<PAGE>
Rule No. 424(b)(5)
Registration No. 033-53717
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED OCTOBER 25, 1994
$150,000,000
Sun Company, Inc.
8 1/8% Notes Due 1999
Interest Payable May 1 and November 1 Due November 1, 1999
------------
The Notes are not redeemable prior to maturity.
Concurrent with the offering of the Notes, the Company is making a public
offering through a separate prospectus of $100,000,000 principal amount of
Debentures Due 2024 (the "Debenture Offering"). This offering is not contingent
upon the consummation of the Debenture Offering.
------------
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 SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
Underwriting
Price to Discounts and Proceeds to
Public (1) Commissions Company (1)(2)
------------ ------------- --------------
<S> <C> <C> <C>
Per Note................................... 99.927% .625% 99.302%
Total...................................... $149,890,500 $937,500 $148,953,000
</TABLE>
(1) Plus accrued interest, if any, from November 1, 1994 to date of delivery.
(2) Before deducting certain expenses payable by the Company estimated at
$65,000.
------------
The Notes are offered by the several Underwriters when, as and if issued by
the Company, delivered to and accepted by the Underwriters and subject to their
right to reject orders in whole or in part. It is expected that delivery of the
Notes will be made on or about November 1, 1994.
CS First Boston
BT Securities Corporation
Goldman, Sachs & Co.
The date of this Prospectus Supplement is October 25, 1994.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES OFFERED
HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
DESCRIPTION OF NOTES
The following description of the terms of the 8 1/8% Notes Due 1999 (the
"Notes") offered hereby supplements and modifies the description of the general
terms and provisions of the Debt Securities set forth in the accompanying
Prospectus, to which reference is hereby made.
GENERAL
The Notes will be Senior Debt Securities issued under the Indenture dated as
of May 15, 1994 between the Company and Citibank, N.A., Trustee (the "Senior
Indenture"). The Notes will be limited to $150,000,000 aggregate principal
amount and will mature on November 1, 1999. The Notes will bear interest at the
rate of 8 1/8% per annum from November 1, 1994 or from the most recent interest
payment date to which interest has been paid or provided for, payable
semiannually on May 1 and November 1 of each year, commencing on May 1, 1995,
to the persons in whose names the Notes are registered at the close of business
on April 15 or October 15, as the case may be, next preceding such interest
payment date. The Notes will be issued only in registered form without coupons
in denominations of $1,000 and integral multiples thereof. Principal and
interest will be payable, and the Notes will be transferable or exchangeable,
at the office or agency of the Company maintained for such purposes in the
Borough of Manhattan, the City of New York, provided that payment of interest
on any Notes may, at the option of the Company, be made by check mailed to the
registered Holders thereof.
The Notes are not redeemable prior to maturity.
The defeasance provisions of the Senior Indenture shall apply to the Notes.
USE OF PROCEEDS
The net proceeds from the sale of the Notes offered hereby are expected to be
approximately $148,888,000 (if the Debenture Offering is completed, combined
net proceeds will be approximately $247,063,000) and will be used to repay
commercial paper as it matures. Pending such use, the net proceeds may be
invested temporarily in cash and cash equivalents or short-term investments or
used to reduce other short-term indebtedness of the Company. As of September
30, 1994, Sun had $450 million of commercial paper outstanding, bearing
interest at rates ranging from 5.02% to 5.85% per annum with remaining
maturities up to five months. The commercial paper was issued primarily to fund
Sun's ongoing working capital requirements.
S-2
<PAGE>
UNDERWRITING
Under the terms and subject to the conditions contained in a Terms Agreement
dated the date hereof and the Underwriting Agreement Basic Provisions dated May
20, 1994 (together, the "Underwriting Agreement"), the Underwriters named below
(the "Underwriters") have severally, but not jointly agreed to purchase from
the Company the following principal amounts of the Notes:
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OF
UNDERWRITERS THE NOTES
------------ ------------
<S> <C>
CS First Boston Corporation.................................. $ 50,000,000
BT Securities Corporation.................................... 50,000,000
Goldman, Sachs & Co.......................................... 50,000,000
------------
Total..................................................... $150,000,000
============
</TABLE>
The Underwriting Agreement provides that the obligations of the Underwriters
are subject to certain conditions precedent, and that the Underwriters will be
obligated to purchase all the Notes if any are purchased.
The Company has been advised by the Underwriters that the Underwriters
propose to offer the Notes to the public initially at the offering price set
forth on the cover page of this Prospectus Supplement and to certain dealers at
such price less a concession of .375% of the principal amount of the Notes;
that the Underwriters and such dealers may allow a discount of .25% of such
principal amount on sales to certain other dealers; and that after the initial
public offering the public offering price and concession and discount to
dealers may be changed by the Underwriters.
The Notes are a new issue of securities with no established trading market.
The Underwriters have advised the Company that one or more of them intends to
act as a market maker for the Notes. However, the Underwriters are not
obligated to do so and may discontinue any market making activity at any time
without notice. No assurance can be given as to the liquidity of the trading
market for the Notes.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including civil liabilities under the Securities Act of 1933, as
amended, or to contribute to payments which the Underwriters may be required to
make in respect thereof.
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.
S-3
<PAGE>
NOTICE TO CANADIAN RESIDENTS
RESALE RESTRICTIONS
The distribution of the Notes in Canada is being made only on a private
placement basis exempt from the requirement that the Company prepare and file a
prospectus with the securities regulatory authorities in each province where
trades of Notes are effected. Accordingly, any resale of the Notes in Canada
must be made in accordance with applicable securities laws which will vary
depending on the relevant jurisdiction, and which may require resales to be
made in accordance with available statutory exemptions or pursuant to a
discretionary exemption granted by the applicable Canadian securities
regulatory authority. Purchasers are advised to seek legal advice prior to any
resale of the Notes.
REPRESENTATIONS OF PURCHASERS
Each purchaser of Notes in Canada who receives a purchase confirmation will
be deemed to represent to the Company and the dealer from whom such purchase
confirmation is received that (i) such purchaser is entitled under applicable
provincial securities laws to purchase such Notes without the benefit of a
prospectus qualified under such securities laws, (ii) where required by law,
that such purchaser is purchasing as principal and not as agent, and (iii) such
purchaser has reviewed the text above under "Resale Restrictions".
RIGHTS OF ACTION AND ENFORCEMENT
The securities being offered are those of a foreign issuer and Ontario
purchasers will not receive the contractual right of action prescribed by
section 32 of the Regulation under the Securities Act (Ontario). As a result,
Ontario purchasers must rely on other remedies that may be available, including
common law rights of action for damages or rescission or rights of action under
the civil liability provisions of the U.S. federal securities laws.
All of the issuer's directors and officers as well as the experts named
herein may be located outside of Canada and, as a result, it may not be
possible for Ontario purchasers to effect service of process within Canada upon
the issuer or such persons. All or a substantial portion of the assets of the
issuer and such persons may be located outside of Canada and, as a result, it
may not be possible to satisfy a judgment against the issuer or such persons in
Canada or to enforce a judgment obtained in Canadian courts against such issuer
or persons outside of Canada.
NOTICE TO BRITISH COLUMBIA RESIDENTS
A purchaser of Notes to whom the Securities Act (British Columbia) applies is
advised that such purchaser is required to file with the British Columbia
Securities Commission a report within ten days of the sale of any Notes
acquired by such purchaser pursuant to this offering. Such report must be in
the form attached to British Columbia Securities Commission Blanket Order BOR
#88/5, a copy of which may be obtained from the Company. Only one such report
must be filed in respect of Notes acquired on the same date and under the same
prospectus exemption.
S-4
<PAGE>
PROSPECTUS
Sun Company, Inc.
Debt Securities
Preference Stock
Common Stock
Warrants
Sun Company, Inc. (the "Company") from time to time may offer one or more
series of its unsecured debt securities (the "Debt Securities"), its Cumulative
Preference Stock (the "Preference Stock"), its Common Stock, $1 par value (the
"Common Stock" and together with the Preference Stock, the "Equity
Securities"), warrants to purchase the Debt Securities or Equity Securities
(the "Warrants") or any combination of the foregoing (such as, among other
combinations, Debt Securities convertible into Equity Securities, Debt or
Equity Securities offered with Warrants, or Debt Securities and Equity
Securities offered together). The aggregate offering price of the Debt
Securities, the Equity Securities, and the Warrants offered hereby (the
"Securities") will not exceed $700,000,000 (or the equivalent thereof if Debt
Securities are denominated in foreign currencies or foreign currency units).
The Securities may be offered as separate series or in units with other
Securities in amounts, at prices and with terms to be determined at or prior to
the time of sale.
