EXHIBIT 4.2
PENNZOIL-QUAKER STATE COMPANY
Officers' Certificate Delivered Pursuant to
Section 301 of the Indenture dated as of February 1, 1999
The undersigned, the Group Vice President and Chief Financial Officer
and the Vice President and Corporate Secretary of Pennzoil-Quaker State Company
(the "Company"), hereby certify that:
1. This Certificate is delivered to The Chase Manhattan Bank
(successor to Chase Bank of Texas, National Association) (the "Trustee"),
as trustee, pursuant to Section 301 of the Indenture dated as of February
1, 1999 between the Company and the Trustee in connection with the Company
Order dated December 5, 2000 (the "Order") for the authentication and
delivery by the Trustee of $150,000,000 aggregate principal amount of 8.65%
Notes due 2002 ("Notes").
2. The undersigned have read Sections 103, 301 and 303 of the
Indenture and the definitions in the Indenture relating thereto.
3. The statements made herein are based either upon the personal
knowledge of the persons making this Certificate or on information, data
and reports furnished to such persons by the officers, counsel, department
heads or employees of the Company who have knowledge of the facts involved.
4. The undersigned have examined the Order, and they have examined
the covenants, conditions and provisions of the Indenture relating thereto.
5. In the opinion of the persons making this Certificate, they have
made such examination or investigation as is necessary to enable them to
express an informed opinion as to whether or not all conditions provided
for in the Indenture with respect to the Order have been complied with.
6. All conditions precedent provided in the Indenture to the
authentication by the Trustee of $150,000,000 aggregate principal amount of
Notes have been complied with, and such Notes may be delivered in
accordance with the Order as provided in the Indenture.
7. The terms of the Notes (including the Form of Notes) shall be as
set forth in the resolutions duly adopted by the Pricing Committee of the
Board of Directors of the Company as of November 30, 2000 (a copy of such
resolutions being attached hereto as Exhibit A).
IN WITNESS WHEREOF, the undersigned have hereunto executed this
Certificate as of December 1, 2000.
/s/ Thomas P. Kellagher
_________________________________________________
Thomas P. Kellagher
Group Vice President and Chief Financial Officer
/s/ Linda F. Condit
_________________________________________________
Linda F. Condit
Vice President and Corporate Secretary
Exhibit A to Officers' Certificate
WHEREAS, pursuant to resolutions adopted by the Board of Directors of
the Company on December 14, 1998, this Pricing Committee was authorized,
empowered and directed, for and on behalf of the Company, to determine any and
all terms and conditions of the sale of the Securities (as defined below) and to
take all other actions necessary to effectuate the registration, issuance and
sale of the Offered Securities.
RESOLVED, that the form, terms and provisions of the Company's
Registration Statement on Form S-3 (Registration No. 333-65909), as amended, as
filed with the Securities and Exchange Commission and as declared effective as
of January 25, 1999, relating to $1,000,000,000 principal amount of Securities
of the Company ("Securities"), as executed for and on behalf of the Company, be
and hereby are in all respects approved; and further
RESOLVED, that the forms, terms and provisions of the Prospectus
included in such registration statement and the Prospectus Supplement dated
November 30, 2000 supplementary thereto ("Prospectus Supplement") and relating
to $150,000,000 principal amount of 8.65% Notes due 2002 (the "Notes") be and
hereby are in all respects approved; and further
RESOLVED, that the form, terms and provisions of the Underwriting
Agreement relating to the Notes between the Company and the underwriter named
therein ("Underwriting Agreement") presented with these resolutions be and
hereby are in all respects approved in the form executed; and further
RESOLVED, that in accordance with the provisions of Section 301 of the
Indenture dated as of February 1, 1999 (the "Indenture") between the Company and
The Chase Manhattan Bank (as successor to Chase Bank of Texas, National
Association), as trustee ("Trustee"), there be and hereby is created and
established a series of debt securities of the Company designated as "8.65%
Notes due 2002" limited in aggregate principal amount to $150,000,000, the terms
of which shall be as set forth in Annex A hereto; and further
RESOLVED, that the form of registered Notes without coupons and the
form of Trustee's authentication certificate to be endorsed on all Notes shall
be substantially in the respective forms set forth in Annex A hereto, with such
