Filed pursuant to Rule 424(b)(2)
Registration No. 33-63996
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED JUNE 14, 1993
U.S.$200,000,000
[LOGO]
Texaco Capital Inc.
3.50% Guaranteed Cash-Settled Convertible Notes Due 2004
Payment of principal and interest is unconditionally guaranteed by
and convertible into the cash value of the common stock of
Texaco Inc.
Interest Payable August 5
----------------
Payments on the 3.50% Guaranteed Cash-Settled Convertible Notes Due 2004 (the
"Notes" ) will be made without deduction for United States withholding taxes,
to the extent described under "Description of the Notes--Payment of
Additional Amounts". The Notes will mature on August 5, 2004. The Notes
are redeemable at par (i) at the option of Texaco Capital Inc. (the
"Company"), as a whole but not in part, at any time on or after
August 5, 1999 and (ii) at any time in the event of certain
changes affecting United States taxation. See "Description of
the Notes-- Redemption by the Company" and "--Tax Redemption".
At any time on or after September 15, 1997 up to and including July 22, 2004,
unless previously redeemed, Notes may be converted into the cash Conversion
Amount (as defined herein), equal to the product of the Conversion Ratio
(equal to 71.35 per U.S.$10,000 principal amount of Notes) and the
Closing Price (as defined herein) of the common stock (the "Texaco
Common Stock") of Texaco Inc. ("Texaco") on the relevant
measurement date(s) as described under "Description of the
Notes--Conversion". The Closing Price of the Texaco Common
Stock on July 28, 1997 was $111.93 per share. The Notes do
not represent any right to receive any Texaco Common
Stock or other securities. The price of the Texaco
Common Stock serves solely as the index to
determine the Conversion Amount.
Each Note will be represented initially by a temporary global bearer Note,
without interest coupons (the "Temporary Global Note"), which will be
deposited with a common depositary for the Euroclear Operator (as defined
herein) and Cedel Bank (as defined herein). Interests in the Temporary
Global Note will be exchangeable for interests in a permanent global
Note, without interest coupons (the "Permanent Global Note"), not
earlier than 40 days after the date upon which payment for and
delivery of the Notes is made, upon customary certification as
to non-United States beneficial ownership. Interests in the
Permanent Global Note will be exchangeable upon 30 days'
written notice by beneficial owners thereof and in
certain other circumstances for definitive Notes in
bearer form with interest coupons attached
("Definitive Notes"), in denominations of
U.S.$10,000 each. See "Description of the
Notes--Form, Denomination and Exchange".
Application has been made to list the Notes solely on the Luxembourg Stock
Exchange. The Notes will be considered by the Luxembourg Stock Exchange as a
fixed-rate debt issue.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE UNITED STATES 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.
Underwriting
Price to Discounts and Proceeds to
Public (1) Commissions(2) Company (3)
---------------- --------------- ----------------
Per Note......................................................... 100% 2.50% 97.50%
Total............................................................ $ 200,000,000 $ 5,000,000 $ 195,000,000
(1) Plus accrued interest, if any, from August 5, 1997.
(2) The Company has agreed to reimburse the Underwriters for certain expenses,
not to exceed $200,000, incurred in connection with the offering made
hereby.
(3) Before deduction of expenses payable by the Company (including those
referred to in note (2) above) estimated at $210,000.
----------------
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 the Temporary
Global Note will be deposited with a common depositary for the Euroclear
Operator and Cedel Bank on or about August 5, 1997, against payment in
immediately available funds.
Credit Suisse First Boston
SBC Warburg UBS Limited
A DIVISION OF SBC
The date of this Prospectus Supplement is July 29, 1997.
IN CONNECTION WITH THIS ISSUE, CREDIT SUISSE FIRST BOSTON (EUROPE) LIMITED
MAY OVER-ALLOT OR EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET
PRICE OF THE NOTES OR THE TEXACO COMMON STOCK AT LEVELS THAT MIGHT NOT OTHERWISE
PREVAIL. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. SEE
"UNDERWRITING".
The Company has entered into hedging arrangements related to the Texaco
Common Stock with Credit Suisse Financial Products ("CSFP"), an affiliate of one
of the Underwriters, in connection with the Company's obligations under the
Notes. In connection therewith, CSFP has purchased shares of Texaco Common Stock
in secondary market transactions at or before the time of the pricing of the
Notes. See "Underwriting".
The Company and Texaco confirm that they have taken reasonable care to
ensure that this Prospectus Supplement, the accompanying Prospectus and any
document incorporated by reference herein or therein do not contain any untrue
statement of a material fact regarding Texaco and its subsidiaries (including
the Company) or the Notes or omit to state such a material fact necessary in
order to make the statements herein and therein, in the light of the
circumstances under which they were made, not misleading.
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS
SUPPLEMENT OR THE PROSPECTUS WITH RESPECT TO THE OFFERING MADE HEREBY AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY, TEXACO 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 CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT
TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY OR TEXACO SINCE SUCH DATE.
------------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT PAGE PROSPECTUS PAGE
- ------------------------------------------------- --------- ------------------------------------------------- -----
Addendum--Documents Incorporated by Available Information............................ 2
Reference...................................... S-3 Documents Incorporated by Reference.............. 3
Use of Proceeds.................................. S-3 Texaco Inc....................................... 3
Texaco Capital Inc............................... S-4 Ratio of Earnings to Fixed Charges............... 4
Selected Financial Data of Texaco................ S-5 Texaco Capital Inc............................... 4
Price Range of the Texaco Common Stock........... S-7 Use of Proceeds.................................. 4
Description of the Notes......................... S-8 Plan of Distribution............................. 4
United States Federal Taxation................... S-19 Description of the Debt Securities............... 5
Underwriting..................................... S-21 Description of the Warrants...................... 10
Experts.......................................... S-22 Experts.......................................... 11
Legal Opinions................................... S-22 Legal Opinions................................... 12
General Information.............................. S-22
------------------------
S-2
ADDENDUM--DOCUMENTS INCORPORATED BY REFERENCE
The documents incorporated by reference in this Prospectus Supplement and
the accompanying Prospectus include:
(a) Annual Report of Texaco for the fiscal year ended December 31, 1996,
filed on Form 10-K (dated and filed March 27, 1997);
(b) Quarterly Report of Texaco for the quarterly period ended March 31,
1997, filed on Form 10-Q (dated and filed May 12, 1997);
(c) Form 8-K--Texaco--date of earliest event reported, December 24, 1996
(dated January 6, 1997 and filed January 7, 1997);
(d) Form 8-K--Texaco--date of earliest event reported, January 23, 1997
(dated and filed January 23, 1997);
(e) Form 8-K--Texaco--date of earliest event reported, January 27, 1997
(dated January 28, 1997 and filed January 29, 1997);
(f) Form 8-K--Texaco--date of earliest event reported, March 18, 1997 (dated
and filed March 19, 1997);
(g) Form 8-K--Texaco--date of earliest event reported, April 21, 1997 (dated
and filed April 22, 1997);
(h) Form 8-K--Texaco--date of earliest event reported, June 17, 1997 (dated
and filed June 19, 1997);
(i) Form 8-K--Texaco--date of earliest event reported, July 16, 1997 (dated
and filed July 17, 1997);
(j) Form 8-K--Texaco--date of earliest event reported, July 22, 1997 (dated
and filed July 22, 1997);
(k) Form 8-K--Texaco--date of earliest event reported, July 25, 1997 (dated
and filed July 25, 1997); and
(l) Texaco's Proxy Statement dated March 27, 1997, issued in connection with
Texaco's 1997 Annual Meeting.
See "Documents Incorporated by Reference" in the accompanying Prospectus.
The United States Securities and Exchange Commission (the "Commission")
maintains a World Wide Web site that contains reports, proxy and information
statements and other information regarding Texaco. The address of such site is:
http://www.sec.gov.
Copies of all documents incorporated by reference herein are available
without charge at the specified office of the Luxembourg Paying Agent (as
defined below).
USE OF PROCEEDS
The net proceeds of the sale of the Notes will be lent to Texaco or its
subsidiaries to be used for working capital, for retirement of debt and for
other general corporate purposes.
S-3
TEXACO CAPITAL INC.
Texaco Capital Inc., a wholly owned subsidiary of Texaco, is a Delaware
corporation which was incorporated on June 24, 1983. Its principal executive
offices are located at 1013 Centre Road, Wilmington, Delaware 19805; telephone:
(302) 998-0595. The Company is engaged principally in the business of lending
funds borrowed from unrelated persons to Texaco and its subsidiaries for general
corporate purposes. The Directors of the Company and their principal occupations
are: Robert C. Gordan, Assistant Treasurer of Texaco; James F. Link, Treasurer
of Texaco; and Peter M. Wissel, Assistant Treasurer of Texaco. The address of
each of the Directors is 2000 Westchester Avenue, White Plains, New York 10650.
SHORT-TERM DEBT AND CAPITALIZATION
The following table sets forth the short-term debt and capitalization of the
Company as of March 31, 1997, as adjusted to give effect to the issuance of the
Notes offered hereby:
(MILLIONS OF
DOLLARS)
-------------
(UNAUDITED)(a)
Short-Term Debt:
Current portion of long-term debt................................................................ $ 494
------
------
Long-Term Debt:
Medium-term Notes, due 1998 through 2043......................................................... $ 438
8 1/2% Extendible Notes Due 1999................................................................. 5
9.45% Extendible Notes Due 2000.................................................................. 51
9% Notes Due 1999................................................................................ 200
9 3/4% Debentures Due 2020....................................................................... 250
8 5/8% Debentures Due 2010....................................................................... 150
8 1/2% Notes Due 2003............................................................................ 199
8 7/8% Debentures Due 2021....................................................................... 150
8 1/4% Debentures Due 2006....................................................................... 150
8 5/8% Debentures Due 2031....................................................................... 199
8 5/8% Debentures Due 2032....................................................................... 199
6 7/8% Notes Due 1999............................................................................ 200
8 3/8% Debentures Due 2022....................................................................... 198
8% Debentures Due 2032........................................................................... 147
7 3/4% Debentures Due 2033....................................................................... 199
7 1/2% Debentures Due 2043....................................................................... 198
6 7/8% Debentures Due 2023....................................................................... 195
7.09% Notes Due 2007............................................................................. 150
3.50% Cash-Settled Convertible Notes Due 2004.................................................... 200(b)
------
Total Long-Term Debt......................................................................... $ 3,478(b)
------
------
- ------------------------
(a) Stockholders' equity as of March 31, 1997 amounted to $1,000 of common
stock, $1.00 par value. Authorized capital is $1,000.
