agreed to by the parties hereto that the
registration statement of the Company filed with the Securities Commission on
May 20, 1994 and declared effective on June 27, 1994 shall not be deemed to
constitute an offer of the Company's Common Stock for purposes of this
paragraph.
II.
The Company and the Sellers are advised by you that the Underwriters
propose to make a public offering of their respective portions of the Shares as
soon after the Registration Statement and this Agreement have become effective
as in your judgment is advisable. The Company and the Sellers are further
advised by you that the Shares are to be offered to the public initially at
$____________ a Share (the public offering price) and to certain dealers
selected by you at a price that represents a concession not in excess of
$____________ a Share under the public offering price, and that any Underwriter
may allow, and such dealers may reallow, a concession, not in excess of
$___________ a Share, to any Underwriter or to certain other dealers. Each
Underwriter hereby represents and agrees that, except with respect to the United
States, no action has been or will be taken by the Underwriters that would
permit a public offering of the shares in any country or jurisdiction where
action for that purpose is required.
<PAGE>
Morgan Stanley & Co.
Incorporated
-5- __________, 1994
III.
Payment for the Firm Shares shall be made by certified or official bank
check or checks payable to the order of the Trustee, as paying agent, in New
York Clearing House funds at the office of Simpson Thacher & Bartlett, 425
Lexington Avenue, New York, New York, or such other place as shall be designated
in writing by you. Such payment shall be made at 10:00 A.M., New York City time,
on __________, 1994, or at such other time on the same or such other date, not
later than __________, 1994, as shall be designated in writing by you. The time
and date of such payment are hereinafter referred to as the Closing Date.
Payment for any Additional Shares shall be made by certified or official
bank check or checks payable to the order of the Trustee, as paying agent, in
New York Clearing House funds at the office of Simpson Thacher & Bartlett, 425
Lexington Avenue, New York, New York, or such other place as shall be designated
in writing by you. Such payment shall be made at 10:00 A.M., New York City
time, on such date (which may be the same as the Closing Date but shall in no
event be earlier than the Closing Date nor later than ten business days after
the giving of the notice hereinafter referred to) as shall be designated in a
written notice from you to the Trustee of your determination, on behalf of the
Underwriters, to purchase a number, specified in said notice, of Additional
Shares, or on such other date, in any event not later than ___________, 19__, as
shall be designated in writing by you. The time and date of such payment are
hereinafter referred to as the Option Closing Date. The notice of the
determination to exercise the option to purchase Additional Shares and of the
Option Closing Date may be given at any time within 30 days after the date of
this Agreement.
Certificates for the Firm Shares and Additional Shares shall be in
definitive form and registered in such names and in such denominations as you
shall request in writing not later than two full business days prior to the
Closing Date or the Option Closing Date, as the case may be. The certificates
evidencing the Firm Shares and Additional Shares shall be delivered to you on
the Closing Date or the Option Closing Date, as the case may be, for the
respective accounts of the several Underwriters, with any transfer taxes payable
in connection with the transfer of the Shares to the Underwriters duly paid,
against payment of the purchase price therefor.
IV.
The Company represents, warrants and agrees with each Underwriter that:
<PAGE>
Morgan Stanley & Co.
Incorporated
-6- __________, 1994
(a) The Registration Statement has been prepared by the Company in
conformity with the requirements of the Securities Act and the rules and
regulations (the "Rules and Regulations") of the Commission thereunder, and
the Registration Statement has become effective under the Securities Act.
Copies of the Registration Statement as originally filed and each amendment
thereof, if any, have been delivered by the Company to the Underwriters. As
used in this Agreement, "Effective Time" means the date and the time as of
which the Registration Statement was declared effective by the Commission;
"Effective Date" means the date of the Effective Time. The Commission has
not issued any order preventing or suspending the use of any preliminary
prospectus, the Prospectus or the Registration Statement;
(b) On the Effective Date, the Registration Statement conformed in all
respects to the requirements of the Securities Act and the Rules and
Regulations and did not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, and on the date hereof and at
the time of filing of the Prospectus with the Commission pursuant to Rule
424(b) under the Rules and Regulations, the Registration Statement and the
Prospectus conform and will conform in all respects to the requirements of
the Securities Act and the Rules and Regulations and neither of such
documents include or will include any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
to make the statements therein not misleading; provided, that no
representation or warranty is made as to information contained in or omitted
from the Registration Statement or the Prospectus in reliance upon and in
conformity with written information furnished to the Company through the
Representative by or on behalf of any Underwriter or written information
furnished to the Company by or on behalf of any Seller specifically for
inclusion therein;
(c) The Company and each of its Significant Subsidiaries (as defined in
Rule 405 of the Rules and Regulations, but excluding any subsidiary of the
Company the major part of the business of which consists of finance,
banking, credit, leasing, real estate, financial services or other similar
services or coal operations or any combination thereof) have been duly
incorporated and are validly existing as corporations under the laws of
their respective jurisdictions of incorporation, are duly qualified to do
business and are in good standing as a foreign corporation in each
jurisdiction in which the failure to so qualify or be in good standing would
have a material adverse effect on the business, properties, financial
position, stockholders' equity or results of operations of the Company and
its subsidiaries on a consolidated basis, and the Company and each of its
Significant Subsidiaries have all corporate
<PAGE>
Morgan Stanley & Co.