changes and completions as the officers of the Company executing such Notes
shall approve; and further
RESOLVED, that the entire principal amount of Notes may be executed at
one time or from time to time by the Company and delivered to the Trustee and
shall be authenticated by the Trustee and delivered to or upon the order of the
Company signed by the Chairman of the Board, the President or any Vice President
and the Treasurer, any Assistant Treasurer, the Secretary or any Assistant
Secretary of the Company, such Notes so authenticated and delivered thereby
entitling the holders thereof to such rights, and subjecting them to such
limitations, as set forth in the Indenture and Annex A hereto; and the officers
of the Company hereinafter specified be and hereby are authorized, for and on
behalf of the Company, to cause to be executed, issued, authenticated and
delivered Notes in an aggregate principal amount not to exceed $150,000,000; and
further
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RESOLVED, that the Notes, whether in definitive or temporary form,
shall be signed on behalf of the Company by the Chairman of the Board, the
President or any Vice President of the Company, under the corporate seal of the
Company attested by the Secretary or an Assistant Secretary; provided, that the
signature of any such officer upon the Notes may be in facsimile or may be
imprinted or otherwise reproduced on the Notes, the Company hereby adopting as
binding upon it the facsimile signature of any person who shall be any such
officer of the Company at the time of the execution of the Notes, irrespective
of the date as of which the same shall be executed or authenticated and
notwithstanding the fact that at the time the Notes shall be authenticated or
delivered or disposed of he shall have ceased to be such officer of the Company;
and provided, that the seal of the Company may be in facsimile and may be
impressed, affixed, imprinted or otherwise reproduced on the Notes; and further
RESOLVED, that the Company adopt as and for its signature on any of
the Notes authorized to be executed on its behalf pursuant to the provisions of
these resolutions the facsimile signatures of James L. Pate, as Chairman of the
Board, and Linda F. Condit, Vice President and Corporate Secretary,
respectively, when used and imprinted on the Notes, and the Company hereby
adopts as and for its corporate seal a facsimile thereof when used and imprinted
on the Notes; and further
RESOLVED, that any person, firm or corporation at any time, unaffected
by any amendment, modification or rescission of this resolution, may rely on the
facsimile signatures authorized by the preceding resolution, when imprinted on
the Notes by an officer or employee of the Company, whether or not authorized by
the preceding resolution, by use of any signature machine of the Company, or
when imprinted on the Notes by an officer or employee of American Bank Note
Company, whether or not authorized by it, by use of any signature machine of
such company; and any such facsimile so relied upon shall be valid and effectual
and binding on the Company as if the same had been executed manually or by a
duly authorized officer or agent of the Company acting on its behalf; and
further
RESOLVED, that the officers of the Company be and hereby are
authorized and empowered, for and on behalf of the Company, acting severally or
jointly, to sign, seal and deliver such papers and documents and to do or cause
to be done any or all such acts and things as they may deem necessary,
appropriate or desirable in order to enable the Company fully and promptly to
perform all of its obligations under the Underwriting Agreement; and further
RESOLVED, that the proceeds from the sale of the Notes be applied in
the manner set forth under the caption "Use of Proceeds" in the Prospectus
Supplement; and further
RESOLVED, that the officers of the Company be and hereby are
authorized and empowered, for and on behalf of the Company, to take any and all
action that any such officer may deem necessary, appropriate or desirable in
connection with making the Notes eligible for trading through The Depository
Trust Company (the "DTC") or any other securities clearing agency or depositary,
including, without limitation, negotiating, entering into, executing and
delivering a letter agreement with the DTC or any such agency or depositary
relating to the aforesaid; and further
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RESOLVED, that the officers of the Company be and hereby are
authorized to perform and to do such acts and things and to execute and file
such other documents, as in their opinion may be necessary, desirable or
appropriate in order to carry out the purposes of the foregoing resolutions.