(b) Including the Notes offered hereby.
There has been no material change in the capitalization of the Company since
March 31, 1997.
SEPARATE FINANCIAL INFORMATION FOR THE COMPANY IS NOT INCLUDED HEREIN AND
WILL NOT BE INCLUDED IN ANY REPORTS FILED PURSUANT TO THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED, AS THE COMPANY IS WHOLLY OWNED BY TEXACO, IT
ESSENTIALLY HAS NO INDEPENDENT OPERATIONS, AND THE NOTES ARE FULLY AND
UNCONDITIONALLY GUARANTEED BY TEXACO.
S-4
SELECTED FINANCIAL DATA OF TEXACO
CONSOLIDATED SHORT-TERM DEBT AND CAPITALIZATION
The following table sets forth the consolidated short-term debt and
capitalization of Texaco and subsidiary companies as of March 31, 1997, as
adjusted to give effect to the issuance of the Notes offered hereby:
(MILLIONS
OF
DOLLARS)
-----------
(UNAUDITED)
Short-Term Debt:
Notes payable, commercial paper and current portion of long-term debt.............................. $ 466
-----------
-----------
Long-Term Debt and Minority Interest:
Long-term debt and capital lease obligations....................................................... $ 5,229(a)
Minority interest in subsidiary companies.......................................................... 669
-----------
Total Long-Term Debt and Minority Interest....................................................... 5,898(a)
-----------
Stockholders' Equity:
Market Auction Preferred Shares.................................................................... 300
ESOP Convertible Preferred Stock................................................................... 471
Unearned employee compensation and benefit plan trust.............................................. (377)
Common Stock--par value $6.25:
Shares authorized--350,000,000
Shares issued-- 274,293,417, including treasury stock............................................ 1,714
Paid-in capital in excess of par value............................................................. 630
Retained earnings.................................................................................. 9,048
Currency translation adjustment.................................................................... (95)
Unrealized net gain on investments................................................................. 22
-----------
11,713
Less--Common Stock held in treasury, at cost....................................................... 651
-----------
Total Stockholders' Equity....................................................................... 11,062
-----------
Total Capitalization........................................................................... $ 16,960(a)
-----------
-----------
- ------------------------
(a) Including the Notes offered hereby.
There has been no material adverse change in the consolidated capitalization
of Texaco and subsidiary companies since March 31, 1997.
S-5
OPERATING RESULTS AND BALANCE SHEET DATA
The following summary of consolidated financial information, with the
exception of the ratio of earnings to fixed charges on a total enterprise basis,
was derived from and is qualified in its entirety by, and should be read in
conjunction with, the financial statements contained in Texaco's Annual Report
on Form 10-K for the year ended December 31, 1996 and the Quarterly Report on
Form 10-Q for the quarterly period ended March 31, 1997:
DECEMBER 31,
MARCH 31, -----------------------------------------------------
1997 1996 1995 1994 1993 1992
----------- --------- --------- --------- --------- ---------
(UNAUDITED) (MILLIONS OF DOLLARS)
FOR THE PERIOD ENDED:
Total revenues from continuing operations.............. $ 12,029 $ 45,500 $ 36,787 $ 33,353 $ 34,071 $ 36,530
Net income from continuing operations before
discontinued chemical operations and cumulative
effect of accounting changes......................... $ 980 $ 2,018 $ 728 $ 979 $ 1,259 $ 1,038
Discontinued chemical operations....................... -- -- -- (69) (191) (26)
Cumulative effect of accounting changes................ -- -- (121) -- -- (300)
----------- --------- --------- --------- --------- ---------
Net income............................................. $ 980 $ 2,018 $ 607 $ 910 $ 1,068 $ 712
Ratio of earnings to fixed charges of Texaco on a total
enterprise basis (unaudited)......................... 5.90 5.75 2.55 2.86 2.91 3.10
AT END OF PERIOD:
Current assets......................................... $ 7,361 $ 7,665 $ 6,458
Noncurrent assets...................................... 19,647 19,298 18,479
Current liabilities.................................... (5,742) (6,184) (5,206)
Noncurrent liabilities and deferred credits............ (9,535) (9,749) (9,545)
Minority interest in subsidiary companies.............. (669) (658) (667)
----------- --------- ---------
Stockholders' equity................................... $ 11,062 $ 10,372 $ 9,519
----------- --------- ---------
----------- --------- ---------
RECENT DEVELOPMENTS
On July 22, 1997, Texaco reported that consolidated net income of Texaco and
subsidiary companies for the second quarter of 1997 totaled $571 million, or
$2.14 per share, as compared with $689 million or $2.59 per share for the second
quarter of 1996. For the first half of 1997, net income was $1,551 million, or
$5.86 per share, as compared with $1,075 million, or $4.01 per share for the
first half of 1996. Net income for all periods included special items, as noted
below:
FOR THE THREE MONTHS
FOR THE SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
-------------------- --------------------
1997 1996 1997 1996
--------- --------- --------- ---------
(UNAUDITED)
Net income before special items.......................................... $ 932 $ 851 $ 440 $ 465
--------- --------- --------- ---------
Gains on major asset sales............................................... 174 224 174 224
Financial reserves....................................................... (43) -- (43) --
U.S. tax issue........................................................... 488 -- -- --
--------- --------- --------- ---------
619 224 131 224
--------- --------- --------- ---------
Net income............................................................... $ 1,551 $ 1,075 $ 571 $ 689
--------- --------- --------- ---------
--------- --------- --------- ---------
For a further discussion of Texaco's second quarter 1997 earnings, reference
is made to Texaco's Current Report on Form 8-K dated July 22, 1997 (date of
earliest event reported: July 22, 1997), as filed with the Commission.
In addition, Texaco reported short-term debt of $472 million, long-term debt
and capital lease obligations of $5,067 million, minority interest in subsidiary
companies of $656 million and total stockholders' equity of $11,415 million at
June 30, 1997.
S-6
PRICE RANGE OF THE TEXACO COMMON STOCK
The Texaco Common Stock is traded on the New York Stock Exchange, Inc. (the
"NYSE") under the symbol "TX". The following table sets forth the quarterly high
and low closing prices for the Texaco Common Stock for each of the four calendar
quarters in 1993, 1994, 1995 and 1996 and the monthly high and low closing
prices for the Texaco Common Stock for the first six months of 1997 and for
July, 1997 through July 28, 1997, and the closing price at July 28, 1997, all as
reported by the NYSE. The historical prices of the Texaco Common Stock should
not be taken as an indication of future prices. No assurance can be given that
the price of the Texaco Common Stock will achieve or remain at a level that will
result in the Conversion Amount of a Note exceeding the principal amount of such
Note.
HIGH LOW
($) ($)
--------- ---------
1993
Quarter ended March 31....................................................................... 64.50 57.75
Quarter ended June 30........................................................................ 65.25 62.13
Quarter ended September 30................................................................... 67.75 61.25
Quarter ended December 31.................................................................... 69.50 62.50
1994
Quarter ended March 31....................................................................... 67.75 63.00
Quarter ended June 30........................................................................ 65.63 60.38
Quarter ended September 30................................................................... 63.88 59.00
Quarter ended December 31.................................................................... 65.38 59.63
1995
Quarter ended March 31....................................................................... 66.63 59.88
Quarter ended June 30........................................................................ 69.13 65.00
Quarter ended September 30................................................................... 67.25 63.75
Quarter ended December 31.................................................................... 80.13 64.38
1996
Quarter ended March 31....................................................................... 88.38 76.25
Quarter ended June 30........................................................................ 88.13 80.00
Quarter ended September 30................................................................... 95.25 84.00
Quarter ended December 31.................................................................... 105.88 94.00
1997
January...................................................................................... 108.38 99.63
February..................................................................................... 105.50 98.88
March........................................................................................ 109.75 98.75
April........................................................................................ 108.50 101.00
May.......................................................................................... 113.25 104.13
June......................................................................................... 113.88 108.10
July (through July 28)....................................................................... 113.63 109.63
Closing price on July 28, 1997............................................................... 111.93
Holders of the Notes will not be entitled to receive any dividends that may
be payable by Texaco with respect to the Texaco Common Stock.
On July 25, 1997 Texaco's Board of Directors declared a 2-for-1 stock split
to be paid in the form of a stock dividend on September 29, 1997 to holders of
record of the Texaco Common Stock on September 11, 1997. This stock split will
result in an adjustment pursuant to the provisions described under "Description
of the Notes--Anti-Dilution Adjustments--Texaco Common Stock Dividends and
Extraordinary Dividends and Distributions".
S-7
DESCRIPTION OF THE NOTES
THE FOLLOWING DESCRIPTION OF THE PARTICULAR TERMS OF THE NOTES OFFERED
HEREBY SUPPLEMENTS AND, TO THE EXTENT INCONSISTENT THEREWITH, REPLACES THE
DESCRIPTION OF THE GENERAL TERMS AND PROVISIONS OF THE DEBT SECURITIES SET FORTH
IN THE ACCOMPANYING PROSPECTUS, TO WHICH DESCRIPTION REFERENCE IS HEREBY MADE.
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE INDENTURE
REFERRED TO IN THE ACCOMPANYING PROSPECTUS (AS AMENDED BY THE SECOND SUPPLEMENT
TO THE FIRST SUPPLEMENTAL INDENTURE TO BE DATED AS OF AUGUST 5, 1997 (AS SO
AMENDED, THE "INDENTURE")).
GENERAL
The Notes offered hereby constitute a series of Debt Securities under the
Indenture, which series is limited to U.S.$200 million aggregate principal
amount.