The specific terms of the Securities being offered will be set forth in an
accompanying Prospectus Supplement (the "Prospectus Supplement"), together with
the terms of the offering of the Securities, the initial offering price and the
net proceeds to the Company from the sale thereof. The Prospectus Supplement
will set forth, among other matters, the following: (1) in the case of Debt
Securities, the specific designation, aggregate principal amount, ranking as
senior debt (the "Senior Debt Securities") or subordinated debt (the
"Subordinated Debt Securities"), authorized denominations, maturity, rate or
method for calculation of interest and dates for the payment thereof, any
conversion, redemption, prepayment or sinking fund provisions, and the
currency, currencies or currency units in which principal, premium, if any, or
interest, if any, is payable; (2) in the case of Preference Stock, the
designation, number of shares offered, stated value, liquidation preference,
dividend rate (or method of calculation thereof), dates on which dividends are
to be payable and dates from which dividends shall accrue, any redemption or
sinking fund provisions, voting rights and any conversion or exchange features;
(3) in the case of Common Stock, the number of shares offered and the terms of
the offering and sale thereof; (4) in the case of Warrants, the designation,
number of Warrants offered, number or principal amount of Equity Securities or
Debt Securities issuable upon exercise, exercise price and, where applicable,
the duration and detachability of the Warrants; and (5) in the case of all
Securities, whether they are being sold separately or as a unit with other
Securities. The Prospectus Supplement will also contain information, where
applicable, about certain United States Federal income tax considerations
relating to, and any listing on a securities exchange of, the Securities
covered by the Prospectus Supplement.
The Company may sell the Securities to or through underwriters or directly to
purchasers, agents, dealers or through brokers. The names of underwriters,
dealers, or agents, if any, will be identified in the Prospectus Supplement.
------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECU-RITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR AD- EQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
------------
The date of this Prospectus is October 25, 1994.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 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 Current Reports on Form 8-K dated February 24, 1994 and
October 24, 1994.
3. The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1994 and June 30, 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
2
<PAGE>
THE COMPANY
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.
The Company, through its subsidiaries, is principally a petroleum refiner and
marketer with interests in oil and gas exploration and production and oil sands
mining. 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 also has interests in coal, real estate and leasing operations in the
United States. Each of these businesses is subject to a plan of disposition
which management is actively pursuing.
USE OF PROCEEDS
The net proceeds from the sale of the Securities will be added to the general
funds of Sun and used for general corporate purposes, including working capital
and capital expenditures. The proceeds may also be used to repay indebtedness
of Sun.
SUMMARY OF FINANCIAL INFORMATION
The following table represents selected financial data of Sun for each of the
five years in the period ended December 31, 1993. Reference is made to the
detailed information and financial statements available in the documents
described above under "Incorporation of Certain Documents by Reference." 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 have been
included in income from continuing operations. In addition, the net assets and
liabilities relating to Sun Coal and Radnor have been segregated on the
consolidated balance sheets from their historic classifications to separately
identify them as investments in operations held for sale. The following
financial data reflects this method of presentation.
3
<PAGE>
<TABLE>
<CAPTION>
1993 1992 1991 1990 1989
------ ------- ------- ------- -------
(MILLIONS OF DOLLARS EXCEPT RATIOS)
<S> <C> <C> <C> <C> <C>
FOR THE YEAR ENDED DECEMBER
31:
Sales and other operating
revenue (including consumer
excise taxes).............. $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). $ 426(2) $ (432)(3) $ (108)(4) $ 393 $ 236
Net income (loss)(1)(5)(6).. $ 288(2) $ (559)(3) $ (387)(4) $ 229 $ 98
Ratio of earnings to fixed
charges(7)................. 5.14 N/A N/A 3.91 2.59
AT DECEMBER 31:
Total assets................ $5,900 $ 6,071 $ 7,017 $ 7,852 $ 7,647
Long-term debt.............. $ 726 $ 792 $ 852 $ 832 $ 887
Stockholders' equity........ $1,984 $ 1,896 $ 2,696 $ 3,274 $ 3,254
</TABLE>
- --------
(1) Includes impact of provisions for write-down of assets and other matters of
$23 million ($12 million after tax) in 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 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 $174 million ($121 million after
tax).
(3) Includes impact of gain on Iranian litigation settlement of $178 million
($117 million after tax).
(4) Includes impact of provision for environmental remediation work at various
domestic refining and marketing sites of $118 million ($78 million after
tax).
(5) Includes income (loss) from operations held for sale of $3, $19, $(257), $9
and $(12) million in 1993, 1992, 1991, 1990 and 1989, respectively. (See
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.)
(6) Includes impact of the cumulative effect of a change: in the method of
accounting for income taxes in 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 Annual
Report on Form 10-K for the fiscal year ended December 31, 1993, as
amended, incorporated by reference herein.)
(7) The ratio of earnings to fixed charges has been computed using principally
pretax earnings from continuing operations before the cumulative effect of
a change in accounting principle and before deducting fixed charges. Fixed
charges are comprised of interest cost and debt expense of continuing
operations (including amounts capitalized) and one-third of rental expense
applicable to operating leases (which is that portion deemed to be
interest). For 1992 and 1991, earnings were inadequate to cover fixed
charges by $454 million and $76 million, respectively, as a result of the
$745 million and $156 million provisions for write-down of assets and other
matters.
DESCRIPTION OF THE DEBT SECURITIES
The Debt Securities will be either Senior Debt Securities or Subordinated
Debt Securities and may be issued as convertible Debt Securities. The Senior
Debt Securities will be issued under an Indenture dated as of May 15, 1994 (the
"Senior Indenture") between the Company and Citibank, N.A., Trustee (the
"Senior Trustee"). The Subordinated Debt Securities will be issued under an
Indenture dated as of May 15, 1994 (the "Subordinated Indenture") between the
Company and Bankers Trust Company, Trustee
4
<PAGE>
(the "Subordinated Trustee"). The Senior Indenture and the Subordinated
Indenture are sometimes hereinafter collectively referred to as the
"Indentures." The Senior Trustee and the Subordinated Trustee are sometimes
hereinafter collectively referred to as the "Trustees." References set forth in
the following description of Debt Securities are to sections of both Indentures
unless otherwise indicated. The following description summarizes certain
general terms and provisions of the Debt Securities, is not complete and is
qualified in its entirety by reference to all of the provisions of the
Indentures, including the definitions therein of certain terms. Copies of the
Indentures have been filed as exhibits to the Registration Statement.
Capitalized terms used below but not defined have the meanings assigned in the
Indentures. Further terms of the Debt Securities will be set forth in the
Prospectus Supplement.
GENERAL
The Debt Securities will be direct, unsecured obligations of the Company. The
particular terms of the Debt Securities being offered (the "Offered Debt
Securities"), any modifications of or additions to the general terms of the
Debt Securities as described herein that may be applicable in the case of the
Offered Debt Securities and any applicable Federal income tax considerations
will be described in the Prospectus Supplement relating to the Offered Debt
Securities, which may include the following:
(1) the title of the Offered Debt Securities;
(2) the aggregate principal amount of the Offered Debt Securities;
(3) the date or dates on which or periods during which the Offered Debt
Securities of a series may be issued, or the method by which such date or
dates will be determined, on which the principal of (and premium, if any,
on) such Offered Debt Securities will be payable;
(4) the rate or rates at which the Offered Debt Securities will bear
interest, if any, or the method by which such rate or rates shall be
determined, the date or dates from which such interest, if any, shall
accrue or the method by which such date or dates shall be determined, the
interest payment dates on which such interest shall be payable and, in the
case of Registered Securities, the regular record dates, if any, for the
interest payable on such interest payment dates, and, in the case of
floating rate securities, the notice, if any, to Holders regarding the
determination of interest and the manner of giving such notice;
(5) the place or places, if any, in addition to or instead of the
corporate trust office of the applicable Trustee (in the case of Registered
Securities) or the principal London office of the applicable Trustee (in
the case of Bearer Securities), where the principal of (and premium, if
any) and interest, if any, on the Offered Debt Securities shall be payable,
the extent to which, or the manner in which, any interest payable on any
Global Security on an interest payment date will be paid, and the manner in
which any principal of, or premium, if any, on any Global Security on an
interest payment date will be paid;
(6) any mandatory or optional sinking fund or purchase fund or analogous
provisions;
(7) the period or periods within which, the price or prices at which, and
the terms and conditions upon which the Offered Debt Securities of the
series may be redeemed pursuant to any optional or mandatory redemption
provisions;
(8) any terms pursuant to which the Offered Debt Securities may be
convertible into Debt Securities or Equity Securities;
(9) if the Offered Debt Securities of the series are denominated or
payable in a foreign currency, any other terms concerning the payment of
principal of (and premium, if any) or any interest on the Offered Debt
Securities (including the currency or currencies of payment thereof);
(10) whether the Offered Debt Securities are to be issued in whole or in
part in the form of one or more Global Securities and, if so, the
depositary or any common depositary for such Global Securities, and if the
Offered Debt Securities of the series are issuable only as Registered
Securities;
(11) the terms and conditions, if any, upon which any Global Securities
may be exchanged in whole or in part for other definitive Offered Debt
Securities;
5
<PAGE>
(12) if Bearer Securities are to be issued, (x) whether interest in
respect of any portion of a temporary Offered Debt Security in global form
(representing all of the Outstanding Bearer Securities of the series)
payable in respect of any interest payment date prior to the exchange of
such temporary Offered Debt Security for definitive Offered Debt Securities
of the series shall be paid to any clearing organization with respect to
the portion of such temporary Offered Debt Security held for its account
and, in such event, the terms and conditions (including any certification
requirements) upon which any such interest payment received by a clearing
organization will be credited to the Persons entitled to interest payable
on such interest payment date, and (y) the terms upon which interests in
such temporary Offered Debt Security in global form may be exchanged for
interests in a permanent Global Security or for definitive Offered Debt
Securities of the series and the terms upon which interests in a permanent
Global Security, if any, may be exchanged for definitive Offered Debt
Securities of the series;
(13) any index used to determine the amount of payment of principal or
any premium or interest, if any, on the Offered Debt Securities;
(14) the application, if any, of the defeasance provisions to the Offered
Debt Securities;
(15) whether the Offered Debt Securities of the series are to be issued
as original issue discount securities ("Discount Securities") and the
amount of discount at which such Offered Debt Securities may be issued and,
if other than the principal amount thereof, the portion of the principal
amount of the Offered Debt Securities of the series which shall be payable
upon declaration of acceleration of the Maturity thereof upon an Event of
Default;
(16) whether Offered Debt Securities of the series are to be issued as
Registered Securities or Bearer Securities or both, and if Bearer
Securities are issued, whether any interest coupons appertaining thereto
("Coupons") will be attached thereto, whether Bearer Securities of the
series may be exchanged for Registered Securities of the series and the
circumstances under which and the place or places at which any such
exchanges, if permitted, may be made; and
(17) whether provisions for payment of additional amounts or tax
redemptions shall apply and, if such provisions shall apply, such
provisions; and, if Bearer Securities of the series are to be issued, the
applicable procedures and certificates relating to the exchange of
temporary Global Securities for definitive Bearer Securities;
(18) if other than U.S. dollars, the currency, currencies or currency
units (the term "currency" as used herein will include currency units) in
which the Offered Debt Securities of the series shall be denominated or in
which payment of the principal of (and premium, if any) and interest on the
Offered Debt Securities of the series may be made, and the particular
provisions applicable thereto;
(19) if the principal of (and premium, if any) or interest on Offered
Debt Securities of the series are to be payable, at the election of the
Company or a Holder thereof, in a currency other than that in which the
Offered Debt Securities are denominated or payable without such election,
in addition to or in lieu of the applicable provisions of the Indentures,
the period or periods within which and the terms and conditions upon which,
such election may be made and the time and the manner of determining the
exchange rate or rates between the currency or currencies in which the
Offered Debt Securities are denominated or payable without such election
and the currency or currencies in which the Offered Debt Securities are to
be paid if such election is made;
(20) the date as of which any Offered Debt Securities of the series shall
be dated; and
(21) any other terms of the Offered Debt Securities.