Incorporated
-7- __________, 1994
power and authority necessary to own or hold their respective properties and
to conduct the businesses in which such corporations are engaged;
(d) All of the issued shares of capital stock of each Significant
Subsidiary of the Company (other than Suncor, Inc. and other than as
described in the Prospectus) have been duly and validly authorized and
issued and are fully paid, non-assessable and are owned directly or
indirectly by the Company, free and clear of all liens, encumbrances,
equities or claims;
(e) The execution, delivery and performance of this Agreement by the
Company and the consummation of the transactions contemplated hereby will
not conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage, deed
of trust, loan agreement or other agreement or instrument to which the
Company or any of its Significant Subsidiaries is a party or by which the
Company or any of its Significant Subsidiaries is bound or to which any
property or assets of the Company or any of its Significant Subsidiaries are
subject, except for any conflict, breach or violation which would not,
individually or in the aggregate, have a material adverse effect on the
business, properties, financial position, stockholders' equity or results of
operations of the Company and its subsidiaries, taken as a whole, nor will
such actions result in any violation of the provisions of the charter or
bylaws of the Company or any of its Significant Subsidiaries or any statute
or any order, rule or regulation of any court or governmental agency or body
having jurisdiction over the Company or any of its Significant Subsidiaries
or any of their properties or assets; and except for the registration of the
Shares under the Securities Act and such consents, approvals,
authorizations, registrations or qualifications as may be required under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
applicable state or foreign securities laws in connection with the purchase
and distribution of the Shares by the Underwriters, no consent, approval,
authorization or order of, or filing or registration with, any such court or
governmental agency or body is required for the execution, delivery and
performance of this Agreement by the Company and the consummation of the
transactions contemplated hereby;
(f) There are no contracts, agreements or understandings between the
Company and any person granting such person the right to require the Company
to include any securities owned or to be owned by such person in the
securities registered pursuant to the Registration Statement, or, except as
described in the Prospectus, to require the Company to file any other
registration statement under the Securities Act with respect to any
securities of the Company owned or to be owned by such person or to require
<PAGE>
Morgan Stanley & Co.
Incorporated
-8- __________, 1994
the Company to include such securities in any securities being registered
pursuant to any other registration statement filed by the Company under the
Securities Act;
(g) This Agreement has been duly authorized, executed and delivered by
the Company; the Shares have been duly and validly authorized and issued and
are fully paid and non-assessable; no further approval or authority of the
stockholders or the Board of Directors of the Company will be required for
the sale of the Shares as contemplated hereby, and the Shares and the
capital stock of the Company conform to the descriptions thereof contained
in the Registration Statement and the Prospectus;
(h) Except as described in the Prospectus, there are no legal or
governmental proceedings pending to which the Company is a party or of which
any property of the Company or any of the Company's Significant Subsidiaries
is the subject, the outcome of which is likely to have a material adverse
effect on the consolidated financial position of the Company and its
subsidiaries, taken as a whole;
(i) The audited financial statements included or incorporated by
reference in the Registration Statement or included or incorporated by
reference in the Prospectus present fairly the consolidated financial
position of the Company and its subsidiaries and the consolidated results of
their operations, changes in stockholders' equity and their cash flows, at
the dates and for the periods indicated, and have been prepared in
conformity with generally accepted accounting principles. The unaudited
consolidated financial statements of the Company and its subsidiaries and
the related notes, included or incorporated by reference in the Registration
Statement or included or incorporated by reference in the Prospectus present
fairly their consolidated financial position and the consolidated results of
their operations and their cash flows at the dates and for the periods
indicated in conformity with generally accepted accounting principles
(except for the absence of notes), subject to normally recurring changes
resulting from year-end audit adjustments, and prepared in accordance with
the instructions to Form 10-Q, and since the date of such statements, there
has been no material adverse change in the operations, business, property,
assets or liabilities of the Company or any of its Significant Subsidiaries,
or in the consolidated financial condition the Company;
(j) No relationship, direct or indirect, exists between or among the
Company on the one hand, and the directors, officers, stockholders,
customers or suppliers of the Company on the other hand, which is required
to be described in the Prospectus and which is not so described;
<PAGE>
Morgan Stanley & Co.
Incorporated
-9- __________, 1994
(k) Except as described in the Prospectus, since the date as of which
information is given in the Prospectus, the Company has not issued or
granted any rights to acquire any equity securities of the Company (other
than pursuant to employee benefit plans, stock option plans or other
employee or director compensation plans existing on the date of the
Prospectus);
(l) Neither the Company nor any of its Significant Subsidiaries is in
violation of its charter or bylaws or in default, and no event has occurred
which, with the notice or lapse of time or both, would constitute a default,
in the due performance or observance of any term, covenant or condition
contained in any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company or any Significant Subsidiary
is a party or by which they are bound or to which any of their properties or
assets is subject, which violation, default or event in each case will have
a material adverse affect on the business, properties, financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries, taken as a whole;
(m) There are no contracts or other documents which are required to be
filed as exhibits to the Registration Statement by the Securities Act or by
the Rules and Regulations which have not been filed as exhibits to the
Registration Statement;
(n) The Company is not required to be registered, and is not regulated,
as an "investment company" as such term is defined under the United States
Investment Company Act of 1940;
(o) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole, from that
set forth in the Prospectus, as amended or supplemented; and
(p) Any certificate signed by any officer of the Company and delivered
to you or to counsel for the Underwriters shall be deemed a representation
and warranty by the Company to each Underwriter as to the matters covered
thereby.
The Trustee, on behalf of the Charitable Trusts, severally with respect
to each Charitable Trust represents, warrants and agrees with each Underwriter
that:
<PAGE>
Morgan Stanley & Co.
Incorporated
-10- __________, 1994
(a) Such Charitable Trust was duly established and the Trustee is the
duly appointed and incumbent trustee of such Trust having the requisite
authority to execute and deliver this Agreement and to sell the Shares being
sold to the Underwriters by such Charitable Trust;
(b) This Agreement has been duly authorized, executed and delivered by
or on behalf of such Charitable Trust, and all authorizations and consents
necessary for the execution and delivery by such Charitable Trust of this
Agreement have been given and are in full force and effect on the date
hereof;
(c) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will not conflict with
or result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any material agreement, instrument, decree,
judgment or order pursuant to which such Charitable Trust was established or
to which such Charitable Trust is a party or by which such Charitable Trust
may be bound or to which any material portion of the properties of such
Charitable Trust may be subject;
(d) Such Charitable Trust has, and on the Closing Date and the Option
Closing Date, if any, will have, valid marketable title to the Shares to be
sold by such Charitable Trust and the legal right and power, and all
authorization and approval required by law, to enter into this Agreement and
to sell, transfer and deliver the Shares to be sold by such Charitable
Trust;
(e) The Shares to be sold by such Charitable Trust pursuant to this
Agreement are owned by such Charitable Trust free and clear of all liens,
encumbrances, equities or claims;
(f) Delivery of the Shares to be sold by such Charitable Trust pursuant
to this Agreement will pass marketable title to such Shares free and clear
of all liens, encumbrances, equities or claims;
(g) All information furnished by or on behalf of such Charitable Trust
for use in the Registration Statement and Prospectus is on the date hereof,
and will be at the time of the filing of the Prospectus pursuant to Rule
424(b) under the Rules and Regulations, true and correct, and does not on
the date hereof, and will not at the time of the filing of the Prospectus
pursuant to Rule 424(b) under the Rules and Regulations, contain any untrue
statement of a material fact or omit to state any material fact necessary to
make such information not misleading; and
<PAGE>
Morgan Stanley & Co.