The Notes will bear interest from August 5, 1997 (the "Issue Date") at the
rate of 3.50% per annum, payable annually in arrears on each August 5,
commencing on August 5, 1998 (each, an "Interest Payment Date") or, if any such
day is not a Business Day, on the next succeeding Business Day (and no interest
shall accrue for the intervening period). Each Note will cease to bear interest
(except for interest on overdue amounts) from and after the earliest of (a)
August 5, 2004 (the "Maturity Date"), (b) the Interest Payment Date immediately
preceding the Conversion Date (as defined below) relating to the conversion of
such Note into the Conversion Amount or, if there is no such Interest Payment
Date, the Issue Date or (c) the date fixed for redemption of the Notes.
THE NOTES ARE CONVERTIBLE SOLELY INTO CASH OR PAYABLE IN CASH AT MATURITY OR
UPON REDEMPTION. THE NOTES DO NOT REPRESENT ANY RIGHT TO RECEIVE ANY TEXACO
COMMON STOCK OR OTHER SECURITIES. THE PRICE OF THE TEXACO COMMON STOCK SERVES
SOLELY AS THE INDEX USED TO DETERMINE THE CONVERSION AMOUNT APPLICABLE TO THE
NOTES.
The Notes do not contain event risk provisions designed to require the
Company to redeem the Notes, reset the interest rate or take other actions in
response to highly leveraged transactions, change in credit rating or other
similar occurrences.
DEFINITIONS
"Business Day" means any day that is not a Saturday, a Sunday or a day on
which banking institutions or trust companies in The City of New York, the City
of London or Luxembourg are authorized or obligated by law or executive order to
close.
"Calculation Agent" means CSFP or any sucessor or replacement calculation
agent under the Indenture.
"Closing Price" means, with respect to any security on any date, the closing
sale price or last reported sale price for the security on the principal
securities exchange or national market system on which such security is listed
for trading or quoted on such date or, if such security is not so listed or
quoted on such date, the fair market value of such security on such date, as
determined by the Calculation Agent, in each case subject to adjustment as
described under "--Anti-Dilution Adjustments" below.
"Conversion Amount" means, with respect to each Note surrendered for
conversion, (i) if the relevant Conversion Notice (as defined below) is
delivered prior to notice of redemption having been given by the Company, an
amount in cash determined by the Calculation Agent to be the Closing Price of
the Texaco Common Stock on the related Conversion Date (or, if the Conversion
Date is not a Trading Day, on the first following day that is a Trading Day)
multiplied by the Conversion Ratio, or (ii) if the relevant Conversion Notice is
delivered after the giving of a notice of redemption by the Company or within
eight Business Days prior to July 22, 2004, an amount in cash determined by the
Calculation Agent to be the
S-8
average of the Closing Prices of the Texaco Common Stock on the five consecutive
Trading Days commencing on the applicable Conversion Date multiplied by the
Conversion Ratio.
"Conversion Date" means, with respect to any Note surrendered for
conversion, the second Business Day immediately following the date of surrender
of such Note and delivery of the related Conversion Notice.
"Conversion Period" means, with respect to any Note, the period commencing
on September 15, 1997 and ending at 5:00 P.M., London time, on July 22, 2004 or,
if such Note shall have been called for redemption prior to August 5, 2004,
ending at 5:00 P.M., London time, on the date eight Business Days prior to the
date fixed for redemption thereof; provided that if the Company defaults in
making payment in full in respect of any Note that has been called for
redemption on or prior to the date fixed for redemption thereof, the Conversion
Period with respect to such Note will continue until 5:00 P.M., London time, on
the date upon which the full amount of the moneys payable in respect of such
Note has been duly received by the Trustee and notice of such receipt has been
duly given to the holders of the Notes by the Trustee.
"Conversion Ratio" means, with respect to any Note, 71.35 shares of Texaco
Common Stock per U.S.$10,000 principal amount.
"Settlement Date" means, with respect to any conversion of the Note, the day
as soon as reasonably practicable after the Conversion Date determined by the
Calculation Agent and the Principal Conversion Agent to be the day for payment
of the Conversion Amount (which date may be later than the Maturity Date or any
date fixed for redemption).
"Trading Day" means, with respect to any security, any day that is a trading
day on the principal securities exchange or national market system on which such
security is then listed or quoted other than a day on which (i) trading on such
exchange or national market system is scheduled to close prior to its regular
weekday closing time or (ii) there occurs any suspension of or limitation
imposed on trading of such security on such exchange or national market system
during the one-half hour period that ends at its regular weekday closing time
that is, in the determination of the Calculation Agent, material.
FORM, DENOMINATION AND EXCHANGE
The Notes will be issued in bearer form in denominations of U.S.$10,000.
In compliance with United States federal income tax laws and regulations,
Notes (including bearer Notes in global form) will not be offered, sold, resold
or delivered, directly or indirectly, in the United States or its possessions or
to United States persons (as defined below), except as otherwise permitted by
United States Treasury Regulations Section 1.163-5(c)(2)(i)(D). The Underwriters
have agreed that they will not, in connection with the original issuance of any
Notes or during the restricted period (as defined in United States Treasury
Regulations Section 1.163-5(c)(2)(i)(D)(7)) (the "restricted period"), offer,
sell, resell or deliver, directly or indirectly, any Notes to persons who are in
the United States or its possessions or to United States persons (other than as
permitted by the applicable Treasury Regulations described above). In addition,
the Underwriters have in place procedures reasonably designed to ensure that
their employees or agents who are directly engaged in selling Notes are aware of
the above restrictions on the offering, sale, resale or delivery of Notes.
Notes and any coupons appertaining thereto will bear the following legend:
"Any United States person who holds this obligation will be subject to
limitations under the United States federal income tax laws, including the
limitations provided in Sections 165(j) and 1287(a) of the United States
Internal Revenue Code". The sections referred to in such legend provide that,
with certain exceptions, a United States person will not be permitted to deduct
any loss, and will not be eligible for capital gain treatment with respect to
any gain realized on the sale, exchange or redemption of, such Notes or coupons.
S-9
As used herein, "United States person" means, for United States federal
income tax purposes, a citizen or resident of the United States, a corporation,
partnership or other entity created or organized in or under the laws of the
United States or any political subdivision thereof, or an estate or trust the
income of which is subject to United States federal income taxation regardless
of its source.
Notes may be presented for exchange in the manner set forth below. No
service charge will be made for any exchange of Notes, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith. Notes and any coupons appertaining
thereto will be transferable by delivery.
Each Note will be represented initially by the Temporary Global Note,
without interest coupons, which will be deposited with a common depositary (a
"Common Depositary") for the Morgan Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear System (the "Euroclear Operator") and Cedel
Bank, societe anonyme ("Cedel Bank"), for credit to the account designated by or
on behalf of the subscriber thereof. Upon deposit of the Temporary Global Note,
the Euroclear Operator or Cedel Bank, as the case may be, will credit each
subscriber with a principal amount of Notes equal to the principal amount
thereof for which it has subscribed and paid. The interests of the beneficial
owner or owners in the Temporary Global Note will be exchangeable, on or after
the date (the "Exchange Date") that is 40 days after the date on which the
Company receives the proceeds of the sale of such Note (the "Closing Date"), for
an interest in the Permanent Global Note to be held by a Common Depositary for
the Euroclear Operator and Cedel Bank, for credit to the account designated by
or on behalf of the beneficial owner thereof; provided that (i) the Exchange
Date for any Note held by an Underwriter as part of an unsold allotment or
subscription more than 40 days after the Closing Date for such Note shall be the
day after the date such Note is sold by such Underwriter and (ii) such exchange
will be made only upon receipt of Ownership Certificates (as defined below). No
principal or interest may be paid on the Temporary Global Note until the person
entitled to receive such principal or interest furnishes an Ownership
Certificate. An "Ownership Certificate" is a signed certificate in writing (or
an electronic certificate described in United States Treasury Regulations
Section 1.163-5(c)(2)(i)(D)(3)(ii)) stating that on such date such Note (i) is
owned by a person that is not a United States person, (ii) is owned by a United
States person that (a) is a foreign branch of a United States financial
institution (as defined in United States Treasury Regulations Section
1.165-12(c)(1)(v)) (a "financial institution") purchasing for its own account or
for resale, or (b) is acquiring such Note through a foreign branch of a United
States financial institution and who holds the Note through such financial
institution through such date (and in either case (a) or (b), each such United
States financial institution agrees, on its own behalf or through its agent,
that the Company may be advised that it will comply with the requirements of
Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of 1986, as
amended, and the regulations thereunder), or (iii) is owned by a United States
or foreign financial institution for the purposes of resale during the
restricted period, and in addition if the owner of such Note is a United States
or foreign financial institution described in clause (iii) above (whether or not
also described in clause (i) or (ii)), such financial institution certifies that
it has not acquired the Note for purposes of resale directly or indirectly to a
United States person or to a person within the United States or its possessions.
The beneficial owner of a Note represented by the Permanent Global Note may,
upon 30 days' written notice to any Non-U.S. Paying Agent (as defined below),
given by the beneficial owner through either the Euroclear Operator or Cedel
Bank, exchange such owner's interest in the Permanent Global Note for a
Definitive Note or Notes, which will be serially numbered, with coupons
attached, in denominations of U.S.$10,000. Upon receipt by such Non-U.S. Paying
Agent of an initial request to exchange an interest in the Permanent Global Note
for a Definitive Note or Notes, all other interests in the Permanent Global Note
shall be exchanged for Definitive Notes. Interests in the Permanent Global Note
will also be exchanged by the Company in whole, but not in part, for Definitive
Notes, which will be serially numbered, with coupons attached, of any authorized
denominations if (i) any Note represented by the Permanent Global Note is
accelerated following an Event of Default (as defined in the accompanying
Prospectus) or
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(ii) either Euroclear or Cedel Bank or any other relevant clearing system is
closed for business for a continuous period of fourteen days (other than by
reason of public holidays) or announces an intention to cease business
permanently or in fact does so. The Common Depositary for the Euroclear Operator
and Cedel Bank will instruct the Principal Paying Agent regarding the aggregate
principal amount and denominations of Definitive Notes that must be
authenticated and delivered to each of the Euroclear Operator and Cedel Bank.