The Indentures do not limit the aggregate principal amount of Debt Securities
which may be issued thereunder. The Debt Securities may be issued from time to
time in one or more series as authorized from time to time by the Board of
Directors of the Company or by any duly authorized officer. (Section 3.01)
In the event that Discount Securities are issued, the Federal income tax
consequences and other special considerations applicable to such Discount
Securities will be described in the Prospectus Supplement relating thereto.
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All of the Debt Securities of a series need not be issued at the same time,
and may vary as to interest rate, maturity and other provisions and unless
otherwise provided, a series may be reopened for issuance of additional Debt
Securities of such series. (Section 3.01)
The Offered Debt Securities of any series may be issued in definitive form
or, if so indicated in the Prospectus Supplement, may be represented in whole
or in part by a global security or securities ("Global Securities"), registered
in the name of a depositary designated by the Company. Each Debt Security
represented by a Global Security is referred to herein as a "Book-Entry
Security." Except with respect to Book-Entry Securities, Debt Securities may be
presented for exchange or registration of transfer, in the manner, at the
places and subject to the restrictions set forth in the Debt Securities and the
Prospectus Supplement.
The Debt Securities are obligations of the Company exclusively. Since a
substantial part of the operations of the Company is conducted through
subsidiaries, the cash flow and the consequent ability to service debt,
including the Debt Securities, of the Company are dependent, in part, upon the
earnings of its subsidiaries and the payment of funds by those subsidiaries to
the Company in the form of loans, dividends or otherwise. The subsidiaries are
separate and distinct legal entities and have no obligation, contingent or
otherwise, to pay any amounts due pursuant to the Debt Securities or to make
any funds available therefor. Moreover, the payment of dividends and the making
of loans and advances to the Company by its subsidiaries are generally
contingent upon the earnings of those subsidiaries and subject to various
business considerations.
Any right of the Company to receive assets of any of its subsidiaries upon
their liquidation or reorganization (and the consequent rights of the Holders
of Debt Securities to participate in those assets) will be effectively
subordinated to the claims of that subsidiary's creditors (including trade
creditors), except to the extent that the Company is itself recognized as a
creditor of such subsidiary. In such case the claims of the Company may still
be subordinate to the claims of creditors secured by the assets of such
subsidiary and any claims of creditors of such subsidiary senior to those held
by the Company.
At June 30, 1994, liabilities of the consolidated subsidiaries of the Company
to which the Debt Securities would have been effectively subordinated,
aggregated approximately $3,125 million, excluding minority interest of $362
million.
SENIOR DEBT SECURITIES
Senior Debt Securities will rank equally with all other unsecured debt of the
Company other than Subordinated Debt Securities or other indebtedness which is
by its terms subordinated to the Senior Debt Securities.
SUBORDINATED DEBT SECURITIES
Subordinated Debt Securities will be subordinate and junior in the right of
payment, to the extent and in the manner set forth in the Subordinated
Indenture, to all present or future Senior Indebtedness. "Senior Indebtedness"
is defined as (a) indebtedness of the Company for money borrowed and (b)
renewals, extensions, and modifications of such indebtedness, unless in any
case it is provided that the particular indebtedness, renewal, extension or
modification is not Senior Indebtedness. (Subordinated Indenture Section 1.01)
If this Prospectus is being delivered in connection with the offering of a
series of Subordinated Debt Securities, the accompanying Prospectus Supplement
or the information incorporated therein by reference will set forth the
approximate amount of Senior Indebtedness outstanding as of a recent date.
Upon any distribution of assets of the Company upon the dissolution, winding
up, liquidation or reorganization of the Company, the payment of the principal
of and premium, if any, and interest on the Subordinated Debt Securities will
be subordinated to the extent provided in the Subordinated Indenture in right
of payment to the prior payment in full of all Senior Indebtedness, including
Senior Debt Securities (Sections 16.01 and 16.02 of the Subordinated
Indenture), but the obligation of the Company to make payment of principal and
premium, if any, or interest on the Subordinated Debt Securities will not
otherwise
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be affected. (Section 16.02 of the Subordinated Indenture) In the event that
any payment on account of principal, premium, if any, sinking fund or interest
made by the Company on the Subordinated Debt Securities at any time when there
is a default in the payment of principal, premium, if any, sinking fund or
interest on Senior Indebtedness is received by the Trustee under the
Subordinated Indenture or the Holders of any of the Subordinated Debt
Securities before all Senior Indebtedness is paid in full, such payment or
distribution shall be paid over to the holders of such Senior Indebtedness or
on their behalf for application to the payment of all such Senior Indebtedness
remaining unpaid until all such Senior Indebtedness shall have been paid in
full, after giving effect to any concurrent payment or distribution to the
holders of such Senior Indebtedness. Subject to payment in full of Senior
Indebtedness, the Holders of the Subordinated Debt Securities will be
subrogated to the rights of the holders of the Senior Indebtedness to the
extent of payments made to the holders of such Senior Indebtedness out of the
distributive share of the Subordinated Debt Securities. (Section 16.02 of the
Subordinated Indenture)
By reason of such subordination, in the event of a distribution of assets
upon insolvency, certain general creditors of the Company may recover more,
ratably, than Holders of the Subordinated Debt Securities. The Subordinated
Indenture provides that the subordination provisions thereof shall not apply to
money and securities held in trusts pursuant to the satisfaction and discharge
and the legal defeasance provisions of the Subordinated Indenture. (Sections
4.02 and 15.02 of the Subordinated Indenture)
CONVERTIBLE DEBT SECURITIES
Debt Securities issued under either the Senior Indenture or the Subordinated
Indenture may provide for a right of conversion into Equity Securities. The
terms and conditions, if any, on which the Debt Securities being offered are
convertible into Equity Securities will be set forth in the Prospectus
Supplement relating thereto. Such terms will include the Equity Securities into
which such Debt Securities are convertible, the conversion price, the
conversion period, provisions as to whether conversion will be at the option of
the Holder or the Company, the events requiring an adjustment of the conversion
price and provisions affecting conversion in the event of the redemption of
such Debt Securities.
DENOMINATIONS, REGISTRATION AND TRANSFER
Unless otherwise specified in the Prospectus Supplement, the Offered Debt
Securities of any series shall be issuable only as Registered Securities in
denominations of $1,000 and any integral multiple thereof and shall be payable
only in U.S. dollars. (Section 3.02) The Indentures also provide that Debt
Securities of a series may be issuable in global form. See "Global Securities."
Unless otherwise indicated in the Prospectus Supplement, Bearer Securities will
have Coupons attached. (Section 2.01)
Registered Securities of any series will be exchangeable for other Registered
Securities of the same series of like principal amount and of like Stated
Maturity and with like terms and conditions. If so provided in the Prospectus
Supplement, at the option of the Holder thereof, to the extent permitted by
law, any Bearer Security of any series which by its terms is registrable as to
principal and interest may be exchanged for a Registered Security of such
series of like aggregate principal amount and of a like Stated Maturity and
with like terms and conditions, upon surrender of such Bearer Security at the
corporate trust office of the applicable Trustee or at any other office or
agency of the Company designated for the purpose of making any such exchanges.