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Annex A
PENNZOIL-QUAKER STATE COMPANY
8.65% Notes due 2002
A series of Securities is hereby established pursuant to Section 301
of the Indenture dated as of February 1, 1999 (the "Indenture") between
Pennzoil-Quaker State Company (the "Company") and The Chase Manhattan Bank (as
successor to Chase Bank of Texas, National Association) (the "Trustee") as
follows:
1. Each capitalized term used but not defined herein shall have the
meaning assigned to such term in the Indenture.
2. The title of the 8.65% Notes due 2002 shall be "8.65% Notes due
2002" (the "Notes").
3. The limit upon the aggregate principal amount of the Notes that
may be authenticated and delivered under the Indenture (except for Notes of such
series authenticated and delivered upon registration of transfer of, or in
exchange for, or in lieu of, other Notes of such series pursuant to Section 304,
305, 306, 906 or 1107 of the Indenture and except for any Notes of such series
that, pursuant to Section 303 of the Indenture, are deemed never to have been
authenticated and delivered thereunder) is $150,000,000.
4. The date on which the principal of the Notes is payable shall be
December 1, 2002.
5. The initial rate at which the Notes shall bear interest shall be
8.65% per annum. The date from which interest shall accrue for the Notes shall
be December 5, 2000. The Interest Payment Dates on which such interest shall be
payable shall be June 1 and December 1 of each year, commencing June 1, 2001.
The Regular Record Date for interest payable on the Notes on any Interest
Payment Date shall be the May 15 or November 15, as the case may be, next
preceding such Interest Payment Date. In the event of a Rating Decline at any
time prior to maturity, the rate at which the Notes shall bear interest shall
increase by 0.75% per annum beginning with the first day following the
announcement of the Rating Decline through the first date that the senior
unsecured long-term debt of the Company is rated as Investment Grade by both
Rating Agencies, at which time the rate at which the Notes shall bear interest
shall be 8.65% per annum. In the event of one or more subsequent Rating
Declines, the rate at which the Notes shall bear interest shall again be
adjusted as set forth in the previous sentence. No additional amounts with
respect to the Notes shall be payable. The Company shall give prompt written
notice to the Trustee and the Holders of any change in the interest rate on the
Notes, which notice shall state the new rate of interest, its effective date and
a description of the circumstances requiring such change
6. The place or places where the principal of, premium (if any) on
and interest on the Notes shall be payable shall be the office or agency of the
Company maintained for that purpose, initially the corporate trust office of the
Trustee, in Dallas, Texas, and any other office or agency maintained by the
Company for such purpose. Payments in respect of Notes in the form of global
Securities (including principal, premium, if any, and interest) shall be made by
wire transfer of immediately available funds to the accounts specified by the
Holder of such Notes. In all other cases, at the option of the Company, payment
of interest on any Notes may be
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made by check mailed to the address of the Person entitled thereto as such
address shall appear in the Security Register for such Notes.
7. The Notes are not subject to redemption prior to maturity.
8. Except as set forth in paragraph 11 below, the Company shall have
no obligation to redeem, purchase or repay Notes pursuant to any mandatory
redemption, sinking fund or analogous provisions or at the option of a Holder
thereof.
9. The Depository Trust Company is hereby designated as the
Depositary with respect to any global Notes.