Such exchanges shall occur at no expense to the beneficial owners as soon as
practicable after the receipt of the initial request for Definitive Notes or of
a notice of such acceleration or clearing system closure. Notwithstanding the
foregoing, none of the Company, the Trustee and any Non-U.S. Paying Agent will
be required to exchange Notes to be redeemed during the period of 15 calendar
days preceding the first publication of notice of redemption of the Notes. No
Definitive Note will be delivered in the United States. References herein to
"Notes" shall, except where otherwise indicated, include interests in a
Permanent or Temporary Global Note as well as Definitive Notes and any
appurtenant coupons.
INTEREST AND PRINCIPAL PAYMENTS
Interest payable on a Note represented by the Temporary Global Note or any
portion thereof will be paid to each of the Euroclear Operator and Cedel Bank,
as the case may be, with respect to that portion of the Temporary Global Note
held for its account upon delivery to the Principal Paying Agent of an Ownership
Certificate signed by the Euroclear Operator or Cedel Bank, as the case may be,
dated no earlier than such Interest Payment Date, which certificate must be
based on Ownership Certificates provided to the Euroclear Operator or Cedel
Bank, as the case may be, by its member organizations. Each of the Euroclear
Operator and Cedel Bank will in such circumstances credit the interest received
by it in respect of the Temporary Global Note or any portion thereof to the
accounts of or for the beneficial owners thereof to the extent that they have
furnished such Ownership Certificates.
The Permanent Global Note will provide that principal of and interest on the
Permanent Global Note will be paid to each of the Euroclear Operator and Cedel
Bank, as the case may be, with respect to that portion of the Permanent Global
Note held for its account. Each of the Euroclear Operator and Cedel Bank will in
such circumstances credit such principal and any interest received by it in
respect of the Permanent Global Note to the respective accounts of or for the
beneficial owners of the Permanent Global Note at maturity, redemption or
conversion or on an Interest Payment Date, as the case may be. Payment of
principal of and any interest in respect of the Permanent Global Note will be
made to the Euroclear Operator and Cedel Bank in immediately available funds.
Payment of principal of and any interest on a Definitive Note at maturity or
upon redemption or conversion will be made in immediately available funds,
subject to any applicable laws and regulations, only against presentation and
surrender of such Note and any coupons at the offices of a Non-U.S. Paying Agent
by check or, at the option of the holder, by wire transfer of immediately
available funds to an account maintained by the payee with a bank located
outside the United States if appropriate wire transfer instructions have been
received by such Non-U.S. Paying Agent not less than 15 calendar days prior to
an applicable payment date. Payment of interest on a Definitive Note due on any
Interest Payment Date will be made only against presentation and surrender of
the coupon relating to such Interest Payment Date.
No payment with respect to any Note will 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 wire transfer to an account maintained with a bank located in the
United States except as may be permitted under United States federal tax laws
and regulations then in effect without adverse tax consequences to the Company.
Notwithstanding the foregoing, payments of principal of and interest on Notes
will be made at the office of the Company's paying agent in the Borough of
Manhattan, The City of New York, if and only if (i) payment of the full amount
thereof in U.S. dollars at all offices or agencies outside the United States is
illegal or effectively precluded by exchange controls or other similar
restrictions, (ii) such paying agent in the Borough of Manhattan, The City of
New York, under applicable law and regulations, would be able to
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make such payment and (iii) such payment would not involve, in the opinion of
the Company, adverse tax consequences for the Company.
PAYING AND CONVERSION AGENTS
The Company has initially designated The Chase Manhattan Bank as its
principal Paying Agent for the Notes outside the United States (the "Principal
Paying Agent", which term includes any successor principal paying agent
appointed by the Company). The Company may at any time appoint additional paying
agents for the Notes outside the United States (each a "Non-U.S. Paying Agent",
which term includes the Principal Paying Agent and any such additional or
successor paying agent appointed by the Company). So long as Notes are listed on
the Luxembourg Stock Exchange and the rules of such exchange so require, the
Company will maintain a Non-U.S. Paying Agent in Luxembourg (the "Luxembourg
Paying Agent"), which shall initially be The Chase Manhattan Bank Luxembourg
S.A.
The Company has initially designated The Chase Manhattan Bank as its
principal conversion agent for the Notes outside the United States (the
"Principal Conversion Agent", which term includes any successor principal
conversion agent appointed by the Company). The Company may at any time appoint
additional conversion agents for the Notes outside the United States (each a
"Conversion Agent", which term includes the Principal Conversion Agent and any
such additional or successor conversion agent appointed by the Company). So long
as Notes are listed on the Luxembourg Stock Exchange and the rules of such
exchange so require, the Company will maintain a Conversion Agent in Luxembourg,
which shall initially be The Chase Manhattan Bank Luxembourg S.A.
MATURITY AMOUNT
On the Maturity Date, each holder of a Note that has not previously given a
valid Conversion Notice (as described below under "--Conversion") will be
entitled to receive the principal amount of such Note (together with interest
payable on the Interest Payment Date falling on the Maturity Date).
CONVERSION
At any time during the Conversion Period, a Note may be surrendered for
conversion into the cash Conversion Amount at the option of the holder thereof
as follows. On any Business Day during the Conversion Period, the holder of a
Note may give notice to any Conversion Agent, who will provide copies to the
Company, the Calculation Agent, the Principal Conversion Agent and the Trustee,
in writing in the form provided in the Indenture (a "Conversion Notice") that
such holder elects to convert such Note or a specified portion thereof into the
Conversion Amount. Notes may only be converted in a minimum principal amount of
U.S.$10,000 and integral multiples of U.S.$10,000 in excess thereof. Any Note to
be converted, and all unmatured coupons appertaining thereto (for this purpose
treating any coupon expressed to be payable on the relevant Conversion Date as
an unmatured Coupon), must be surrendered to such Conversion Agent together with
the Conversion Notice relating thereto. In addition, the Company may impose
additional certification requirements or restrictions from time to time, and the
Conversion Agents may require indemnity for missing unmatured coupons. On and
after the Conversion Date with respect to any Note, unmatured coupons relating
to such Note (whether or not attached) shall become void and no payment shall be
made in respect thereof.
AT ANY TIME THAT A NOTE IS REPRESENTED BY AN INTEREST IN THE PERMANENT
GLOBAL NOTE (AS DESCRIBED ABOVE UNDER "--FORM, DENOMINATION AND EXCHANGE"), THE
CONVERTING OWNER OF A BENEFICIAL INTEREST IN SUCH NOTE MUST DELIVER THE
CONVERSION NOTICE IN THE MANNER AFORESAID TO THE EUROCLEAR OPERATOR OR CEDEL
BANK, WITH A COPY DELIVERED TO ANY CONVERSION AGENT, TOGETHER WITH AN AUTHORITY
TO DEBIT SUCH HOLDER'S ACCOUNT PRO TANTO. ON THE RELEVANT CONVERSION DATE, THE
EUROCLEAR OPERATOR OR CEDEL BANK, AS THE CASE MAY BE, SHALL DEBIT SUCH OWNER'S
ACCOUNT WITH THE PRINCIPAL AMOUNT OF THE NOTE TO BE CONVERTED AND THE PRINCIPAL
AMOUNT OF NOTES REPRESENTED BY THE PERMANENT GLOBAL NOTE SHALL BE REDUCED
ACCORDINGLY.
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NOTWITHSTANDING THE FOREGOING, NO NOTE MAY BE CONVERTED OR SURRENDERED FOR
CONVERSION INTO THE CASH CONVERSION AMOUNT AT ANY TIME THAT SUCH NOTE IS
REPRESENTED BY AN INTEREST IN THE TEMPORARY GLOBAL NOTE.
Any Conversion Agent will provide any holder of a Note with copies of the
form of Conversion Notice upon request. If the delivery instructions for
Conversion Notices shall be changed, the Principal Conversion Agent will notify
holders of Notes, in the manner set forth below under "--Notices", of such
revised delivery instructions. To be valid, a Conversion Notice must be given
precisely as required, and must be given by the holder of the Notes to be
converted. Conversion Notices that do not conform to the requirements of the
form of Conversion Notice or that are not delivered within the Conversion Period
will not be valid. Once given, a Conversion Notice may not be withdrawn or
revoked. Any question as to the validity of a Conversion Notice or as to whether
such notice has been properly and timely given will be resolved finally by the
Principal Conversion Agent in its sole discretion.
On the Settlement Date with respect to the conversion of a Note, the holder
of such Note will be entitled to receive the Conversion Amount in cash. If a
valid Conversion Notice has not been received by the Principal Conversion Agent
before the end of the Conversion Period, such holder will be entitled to receive
the principal amount of such Note on the Maturity Date or upon earlier
redemption (together with the accrued interest thereon, if any).
ANTI-DILUTION ADJUSTMENTS
The Closing Price of the Texaco Common Stock on any of the Trading Days used
to calculate the Conversion Amount will be subject to adjustment by the
Calculation Agent as described below to the extent that any of the events
requiring such adjustment occurs during the period commencing on the date of
this Prospectus Supplement and ending on such Trading Day.
TEXACO COMMON STOCK DIVIDENDS AND EXTRAORDINARY DIVIDENDS AND DISTRIBUTIONS
In the event that a dividend or other distribution is declared (i) on any
class of Texaco capital stock, payable in shares of Texaco Common Stock, (ii) on
the Texaco Common Stock payable in cash in an amount greater than 10% of the
Closing Price of the Texaco Common Stock on the date fixed for the determination
of the shareholders of Texaco entitled to receive such cash dividend (an
"Extraordinary Cash Dividend"), or (iii) on the Texaco Common Stock of evidences
of indebtedness or assets (including securities, but excluding any dividend or
distribution covered by clause (i) or any Texaco Spin-off described under
"--Dissolution of Texaco; Mergers, Consolidations or Sales of Assets; Spin-offs"
below) (an "Extraordinary Distribution"), any Closing Price of the Texaco Common
Stock used to calculate the Conversion Amount on any Trading Day that follows
the date (the "Texaco Record Date") fixed for the determination of the
shareholders of Texaco entitled to receive such dividend or other distribution
shall be increased by multiplying such Closing Price by a fraction, the
numerator of which shall be the number of shares of Texaco Common Stock
outstanding on the Texaco Record Date plus the number of shares constituting
such distribution or, in the case of any Extraordinary Cash Dividend or
Extraordinary Distribution, plus the number of shares of Texaco Common Stock
that could be purchased with the amount of such Extraordinary Cash Dividend or
the fair market value (as determined by the Calculation Agent, whose
determination shall be conclusive and binding) of the evidences of indebtedness
or assets constituting such Extraordinary Distribution at the Closing Price on
the Trading Day immediately subsequent to such Texaco Record Date, and the
denominator of which shall be the number of shares of Texaco Common Stock
outstanding on the Texaco Record Date.