Subject to certain exceptions, any Bearer Security issued with Coupons
surrendered for exchange must be surrendered with all unmatured Coupons and any
matured Coupons in default attached thereto. (Section 3.05)
Notwithstanding the foregoing, the exchange of Bearer Securities for
Registered Securities will be subject to the provisions of United States income
tax laws and regulations applicable to Debt Securities in effect at the time of
such exchange. (Section 3.05)
Except as specified in the Prospectus Supplement, in no event may Registered
Securities, including Registered Securities received in exchange for Bearer
Securities, be exchanged for Bearer Securities. (Section 3.05)
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Upon surrender for registration of transfer of any Registered Security of any
series at the office or agency of the Company maintained for such purpose, the
Company shall deliver, in the name of the designated transferee, one or more
new Registered Securities of the same series of like aggregate principal amount
of such denominations as are authorized for Registered Securities of such
series and of a like Stated Maturity and with the same terms and conditions. No
service charge will be made for any transfer or exchange of Debt Securities,
but the Company may require payment of a sum sufficient to cover any tax or
other governmental charge payable in connection therewith. (Section 3.05)
The Company shall not be required (i) to register, transfer or exchange Debt
Securities of any series during a period beginning at the opening of 15
business days before the day of the transmission of a notice of redemption of
Debt Securities of such series selected for redemption and ending at the close
of business on the day of such transmission, or (ii) to register, transfer or
exchange any Debt Security so selected for redemption in whole or in part,
except the unredeemed portion of any Debt Security being redeemed in part.
(Section 3.05)
GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in part in global
form that will be deposited with, or on behalf of, a depositary identified in
the Prospectus Supplement. Global Securities may be issued in either registered
or bearer form and in either temporary or permanent form (each a "Global
Security"). Payments of principal of (premium, if any) and interest on Debt
Securities represented by a Global Security will be made by the Company to the
applicable Trustee and then by such Trustee to the depositary.
The Company anticipates that any Global Securities will be deposited with, or
on behalf of, The Depository Trust Company, New York, New York ("DTC"), that
such Global Securities will be registered in the name of DTC's nominee, and
that the following provisions will apply to the depositary arrangements with
respect to any such Global Securities. Additional or differing terms of the
depositary arrangements will be described in the Prospectus Supplement relating
to a particular series of Debt Securities issued in the form of Global
Securities.
So long as DTC or its nominee is the registered owner of a Global Security,
DTC or its nominee, as the case may be, will be considered the sole Holder of
the Debt Securities represented by such Global Security for all purposes under
the applicable Indenture. Except as provided below, owners of beneficial
interests in a Global Security will not be entitled to have Debt Securities
represented by such Global Security registered in their names, will not receive
or be entitled to receive physical delivery of Debt Securities in certificated
form and will not be considered the owners or Holders thereof under the
applicable Indenture. The laws of some states require that certain purchasers
of securities take physical delivery of such securities in certificated form;
accordingly, such laws may limit the transferability of beneficial interests in
a Global Security.
If DTC is at any time unwilling or unable to continue as depositary and a
successor depositary is not appointed by the Company within 90 days, the
Company will issue individual Debt Securities in certificated form in exchange
for the Global Securities. In addition, the Company may at any time, and in its
sole discretion, determine not to have any Debt Securities represented by one
or more Global Securities and, in such event, will issue individual Debt
Securities in certificated form in exchange for the relevant Global Securities.
If Registered Securities of any series shall have been issued in the form of
one or more Global Securities and, if an Event of Default with respect to the
Debt Securities of such series shall have occurred and be continuing, the
Company will issue individual Debt Securities in certificated form in exchange
for the relevant Global Securities.
The following is based on information furnished by DTC:
DTC may act as securities depositary for certain of the Debt Securities. The
Debt Securities for which DTC acts as depositary will be issued as Registered
Securities registered in the name of Cede & Co. (DTC's partnership nominee).
One fully registered Debt Security certificate is issued with respect to each
$150 million
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of principal amount of the Debt Securities of a series, and an additional
certificate will be issued with respect to any remaining principal amount of
such series.
DTC is a limited-purpose trust company organized under the Banking Law of the
State of New York, a "banking organization" within the meaning of the Banking
Law of the State of New York, a member of the Federal Reserve System, a
"clearing corporation" within the meaning of the New York Uniform Commercial
Code, and a "clearing agency" registered pursuant to the provisions of Section
17A of the Exchange Act. DTC holds securities that its participants
("Participants") deposit with DTC. DTC also facilitates the settlement among
Participants of securities transactions, such as transfers and pledges, in
deposited securities through electronic computerized book-entry changes in
Participants' accounts, thereby eliminating the need for physical movement of
securities certificates. Direct Participants include securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations ("Direct Participants"). DTC is owned by a number of its Direct
Participants and by the New York Stock Exchange, Inc., the American Stock
Exchange, Inc. and the National Association of Securities Dealers, Inc. Access
to the DTC system is also available to others such as securities brokers and
dealers, banks and trust companies that clear through or maintain a custodial
relationship with a Direct Participant, either directly or indirectly
("Indirect Participants"). The rules applicable to DTC and its Participants are
on file with the Commission.
Purchase of Debt Securities under the DTC system must be made by or through
Direct Participants, which will receive a credit for the Debt Securities on
DTC's records. The ownership interest of each actual purchaser of each Debt
Security ("Beneficial Owner") is in turn recorded on the Direct and Indirect
Participants' records. A Beneficial Owner does not receive written confirmation
from DTC of its purchase, but such Beneficial Owner is expected to receive
written confirmation providing details of the transaction, as well as periodic
statements of its holdings, from the Direct or Indirect Participant through
which such Beneficial Owner entered into the transaction. Transfers of
ownership interests in Debt Securities are accomplished by entries made on the
books of Participants acting on behalf of Beneficial Owners. Beneficial Owners
do not receive certificates representing their ownership interests in Debt
Securities, except in the event that use of the book-entry system for the Debt
Securities is discontinued.
To facilitate subsequent transfers, the Debt Securities are registered in the
name of DTC's partnership nominee, Cede & Co. The deposit of the Debt
Securities with DTC and their registration in the name of Cede & Co., effects
no change in beneficial ownership. DTC has no knowledge of the actual
Beneficial Owners of the Debt Securities; DTC records reflect only the identity
of the Direct Participants to whose accounts Debt Securities are credited,
which may or may not be the Beneficial Owners. The Participants remain
responsible for keeping account of their holdings on behalf of their customers.
Delivery of notices and other communications by DTC to Direct Participants,
by Direct Participants to Indirect Participants, and by Direct Participants and
Indirect Participants to Beneficial Owners is governed by arrangements among
them, subject to any statutory or regulatory requirements as may be in effect
from time to time.
Neither DTC nor Cede & Co. will consent or vote with respect to the Debt
Securities. Under its usual procedures, DTC mails a proxy (an "Omnibus Proxy")
to the issuer as soon as possible after the record date. The Omnibus Proxy
assigns Cede & Co.'s consenting or voting rights to those Direct Participants
to whose accounts the Debt Securities are credited on the record date
(identified on a list attached to the Omnibus Proxy).
Principal and interest payments on the Debt Securities for which DTC acts as
depositary will be made to DTC. DTC's practice is to credit Direct
Participants' accounts on the payable date in accordance with their respective
holdings as shown on DTC's records unless DTC has reason to believe that it
will not receive payment on the payable date. Payments by Participants to
Beneficial Owners will be governed by standing instructions and customary
practices, as is the case with securities held for the accounts of customers in
bearer form or registered in "street name," and will be the responsibility of
such Participant and not of DTC, the
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Paying Agent or the Company, subject to any statutory or regulatory
requirements as may be in effect from time to time. Payment of principal and
interest to DTC is the responsibility of the Company or the Paying Agent,
disbursement of such payments to Direct Participants is the responsibility of
DTC, and disbursement of such payments to the Beneficial Owners is the
responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as securities depositary with
respect to the Debt Securities at any time by giving reasonable notice to the
Company or the Paying Agent. Under such circumstances, in the event that a
successor securities depositary is not appointed by the Company within 90 days,
the Company will issue individual Debt Securities in certificated form in
exchange for the Global Securities.
The Company may decide to discontinue use of the system of book-entry
transfers through DTC (or a successor securities depositary). In that event,
the Company will issue individual Debt Securities in certificated form in
exchange for the Global Securities.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources (including DTC) that the Company believes to be
reliable, but the Company takes no responsibility for the accuracy thereof.
Unless stated otherwise in the Prospectus Supplement, the underwriters or
agents with respect to a series of Debt Securities issued as Global Securities
will be Direct Participants in DTC.
None of the Company, any underwriter or agent, the applicable Trustee or any
applicable Paying Agent will have the responsibility or liability for any
aspect of the records relating to or payments made on account of beneficial
interests in a Global Security, or for maintaining, supervising or reviewing
any records relating to such beneficial interests.
CERTAIN RESTRICTIVE COVENANTS IN THE SENIOR INDENTURE
Limitations on Liens
Nothing in either Indenture or the Debt Securities in any way restricts or
prevents the Company or any Subsidiary from incurring any indebtedness.