10. So long as any of the Notes are outstanding, the Company will
not, and will not permit any Material Subsidiary to, pledge, mortgage,
hypothecate or grant a security interest in, or permit any Lien upon, any
property or assets owned by the Company or any Material Subsidiary to secure any
Indebtedness, without making effective provision whereby the Notes shall (so
long as such other Indebtedness shall be so secured) be equally and ratably
secured with any and all such other Indebtedness and any other indebtedness
similarly entitled to be equally and ratably secured (including any other series
of outstanding Senior Debt Securities under the Indenture); provided, however,
that the foregoing restrictions shall not apply to nor prevent the creation or
existence of
(a) any Lien upon any property or assets (together with receivables
and intangibles related to such property or assets and the cash proceeds
thereof) created at the time of the acquisition or construction of such property
or assets by the Company or any Material Subsidiary or within one year after
such time to secure all or a portion of the purchase price or construction costs
(or Indebtedness incurred to finance such purchase price or construction costs)
for such property or assets;
(b) any Lien upon any property or assets (together with receivables
and intangibles related to such property or assets and the cash proceeds
thereof), existing thereon at the time of the acquisition thereof by the Company
or any Material Subsidiary (whether or not the obligations secured thereby are
assumed by the Company or any Subsidiary);
(c) any Lien upon any property or assets (together with receivables
and intangibles related to such property or assets and the cash proceeds
thereof), whenever acquired, of any Person that becomes a Material Subsidiary
after the date of the first issuance of the Notes, provided that (i) the
instrument creating such Lien shall be in effect prior to the time such Person
becomes a Material Subsidiary and (ii) such Lien shall only apply to properties
or assets (together with receivables and intangibles related to such property or
assets and the cash proceeds thereof) owned by such Person at the time it
becomes a Material Subsidiary or thereafter acquired by it from sources other
than the Company or another Material Subsidiary;
(d) any extension, renewal or refunding of any Lien permitted by
clauses (a), (b) or (c) above on substantially the same property or assets
theretofore subject thereto;
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(e) any Lien in favor of the Company and any Lien created or assumed
by a Subsidiary in favor of another Subsidiary;
(f) any Lien created or assumed by the Company or a Material
Subsidiary in connection with the issuance of debt securities the interest on
which is excludable from gross income of the holder of such security pursuant to
the Internal Revenue Code of 1986, as amended, for the purpose of financing, in
whole or in part, the acquisition or construction of property or assets to be
used by the Company or a Subsidiary;
(g) any Lien existing in connection with any sale, securitization or
monetization of receivables or other rights to receive payment of the Company
and any of its Subsidiaries, so long as such sale, securitization or
monetization is treated as a sale pursuant to applicable financial accounting
standards; or
(h) any Lien securing any Indebtedness in an amount which, together
with all other Indebtedness secured by a Lien that is not otherwise permitted
under the terms of clauses (a), (b), (c), (d), (e) or (f) above does not at the
time of the incurrence of the Indebtedness so secured exceed 5% of Consolidated
Net Tangible Assets of the Company and its Material Subsidiaries as shown on a
balance sheet as of the date of the balance sheet contained in the Company's
most recent periodic report in Form 10-K or 10-Q filed with the Commission prior
to the date of such incurrence.
"Capital Lease Obligations" of any Person means the obligations of
such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under
generally accepted accounting principles, and the amount of such obligations
shall be the capitalized amount thereof determined in accordance with generally
accepted accounting principles.
"Consolidated Net Tangible Assets" means the total amount of assets,
including all cash received from asset sales during the 12 months prior to the
date of determination to the extent that such cash has not been reinvested, of
the Company and its Subsidiaries on a consolidated basis (less applicable
reserves and other properly deductible items) after deducting therefrom (a) all
current liabilities (excluding any which are, by their terms, extendable or
renewable at the option of the obligor thereon to a time more than 12 months
after the time as of which the amount thereof is being computed) and (b) all
goodwill, trade names, trademarks, patents, unamortized debt premium or discount
and expense and other like intangible assets, determined in accordance with
generally accepted accounting principles.
"Guarantee" of or by any Person (the "guarantor") means any
obligation, contingent or otherwise, of the guarantor guaranteeing or having the
economic effect of guaranteeing any Indebtedness or other obligation of any
other Person (the "primary obligor") in any manner, whether directly or
indirectly, and including any obligation of the guarantor, direct or indirect,
(a) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation or to purchase (or to advance or
supply funds for the purchase of) any security for the payment thereof, (b) to
purchase or lease property, securities or services for the purpose of assuring
the owner of such Indebtedness or other obligation of the
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payment thereof, (c) to maintain working capital, equity capital or any other
financial statement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such Indebtedness or other obligation or (d)
as an account party in respect of any letter of credit or letter of guaranty
issued to support such Indebtedness or obligation; provided, that the term
Guarantee shall not include endorsements for collection or deposit in the
ordinary course of business.