SUBDIVISIONS AND COMBINATIONS OF THE TEXACO COMMON STOCK
In the event that the outstanding shares of Texaco Common Stock are
subdivided into a greater number of shares, the Closing Price of the Texaco
Common Stock used to calculate the Conversion Amount on any Trading Day that
follows the date on which such subdivision becomes effective will be
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proportionately increased and, conversely, in the event that the outstanding
shares of Texaco Common Stock are combined into a smaller number of shares, such
Closing Price of the Texaco Common Stock will be proportionately reduced.
RECLASSIFICATIONS OF THE TEXACO COMMON STOCK
In the event that the Texaco Common Stock is changed into the same or a
different number of shares of any class or classes of stock, whether by capital
reorganization, reclassification or otherwise (except to the extent otherwise
provided under "--Texaco Common Stock Dividends and Extraordinary Dividends and
Distributions" and "--Subdivisions and Combinations of Texaco Common Stock"
above or pursuant to a Reorganization Event described under "--Dissolution of
Texaco; Mergers, Consolidations or Sales of Assets; Spin-offs" below), the
Conversion Amount will be calculated by using the aggregate Closing Prices of
the shares of stock into which a share of Texaco Common Stock was changed on any
Trading Day that follows the effectiveness of such change.
As a result of the foregoing provisions, in the case of a reorganization or
reclassification of the Texaco Common Stock, the Closing Prices of one or more
securities in addition to or in substitution for the Texaco Common Stock may be
used to calculate the Conversion Amount. For example, if the Texaco Common Stock
were reclassified into one share of Texaco Class A Common Stock and one share of
Texaco Class B Common Stock, the Conversion Amount would be calculated by
reference to the Closing Prices of the Texaco Class A Common Stock and the
Texaco Class B Common Stock.
OTHER DILUTION EVENTS
In the event that the Company (with the prior written approval of the
Calculation Agent) or the Calculation Agent determines that an adjustment should
be made to the Closing Price of the Texaco Common Stock on any of the Trading
Days used to calculate the Conversion Amount as a result of one or more events
or circumstances not otherwise described above (even if such event or
circumstance is specifically excluded from the operation of the provisions
described above), the Company shall at its own expense and acting reasonably
request the Calculation Agent to determine as soon as practicable what
adjustment (if any) is fair and reasonable to take account thereof.
DISSOLUTION OF TEXACO; MERGERS, CONSOLIDATIONS OR SALES OF ASSETS;
SPIN-OFFS.
In the event of any (i) consolidation or merger of Texaco with or into
another entity (other than a consolidation or merger that does not result in a
reclassification, conversion, exchange or cancellation of outstanding Texaco
Common Stock), (ii) sale, transfer, lease or conveyance of all or substantially
all of the assets of Texaco, (iii) liquidation, dissolution or winding up of
Texaco or (iv) declaration of a distribution on the Texaco Common Stock of the
common stock of any subsidiary of Texaco (a "Texaco Spin-off") (any of the
events described in (i), (ii), (iii) or (iv), a "Reorganization Event"), for
purposes of determining the Conversion Amount, the Closing Price of the Texaco
Common Stock on any Trading Day subsequent to, in the case of a Reorganization
Event other than a Texaco Spin-off, the effective time of such Reorganization
Event or, in the case of a Texaco Spin-off, the record date fixed for the
determination of the shareholders of Texaco entitled to receive the securities
distributed in such Texaco Spin-off (the "Spin-off Record Date") will be deemed
to be the amount equal to (1) the value of the cash and other property
(including securities) received by a holder of a share of Texaco Common Stock
(assuming such holder of Texaco Common Stock failed to exercise any rights of
election and received per share the kind and amount received by a plurality of
non-electing shares) in any such Reorganization Event (plus, in the case of a
Texaco Spin-off, the value of a share of Texaco Common Stock), and (2) to the
extent that such holder obtains securities in any Reorganization Event, the
value of the cash and other property received by the holder of such securities
in any subsequent event with respect to the issuer of such securities that
would, if such issuer were Texaco, be a Reorganization Event. For purposes of
determining any such Closing Prices, the value of (i) any cash and other
property (other than securities) received in any such Reorganization
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Event will be an amount equal to the value of such cash and other property at
the effective time of such Reorganization Event (as determined by the
Calculation Agent, whose determination shall be conclusive and binding), and
(ii) any property consisting of securities received in any such Reorganization
Event will be an amount equal to the Closing Prices of such securities on any
Trading Day following, in the case of a Reorganization Event other than a Texaco
Spin-off, the effective time of such Reorganization Event or, in the case of a
Texaco Spin-off, the Spin-off Record Date.
As a result of the foregoing provisions, in the case of certain
Reorganization Events, the Closing Prices of the securities of a successor
entity to Texaco or the Closing Prices of the securities of another issuer,
including, for example, in the case of a Texaco Spin-off, the Closing Prices of
the distributed security, may determine the Conversion Amount. For example, in
the case of a stock for stock merger in which Texaco does not survive, the
Conversion Amount would be calculated by reference of the Closing Prices of a
successor entity to Texaco on the relevant Trading Days. As set forth above, the
Closing Prices of Texaco Common Stock are subject to adjustment for certain
events. Such Closing Prices will not be adjusted for other events, such as
offerings of Texaco Common Stock for cash or other consideration or an issuer
tender or exchange offer at a premium to the then-current market price, which
could adversely affect the price of Texaco Common Stock and, therefore,
adversely affect the trading price of the Notes. There can be no assurance that
Texaco will not make offerings of Texaco Common Stock in the future or effect an
issuer tender or exchange offer or take any other action that adversely affects
the value of the Notes but does not result in an anti-dilution adjustment.
If any action would require adjustment of the Closing Price pursuant to more
than one of the foregoing provisions, only one adjustment shall be made and such
adjustment shall be the amount of adjustment that has the highest absolute value
to the holder of a Note. No adjustment in the Closing Price shall be required
unless such adjustment would require an increase or decrease of at least 1% of
the Closing Price, but any adjustment that would otherwise be required to be
made shall be carried forward and taken into account in any subsequent
adjustment.
The Calculation Agent will promptly notify the Company and the Principal
Conversion Agent, which will in turn notify the holders of the Notes, in the
manner described below under "--Notices", of any event requiring an adjustment
and of the method of calculation to be used to make any dilution adjustment as
described above. So long as the Notes are listed on the Luxembourg Stock
Exchange, the Calculation Agent will also notify the Luxembourg Stock Exchange
with respect to any such adjustment.
RELATIONSHIP OF NOTES AND TEXACO COMMON STOCK
The Notes are convertible solely for cash and are payable in cash at
maturity or upon redemption or conversion and do not represent any right to
receive any Texaco Common Stock or other securities. The price of the Texaco
Common Stock serves solely as the index used to determine the Conversion Amount
applicable to the Notes.
The market price of the Notes may be affected by a variety of factors,
including, without limitation, possible changes in interest rates or by changes
in the price of the Texaco Common Stock. As the Conversion Amount is calculated
by reference to the Closing Price(s) of the Texaco Common Stock, the Conversion
Amount may be affected by volatility in the price of the Texaco Common Stock.
The Company has entered into hedging arrangements related to the Texaco
Common Stock with CSFP in connection with the Company's obligations under the
Notes. See "Underwriting."
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It is impossible to predict whether the price of the Texaco Common Stock
will rise or fall. Trading prices of Texaco Common Stock will be influenced by
Texaco's financial results and prospects and by complex and interrelated
political, economic, financial and other factors that can affect capital markets
generally, the market segment of which Texaco is a part and Texaco itself.
CALCULATION AGENT
All determinations made by the Calculation Agent shall be at the sole
discretion of the Calculation Agent and, in the absence of manifest error, shall
be conclusive and binding for all purposes. All results of any calculation of
the Conversion Amount will be rounded, if necessary, to the nearest
one-one-hundred-thousandth of a percent (with five one-millionths of a
percentage point being rounded downward).
NOTICES
Notices to holders of the Notes will be given by publication in a newspaper
in the English language of general circulation in the City of London or, if
publication in London is not practical, in an English language newspaper with
general circulation in Western Europe. Such publication is expected to be made
in the FINANCIAL TIMES. Notwithstanding the foregoing, so long as the Notes are
represented by the Temporary Global Note or the Permanent Global Note and such
Note is held on behalf of the Euroclear Operator or Cedel Bank, any such notice
may, at the Company's option in lieu of such publication, be given by delivery
to the Euroclear Operator or Cedel Bank, as the case may be, in which event such
notice shall be deemed to have been given to the holders of the Notes on the
seventh business day in Brussels or Luxembourg, as the case may be, after the
day on which such notice is so delivered.
So long as the Notes are listed on the Luxembourg Stock Exchange and the
rules of the Luxembourg Stock Exchange so require, notices to the Noteholders
will also be published in English in a leading newspaper having general
circulation in Luxembourg (which is expected to be the LUXEMBURGER WORT), or, if
such Luxembourg publication is not practicable, in one other leading English
language daily newspaper with general circulation in Europe, such newspaper
being published on each Business Day in morning editions, whether or not it
shall be published in Saturday, Sunday or holiday editions.
Except as set forth above, notices shall be deemed to have been given on the
date of publication as aforesaid or, if published on different dates, on the
date of the first such publication.
REDEMPTION BY THE COMPANY
The Notes are redeemable, at the option of the Company, as a whole but not
in part, at any time on or after August 5, 1999, at the principal amount thereof
(together with the accrued interest thereon, if any).
In the event that the Company exercises its option to redeem the Notes, the
Company will give notice to the holders of the Notes, in the manner described
below under "--Notices", not less than 15 days nor more than 30 days prior to
the date fixed for redemption. All notices of redemption will be made in the
name, and at the expense, of the Company.