However, the Senior Indenture provides that neither the Company nor any
Restricted Domestic Subsidiary will issue, assume or guarantee any notes,
bonds, debentures or other similar evidences of indebtedness for money borrowed
("Debt") secured by mortgage, lien, pledge or other encumbrance upon any
Restricted Property without effectively providing that the Senior Debt
Securities of all series (excluding any series of Debt Securities with respect
to which the property securing such Debt is not Restricted Property, but
including, if the Company so determines, any other indebtedness or obligation
then existing or thereafter created, ranking equally with the Senior Debt
Securities of all series) shall be secured equally and ratably with (or prior
to) such Debt so long as such Debt shall be so secured. This restriction does
not, however, apply to (a) mortgages, liens, pledges or other encumbrances
("Mortgages") on property to secure all or part of the cost of exploration,
drilling or development thereof or all or part of the cost of altering or
repairing equipment used in connection therewith or the cost of improvement of
property which, in the opinion of the Board of Directors, is substantially
unimproved for the use intended by the Company or to secure Debt incurred to
provide funds for any such purpose; (b) Mortgages which secure only
indebtedness owing by a Subsidiary to the Company, or to one or more
Subsidiaries, or to the Company and one or more Subsidiaries; (c) Mortgages on
the property of any corporation existing at the time such corporation becomes a
Subsidiary; (d) Mortgages on any property to secure Debt or other indebtedness
incurred in connection with the construction, installation or financing of
pollution control or abatement facilities or other forms of industrial revenue
bond financing or Debt issued or guaranteed by the United States, any State or
any department, agency or instrumentality of either; and (e) any extension,
renewal or replacement of any Mortgage referred to in the foregoing clauses (a)
through (d) or, with respect to the Debt Securities of any series, of any
Mortgage existing on the date Debt Securities of such series are first issued.
Notwithstanding the foregoing, the Company and any one or more Restricted
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Domestic Subsidiaries may, without securing the Senior Debt Securities of all
series, issue, assume or guarantee Debt secured by Mortgages which would
otherwise be subject to the foregoing restrictions in an aggregate principal
amount which, together with all other such Debt of the Company and its
Restricted Domestic Subsidiaries, and the aggregate value of sale and lease-
back transactions which would otherwise be subject to the restrictions
described under "Limitation on Sale and Lease-Back Transactions," does not at
the time such Debt is incurred exceed five percent (5%) of the Stockholders'
Equity in the Company and its consolidated subsidiary companies as shown in the
audited consolidated balance sheet contained in the latest Annual Report to
Shareholders. The following types of transactions, among others, are not deemed
to create Debt secured by Mortgages: (1) the sale or other transfer of crude
oil, natural gas or other petroleum hydrocarbons in place for a period of time
until, or in an amount such that, the transferee will realize therefrom a
specified amount (however determined) of money or such crude oil, natural gas
or other petroleum hydrocarbons, or the sale or other transfer of any other
interest in property of the character commonly referred to as a production
payment or overriding royalty, and (2) Mortgages required by any contract or
statute in order to permit the Company or a Subsidiary to perform any contract
or subcontract made by it with or at the request of the United States, any
State or any department, agency or instrumentality of either, or to secure
partial, progress, advance or other payments to the Company or any Subsidiary
by such governmental unit pursuant to the provisions of any contract or
statute. (Senior Indenture Section 12.07)
The Senior Indenture contains no limitations on Mortgages on property
presently owned which is not Restricted Property or, with respect to any series
of Debt Securities, property acquired or constructed after the date Debt
Securities of such series are first issued (the "Series Issuance Date"). The
term Restricted Property is defined in the Senior Indenture separately with
respect to each series of Debt Securities to mean any property interest owned
by the Company or a Subsidiary on the Series Issuance Date in land located in
the continental United States and then classified by such owner as productive
of crude oil, natural gas or other petroleum hydrocarbons in paying quantities,
any refining plant or manufacturing plant owned by the Company or a Subsidiary
on the Series Issuance Date and located in the continental United States
(except related facilities which in the opinion of the Board of Directors are
transportation or marketing facilities, and a refining plant or manufacturing
plant which in the opinion of the Board of Directors is not a principal plant
of the Company and its Subsidiaries) and any shares of capital stock,
partnership interests or indebtedness of a Restricted Domestic Subsidiary. The
term Restricted Property with respect to any series of Debt Securities does not
include future additions or improvements to or replacements of all or any part
of any refining or manufacturing plant owned on the Series Issuance Date. The
term Restricted Domestic Subsidiary is defined in the Indenture to mean any
Subsidiary of the Company (other than Sun Ship, Inc.) which owns Restricted
Property except a Subsidiary substantially all the real property, plants and
equipment of which are located outside the continental United States, a
Subsidiary the assets of which constitute less than five percent (5%) of the
assets of the Company and its consolidated subsidiaries, and a Subsidiary the
major part of the business of which consists of finance, banking, credit,
leasing, real estate, financial services or other similar operations, coal
operations, or any combination thereof. The term Subsidiary is defined in the
Senior Indenture to include any corporation more than 50% of the outstanding
voting stock of which is owned directly or indirectly by the Company or by one
or more Subsidiaries thereof, or by the Company and one or more Subsidiaries.
For purposes of this definition, "voting stock" means stock which ordinarily
has voting power for the election of directors whether at all times or only so
long as no senior class of stock has such voting power by reason of any
contingency. (Senior Indenture Section 1.01)
Limitation on Sale and Lease-Back Transactions
The Senior Indenture provides that neither the Company nor any Restricted
Domestic Subsidiary will enter into any arrangement with any person providing
for the leasing of any Restricted Property which has been or is to be sold or
transferred by the Company or such Restricted Domestic Subsidiary to such
person or to any other person to which funds have been or are to be advanced by
such person on the security of the leased property to the Company or a
Restricted Domestic Subsidiary for a period of more than three years unless
either (a) the Company or such Restricted Domestic Subsidiary would be
entitled, pursuant to the above provisions, to incur Debt in a principal amount
equal to or exceeding the value of such sale and lease-
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back transactions secured by a Mortgage on the property to be leased without
equally and ratably securing all series of the Senior Debt Securities with
respect to which such property is Restricted Property, or (b) the Company
during or immediately after the expiration of four months after the effective
date of such transaction applies to the voluntary retirement of its funded debt
an amount (less certain credits set forth in the Indenture) equal to the
greater of the net proceeds of the sale or transfer of the property leased in
such transaction or the fair value in the opinion of the Board of Directors of
the property at the time of entering into such transaction. (Senior Indenture
Section 12.08)
The Senior Indenture contains no limitations on the sale and lease-back of
any property presently owned which is not Restricted Property or, with respect
to any series of Debt Securities, property acquired or constructed after the
Series Issuance Date.
WAIVER OF COMPLIANCE WITH COVENANTS
The Company may omit in any particular instance to comply with certain
covenants in the Indentures (including, if so specified in the Prospectus
Supplement, any covenant not set forth in the Indentures but specified in the
Prospectus Supplement to be applicable to the Debt Securities of any series,
except as otherwise provided in the Prospectus Supplement, and in the case of
the Senior Indenture, the covenants relating to the limitation on liens and the
limitation on sale and lease-back transactions) with respect to the Debt
Securities of any series if before the time for such compliance the Holders of
at least a majority in principal amount of the Outstanding Debt Securities of
such series either waive such compliance in such instance or generally waive
compliance with such provisions, but no such waiver may extend to or affect any
term, provision or condition except to the extent expressly so waived, and,
until such waiver becomes effective, the obligations of the Company and the
duties of the applicable Trustee in respect of any such provision will remain
in full force and effect. (Senior Indenture Section 12.09 and Subordinated
Indenture Section 12.07)
EVENTS OF DEFAULT
The following are Events of Default under each Indenture with respect to Debt
Securities of any series issued thereunder: (a) failure to pay principal of or
any premium on any Debt Security of that series when due; (b) failure to pay
any interest on any Debt Security of that series when due, continued for 30
days; (c) failure to perform any other covenant of the Company in the Indenture
(other than a covenant included in the Indenture solely for the benefit of
series of Debt Securities other than that series), continued for 90 days after
there has been given to the Company by the applicable Trustee or to the Company
and the applicable Trustee by the Holders of at least 25% in principal amount
of the Outstanding Debt Securities of such series, a written notice specifying
such default or breach and requiring it to be remedied; (d) acceleration of
Debt Securities of another series or any other indebtedness for borrowed money
of the Company, in an aggregate principal amount exceeding $10,000,000 under
the terms of the instrument or instruments under which such indebtedness is
issued or secured, if such acceleration is not annulled within 30 days after
written notice as provided in the Indenture; (e) certain events in bankruptcy,
insolvency or reorganization involving the Company; and (f) any other Event of
Default provided with respect to Debt Securities of the series. (Section 5.01)
If an Event of Default with respect to Debt Securities of any series at the
time Outstanding occurs and is continuing, either the Trustee or the Holders of
at least 25% in aggregate principal amount of the Outstanding Debt Securities
of that series may declare the principal amount (or, if the Debt Securities of
that series are Discount Securities, such portion of the principal amount as
may be specified in the terms of that series) of all the Debt Securities of
that series to be due and payable immediately. At any time after a declaration
of acceleration with respect to Debt Securities of any series has been made,
but before a judgment or decree based on acceleration has been obtained, the
Holders of a majority in aggregate principal amount of Outstanding Debt
Securities of that series may, under certain circumstances, rescind and annul
such acceleration. (Section 5.02)
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Each Indenture provides that, subject to the duty of the applicable Trustee
during a default to act with the required standard of care, the Trustee will be
under no obligation to exercise any of its rights or powers under the Indenture
at the request or direction of any of the Holders unless such holders shall
have offered to the Trustee reasonable indemnity. (Section 6.03) Subject to
such provisions for the indemnification of the Trustee, the Holders of a
majority in aggregate principal amount of the Outstanding Debt Securities of
any series will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee, with respect to the
Debt Securities of that series. (Section 5.12)
Each Indenture requires the Company to furnish to the applicable Trustee
annually a statement as to the performance by the Company of certain of its
obligations under such Indenture and as to any default in such performance.