"Indebtedness" of any Person means, without duplication, (a) all
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
upon which interest charges are customarily paid, (d) all obligations of such
Person under conditional sale or other title retention agreements relating to
property acquired by such Person, (e) all obligations of such Person in respect
of the deferred purchase price of property or services (excluding current
accounts payable incurred in the ordinary course of business), (f) all
Indebtedness of others secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien on
property owned or acquired by such Person, whether or not the Indebtedness
secured thereby has been assumed, (g) all Guarantees by such Person of
Indebtedness or others, (h) all Capital Lease Obligations of such Person, (i)
all obligations, contingent or otherwise, of such Person as an account party in
respect of letters of credit and letters of guaranty and (j) all obligations,
contingent or otherwise, of such Person in respect of bankers acceptances. The
Indebtedness of any Person shall include the Indebtedness of any other entity
(including any partnership in which such Person is a general partner) to the
extent such Person is liable therefor as a result of such Person's ownership
interest in or other relationship with such entity, except to the extent the
terms of such Indebtedness provide that such Person is not liable therefor.
"Lien" means (x) with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, hypothecation, encumbrance, charge or security interest in,
on or of such asset and (b) the interest of a vendor or a lessor under any
conditional sale agreement or title retention agreement (or any financing lease
having substantially the same economic effect as any of the foregoing) relating
to such asset, and (y) the interest of the lessor under a lease incurred after
the date of the first issuance of the Notes with a term of three years or more
that should be, in accordance with generally accepted accounting principles,
recorded as a capital lease.
"Material Subsidiary" means each of (a) any Subsidiary of the Company
whose percentage of the Consolidated Net Tangible Assets represented by such
Subsidiary's portion of such Consolidated Net Tangible Assets (after
intercompany eliminations) exceeds 10% as of the end of the most recently-
completed fiscal quarter, and (b) any other Subsidiary which at the time shall
have been designated by the Company as a Material Subsidiary in an officers'
certificate delivered to the Trustee for such purpose.
"Person" means any natural person, corporation, limited liability
company, trust, joint venture, association, company, partnership, Governmental
Authority or other entity.
"Subsidiary" means, with respect to the Company at any date, any
corporation, limited liability company, partnership, association or other entity
the accounts of which would be consolidated with those of the Company in the
Company's consolidated financial statements if
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such financial statements were prepared in accordance with generally accepted
accounting principles as of such date, as well as any other corporation, limited
liability company, partnership, association or other entity (a) of which
securities or other ownership interests representing more than 50% of the equity
or more than 50% of the ordinary voting power or, in the case of a partnership,
more than 50% of the general partnership interests are, as of such date, owned,
controlled or held, or (b) that is, as of such date, otherwise controlled, by
the Company or one or more subsidiaries of the Company or by the Company and one
or more subsidiaries of the Company.
11. (a) In the event that there occurs after May 1, 2001 and before
November 1, 2002, or occurs on or prior to and is continuing as of May 1, 2001,
a Rating Decline, each Holder of Notes shall have the right, at such Holder's
option, to require the Company to purchase all or any part (in integral
multiples of $1,000) of such Holder's Notes on the Purchase Date at a purchase
price (the "Purchase Price") payable in cash of 100% of the principal amount
thereof, plus accrued and unpaid interest, if any, to the Purchase Date, in
accordance with the procedures set forth in subsections (b) and (c) of this
paragraph 11. If prior to the date on which the Notes are presented and
surrendered for purchase, the senior unsecured long-term debt of the Company is
again rated as Investment Grade by both Rating Agencies, the Holder's option
under this paragraph 11 shall lapse.