TAX REDEMPTION
Notes may be redeemed as a whole, at the option of the Company at any time
prior to maturity, upon the giving of a notice of redemption as described below,
at the principal amount thereof, together with accrued interest to the date
fixed for redemption, if the Company determines that, as a result of any change
in or amendment to the laws (or any regulations or rulings promulgated
thereunder) of the United States or of any political subdivision or taxing
authority thereof or therein affecting taxation, or any change in official
position regarding the application or interpretation of such laws, regulations
or rulings, which change or amendment becomes effective on or after the date of
this Prospectus Supplement, the Company or Texaco, as the case may be, has or
will become obligated to pay Additional Amounts (as defined below) with respect
to such Notes as described below under "--Payment of Additional Amounts". Prior
to the giving of any notice of redemption pursuant to this paragraph, the
Company shall deliver to the Trustee (i) a certificate stating that the Company
is entitled to effect such redemption and setting forth a statement
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of facts showing that the conditions precedent to the right of the Company to so
redeem have occurred (the date on which such certificate is delivered to the
Trustee being the "Redemption Determination Date"), and (ii) an opinion of
counsel reasonably acceptable to the Trustee to such effect based on such
statement of facts; provided that no such notice of redemption shall be given
earlier than 60 days prior to the earliest date on which the Company or Texaco,
as the case may be, would be obligated to pay such Additional Amounts if a
payment in respect of such Note were then due.
Notice of redemption will be given not less than 30 nor more than 60 days
prior to the date fixed for redemption, which date will be specified in the
notice. Such notice will be given in the manner described under "Notices" above.
If any date fixed for redemption is a date prior to the Exchange Date,
Definitive Notes will be issuable on and after such redemption date as if such
redemption date had been the Exchange Date, subject to receipt of Ownership
Certificates described above under "--Form, Denomination and Exchange", delivery
of which is a condition to delivery of definitive bearer Notes.
If the Company shall determine that any payment made outside the United
States by the Company or Texaco, as the case may be, by any Paying Agent of
principal or interest due in respect of any Note or coupon would, under any
present or future laws or regulations of the United States, be subject to any
certification, identification or other information reporting requirement of any
kind, the effect of which is the disclosure to the Company, Texaco, any Paying
Agent or any governmental authority of the nationality, residence or identity of
a beneficial owner of such Note or coupon who is a United States Alien (as
defined below under "--Payment of Additional Amounts") (other than such a
requirement (a) that would not be applicable to a payment made by the Company or
Texaco, as the case may be, or any Paying Agent (i) directly to the beneficial
owner or (ii) to a custodian, nominee or other agent of the beneficial owner, or
(b) that can be satisfied by such custodian, nominee or other agent certifying
to the effect that such beneficial owner is a United States Alien; provided that
in each case referred to in clauses (a)(ii) and (b) payment by such custodian,
nominee or agent to such beneficial owner would not otherwise be subject to any
such requirement), the Company shall redeem the Notes, as a whole, at the
principal amount of the Notes, together with accrued interest to the date fixed
for redemption or, at the election of the Company or Texaco, as the case may be,
if the conditions of the next paragraph are satisfied, pay the additional
amounts specified in such paragraph. The Company shall make such determination
and election as soon as practicable and publish prompt notice thereof (the
"Determination Notice") stating the effective date of such certification,
identification or other information reporting requirements, whether the Company
will redeem the Notes or has elected to pay the additional amounts specified in
the next paragraph, and (if applicable) the last date by which the redemption of
the Notes must take place, as provided in the next sentence. If the Company
redeems the Notes, such redemption shall take place on such date, not later than
one year after the publication of the Determination Notice, as the Company shall
elect by notice to the Trustee at least 60 days prior to the date fixed for
redemption. Notice of such redemption of the Notes will be given to the holders
of the Notes not more than 60 nor less than 30 days prior to the date fixed for
redemption. Notwithstanding the foregoing, the Company shall not so redeem the
Notes if the Company or Texaco, as the case may be, shall subsequently
determine, not less than 30 days prior to the date fixed for redemption, that
subsequent payments would not be subject to any such certification,
identification or other information reporting requirement, in which case the
Company shall publish prompt notice of such determination and any earlier
redemption notice shall be revoked and of no further effect.
If and so long as the certification, identification or other information
reporting requirements referred to in the preceding paragraph would be fully
satisfied by payment of a backup withholding tax or similar charge, the Company
or Texaco, as the case may be, may elect to pay as additional amounts such
amounts as may be necessary so that every net payment made outside the United
States following the effective date of such requirements by the Company or
Texaco, as the case may be, or any Paying Agent of principal or interest due in
respect of any Note or any coupon of which the beneficial owner is a United
States Alien (but without any requirement that the nationality, residence or
identity of such beneficial owner be disclosed to the Company, Texaco, any
Paying Agent or any governmental authority, with respect to the
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payment of such additional amounts), after deduction or withholding for or on
account of such backup withholding tax or similar charge (other than a backup
withholding tax or similar charge that (i) would not be applicable in the
circumstances referred to in the second parenthetical clause of the first
sentence of the preceding paragraph, or (ii) is imposed as a result of
presentation of such Note or coupon for payment more than 15 days after the date
on which such payment becomes due and payable or on which payment thereof is
duly provided for, whichever occurs later), will not be less than the amount
provided for in such Note or coupon to be then due and payable. In the event the
Company or Texaco, as the case may be, elects to pay any additional amounts
pursuant to the applicable provisions of this paragraph, the Company shall have
the right to redeem the Notes as a whole at any time pursuant to the provisions
of the preceding paragraph and the redemption price of such Notes will not be
reduced for applicable withholding taxes. If the Company or Texaco, as the case
may be, elects to pay additional amounts pursuant to this paragraph and the
condition specified in the first sentence of this paragraph should no longer be
satisfied, then the Company will redeem the Notes as a whole, pursuant to the
applicable provisions of the preceding paragraph.
PAYMENT OF ADDITIONAL AMOUNTS
The Company or Texaco, as the case may be, will, subject to certain
exceptions and limitations set forth below, pay such additional amounts (the
"Additional Amounts") to the holder of any Note or of any coupon appertaining
thereto who is a United States Alien as may be necessary in order that every net
payment of the principal of and interest on such Note and any other amounts
payable on such Note, after withholding for or on account of any present or
future tax, assessment or governmental charge imposed upon or as a result of
such payment by the United States (or any political subdivision or taxing
authority thereof or therein), will not be less than the amount provided for in
such Note or coupon to be then due and payable. The Company or Texaco, as the
case may be, will not, however, be required to make any payment of Additional
Amounts to any such holder for or on account of:
(a) any such tax, assessment or other governmental charge that would not
have been so imposed but for (i) the existence of any present or former
connection between such holder (or between a fiduciary, settlor,
beneficiary, member or shareholder of such holder, if such holder is an
estate, a trust, a partnership or a corporation) and the United States and
its possessions, including, without limitation, such holder (or such
fiduciary, settlor, beneficiary, member or shareholder) being or having been
a citizen or resident thereof or being or having been engaged in a trade or
business or present therein or having or having had a permanent
establishment therein or (ii) the presentation by the holder of any such
Note or coupon for payment on a date more than 15 days after the date on
which such payment became due and payable or the date on which payment
thereof is duly provided for, whichever occurs later;
(b) any estate, inheritance, gift, sales, transfer or personal property
tax or any similar tax, assessment or governmental charge;
(c) any tax, assessment or other governmental charge imposed by reason
of such holder's past or present status as a personal holding company or
foreign personal holding company or controlled foreign corporation or
passive foreign investment company with respect to the United States or as a
corporation that accumulates earnings to avoid United States federal income
tax or as a private foundation or other tax-exempt organization;
(d) any tax, assessment or other governmental charge that is payable
otherwise than by withholding from payments on or in respect of any Note;
(e) any tax, assessment or other governmental charge required to be
withheld by any Paying Agent from any payment of principal of or interest on
any Note, if such payment can be made without such withholding by any other
Paying Agent in a city in Western Europe;
(f) any tax, assessment or other governmental charge that would not have
been imposed but for the failure to comply with certification, information
or other reporting requirements concerning the
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nationality, residence or identity of the holder or beneficial owner of such
Note, if such compliance is required by statute or by regulation of the
United States or of any political subdivision or taxing authority thereof or
therein as a precondition to relief or exemption from such tax, assessment
or other governmental charge;
(g) any tax, assessment or other governmental charge imposed by reason
of such holder's past or present status as the actual or constructive owner
of 10% or more of the total combined voting power of all classes of stock
entitled to vote of the Company or as a direct or indirect subsidiary of the
Company; or
(h) any combination of items (a), (b), (c), (d), (e), (f) or (g);
nor shall Additional Amounts be paid with respect to any payment on a Note to a
United States Alien who is a fiduciary or partnership or other than the sole
beneficial owner of such payment to the extent such payment would be required by
the laws of the United States (or any political subdivision thereof) to be
included in the income, for tax purposes, of a beneficiary or settlor with
respect to such fiduciary or a member of such partnership or a beneficial owner
who would not have been entitled to the Additional Amounts had such beneficiary,
settlor, member or beneficial owner been the holder of the Note.
The term "United States Alien" means any person who, for United States
federal income tax purposes, is a foreign corporation, a nonresident alien
individual, a nonresident alien fiduciary of a foreign estate or trust, or a
foreign partnership one or more of the members of which is a foreign
corporation, a nonresident alien individual or a nonresident alien fiduciary of
a foreign estate or trust.
REPLACEMENT NOTES
If the holder of a Note claims that the Note has been lost, mutilated,
destroyed or wrongfully taken, the Company will issue and the Trustee will
authenticate a replacement Note in the same principal amount. If required, an
indemnity bond must be provided by the holder sufficient in the judgment of the
Company and the Trustee to protect the Company, Texaco, the Trustee and each
Paying Agent and Conversion Agent from any loss any of them may suffer if any
Note is replaced. The Company may charge for its expenses in replacing a Note.
GUARANTIES
Texaco will unconditionally guarantee the due and punctual payment of the
principal (including the Conversion Amount) of and interest on the Notes, when
and as the same shall become due and payable, whether at maturity or upon
redemption, conversion or otherwise.