Incorporated
-11- __________, 1994
(h) Any certificate signed by or on behalf of such Charitable Trust and
delivered to you or to counsel for the Underwriters shall be deemed a
representation and warranty by such Charitable Trust to each Underwriter as
to the matters covered thereby.
The Glenmede Trust Company, in its individual capacity ("Glenmede"),
represents, warrants and agrees with each Underwriter and the Company that:
(a) Glenmede is a trust company (without banking powers) duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania; and Glenmede is duly qualified to transact
business and is in good standing as a foreign corporation in each
jurisdiction in which the failure to so qualify or be in good standing would
have a material adverse effect, or a prospective material adverse effect, on
the condition (financial or otherwise), earnings, business or operations of
Glenmede and its subsidiaries, considered as one enterprise;
(b) This Agreement has been duly authorized, executed and delivered by
Glenmede; and all authorizations and consents necessary for the execution
and delivery by Glenmede of this Agreement have been obtained and are in
full force and effect on the date hereof;
(c) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will not conflict with
or result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any material agreement, instrument, decree,
judgment or order to which Glenmede is a party or by which Glenmede may be
bound or to which any material portion of the properties of Glenmede may be
subject; and
(d) Any certificate signed by any officer of Glenmede and delivered to
you or to counsel for the Underwriters shall be deemed a representation and
warranty by Glenmede to each Underwriter as to the matters covered thereby.
V.
The obligations of the Underwriters hereunder are subject to all of the
following conditions:
<PAGE>
Morgan Stanley & Co.
Incorporated
-12- __________, 1994
(a) No stop order suspending the effectiveness of the Registration
Statement shall be in effect, and no proceedings for such purpose shall be
pending before or threatened by the Commission. There shall not have
occurred any change, or any development involving a prospective change, in
the condition (financial or otherwise), earnings, business or operations, of
the Company and its Significant Subsidiaries, from that set forth in the
Registration Statement, that, in your judgment, is material and adverse and
that makes it, in your judgment, impracticable to market the Shares on the
terms and in the manner contemplated in the Prospectus.
(b) You shall have received on the Closing Date a certificate, dated
the Closing Date and signed by an executive officer of the Company, (i) to
the effect set forth in Article V(a), (ii) to the effect that the
representations and warranties of the Company contained herein are true and
correct as of the Closing Date and that the Company has complied with all of
the conditions on its part to be performed or satisfied hereunder on or
before the Closing Date and (iii) to the effect that there has not occurred
any material adverse change, or any development that the Company believes is
likely to have a material adverse effect, on the condition (financial or
otherwise), earnings, business or operations, of the Company from that set
forth in the Registration Statement.
The officer signing and delivering such certificate may rely upon the
best of his knowledge as to proceedings threatened.
(c) You shall have received on the Closing Date a certificate, dated
the Closing Date and signed by the Trustee on behalf of each Charitable
Trust, to the effect that the representations and warranties of such
Charitable Trust contained herein are true and correct as of the Closing
Date.
(d) You shall have received on the Closing Date a certificate, dated
the Closing Date and signed by an executive officer of Glenmede, to the
effect that the representations and warranties of Glenmede contained herein
are true and correct as of the Closing Date.
(e) You shall have received on the Closing Date an opinion of either
the Vice President and General Counsel or the Assistant General Counsel of
the Company, counsel to the Company, dated the Closing Date, in form and
substance satisfactory to the Underwriters, to the effect that:
<PAGE>
Morgan Stanley & Co.
Incorporated
-13- __________, 1994
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
Commonwealth of Pennsylvania and has all corporate power and authority
necessary to own or hold its properties and conduct its businesses in
the manner contemplated in the Prospectus;
(ii) The Shares have been duly and validly authorized and
issued and are fully paid and non-assessable;
(iii) The Registration Statement has become effective and, to
the knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceeding for that purpose is pending or threatened by the Commission;
(iv) The Registration Statement and the Prospectus
(including all documents incorporated by reference therein) and any
further amendments or supplements thereto made by the Company prior to
the Closing Date (other than the financial statements and related
schedules and other financial and statistical data included therein, as
to which such counsel need express no opinion) comply as to form in all
material respects with the requirements of the Securities Act, the
Exchange Act and the applicable rules and regulations thereunder;
(v) The Shares and the capital stock of the Company conform
in all material respects to the statements concerning them in or
incorporated by reference in the Registration Statement and the
Prospectus; and the provisions of the contracts, agreements and
instruments (as the same may be in effect on the Closing Date)
summarized in the Prospectus, any supplement thereto or any document
incorporated by reference therein, conform in all material respects to
the descriptions thereof in the Prospectus, any supplement thereto or
any document incorporated by reference therein;
(vi) To such counsel's knowledge, there are no contracts or
other documents which are required to be filed as exhibits to the
Registration Statement by the Securities Act or by the Rules and
Regulations which have not been filed as exhibits to the Registration
Statement;
(vii) This Agreement has been duly authorized, executed and
delivered by the Company;
<PAGE>
Morgan Stanley & Co.