(Section 12.02)
MODIFICATION AND WAIVER
Modifications and amendments of either Indenture may be made by the Company
and the Trustee with the consent of the Holders of a majority in aggregate
principal amount of the Outstanding Debt Securities of each series affected by
such modifications or amendments; provided, however, that no such modification
or amendment may, without the consent of the Holder of each Outstanding Debt
Security affected thereby, (a) change the stated maturity date of the principal
of, or any installment of principal of, or premium or interest, if any, on any
Debt Security; (b) reduce the principal amount of or premium or interest, if
any, on any Debt Security; (c) reduce the amount of principal of a Discount
Security payable upon acceleration of the maturity thereof; (d) change the
currency of payment of principal of or premium or interest, if any, on any Debt
Security; (e) impair the right to institute suit for the enforcement of any
payment on or with respect to any Debt Security; (f) reduce the percentage in
principal amount of Outstanding Debt Securities of any series, the consent of
whose Holders is required for modification or amendment of such Indenture or
for waiver of compliance with certain provisions of the Indenture or for waiver
of certain defaults; or (g) limit any obligation of the Company to maintain a
paying agency outside the United States pursuant to Section 12.03. (Section
11.02)
The Holders of a majority in aggregate principal amount of the Outstanding
Debt Securities of each series may, on behalf of all Holders of Debt Securities
of that series, waive, insofar as that series is concerned, compliance by the
Company with certain restrictive provisions of the applicable Indenture.
(Senior Indenture Section 12.09 and Subordinated Indenture Section 12.07) The
Holders of a majority in aggregate principal amount of the Outstanding Debt
Securities of each series may, on behalf of all Holders of Debt Securities of
that series, waive any past default under the Indenture with respect to Debt
Securities of that series, except (i) a default in the payment of principal or
of premium or interest, if any, or (ii) in respect of a covenant or provision
of the applicable Indenture which cannot be modified or amended without the
consent of the Holder of each Outstanding Debt Security of such series
affected. (Section 5.13)
DISCHARGE, LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The applicable Indenture with respect to the Debt Securities of any series
may be discharged, subject to certain terms and conditions, when (1) either (A)
all Debt Securities and the Coupons, if any, of such series have been delivered
to the applicable Trustee for cancellation, or (B) all Debt Securities and the
Coupons, if any, of such series not theretofore delivered to the applicable
Trustee for cancellation (i) have become due and payable, (ii) will become due
and payable at their Stated Maturity within one year or (iii) are to be called
for redemption within one year under arrangements satisfactory to the
applicable Trustee for the giving of notice by the applicable Trustee, and the
Company, in the case of (i), (ii) or (iii) of subclause (B) has, subject to
certain limited exceptions set forth in the Indentures, irrevocably deposited
or caused to be deposited with the applicable Trustee as trust funds in trust
for such purpose an amount in the currency in which such Debt Securities are
denominated sufficient to pay and discharge the entire indebtedness on such
Debt Securities for principal (and premium, if any) and interest to the date of
such deposit (in the case of Debt Securities which
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have become due and payable) or to the Stated Maturity or Redemption Date, as
the case may be; provided, however, in the event a petition for relief under
the applicable Federal or state bankruptcy, insolvency or other similar law is
filed with respect to the Company within 91 days after the deposit and the
applicable Trustee is required to return the deposited money to the Company,
the obligations of the Company under the applicable Indenture with respect to
such Debt Securities will not be deemed terminated or discharged; (2) the
Company has paid or caused to be paid all other sums payable under the
applicable Indenture by the Company and (3) the Company has delivered to the
applicable Trustee an officers' certificate and an opinion of counsel each
stating that all conditions precedent therein provided relating to the
satisfaction and discharge of the applicable Indenture with respect to such
series have been complied with. (Section 4.01)
If provision is made for the defeasance of Debt Securities of a series, and
if the Debt Securities of such series are Registered Securities and denominated
and payable only in U.S. Dollars, then the following defeasance provisions of
each Indenture shall apply to such series of Debt Securities except as
otherwise specified in the Prospectus Supplement for such series. (Section
15.01)
At the Company's option, either (a) the Company shall be deemed to have been
discharged from its obligations with respect to Debt Securities of any series
("legal defeasance option") or (b) the Company shall cease to be under any
obligation to comply with certain provisions of the Indentures relating to
mergers and consolidations of the Company, and, in the case of the Senior
Indenture, the provisions relating to limitations on liens and sale and lease-
back transactions, with respect to Debt Securities of any series (and, if so
specified, any other obligation of the Company or restrictive covenant added
for the benefit of such series) ("covenant defeasance option") at any time
after the applicable conditions set forth below have been satisfied: (1) the
Company shall have deposited or caused to be deposited irrevocably with the
applicable Trustee as trust funds held in trust, specifically pledged as
security for, and dedicated solely to, the benefit of the Holders of the Debt
Securities of such series (i) money in an amount, (ii) U.S. Government
Obligations which through the payment of interest and principal in respect
thereof in accordance with their terms will provide, not later than one day
before the due date of any payment, money in an amount or (iii) a combination
of (i) and (ii) sufficient, in the opinion (with respect to (i) and (ii)) of a
nationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the applicable Trustee, to pay and
discharge each installment of principal (including any mandatory sinking fund
payments) of and premium, if any, and interest on, the Outstanding Debt
Securities of such series on the dates such installments of interest or
principal and premium are due; (2) such deposit shall not cause the applicable
Trustee with respect to Debt Securities of that series to have a conflicting
interest with respect to the Debt Securities of any series; (3) such deposit
will not result in a breach or violation of, or constitute a default under, the
applicable Indenture or any other agreement or instrument to which the Company
is a party or by which it is bound; (4) if the Debt Securities of such series
are then listed on any national securities exchange, the Company shall have
delivered to the applicable Trustee an opinion of counsel or a letter or other
document from such exchange to the effect that Company's exercise of its
defeasance option would not cause such Debt Securities to be delisted; (5) no
Event of Default or event (including such deposit) which, with the giving of
notice or lapse of time, or both, would become an Event of Default with respect
to the Debt Securities of such series shall have occurred and be continuing on
the date of such deposit and, with respect to the legal defeasance option only,
no Event of Default under the provisions of the Indentures relating to certain
events of bankruptcy or insolvency or event which with the giving of notice or
lapse of time, or both, would become an Event of Default under such bankruptcy
or insolvency provisions shall have occurred and be continuing on the 91st day
after such date; and (6) the Company shall have delivered to the applicable
Trustee an opinion of counsel or a ruling of the Internal Revenue Service to
the effect that the Holders of the Debt Securities of such series will not
recognize income, gain or loss for Federal income tax purposes as a result of
such deposit, defeasance or Discharge. Notwithstanding the foregoing, if the
Company exercises its covenant defeasance option and an Event of Default under
the provisions of the Indentures relating to certain events of bankruptcy or
insolvency or event which with the giving of notice or lapse of time, or both,
would become an Event of Default under such bankruptcy or insolvency provisions
shall have occurred and be continuing on the 91st day after the date of such
deposit, the defeased covenant obligations will be reinstated. (Section 15.02)
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Defeasance provisions, if any, for Debt Securities denominated in a foreign
currency or currencies or for Bearer Securities may be specified in the
Prospectus Supplement. (Section 15.01)
PAYMENT AND PAYING AGENTS
If Debt Securities of a series are issuable only as Registered Securities,
the Company will maintain in each Place of Payment for such series an office or
agency where Debt Securities of that series may be presented or surrendered for
payment, where Debt Securities of that series may be surrendered for
registration of transfer or exchange, where Debt Securities of that series
which are convertible may be surrendered for conversion and where notices and
demands to or upon the Company in respect of the Debt Securities of that series
and the applicable Indenture may be served. If Debt Securities of a series are
issuable as Bearer Securities, the Company will maintain (a) in the Borough of
Manhattan, The City and State of New York, an office or agency where any
Registered Securities of that series may be presented or surrendered for
payment, where any Registered Securities of that series may be surrendered for
registration of transfer, where Debt Securities of that series may be
surrendered for exchange, where Debt Securities of that series which are
convertible may be surrendered for conversion, where notices and demands to or
upon the Company in respect of the Debt Securities of that series and the
applicable Indenture may be served and where Bearer Securities of that series
and related Coupons may be presented or surrendered for payment in the
circumstances described in the following paragraph (and not otherwise), (b),
subject to any laws or regulations applicable thereto, in a Place of Payment
for that series which is located outside the United States, an office or agency
where Debt Securities of that series and related Coupons may be presented and
surrendered for payment (including payment of any additional amounts payable on
Debt Securities of that series, if so provided in such series); provided,
however, that if the Debt Securities of that series are listed on The Stock
Exchange of the United Kingdom and the Republic of Ireland, the Luxembourg
Stock Exchange or any other stock exchange located outside the United States
and such stock exchange shall so require, the Company will maintain a Paying
Agent for the Debt Securities of that series in London, Luxembourg or any other
required city located outside the United States, as the case may be, so long as
the Debt Securities of that series are listed on such exchange, and (c) subject
to any laws or regulations applicable thereto, in a Place of Payment for that
series located outside the United States an office or agency where any
Registered Securities of that series may be surrendered for registration of
transfer, where Debt Securities of that series may be surrendered for exchange,
where Debt Securities of that series which are convertible may be surrendered
for conversion and where notices and demands to or upon the Company in respect
of the Debt Securities of that series and the applicable Indenture may be
served. The Company will give prompt written notice to the applicable Trustee
of the location and any change in location of such office or agency.