GOVERNING LAW
The laws of the State of New York will govern the Indenture and the Notes.
UNITED STATES FEDERAL TAXATION
THE FOLLOWING IS A GENERAL SUMMARY OF THE MAJOR UNITED STATES FEDERAL TAX
ISSUES RELATING TO HOLDING AND DISPOSING OF NOTES. THE PRECISE CONSEQUENCES TO
ANY PERSON OF HOLDING OR DISPOSING OF NOTES WILL DEPEND UPON THEIR OWN
CIRCUMSTANCES, AND SUCH PERSONS ARE ADVISED TO CONSULT THEIR OWN TAX ADVISERS AS
TO THE EXACT UNITED STATES FEDERAL TAX CONSEQUENCES OF HOLDING THE NOTES OR OF
ANY TRANSACTION INVOLVING THE NOTES.
In the opinion of Michael N. Ambler, General Tax Counsel to the Company,
under present United States federal income tax law, and subject to the
discussion below concerning backup withholding:
(a) payments of principal, interest (including original issue discount,
if any) and premium on the Notes by the Company or any paying agent to any
United States Alien holder will not be subject to United States federal
withholding tax, provided that, in the case of interest, such holder does
not own, actually or constructively, ten percent or more of the total
combined voting power of all classes of stock of the Company entitled to
vote, is not a controlled foreign corporation related, directly or
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indirectly, to the Company through stock ownership, and is not a bank
receiving interest described in Section 881(c)(3)(A) of the Internal Revenue
Code of 1986, as amended (the "Code");
(b) a United States Alien holder of a Note will not be subject to United
States federal income tax on gain realized on the sale, exchange or other
disposition of such Note unless (i) such holder is an individual who is
present in the United States for 183 days or more during the taxable year of
disposition and either such individual has a "tax home" (as defined in Code
Section 911(d)(3)) in the United States or the gain is attributable to an
office or other fixed place of business maintained by such individual in the
United States or (ii) such gain is effectively connected with the conduct by
such holder of a trade or business in the United States;
(c) a Note or coupon held by an individual who is not a citizen or
resident of the United States at the time of such individual's death will
not be subject to United States federal estate tax as a result of such
individual's death, provided that the individual does not own, actually or
constructively, ten percent or more of the total combined voting power of
all classes of stock of the Company entitled to vote and, at the time of the
individual's death, payments with respect to such Note would not have been
effectively connected with the conduct by such individual of a trade or
business in the United States.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Under current United States federal income tax law, a 31% backup withholding
tax and information reporting requirements apply to certain payments of
principal, premium and interest (including original issue discount) made to, and
to the proceeds of sales before maturity by, certain noncorporate United States
persons. Under current Treasury Regulations, backup withholding will not apply
to payments of principal, premium or interest made outside the United States by
the Company or any paying agent on a Note, provided that the Company or such
paying agent, as the case may be, does not have actual knowledge that the payee
is a United States person.
Under current Treasury regulations, payments of principal, premium or
interest made to or through a foreign office of a custodian, nominee or other
agent acting on behalf of a beneficial owner of a Note, as well as payments on
the sale, exchange or other disposition of a Note made to or through a foreign
office of a broker, generally will not be subject to backup withholding.
However, if such custodian, nominee or other agent, or such broker, is a United
States person, a controlled foreign corporation for United States tax purposes,
or a foreign person 50% or more of whose gross income is effectively connected
with a United States trade or business for a specified three-year period, such
custodian, nominee or other agent, or such broker, may be subject to certain
information reporting requirements with respect to such payment unless it has in
its records documentary evidence that the beneficial owner is not a United
States person and certain conditions are met or the beneficial owner otherwise
establishes an exemption. Under proposed regulations that would become effective
for payments made on or after January 1, 1998, payments by such a United States
or United States-related payor or broker will be subject to backup withholding
if such payor or such broker has actual knowledge that the payee is a United
States person.
Payments to or through the United States office of a broker will be subject
to backup withholding and information reporting unless the holder certifies,
under penalties of perjury, that it is not a United States person or otherwise
establishes an exemption.
United States Alien holders of Notes should consult their tax advisers
regarding the application of information reporting and backup withholding in
their particular situations, the availability of an exemption therefrom, and the
procedure for obtaining such an exemption, if available. Any amounts withheld
from a payment to a United States Alien holder under the backup withholding
rules will be allowed as a credit against such holder's United States federal
income tax liability and may entitle such holder to a refund, provided that the
required information is furnished to the United States Internal Revenue Service.
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The opinion of counsel as set forth above is based on the Code, regulations,
rulings and judicial decisions as of the date hereof. Subsequent developments in
these areas could have a material effect on the opinion.
UNDERWRITING
Under the terms and subject to the conditions contained in the Underwriting
Agreement dated the date hereof, the Company has agreed to sell to each of the
underwriters (the "Underwriters") named below, and each of the Underwriters has
severally but not jointly agreed to purchase, the principal amount of Notes set
forth below opposite its name.
PRINCIPAL AMOUNT
UNDERWRITER OF NOTES
- ---------------------------------------------------------------------------- ----------------
Credit Suisse First Boston (Europe) Limited................................. $ 190,000,000
Swiss Bank Corporation...................................................... 5,000,000
UBS Limited................................................................. 5,000,000
----------------
Total................................................................. $ 200,000,000
----------------
----------------
In the Underwriting Agreement, the Underwriters have agreed, subject to the
terms and conditions set forth therein, to purchase all the Notes offered hereby
if any Notes are purchased. The Underwriting Discounts and Commissions set forth
on the cover page of this Prospectus consist of a selling concession of 1.5%, a
management commission of 0.5% and an underwriting commission of 0.5%, in each
case of the principal amount of the Notes. The Underwriting Agreement also
entitles Credit Suisse First Boston (Europe) Limited, on behalf of the
Underwriters, to terminate it under certain circumstances prior to payment being
made to the Company.
The Underwriting Agreement provides that the Company and Texaco will
indemnify the several Underwriters against certain liabilities, including
liabilities under the Securities Act of 1933, or contribute to payments the
Underwriters may be required to make in respect thereof. The Company has agreed
to reimburse the Underwriters for certain expenses, not to exceed $200,000,
incurred in connection with the offering made hereby.
Certain of the Underwriters and their affiliates may be customers of, engage
in transactions with, and perform services for Texaco and its subsidiaries
(including the Company) in the ordinary course of business.
The Notes are a new issue of securities with no established trading market.
The Company has been advised by the Underwriters 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 at any time without
notice. No assurance can be given as to the liquidity of the trading market for
the Notes. Application has been made to list the Notes solely on the Luxembourg
Stock Exchange.
The Notes are in bearer form and subject to U.S. tax law requirements and
may not be offered, sold or delivered within the United States or its
possessions or to a United States person, except in certain limited transactions
permitted by U.S. tax regulations. See "Description of the Notes--Form,
Denomination and Exchange".
Each Underwriter has represented in the Underwriting Agreement that:
(i) it has not offered or sold and prior to the date six months after
August 5, 1997 will not offer or sell any Notes to persons in the United
Kingdom except to persons whose ordinary activities involve them in
acquiring, holding, managing or disposing of investments (as principal or
agent) for the purposes of their businesses or otherwise in circumstances
which have not resulted and will not result in an offer to the public in the
United Kingdom within the meaning of the Public Offers of Securities
Regulations 1995;
S-21
(ii) it has complied and will comply with all applicable provisions of
the Financial Services Act 1986 with respect to anything done by it in
relation to the Notes in, from or otherwise involving the United Kingdom;
and
(iii) it has only issued or passed on, and will only issue or pass on, in
the United Kingdom any document received by it in connection with the issue
of the Notes to a person who is of a kind described in Article II(3) of the
Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order
1996 (as amended) or is a person to whom such document may otherwise
lawfully be issued or passed on.
In connection with the offering, the Underwriters may engage in transactions
that stabilize, maintain or otherwise affect the price of the Notes or the
Texaco Common Stock. Specifically, the Underwriters may overallot the offering,
creating a syndicate short position. In addition, the Underwriters may bid for,
and purchase, the Notes or the Texaco Common Stock in the open market to cover
syndicate shorts or to stabilize the price of the Notes or the Texaco Common
Stock. Finally, the underwriting syndicate may reclaim selling concessions
allowed for distributing Notes in the offering, if the syndicate repurchases
previously distributed Notes in syndicate covering transactions, in
stabilization transactions or otherwise. Any of these activities may stabilize
or maintain the market price of the Notes or the Texaco Common Stock above
independent market levels. The Underwriters are not required to engage in these
activities, and may end any of these activities at any time.
The Company has entered into hedging arrangements related to the Texaco
Common Stock with CSFP in connection with the Company's obligations under the
Notes. In connection therewith, CSFP has purchased shares of Texaco Common Stock
in secondary market transactions at or before the time of the pricing of the
Notes. Texaco also has in effect a Common Stock Repurchase Program. Depending
on, among other things, future market conditions, the aggregate amount and the
composition of these hedging arrangements between the Company and CSFP and the
aggregate amount of any repurchases by Texaco of its Common Stock pursuant to
its Common Stock Repurchase Program are likely to vary over time. The effect, if
any, of such arrangements and activities on the market price of Texaco Common
Stock or the Notes cannot be ascertained at this time.
EXPERTS
The audited consolidated financial statements incorporated by reference in
the Annual Report of Texaco Inc. for the fiscal year ended December 31, 1996
filed on Form 10-K, incorporated herein by reference, have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and are incorporated by reference herein in
reliance upon the authority of said firm as experts in accounting and auditing
in giving said report.
LEGAL OPINIONS
The validity of the Notes being offered hereby will be passed upon for the
Company and Texaco Inc. by Paul R. Lovejoy, Assistant General Counsel of Texaco
Inc., or such other attorney of Texaco Inc. as the Company and Texaco Inc. may
designate, and for the Underwriters by Davis Polk & Wardwell, 450 Lexington
Avenue, New York, New York 10017.