Incorporated
-14- __________, 1994
(viii) The compliance by the Company with all of the
provisions of this Agreement, the Shares and the consummation of the
transactions contemplated hereby will not conflict with or result in a
breach of violation of any of the terms or provisions of, or constitute
a default under, any indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument, the conflict, breach, violation, or
default of which would have a materially adverse affect on the business,
properties, financial position, stockholders' equity or results of
operations of the Company and its subsidiaries taken as a whole, nor
will such actions result in any violation of the provisions of the
charter or bylaws of the Company or any violation of any statute or any
order, rule or regulation known to such counsel of any court or
governmental agency or body having jurisdiction over the Company or any
of its subsidiaries or any of their properties or assets; and, except
for the registration of the Shares under the Securities Act and such
consents, approvals, authorizations, registrations or qualifications as
may be required under the Exchange Act and applicable state or foreign
securities laws in connection with the purchase and distribution of the
Shares by the Underwriters, no consent, approval, authorization or order
of, or filing, or registration with, any such court or governmental
agency or body is required for the execution, delivery and performance
of this Agreement by the Company and the consummation of the
transactions contemplated hereby; and
(ix) The Company is not required to be registered, and is
not regulated, as an "investment company" as such term is defined under
the Investment Company Act of 1940.
In addition, such counsel shall state that such counsel has participated in
conferences with officers of the Company at which the Registration Statement
was discussed, and although he is not passing upon and does not assume any
responsibility for, and shall not be deemed to have independently verified,
the accuracy, completeness or fairness of the statements contained or
incorporated by reference in the Registration Statement and Prospectus
(except as and to the extent set forth in subparagraph (v) above), on the
basis of the foregoing, no facts have come to the attention of such counsel
which lead him to believe that the Registration Statement, as of the
Effective Time, contained an untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to make
the statements therein not misleading, or that the Prospectus, as of the
date of such opinion, contains an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances
<PAGE>
Morgan Stanley & Co.
Incorporated
-15- __________, 1994
under which they were made, not misleading (except that, in each case, such
counsel need express no comment with respect to the financial statements and
related schedules, other financial and statistical data included in the
Registration Statement or the Prospectus).
In rendering such opinion, such counsel may rely as to matters of fact
upon certificates of officers of the Company and its subsidiaries and public
officials and include such limitations and assumptions as are customarily
contained in opinions given by counsel for issuers in securities
transactions.
With respect to certain matters relating to the law of the State of New
York, such counsel may rely on the opinion of counsel to the Underwriters.
(f) You shall have received on the Closing Date an opinion of Pepper,
Hamilton & Scheetz, counsel for Glenmede, the Trustee and the Charitable
Trusts, dated the Closing Date, in form and substance satisfactory to the
Underwriters, to the effect that:
(i) each Charitable Trust was duly established by execution
of a trust agreement, and the Trustee is the duly appointed and
incumbent trustee of each such Charitable Trust and such trust agreement
duly empowers such Trustee, on behalf of such Charitable Trust, to
execute and deliver this Agreement and to sell the Shares being sold to
the Underwriters by such Charitable Trust;
(ii) this Agreement has been duly authorized, executed and
delivered by or on behalf of each Charitable Trust, the Trustee and
Glenmede, and all authorizations and consents necessary for the
execution and delivery by each Charitable Trust, the Trustee and
Glenmede of this Agreement have been given and are in full force and
effect on the date hereof;
(iii) the execution, delivery and performance of this
Agreement will not conflict with or result in a breach or violations of
any of the terms or provisions of, or constitute as default under, any
provision of applicable law, or any agreement or other instrument known
to such counsel pursuant to which any Charitable Trust was established
or binding upon any Charitable Trust and no consent, approval or
authorization of any governmental body is required for the performance
by any Charitable Trust of this Agreement, except such as are specified
and have been obtained;
<PAGE>
Morgan Stanley & Co.
Incorporated
-16- __________, 1994
(iv) each Charitable Trust has valid marketable title to the
Shares to be sold by such Charitable Trust and has the legal right and
power, and all authorization and approval required by law, to enter into
this Agreement and to sell, transfer and deliver the Shares to be sold
by such Charitable Trust;
(v) delivery of the certificates for the Shares to be sold
by each Charitable Trust pursuant to this Agreement will pass marketable
title to such Shares free and clear of any security interests, claims,
liens, equities and other encumbrances;
(vi) Glenmede is a trust company (without banking powers)
duly organized, validly existing and in good standing under the laws of
the Commonwealth of Pennsylvania; and Glenmede is duly qualified to
transact business and is in good standing as a foreign corporation in
each jurisdiction in which the failure to so qualify or be in good
standing would have a material adverse effect, or a prospective material
adverse effect, on the condition (financial or otherwise), earnings,
business or operations of Glenmede and its subsidiaries, considered as
one enterprise;
(vii) the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby
will not conflict with or result in a breach or violation of any or the
terms or provisions of, or constitute a default under, any material
agreement, instrument, decree, judgment or order to which Glenmede is a
party or by which Glenmede may be bound or to which any material portion
of the properties of Glenmede may be subject.
In rendering such opinion, such counsel may rely as to matters of fact
upon certificates of officers of the Company and its subsidiaries and public
officials and include such limitations and assumptions as are customarily
contained in opinions given by counsel for issuers in securities
transactions.
With respect to certain matters relating to the law of the State of New
York, counsel for Glenmede, the Trustee and the Charitable Trusts may rely on
the opinion of counsel for the Underwriters.
(g) You shall have received on the Closing Date an opinion of Simpson
Thacher & Bartlett, counsel for the Underwriters, dated the Closing Date, as
to certain matters.
<PAGE>
Morgan Stanley & Co.
Incorporated
___________, 1994
-17-
With respect to certain matters relating to the laws of the Commonwealth
of Pennsylvania, Simpson Thacher & Bartlett may rely on the opinions of counsel
for the Company and counsel for Glenmede, the Trustee and the Charitable Trusts.