No payment of principal, premium or interest on Bearer Securities shall be
made at any office or agency of the Company in the United States or by check
mailed to any address in the United States or by transfer to an account
maintained with a bank located in the United States; provided, however, that,
if the Debt Securities of a series are denominated and payable in U.S. dollars,
payment of principal of and any premium and interest on Debt Securities of such
series, if so provided in the Prospectus Supplement shall be made at the office
of the Company's Paying Agent in the Borough of Manhattan, the City and State
of New York, if (but only if) payment in U.S. dollars of the full amount of
such principal, premium, interest or additional amounts, as the case may be, at
all offices or agencies outside the United States maintained for the purpose by
the Company in accordance with the applicable Indenture is illegal or
effectively precluded by exchange controls or other similar restrictions.
(Section 12.03)
CONSOLIDATION, MERGER AND SALE
Nothing contained in either Indenture or any of the Debt Securities prevents
any consolidation or merger of the Company with or into any other corporation
or corporations or any sale or conveyance of all or substantially all the
property of the Company to any other corporation, provided that upon any such
consolidation, merger, sale or conveyance of or by the Company, other than a
consolidation or merger in which the Company is the continuing corporation, the
due and punctual payment of the principal of and
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premium, if any, and interest, if any, on all of the Debt Securities, according
to their tenor, and the due and punctual performance and observance of all of
the covenants and conditions of the Indenture to be performed by the Company,
is expressly assumed by the corporation formed by such consolidation, or into
which the Company shall have been merged, or by the corporation which shall
have acquired such property. (Section 10.01)
The Senior Indenture provides that if, upon any consolidation or merger of
the Company with or into any other corporation or upon any sale or conveyance
of all or substantially all its property to any other corporation, any of the
property of the Company or of any Subsidiary would thereupon become subject to
any mortgage, lien or pledge which would not otherwise be permitted by the
Senior Indenture without securing the Outstanding Debt Securities of any
series, the Company will first secure such series of Outstanding Debt
Securities, equally and ratably with any other obligations of the Company or
any Subsidiary then entitled thereto. (Section 10.02)
PENNSYLVANIA TAXES
Individuals who are residents of Pennsylvania and who hold Debt Securities
for their own account (either directly or indirectly) will not be subject to
existing county personal property taxes in Pennsylvania with respect to the
Debt Securities, but the Company is required to deduct from interest paid to
individual owners of Debt Securities who are residents of Pennsylvania and to
remit to Pennsylvania the Corporate Loans Tax which is presently at the annual
rate of four mills ($.004) per $1 principal amount of Debt Securities owned by
each individual, subject to adjustment if interest paid in any year represents
more or less than interest for a full year.
REGARDING THE TRUSTEES
Citibank, N.A., Trustee under the Senior Indenture, also is trustee under an
indenture covering certain other securities of Sun. Sun maintains deposit
accounts and conducts other banking transactions with Citibank, N.A., including
borrowings in the ordinary course of business. Citibank, N.A. is a co-manager
and participating lender in a revolving credit agreement with the Company.
Bankers Trust Company, Trustee under the Subordinated Indenture, also is
trustee under an indenture covering certain other securities of Sun. Sun
maintains deposit accounts and conducts other banking transactions with Bankers
Trust Company, including borrowings in the ordinary course of business. Bankers
Trust Company is the agent and a participating lender in a revolving credit
agreement with the Company. Bankers Trust Company is the sole lender in another
revolving credit agreement with the Company.
DESCRIPTION OF THE EQUITY SECURITIES
The authorized capital stock of the Company consists of 200,000,000 shares of
Common Stock, $1 par value, of which 106,866,693 shares were outstanding on
June 30, 1994 and 15,000,000 shares of Cumulative Preference Stock without par
value, none of which are outstanding.
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.
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The Prospectus Supplement will describe the designations, preferences,
dividend rates, liquidation rights, voting rights, conversion rights,
redemption rights and such other provisions determined by the Board of
Directors of the Company to apply to the Preference Stock.
The following description summarizes certain general terms and provisions of
the Preference Stock, is not complete and is qualified in its entirety by
reference to all of the provisions of the Company's Articles of Incorporation,
as a copy of which is filed as an exhibit to the Registration Statement.
Rank
All shares of the same series of Preference Stock shall be identical in all
respects, except that shares of a series issued at different times may differ
as to the dates from which dividends on such shares shall be cumulative. All
series of Preference Stock shall rank equally with and be identical in all
respects to each other series, unless otherwise determined by the Board of
Directors.
Preference Stock shall rank, as to dividends and upon liquidation,
dissolution or winding up, prior to Common Stock and to any other capital stock
of the Company, other than capital stock which shall by its terms rank prior to
or on a parity with Preference Stock and which shall be authorized by a vote of
the holders of at least two-thirds of the then-outstanding Preference Stock.
Dividend Rights
Before any dividends shall be declared and set apart for payment or paid on
any class or classes of stock of the Company ranking junior to Preference
Stock, the holders of shares of each series of Preference Stock shall be
entitled to receive cash dividends, when and as declared by the Board of
Directors at the annual rate, and no more, fixed in the resolution adopted by
the Board of Directors providing for the issue of such series. Such dividends
shall be payable quarterly in cash. With respect to each series of Preference
Stock, such dividends shall be cumulative from the date or dates of issue of
such series. No dividends shall be declared or paid or set apart for payment on
any series of Preference Stock unless there shall likewise be or have been
declared and paid or set apart for payment on all shares of outstanding
Preference Stock of each other series like dividends in proportion to their
respective annual dividend rates. Accruals of dividends shall not bear
interest.
Redemption
The Company may redeem the whole or any part of any series of Preference
Stock at the times and redemption prices set forth in the resolutions adopted
by the Board of Directors providing for the issue of such series. In the event
of a partial redemption, the shares to be redeemed may be selected by lot or by
such other equitable method as the Board of Directors in its discretion may
determine.
Unless the Company defaults in making payment of the redemption price plus
accrued and unpaid dividends, upon redemption the redeemed shares shall cease
to be outstanding and the holders thereof shall cease to be stockholders with
respect to such shares and shall have no interest in or claim against the
Company except the right to receive the redemption price plus accrued and
unpaid dividends. Conversion rights, if any, of shares called for redemption
shall terminate at the close of business on the business day prior to the
redemption date.
If at any time the Company shall have failed to pay dividends in full on
Preference Stock, thereafter and until dividends in full including all accrued
and unpaid dividends on shares of all series of outstanding Preference Stock,
shall have been declared and set apart for payment or paid, (i) the Company,
without the affirmative vote of the holders of at least a majority of the
shares of outstanding Preference Stock, voting as a class without regard to
series, shall not redeem less than all of the shares of outstanding Preference
Stock, regardless of series and (ii) neither the Company nor any subsidiary
shall purchase any shares of Preference
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Stock except in accordance with a purchase offer made in writing or by
publication which will result in fair and equitable treatment among the
respective series as determined by the Board of Directors in their sole
discretion; provided, however, that (iii) unless prohibited by the provisions
applicable to any series, the Company, to meet the requirements of any sinking
fund provision with respect to any series, may use shares of such series
acquired by it prior to such failure and then held by it as treasury stock and
(iv) nothing shall prevent the Company from completing the purchase or
redemption of shares of Preference Stock for which a purchase contract was
entered into for any sinking fund purposes or the notice of redemption of which
was mailed to the holders thereof, prior to the default.
The Company shall not declare or set apart for payment or pay any dividends
or make any distribution on or redeem, purchase or otherwise acquire or permit
any subsidiary to purchase or acquire, any other class or classes of stock of
the Company ranking junior to Preference Stock as to dividends or upon
liquidation, if at such time the Company shall be in default with respect to
any dividend payable on, or any obligation to purchase, shares of any series of
Preference Stock, but the Company may under such circumstances redeem,
purchase, or otherwise acquire shares of stock of any such junior class in
exchange for, or out of the proceeds from the sale of, other shares of stock of
any junior class.
Voting Rights
Except as described below, or as may be required by law, the holders of
Preference Stock shall have no voting rights. If the Company shall have failed
to pay, or declare and set apart for payment, dividends on Preference Stock in
an aggregate amount equivalent to six full quarterly dividends on all shares of
Preference Stock then outstanding, the number of Directors of the Company shall
be increased by two at the first annual meeting of the shareholders of the
Company held thereafter, and at such meeting and at each subsequent annual
meeting until dividends payable for all past quarterly dividend periods on all
outstanding shares of Preference Stock shall have been paid, or declared and
set apart for payment, in full, the holders of the shares of Preference Stock
shall have the exclusive and special voting right, voting as a class without
regard to series, each share of Preference Stock entitling the holder thereof
to one vote per share, to elect two additional members of the Board of
Directors to hold office for a term of one year; provided, that the right to
vote as a class upon the election of such two additional Directors shall not
limit the right of holders of any series of Preference Stock to vote upon the
election of all other Directors and upon other matters if and to the extent
that such holders are entitled pursuant to resolution providing for the issue
of such series. Upon such payment, or declaration and setting apart for
payment, in full, the terms of the two additional Directors so elected shall
terminate and such voting right of the holders of shares of Preference Stock
shall cease.