(a) Within 5 Business Days following any Rating Decline that
occurs after May 1, 2001, or by May 1, 2001 if a Rating Decline has occurred and
is continuing on May 1, 2001, the Company shall send by first-class mail,
postage prepaid, to the Trustee and to each Holder of Notes, at his address
appearing in the Security Register, a notice stating:
(1) that a Rating Decline has occurred and that such Holder has
the right to require the Company to purchase such Holder's Notes on the Purchase
Date at the Purchase Price, together with such information as the Company deems
relevant or as may be required to be disclosed pursuant to applicable securities
or other laws regarding such Rating Decline;
(2) the Purchase Price;
(3) the place at which Notes are to be presented and surrendered
for purchase, if the Notes are no longer in book-entry form; and
(4) that interest accrued to the Purchase Date will be paid as
specified in such notice and that, unless the Company shall default in payment
of the Purchase Price, after the Purchase Date interest thereon will cease to
accrue with respect to any Notes presented and surrendered for purchase.
(b) Holders of Notes electing to have such Notes purchased will
be required to surrender such Notes to the Company at the address specified in
the notice (or to effect delivery of such Notes through the facilities of the
Depositary). Any such surrender of Notes for purchase by the Company shall be
irrevocable, except in the event the Holder's option under this paragraph 11 has
lapsed under paragraph 11(a). No Notes shall be deemed to have been presented
and surrendered until such Notes are actually received by the Company or its
designated agent. Holders of Notes in definitive form whose Notes are purchased
only in part
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will be issued new Notes equal in principal amount to the unpurchased portion of
the Notes surrendered.
"Investment Grade" means Baa3 or higher by Moody's or BBB- or higher
by S&P or the equivalent of such ratings by Moody's or S&P or any other Rating
Agency permitted to be used.
"Moody's" means Moody's Investors Service, Inc.
"Purchase Date" means, with respect to any Holder of Notes, no earlier
than June 1, 2001 and no later than 30 days after the Notes have been presented
and surrendered to the Company by any Holder of Notes.
"Rating Agencies" means Moody's and S&P and, if Moody's or S&P or both
shall not make a rating of the senior unsecured long-term debt of the Company
publicly available, a nationally recognized securities rating agency or
agencies, as the case may be, selected by the Company, which shall be
substituted for S&P or Moody's or both, as the case may be.
"Rating Decline" means the rating of the senior unsecured long-term
debt of the Company shall be reduced below Investment Grade by either of the
Rating Agencies.
"S&P" means Standard & Poor's Ratings Services, a division of The
McGraw Hill Companies, Inc.
The Notes and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit 1 hereto (the "Form of Notes").
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Exhibit 1
[FACE OF SECURITY]
[This Security is a global Security within the meaning of the
Indenture hereinafter referred to and is registered in the name of a Depositary
or a nominee of a Depositary. This Security is exchangeable for Securities
registered in the name of a Person other than the Depositary or its nominee only
in the limited circumstances described in or pursuant to the Indenture, and no
transfer of this Security (other than a transfer of this Security as a whole by
the Depositary to a nominee of the Depositary or by a nominee of the Depositary
to the Depositary or another nominee of the Depositary) may be registered except
in such limited circumstances. The Depository Trust Company, a New York
corporation ("DTC"), shall act as the Depositary until a successor shall be
appointed by the Company and the Security Registrar. Unless this certificate is
presented by an authorized representative of DTC to the Issuer or its agent for
registration of transfer, exchange or payment, and any certificate issued is
registered in the name of Cede & Co. or such other name as may be requested by
an authorized representative of DTC (and any payment is made to Cede & Co. or
such other entity as may be requested by an authorized representative of DTC),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an
interest herein.]*
Number ___________ $ ________
PENNZOIL-QUAKER STATE COMPANY
8.65% NOTE DUE 2002
CUSIP 709323 AC 3
PENNZOIL-QUAKER STATE COMPANY, a corporation duly organized and
existing under the laws of the State of Delaware (herein called the "Company,"
which includes any successor Person under the Indenture hereinafter referred
to), FOR VALUE RECEIVED, hereby PROMISES TO PAY TO _________________________, or
registered assigns, the principal sum of ______________________ Dollars[, or
such greater or lesser amount as is indicated on the Schedule of Exchanges of
Securities hereto,]* on December 1, 2002, and to pay interest thereon from
December 5, 2000 or from the most recent Interest Payment Date to which interest
has been paid or duly provided for, semi-annually on June 1 and December 1 in
each year, commencing June 1, 2001, at the rate of 8.65% per annum, subject to
adjustment of such rate as provided below, until the principal hereof is paid or
made available for payment. The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in such Indenture,
be paid to the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest payment, which shall be the May 15 or November 15 (whether or
not a Business Day), as the case may be, next preceding such Interest Payment
Date. Any such interest not so punctually paid or duly provided for will
forthwith cease to be payable to the Holder on such Regular Record Date and may
either be paid to the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest to be
* To be included in a global Security.