(h) You shall have received on the date hereof and the Closing Date a
letter dated the date hereof or the Closing Date, as the case may be, in
each case in form and substance reasonably satisfactory to you, from
independent public accountants, containing statements and information of the
type ordinarily included in accountants' "comfort letters" to underwriters
with respect to the financial statements and certain financial information
contained in the Registration Statement and the Prospectus.
The several obligations of the Underwriters to purchase Additional
Shares hereunder are subject to the delivery to you on the Option Closing Date
of such opinions of counsel and documents as you may reasonably request with
respect to the good standing of the Company, the due authorization and issuance
of the Additional Shares and other matters related to the issuance of the
Additional Shares.
VI.
The obligations of the Charitable Trusts to deliver certificates for the
Firm Shares or the Additional Shares to be purchased and sold hereunder on the
Closing Date or on the Option Closing Date, as the case may be, are subject to
all of the following conditions:
(a) The Charitable Trusts shall have been tendered payment on the
Closing Date or on the Option Closing Date, as the case may be, for the
Firm Shares or the Additional Shares, as the case may be, as provided in
Article III hereof; and
(b) The conditions set forth in Article V(b), (e) and (h) to the
Underwriters' obligations hereunder shall have been satisfied.
VII.
In further consideration of the agreements of the Company herein
contained, the Charitable Trusts covenant as follows:
(a) The Company shall have received on the Closing Date a certificate,
dated the Closing Date and signed by the Trustee on behalf of each
Charitable Trust, to the effect that the representations and warranties of
such Charitable Trust contained herein are true and correct as of the
Closing Date;
<PAGE>
Morgan Stanley & Co.
Incorporated
-18- ___________, 1994
(b) The Company shall have received on the Closing Date a certificate,
dated the Closing Date and signed by an executive officer of Glenmede, to
the effect that the representations and warranties of Glenmede contained
herein are true and correct as of the Closing Date; and
(c) The Company shall have received on the Closing Date an opinion of
Pepper, Hamilton & Scheetz, counsel for Glenmede, the Trustee and the
Charitable Trusts, dated the Closing Date, in form and substance as set
forth in section V(f) of this Agreement.
VIII.
In further consideration of the agreements of the Underwriters herein
contained, the Company covenants as follows:
(a) To furnish you, without charge, two signed copies of the
Registration Statement and all amendments thereto (including exhibits
thereto) and to each other Underwriter as many conformed copies of the
Registration Statement and all amendments thereto (including exhibits
thereto) as they may reasonably request and, during the period mentioned in
paragraph (c) below, as many copies of the Prospectus and any supplements
and amendments thereto as you and they may reasonably request.
(b) Before amending or supplementing the Registration Statement or the
Prospectus, to furnish you a copy of each such proposed amendment or
supplement, and to file no such proposed amendment or supplement to which
you reasonably object unless such proposed amendment or supplement is, in
the opinion of Counsel to the Company, required by law.
(c) If, during such period after the first date of the public offering
of the Shares as in the opinion of counsel for the Underwriters the
Prospectus is required by law to be delivered in connection with sales by an
Underwriter or dealer, any event shall occur as a result of which it is
necessary to amend or supplement the Prospectus to make the statements
therein, in the light of the circumstances when the Prospectus is delivered
to a purchaser, not misleading, or if in the opinion of counsel for the
Underwriters it is necessary to amend or supplement the Prospectus to comply
with law or any agreement between the Company and the Trustee, Glenmede or
the Charitable Trusts, forthwith to prepare and furnish, at its own expense,
to the
<PAGE>
Morgan Stanley & Co.
Incorporated
-19- ___________, 1994
Underwriters and to the dealers (whose names and addresses you will furnish
to the Company) to which Shares may have been sold by you on behalf of the
Underwriters and to any other dealers upon request, either amendments or
supplements to the Prospectus so that the statements in the Prospectus as so
amended or supplemented will not, in the light of the circumstances when the
Prospectus is delivered to a purchaser, be misleading or so that the
Prospectus will comply with law.
(d) To endeavor to qualify the Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions as you shall reasonably
request and to pay all expenses (including fees and disbursements of
counsel) in connection therewith; provided, that nothing contained in this
Paragraph shall require the Company to qualify as a foreign corporation in
any jurisdiction where the operations and business of the Company would not
otherwise require such qualification.
(e) To make generally available to the Company's security holders as
soon as practicable an earning statement covering the twelve-month period
ending ______________________, 19__, that satisfies the provisions of
Section 11(a) of the Securities Act and the Rules and Regulations
(including, at the option of the Company, Rule 158).
IX.
The Company and each Charitable Trust, severally and not jointly, agree
to pay or cause to be paid, in such proportion as they shall agree, all taxes,
if any, on the transfer and sale of the Shares being sold by the Charitable
Trusts and all costs and expenses incident to the performance of the obligations
of the Company and the Charitable Trusts under this Agreement, including, but
not limited to, all expenses incident to the delivery of the Shares, the fees
and expenses of counsel and accountants for the Trustee, the Charitable Trusts
and the Company, the costs and expenses incident to the preparation, printing
and filing of the Registration Statement (including all exhibits thereto) and
the Prospectus and any amendments or supplements thereto, the expenses of
qualifying the Shares under the securities or Blue Sky laws of various
jurisdictions, any fees payable or expenses in connection with the listing of
the Shares on any securities exchange and the cost of furnishing to the
Underwriters the required copies of the Registration Statement and Prospectus
and any amendments or supplements thereto.
<PAGE>
Morgan Stanley & Co.
Incorporated
-20- ___________, 1994
X.