The Company shall not, without the affirmative vote of the holders of at
least two-thirds of the outstanding Preference Stock, voting as a class without
regard to series: (i) create any class of stock ranking prior to or on a parity
with Preference Stock as to dividends or upon liquidation or increase the
authorized number of shares of any such previously authorized class of stock;
(ii) alter or change any of the terms and provisions of the Preference Stock so
as adversely to affect the preferences, special rights or powers given to the
Preference Stock or (iii) increase the number of shares of Preference Stock
which the Company is authorized to issue.
Liquidation
Upon the voluntary or involuntary liquidation, dissolution or winding up of
the Company, Preference Stock shall be preferred as to assets over Common Stock
and any other class or classes of stock ranking junior to Preference Stock so
that the holders of shares of Preference Stock of each series shall be entitled
to be paid or to have set apart for payment, before any distribution is made to
the holders of Common Stock and any other class or classes of stock ranking
junior to Preference Stock, the amount set forth in the resolutions providing
for the issue of such series plus an amount equal to all dividends accrued and
unpaid up to and including the date fixed for such payment, and the holders of
Preference Stock shall not be entitled to any other payment.
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If upon such liquidation, dissolution or winding up of the Company, its net
assets shall be insufficient to permit the payment in full of the amounts to
which the holders of all outstanding shares of Preference Stock are entitled,
the entire remaining net assets of the Company shall be distributed among the
holders of Preference Stock in amounts proportionate to the full preferential
amounts to which they are respectively entitled.
COMMON STOCK
All shares of Common Stock presently outstanding are, and the shares of
Common Stock to be issued and sold in connection with any distribution pursuant
to this Prospectus will be, 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 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.
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.
DESCRIPTION OF THE WARRANTS
The following statements with respect to the Warrants are summaries of, and
subject to, the detailed provisions of one or more separate Warrant Agreements
(each, a "Warrant Agreement") between the Company and one or more banking
institutions organized under the laws of the United States of America or any
State thereof, as Warrant Agent (each, a "Warrant Agent"), forms of which are
filed as exhibits to the Registration Statement.
The Warrants, evidenced by Warrant Certificates (the "Warrant Certificates"),
may be issued under the Warrant Agreements independently or together with any
Debt Securities or Equity Securities offered by any Prospectus Supplement.
Unless otherwise specified in the Prospectus Supplement, the Warrants will be
immediately exercisable upon issuance and may be traded separately from any
series of Debt Securities or Equity Securities with which they are issued.
Reference is made to the Prospectus Supplement for the specific terms of any
Warrants offered thereby, including, where applicable, (i) designation,
aggregate principal amount, currencies, denominations and other terms of the
series of any Debt Securities purchasable upon exercise of the Warrants and the
price at which such Debt Securities may be purchased upon such exercise; (ii)
the designation, number of shares, stated value and terms (including, without
limitation, liquidation, dividend, conversion, and voting rights) of the series
of any Preference Stock purchasable upon exercise of Warrants and the price at
which such number of shares of Preference Stock may be purchased upon such
exercise; (iii) the number of shares of any Common Stock purchasable upon
exercise of the Warrants and the price at which such number of shares of Common
Stock may be purchased upon such exercise; (iv) the date on which the right to
exercise such Warrants shall commence and the date (the "Expiration Date") upon
which such right shall expire; (v) United States Federal income tax
consequences applicable to such Warrants; and (vi) any other terms of such
Warrants.
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Each Warrant will entitle the holder thereof to purchase such principal
amount of Debt Securities or number of shares of Equity Securities at such
exercise price as shall in each case be set forth in, or calculable from, the
Prospectus Supplement, which exercise price may be subject to adjustment upon
the occurrence of certain events as set forth in such Prospectus Supplement.
After the close of business on the Expiration Date (or such later date to which
the Expiration Date may be extended by the Company), unexercised Warrants will
become void. The place or places where, and the manner in which, Warrants may
be exercised shall be specified in the Prospectus Supplement.
Prior to the exercise of any Warrants, holders of the Warrants will not have
any of the rights of holders of the Debt Securities or the Equity Securities
purchasable upon exercise, including the right to receive payments of
principal, premium, or interest on any Debt Securities purchasable upon such
exercise or to enforce covenants in the applicable Indenture or to receive
payment of dividends on any Equity Securities purchasable upon such exercise or
to exercise any applicable right to vote.
PLAN OF DISTRIBUTION
The Company may sell the Securities (i) to or through underwriters or
dealers, (ii) directly to one or more institutional purchasers, or (iii)
through agents. The Prospectus Supplement with respect to the Securities
offered thereby will set forth the terms of the offering of such Securities,
including the name or names of any underwriters or agents, the purchase price
of such Securities and the proceeds to the Company from such sale, any
underwriting discounts and other items constituting underwriters' compensation,
any initial public offering price, any discounts or concessions allowed or
reallowed or paid to dealers and any securities exchanges on which such
Securities may be listed. Only underwriters named in the Prospectus Supplement
are deemed to be underwriters in connection with the Securities offered
thereby.
If underwriters are used in the sale, the Securities will be acquired by the
underwriters for their own account and may be resold from time to time in one
or more transactions, including negotiated transactions, at a fixed public
offering price or at varying prices determined at the time of sale. The
Securities may be offered to the public either through underwriting syndicates
represented by one or more managing underwriters or directly by one or more
firms acting as underwriters. The obligations of the underwriters to purchase
such Securities will be subject to certain conditions precedent, and the
underwriters will be obligated to purchase all of the Securities of the series
offered by the Prospectus Supplement if any of such Securities are purchased.
Any initial public offering price and any discounts or concessions allowed or
reallowed or paid to dealers may be changed from time to time.
Securities may also be sold directly by the Company or through agents
designated by the Company from time to time. Any agent involved in the offering
and sale of the Securities, and any commissions payable by the Company to any
such agent, will be set forth in the Prospectus Supplement. Unless otherwise
indicated in the Prospectus Supplement, any such agent is acting on a best
efforts basis for the period of its appointment.
As indicated in the Prospectus Supplement, the Company may authorize agents,
underwriters or dealers to solicit offers by certain institutional investors to
purchase Securities providing for payment and delivery on a future date
specified in the Prospectus Supplement. There may be limitations on the minimum
amount which may be purchased by any such institutional investor or on the
portion of the aggregate principal amount of the Securities which may be sold
pursuant to such arrangements. Institutional investors to which such offers may
be made, when authorized, include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and charitable
institutions and such other institutions as may be approved by the Company. The
obligations of any such purchasers pursuant to such delayed delivery and
payment arrangements will not be subject to any conditions except (i) the
purchase by an institution of the particular Securities shall not at the time
of delivery be prohibited under the laws of any jurisdiction in the United
States to which such institution is subject and (ii) if the particular
Securities are being sold to underwriters, the Company shall have sold to such
underwriters the total principal amount of such Securities
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less the principal amount thereof covered by such arrangements. Underwriters
will not have any responsibility with respect to the validity of such
arrangements or the performance of the Company or such institutional investors
thereunder.
Agents and underwriters may be entitled under agreements entered into with
the Company to indemnification against certain civil liabilities, including
liabilities under the Securities Act, or to contribution with respect to
payments which the agents and underwriters may be required to make in respect
thereof. Agents and underwriters may engage in transactions with, or perform
services for, the Company in the ordinary course of business.
The place and time of delivery of the Offered Securities will be set forth in
the Prospectus Supplement.
LEGAL OPINIONS
The validity of the Securities 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, and for any
underwriters, dealers or agents 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 of the Company and options to purchase Common Stock of the
Company.
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.
22
<PAGE>
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NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFOR-
MATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS SUPPLE-
MENT OR THE PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTA-
TION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY
UNDERWRITER. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE
AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES
OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS
SUPPLEMENT OR THE PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIR-
CUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS
OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF THE COMPANY SINCE SUCH DATE.
------------
TABLE OF CONTENTS
<TABLE>
<S> <C>
PROSPECTUS SUPPLEMENT
<CAPTION>
PAGE
----
<S> <C>
Description of Notes....................................................... S-2
Use of Proceeds............................................................ S-2
Underwriting............................................................... S-3
Notice to Canadian Residents............................................... S-4
PROSPECTUS
Available Information...................................................... 2
Incorporation of Certain Documents by Reference............................ 2
The Company................................................................ 3
Use of Proceeds............................................................ 3
Summary of Financial Information........................................... 3
Description of the Debt Securities......................................... 4
Description of the Equity Securities....................................... 17
Description of the Warrants................................................ 20
Plan of Distribution....................................................... 21
Legal Opinions............................................................. 22
Experts.................................................................... 22
</TABLE>
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[LOGO OF SUN COMPANY, INC. APPEARS HERE]
Sun Company, Inc.
$150,000,000
8 1/8% Notes Due 1999
PROSPECTUS SUPPLEMENT
CS First Boston
BT Securities Corporation
Goldman, Sachs & Co.
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