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fixed by the Trustee, notice whereof shall be given to Holders of Securities of
this series not less than 10 days prior to such Special Record Date, or be paid
at any time in any other lawful manner not inconsistent with the requirements of
any securities exchange on which the Securities may be listed, and upon such
notice as may be required by such exchange, all as more fully provided in the
Indenture.
In the event of a decline in the senior unsecured long-term debt
rating of the Company below investment grade (a "Rating Decline") by Moody's
Investors Service, Inc. ("Moody's") or Standard & Poor's Ratings Services
("S&P") prior to December 1, 2002, the rate of interest on this Security will
increase by 0.75% per annum beginning with the day following the announcement of
a Rating Decline by Moody's or S&P through the first date on which the senior
unsecured long-term debt rating of the Company is rated as investment grade by
Moody's and S&P, at which time this Security will bear interest at a rate of
8.65% per annum. In the event of one or more subsequent Rating Declines, the
rate of interest on this Security shall again be adjusted as provided in the
previous sentence.
Payment of the principal of and premium, if any, and interest on this
Security will be made at the office or agency of the Company maintained for that
purpose in Dallas, Texas, in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts. Payments in respect of this Security, if in the form of a global
Security, shall be made by wire transfer of immediately available funds to the
accounts specified by the Holder of this Security. In all other cases, at the
option of the Company, payment of interest on this Security may be made by check
mailed to the address of the Person entitled thereto as such address shall
appear in the Security Register.
Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
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Dated:
PENNZOIL-QUAKER STATE COMPANY
[SEAL] By:______________________________
Name:
Title:
Attest:
________________________________
Name:
Title:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION:
This is one of the Securities of the series
designated therein referred to in the
within-mentioned Indenture.
THE CHASE MANHATTAN BANK,
as Trustee
By ____________________________
Authorized Officer
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[REVERSE OF SECURITY]
PENNZOIL-QUAKER STATE COMPANY
8.65% NOTE DUE 2002
This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued and to be issued in one or more
series under an Indenture, dated as of February 1, 1999 (herein called the
"Indenture"), between the Company and The Chase Manhattan Bank (as successor to
Chase Bank of Texas, National Association) (herein called the "Trustee," which
term includes any successor trustee under the Indenture), to which Indenture and
all indentures supplemental thereto reference is hereby made for a statement of
the respective rights, limitations of rights, duties and immunities thereunder
of the Company, the Trustee and the Holders of the Securities and of the terms
upon which the Securities are, and are to be, authenticated and delivered. This
Security is one of the series designated on the face hereof, limited in
aggregate principal amount to $150,000,000.
The Securities of this series shall be subject to redemption at the
option of the Company prior to maturity as set forth pursuant to the Indenture.
The Securities of this series shall not be subject to a sinking fund
requirement.
The Indenture contains provisions for defeasance of (a) the entire
indebtedness of this Security and (b) certain restrictive covenants upon
compliance by the Company with certain conditions set forth therein.