The Company agrees to indemnify and hold harmless each Underwriter,
Glenmede and each Charitable Trust and each person, if any, who controls any
Underwriter, Glenmede or such Charitable Trust within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act from and
against any and all losses, claims, damages and liabilities (including without
limitation, any legal or other expenses reasonably incurred in connection with
defending or investigating any such claim) caused by any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or any amendment thereof, or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) or any preliminary prospectus, or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except (i) with respect
to the Charitable Trusts or Glenmede insofar as such losses, claims, damages or
liabilities are caused by any such untrue statement or omission or alleged
untrue statement or omission based upon information relating to the Charitable
Trusts or Glenmede furnished to the Company in writing by or on behalf of any
Charitable Trust or Glenmede expressly for use in the Registration Statement or
any amendment thereof, the Prospectus (as amended or supplemented if the Company
shall have furnished any amendments or supplements thereto), or any preliminary
prospectus; and (ii) with respect to the Underwriters insofar as such losses,
claims, damages or liabilities are caused by any such untrue statement or
omission or alleged untrue statement or omission based upon information relating
to the Underwriters furnished to the Company in writing by or on behalf of any
Underwriter expressly for use in the Registration Statement or any amendment
thereof, the Prospectus (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto), or any preliminary prospectus.
Glenmede, in its individual capacity, agrees to indemnify and hold
harmless each Underwriter and each person, if any, who controls any Underwriter
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act and the Company, its directors, its officers who sign the
Registration Statement and each person, if any, who controls the Company within
the meaning of either such Section, from and against any and all losses, claims,
damages and liabilities (including, without limitation, any legal or other
expenses reasonably incurred in connection with defending or investigating any
such claim) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or any amendment thereof,
or the Prospectus (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) or any preliminary prospectus,
or caused by any omission or alleged
<PAGE>
Morgan Stanley & Co.
Incorporated
-21- ___________, 1994
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, but only with reference
to information relating to the Sellers furnished in writing by or on behalf of
the Sellers expressly for use in the Registration Statement, the Prospectus, any
preliminary prospectus or any amendment or supplement thereto. The statements
set forth under the caption "Selling Shareholders" in the Registration Statement
or any amendments or supplements thereto or in any preliminary prospectus or any
amendments or supplements thereto or in the Prospectus or any amendments or
supplements thereto constitute the only written information furnished by or on
behalf of any of the Charitable Trusts, the Trustee or Glenmede referred to in
Articles IV and X hereof.
Each Underwriter agrees, severally and not jointly, to indemnify and
hold harmless Glenmede, the Charitable Trusts, the Company, the directors of the
Company, the officers of the Company who sign the Registration Statement and
each person, if any, who controls the Company, Glenmede or any Charitable Trust
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses,
reasonably incurred in connection with defending or investigating any such
claim) caused by any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement or any amendment thereof or the
Prospectus (as amended or supplemented if the Company shall have furnished any
amendments or supplements thereto) or any preliminary prospectus, or caused by
any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, but
only with reference to information relating to such Underwriter furnished to the
Company in writing by such Underwriter through you expressly for use in the
Registration Statement, the Prospectus, any preliminary prospectus or any
amendment or supplement thereto.
In case any proceeding (including any governmental investigation) shall
be instituted involving any person in respect of which indemnity may be sought
pursuant to any of the three preceding paragraphs, such person (hereinafter
called the indemnified party) shall promptly notify the person against whom such
indemnity may be sought (hereinafter called the indemnifying party) in writing
and the indemnifying party, upon request of the indemnified party, shall retain
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party and any others the indemnifying party may designate in such
proceeding and shall pay the fees and disbursements of such counsel related to
such proceeding. In any such proceeding, any indemnified party shall have the
right to retain its own counsel, but the fees and expenses of such counsel shall
be at the expense of such indemnified party unless (i) the indemnifying party
and the indemnified party shall have mutually agreed to the retention of such
counsel or (ii) the named parties to any such
<PAGE>
Morgan Stanley & Co.
Incorporated
-22- ___________, 1994
proceeding (including any impleaded parties) include both the indemnifying party
and the indemnified party and representation of both parties by the same counsel
would be inappropriate due to actual or potential differing interests between
them. It is understood that the indemnifying party shall not, in connection with
any proceeding or related proceedings in the same jurisdiction, be liable for
(a) the fees and expenses of more than one separate firm (in addition to any
local counsel) for all Underwriters and all persons, if any, who control any
Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, (b) the fees and expenses of more than one
separate firm (in addition to any local counsel) for the Company, its directors,
its officers who sign the Registration Statement and each person, if any, who
controls the Company within the meaning of either such Section and (c) the fees
and expenses of more than one separate firm (in addition to any local counsel)
for all Charitable Trusts and Glenmede and all persons, if any, who control any
Charitable Trust or Glenmede within the meaning of either such Section, and that
all such fees and expenses shall be reimbursed as they are incurred. In the case
of any such separate firm for the Underwriters and such control persons of
Underwriters, such firm shall be designated in writing by Morgan Stanley & Co.
Incorporated. In the case of any such separate firm for the Company and such
directors, officers and control persons of the Company, such firm shall be
designated in writing by the Company. In the case of any such separate firm for
the Charitable Trusts and Glenmede and such controlling persons of the
Charitable Trusts and Glenmede, such firm shall be designated in writing by the
Trustee, or its appointed successor. The indemnifying party shall not be liable
for any settlement of any proceeding effected without its written consent, but
if settled with such consent or if there be a final judgment for the plaintiff,
the indemnifying party agrees to indemnify the indemnified party from and
against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by the second and third
sentences of this paragraph, the indemnifying party agrees that it shall be
liable for any settlement of any proceeding effected without its written consent
if (i) such settlement is entered into more than 30 days after receipt by such
indemnifying party of the aforesaid request and (ii) such indemnifying party
shall not have reimbursed the indemnified party in accordance with such request
prior to the date of such settlement. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement of any
pending or threatened proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such proceeding.
<PAGE>
Morgan Stanley & Co.
Incorporated
-23- ___________, 1994
If the indemnification provided for in the first, second or third
paragraph of this Article X is unavailable to an indemnified party or
insufficient in respect of any losses, claims, damages or liabilities referred
to therein, then each indemnifying party under such paragraphs, in lieu of
indemnifying such indemnified party thereunder, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities (i) in such proportion as is appropriate to reflect the
relative benefits received by the indemnifying party or parties on the one hand
and the indemnified party or parties on the other hand from the offering of the
Shares or (ii) if the allocation provided by clause (i) is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the indemnifying party or parties on the one hand and of the indemnified party
or parties on the other hand in connection with the statements or omissions that
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative benefits received by the
Charitable Trusts on the one hand and the Underwriters on the other hand in
connection with the offering shall be deemed to be in the same respective
proportions as the net proceeds from the offering (before deducting expenses)
received by the Charitable Trusts and the total underwriting discounts and
commissions received by the Underwriters, in each case as set forth in the table
on the cover of the Prospectus, bear to the aggregate public offering price of
the Shares. Notwithstanding the immediately preceding sentence, if the losses,
claims, damages or liabilities in respect of which contribution is being
sought are caused by any untrue statement or alleged untrue statement of a
material fact or any omission or alleged omission to state a material fact other
than any such statements or omissions based upon information (i) relating to
Underwriters furnished to the Company in writing by or on behalf of any
Underwriter or (ii) relating to the Charitable Trusts furnished to the Company
in writing by or on behalf of Charitable Trusts, then the relative benefits
received by the Company on the one hand and the Underwriters on the other hand
in connection with the offering of the Shares shall be deemed to be in the same
respective proportions as the net proceeds from the offering of the Shares
(before deducting expenses) received by the Charitable Trusts (notwithstanding
that the Company receives none of such proceeds) and the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover of the Prospectus, bear to the aggregate public
offering price of the Shares; and, in such case, the parties hereto agree that
for purposes of this sentence only, the Charitable Trusts and Glenmede would be
deemed to receive no benefits from the offering of the Shares. The relative
fault of the Sellers on the one hand and the Company on the one hand and the
Underwriters on the other hand shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Sellers, the Company or the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
<PAGE>
Morgan Stanley & Co.
Incorporated
-24- ___________, 1994
The Sellers, the Company and the Underwriters agree that it would not be
just and equitable if contribution pursuant to this Article X were determined
by pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation that does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Article X, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Shares underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages that such Underwriter
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to contribute
pursuant to this Article X are several in proportion to the respective number
of Shares they have agreed to purchase hereunder, and not joint. The remedies
provided for in this Article X are not exclusive and shall not limit any
rights or remedies which may otherwise be available to any indemnified party at
law or in equity.
The indemnity and contribution agreements contained in this Article X
and the representations and warranties of the Company and the Sellers contained
in this Agreement shall remain operative and in full force and effect regardless
of (i) any termination of this Agreement, (ii) any investigation made by or on
behalf of any Underwriter or any person controlling any Underwriter, any Seller
or any person controlling any Seller or the Company, its officers or directors
or any other person controlling the Company and (iii) acceptance of and payment
for any of the Shares.
XI.
This Agreement shall be subject to termination in your absolute
discretion, by notice given to the Company, if (a) after the execution and
delivery of this Agreement and prior to the Closing Date (i) trading generally
shall have been suspended or materially limited on or by, as the case may be,
any of the New York Stock Exchange, the American Stock Exchange, the National
Association of Securities Dealers, Inc., the Chicago Board Options Exchange, the
Chicago Mercantile Exchange or the Chicago Board of Trade, (ii) trading of any
securities of the Company shall have been suspended on any exchange or in
<PAGE>
Morgan Stanley & Co.
Incorporated
-25- ___________, 1994
any over-the-counter market, (iii) a general moratorium on commercial banking
activities in New York shall have been declared by either Federal or New York
State authorities or (iv) there shall have occurred any outbreak or escalation
of hostilities or any change in financial markets or any calamity or crisis
that, in your judgment, is material and adverse and (b) in the case of any of
the events specified in clauses (a)(i) through (iv), such event singly or
together with any other such event makes it, in your judgment, impracticable to
market the Shares on the terms and in the manner contemplated in the Prospectus.
XII.
This Agreement shall become effective upon the later of (x) execution
and delivery hereof by the parties hereto and (y) release of notification of the
effectiveness of the Registration Statement by the Commission.
If, on the Closing Date or the Option Closing Date, as the case may be,
any one or more of the Underwriters shall fail or refuse to purchase Shares that
it or they have agreed to purchase hereunder on such date, and the aggregate
number of Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase is not more than one-tenth of the aggregate number
of the Shares to be purchased on such date, the other Underwriters shall be
obligated severally in the proportions that the number of Firm Shares set forth
opposite their respective names in Schedule II bears to the aggregate number of
Firm Shares set forth opposite the names of all such non-defaulting
Underwriters, or in such other proportions as you may specify, to purchase the
Shares which such defaulting Underwriter or Underwriters agreed but failed or
refused to purchase on such date; provided that in no event shall the number of
Shares that any Underwriter has agreed to purchase pursuant to Article I be
increased pursuant to this Article XII by an amount in excess of one-ninth of
such number of Shares without the written consent of such Underwriter. If, on
the Closing Date or the Option Closing Date, as the case may be, any Underwriter
or Underwriters shall fail or refuse to purchase Shares and the aggregate number
of Shares with respect to which such default occurs is more than one-tenth of
the aggregate number of Shares to be purchased on such date, and arrangements
satisfactory to you, the Company and the Charitable Trusts for the purchase of
such Shares are not made within 36 hours after such default, this Agreement
shall terminate without liability on the part of any non-defaulting Underwriter,
the Company, Glenmede or the Charitable Trusts. In any such case either you, the
Company, Glenmede or the Charitable Trusts shall have the right to postpone the
Closing Date or the Option Closing Date, as the case may be, but in no event for
longer than seven days, in order that required changes, if any, in the
Registration Statement and in the Prospectus or in any
<PAGE>
Morgan Stanley & Co.
Incorporated
-26- ___________, 1994
other documents or arrangements may be effected. Any action taken under this
paragraph shall not relieve any defaulting Underwriter from liability in respect
of any default of such Underwriter under this Agreement.