If an Event of Default with respect to the Securities of this series
shall occur and be continuing, the principal of all the Securities of this
series may be declared due and payable in the manner and with the effect
provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of a majority in aggregate principal amount of all
Securities at the time Outstanding to be affected. The Indenture also contains
provisions permitting the Holders of specified percentages in aggregate
principal amount of the Securities of this series at the time Outstanding, on
behalf of the Holders of all Securities of this series, to waive compliance by
the Company with certain provisions of the Indenture and certain past defaults
under the Indenture and their consequences. Any such consent or waiver by the
Holder of this Security shall be conclusive and binding upon such Holder and
upon all future Holders of this Security and of any Security issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Security.
As set forth in, and subject to, the provisions of the Indenture, no
Holder of any Security of this series will have any right to institute any
proceeding with respect to the Indenture or for any remedy thereunder, unless
such Holder shall have previously given to the Trustee written notice of a
continuing Event of Default with respect to this series, the Holders of not less
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than 25% in principal amount of the Outstanding Securities of this series shall
have made written requests, and offered reasonable indemnity, to the Trustee to
institute such proceeding as trustee, and the Trustee shall not have received
from the Holders of a majority in principal amount of the Outstanding Securities
of this series a direction inconsistent with such request and shall have failed
to institute such proceeding within 60 days; provided, however, that such
limitations do not apply to a suit instituted by the Holder hereof for the
enforcement of payment of the principal of or interest on this Security on or
after the respective due dates expressed herein.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of and interest on this
Security at the times, place and rate, and in the coin or currency, herein
prescribed.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company in any place where the principal of (and
premium, if any) and interest on this Security are payable, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Securities of
this series, of authorized denominations and for the same aggregate principal
amount, will be issued to the designated transferee or transferees.
The Securities of this series are issuable only in registered form
without coupons in denominations of $1,000 and any integral multiple thereof.
As provided in the Indenture and subject to certain limitations therein set
forth, Securities of this series are exchangeable for a like aggregate principal
amount of Securities of this series of a different authorized denomination, as
requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Security is registered as the owner
hereof for all purposes, whether or not this Security is overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
If a Rating Decline occurs at any time after May 1, 2001 but before
November 1, 2002, or it occurs on or prior to and is continuing as of May 1,
2001, a Holder of this Security shall have the right, at the Holder's option, to
require that the Company purchase this Security in whole or in part in integral
multiples of $1,000 at a purchase price in cash in an amount equal to 100% of
the principal amount hereof plus accrued and unpaid interest, if any, to the
date of purchase. The option described in this paragraph will lapse if the
senior unsecured long-term debt rating of the Company is again rated as
investment grade by both Rating Agencies.
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In the case of a purchase of this Security in connection with a Rating
Decline, interest accrued to the date of purchase will be paid as specified in a
notice from the Company and, unless the Company shall default in payment of the
purchase price, after the date of purchase, interest will cease to accrue with
respect to this Security.
All terms used in this Security that are defined in or pursuant to the
Indenture shall have the respective meanings assigned to them.
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ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT -_______________
TEN ENT - as tenants by entireties (Cust)
JT TEN - as joint tenants with right of Custodian for_____________________
survivorship and not as tenants (Minor)
in common under Uniform Gifts to
Minors Act of_____________________
(State)
Additional abbreviations may also be used though not in the above list.
____________________
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
______________________________________
________________________________________________________________________________
Please print or typewrite name and address including postal zip code of assignee
________________________________________________________________________________
_______________________________________________________________________________
the within Security and all rights thereunder, hereby irrevocably constituting
and appointing
_______________________________________________________________________________
to transfer said Security on the books of the Company, with full power of
substitution in the premises.
Dated___________________________ ________________________________
Registered Holder
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SCHEDULE OF EXCHANGES OF SECURITIES*
The following exchanges of a part of this global Security for other Securities
have been made:
Principal Amount of
Amount of Decrease in Amount of Increase this Global Security Signature of
Principal Amount of in Principal Amount following such authorized officer of
Date of this of this decrease Trustee or
Exchange Global Security Global Security (or increase) Security Custodian
- -------- --------------- --------------- ------------- ------------------
_____________________
* To be included in a global Security.
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