If this Agreement shall be terminated by the Underwriters, or any of
them, because of any failure or refusal on the part of either the Company or the
Sellers to comply with the terms or to fulfill any of the conditions of this
Agreement, or if for any reason either the Company or the Sellers shall be
unable to perform their obligations under this Agreement, the Company or the
Sellers, as the case may be, will reimburse the Underwriters or such
Underwriters as have so terminated this Agreement with respect to themselves,
severally, for all out-of-pocket expenses (including the fees and disbursements
of their counsel) reasonably incurred by such Underwriters in connection with
this Agreement or the offering contemplated hereunder.
This Agreement may be signed in two or more counterparts, each of which
shall be an original, with the same effect as if the signatures thereto and
hereto were upon the same instrument.
<PAGE>
Morgan Stanley & Co.
Incorporated
-27- ___________, 1994
This Agreement shall be governed by and construed in accordance with the
internal laws of the State of New York.
Very truly yours,
SUN COMPANY, INC.
By:_______________________________
Title:
THE CHARITABLE TRUSTS named in
Schedule I hereto, acting severally
By: THE GLENMEDE TRUST COMPANY,
Trustee for the Charitable Trusts
and not in its individual capacity
By:________________________________
Title:
THE GLENMEDE TRUST COMPANY, in
its individual capacity
By:________________________________
Title:
<PAGE>
Morgan Stanley & Co.
Incorporated
-28- ___________, 1994
Accepted, ________________________, 1994
MORGAN STANLEY & CO.
INCORPORATED
Acting severally on behalf of
themselves and the several
Underwriters named
in Schedule II.
By: MORGAN STANLEY & CO.
INCORPORATED
By:_______________________________
Title:
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
Date of Number of
Trust Name of Shares
Charitable Trust Agreement Trustee To Be Sold
- ----------------- --------- ------- ----------
<S> <C> <C> <C>
</TABLE>
<PAGE>
SCHEDULE II
<TABLE>
<CAPTION>
Number of Firm
Shares
Underwriters To Be Purchased
------------ ---------------
<S> <C>
Morgan Stanley & Co. Incorporated
CS First Boston Incorporated
Smith Barney Inc.
8,000,000
---------
</TABLE>
<PAGE>
Exhibit 23.1
CONSENT OF COUNSEL
I hereby consent to the use of my name under the caption "Legal Opinions"
in a Prospectus included in the Registration Statement on Form S-3 of Sun
Company, Inc. filed with the Securities and Exchange Commission on the date
hereof.
JACK L. FOLTZ
Philadelphia, Pennsylvania
November 4, 1994
<PAGE>
Exhibit 23.2
CONSENT OF COUNSEL
I hereby consent to the use of my name under the caption "Legal Opinions"
in a Prospectus included in the Registration Statement on Form S-3 of Sun
Company, Inc. filed with the Securities and Exchange Commission on the date
hereof.
JONATHAN C. WALLER
Philadelphia, Pennsylvania
November 4, 1994
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Registration Statement
on Form S-3 of our reports dated February 15, 1994 (which include an explanatory
paragraph regarding the Company's change in method of accounting for income
taxes in 1993, the Company's change in method of accounting for the cost of
postretirement health care and life insurance benefits in 1992 and the Company's
change in method of accounting for the cost of crude oil and refined product
inventories at Suncor Inc., the Company's Canadian subsidiary, in 1991) on our
audits of the consolidated financial statements and financial statement
schedules of Sun Company, Inc. and subsidiaries as of December 31, 1993 and
1992, and for each of the three years in the period ended December 31, 1993,
which reports are included or incorporated by reference in the Sun Company, Inc.
Annual Report on Form 10-K, as amended, for the year ended December 31, 1993.
We also consent to the reference to our firm set forth under the caption
"Experts" in this Registration Statement.
COOPERS & LYBRAND L.L.P
2400 Eleven Penn Center
Philadelphia, PA 19103
November 3, 1994
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, That the undersigned officers and/or
directors of Sun Company, Inc., a Pennsylvania corporation ("Company"), which
intends to file with the Securities and Exchange Commission, under the
provisions of the Securities Act of 1933, as amended, a Registration Statement
on Form S-3 with respect to registration under said Act of shares of the
Company's common stock beneficially owned by The Glenmede Trust Company, each
hereby constitutes and appoints the Senior Vice President and Chief Financial
Officer, the Corporate Secretary, and the Comptroller, and each of them, his or
her true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him or her to act in his or her name, place
and stead, in any and all capacities, to sign said Registration Statement and
any related documents, including any and all future amendments thereto, and to
file such Registration Statement and any amendments, with all exhibits thereto,
and any and all documents in connection therewith, 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, as fully to all intents and purposes
as he or she might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or either of them, or their or his or
her substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
<PAGE>
IN WITNESS WHEREOF, the undersigned have hereunto set their hands and seals
this 3rd day of November, 1994.
/s/ROBERT M. AIKEN, JR.
Robert M. Aiken, Jr.
Senior Vice President and Chief
Financial Officer
(Principal Financial Officer)
/s/DONALD J. AINSWORTH
Donald J. Ainsworth
Corporate Secretary
/s/ROBERT H. CAMPBELL
Robert H. Campbell
Chairman of the Board, Chief
Executive Officer, President and
Director (Principal Executive
Officer)
/s/RAYMOND E. CARTLEDGE
Raymond E. Cartledge
Director
/s/RICHARD L. CARTLIDGE
Richard L. Cartlidge
Comptroller
(Principal Accounting Officer)
/s/ROBERT E. CAWTHORN
Robert E. Cawthorn
Director
/s/MARY J. EVANS
Mary J. Evans
Director
/s/THOMAS P. GERRITY
Thomas P. Gerrity
Director
/s/JAMES G. KAISER
James G. Kaiser
Director
/s/THOMAS W. LANGFITT
Thomas W. Langfitt
Director
/s/R. ANDERSON PEW
R. Anderson Pew
Director
/s/ALBERT E. PISCOPO
Albert E. Piscopo
Director
/s/WILLIAM F. POUNDS
William F. Pounds
Director
Alexander B. Trowbridge
Director