GENERAL INFORMATION
LISTING
Application has been made to list the Notes solely on the Luxembourg Stock
Exchange. Prior to the listing, a legal notice relating to the issuance of the
Notes and the Certificate of Incorporation and By-Laws of the Company and Texaco
will be deposited with the GREFFIER EN CHEF DU TRIBUNAL D'ARRONDISSEMENT DE ET A
LUXEMBOURG, which such documents may be examined or copies obtained.
S-22
INFORMATION FOR HOLDERS OF NOTES
So long as any of the Notes remain outstanding, copies of the Indenture
(including the forms of the Notes) and this Prospectus Supplement and the
Prospectus and copies of the Certificate of Incorporation and By-Laws of the
Company and Texaco will be available for inspection, and this Prospectus
Supplement and the Prospectus may be obtained, during usual business hours at
the office of the Luxembourg Paying Agent, currently located at 5 rue Plaetis,
L-2338 Luxembourg, Luxembourg. In addition, copies of the documents incorporated
by reference in this Prospectus and copies of the annual and quarterly reports
hereafter filed by Texaco with the United States Securities and Exchange
Commission may be obtained at such office. The Company is not required to, and
does not intend to, publish or file any annual or quarterly reports. Copies of
the annual and quarterly financial statements of the Company, if any are
published, may also be obtained at such office.
AUTHORIZATION
The issuance of the Notes and the guaranties of Texaco endorsed thereon was
pursuant to authorization of the Board of Directors of Texaco on December 13,
1996 and authorization of the Board of Directors of the Company on January 27,
1997.
U.S. TAXATION
Notes and any coupons appertaining thereto will bear the following legend:
"Any United States person who holds this obligation will be subject to
limitations under the United States federal income tax laws, including the
limitations provided in Sections 165(j) and 1287(a) of the United States
Internal Revenue Code". The sections referred to in such legend provide that,
with certain exceptions, a United States person will not be permitted to deduct
any loss, and will not be eligible for capital gain treatment with respect to
any gain realized on the sale, exchange or redemption of such Notes or coupons.
LITIGATION AND MATERIAL CHANGE
Texaco is of the opinion that the ultimate legal and financial liability
with respect to legal proceedings to which Texaco or any of its subsidiary
companies is a party is not anticipated to be materially important in relation
to the consolidated financial position or results of operations of Texaco and
its subsidiary companies. There has been no material adverse change (not in the
ordinary course of business) in the financial position of Texaco and its
subsidiary companies taken as a whole since December 31, 1996.
CLEARANCE
The Notes have been accepted for clearance through the Euroclear Operator
and through Cedel Bank. The Common Code assigned to the Notes is 7827091. The
ISIN number for the Notes in definitive form is XV0078270914.
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PROSPECTUS
TEXACO CAPITAL INC.
GUARANTEED DEBT SECURITIES AND WARRANTS
PAYMENT OF PRINCIPAL, PREMIUM AND
INTEREST, IF ANY, ON THE DEBT SECURITIES IS GUARANTEED BY
TEXACO INC.
Texaco Capital Inc. (the "Company") intends to issue and sell from time to
time up to $1,050,000,000 (or the equivalent in foreign denominated currency or
units based on or related to currencies, including European Currency Units)
aggregate principal amount of its debt securities ("Debt Securities") or
Warrants to purchase Debt Securities ("Warrants") (the Debt Securities and
Warrants are collectively referred to as the "Securities"), or if any Securities
are issued at original issue discount, such greater amount as shall result in
net proceeds of $1,050,000,000 to the Company, which will be offered to the
public on terms determined by market conditions at the time of sale. Debt
Securities will be guaranteed by Texaco Inc. (the "Guarantor"). The Securities
may be issued in one or more series with the same or various maturities at par,
at a premium, or with an original issue discount. Warrants may be offered with
Debt Securities or separately. The specific designation, aggregate principal
amount, authorized denominations, currency, purchase price, maturity, interest
rate (or method of calculation thereof) and time of payment of interest, any
terms for redemption and repayment and the agent, dealer or underwriter, if any,
in connection with the sale of the Securities in respect of which this
Prospectus is being delivered are set forth in the accompanying Prospectus
Supplement (the "Prospectus Supplement") together with the terms of offering of
the Securities.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
Securities may be offered by the Company directly to investors, through
dealers, through underwriters, or through agents designated from time to time,
as set forth in the Prospectus Supplement. Net proceeds to the Company will be
the purchase price in the case of a dealer, the public offering price less
discount in the case of an underwriter or the bid purchase price less commission
in the case of an agent--in each case less other expenses attributable to
issuance and distribution. See "Plan of Distribution" for possible
indemnification arrangements for dealers, underwriters and agents.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS, OTHER THAN AS CONTAINED HEREIN OR INCORPORATED BY REFERENCE IN
THIS PROSPECTUS, IN CONNECTION WITH THE OFFER CONTAINED IN THIS PROSPECTUS, AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCES CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS
OF THE COMPANY OR THE GUARANTOR SINCE THE DATE HEREOF.
This Prospectus and the Prospectus Supplement 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.
June 14, 1993
TABLE OF CONTENTS
PAGE
-----
Available Information...................................................................................... 2
Documents Incorporated by Reference........................................................................ 3
Texaco Inc................................................................................................. 3
Ratio of Earnings to Fixed Charges......................................................................... 4
Texaco Capital Inc......................................................................................... 4
Use of Proceeds............................................................................................ 4
Plan of Distribution....................................................................................... 4
Description of the Debt Securities......................................................................... 5
Description of the Warrants................................................................................ 10
Experts.................................................................................................... 11
Legal Opinions............................................................................................. 12
AVAILABLE INFORMATION
Texaco Inc. is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and, in accordance therewith, files
reports, proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). Texaco Inc.'s annual proxy statements so filed
contain, among other things, certain information concerning directors and
officers, including their compensation, the number of shares of common stock of
Texaco Inc. owned by the directors and owners of 5% or more of any class of such
securities, and any material interests of such persons in certain transactions.
Such reports, proxy statements and other information filed by Texaco Inc. with
the Commission can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington
D.C. 20549, as well as at the Regional Offices of the Commission at 7 World
Trade Center, New York, New York 10048 and Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such
material can be obtained at prescribed rates from the Public Reference Section
of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. In
addition, certain reports, proxy materials and other information concerning
Texaco Inc. can be inspected at the offices of The New York Stock Exchange,
Inc., 20 Broad Street, New York, New York and the Midwest Stock Exchange, 120
South LaSalle Street, Chicago, Illinois, on which Exchanges the common stock of
Texaco Inc. is listed.
Texaco Inc. will provide without charge to each person to whom a copy of
this Prospectus is delivered, on the request of any such person, a copy of any
or all of the documents incorporated herein by reference (other than exhibits to
such documents, unless such exhibits are specifically incorporated by reference
in such documents). Written or telephone requests for such copies should be
directed to the executive offices of Texaco Inc. c/o the Secretary, 2000
Westchester Avenue, White Plains, New York 10650 (Telephone: (914) 253-4000).
SEPARATE FINANCIAL INFORMATION FOR THE COMPANY IS NOT INCLUDED HEREIN AND
WILL NOT BE INCLUDED IN ANY REPORTS FILED PURSUANT TO THE EXCHANGE ACT, AS THE
COMPANY IS WHOLLY OWNED BY TEXACO INC., IT ESSENTIALLY HAS NO INDEPENDENT
OPERATIONS, AND THE DEBT SECURITIES ARE FULLY AND UNCONDITIONALLY GUARANTEED BY
TEXACO INC.
2
DOCUMENTS INCORPORATED BY REFERENCE
The documents listed below, filed by Texaco Inc. with the Securities and
Exchange Commission (File No. 1-27) pursuant to Sections 13 or 15(d) of the
Securities Exchange Act of 1934, contain the most recently published corporate
and financial data regarding Texaco Inc., and are incorporated by reference in
this Prospectus:
(a) Annual Report of Texaco Inc. for the fiscal year ended December 31,
1992, filed on Form 10-K (dated and filed March 17, 1993)
(b) Form 8-K--Texaco Inc.--date of earliest event reported, January 21,
1993 (dated January 22, 1993 and filed January 25, 1993)
(c) Form 8-K--Texaco Inc.--date of earliest event reported, February 17,
1993 (dated and filed February 19, 1993)
(d) Form 8-K--Texaco Inc.--date of earliest event reported, March 4,
1993 (dated and filed March 8, 1993)
(e) Form 8-K--Texaco Inc.--date of earliest event reported, April 22,
1993 (dated and filed April 23, 1993)
(f) Texaco Inc.'s Proxy Statement dated April 5, 1993, issued in
connection with Texaco Inc.'s 1993 Annual Meeting
(g) Quarterly Report of Texaco Inc. for the quarterly period ended March
31, 1993, filed on Form 10-Q (dated and filed May 14, 1993).
All documents subsequently filed by Texaco Inc. pursuant to Sections 13(a),
13(c), 13(d), 14 and 15(d) of the Exchange Act (except those relating to
employee benefit plans), prior to the termination of the offering described
herein, shall be deemed to be incorporated by reference in this Prospectus and
to be a part thereof from the date of filing of such documents.
Any statement contained in a document incorporated by reference herein shall
be deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained in this Prospectus or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
TEXACO INC.
Texaco Inc. was incorporated in Delaware on August 26, 1926 as The Texas
Corporation. Its name was changed in 1941 to The Texas Company and in 1959 to
Texaco Inc. It is the successor of a corporation incorporated in Texas in 1902.
Its principal executive offices are located at 2000 Westchester Avenue, White
Plains, New York 10650; telephone: (914) 253-4000. As used herein, Texaco
(unless the context otherwise indicates) refers to Texaco Inc. and all of its
consolidated subsidiary companies.
Texaco together with affiliates owned 50% or less, represent a vertically
integrated enterprise principally engaged in the worldwide exploration for and
production, transportation, refining and marketing of crude oil, natural gas and
petroleum products, including petrochemicals.
3
RATIO OF EARNINGS TO FIXED CHARGES
FOR THE THREE YEAR ENDED DECEMBER 31,
MONTHS ENDED ------------------------------
MARCH 31, 1993 1992 1991 1990 1989 1988
-------------- ----- ---- ---- ---- ----
Ratio of earnings to fixed charges of Texaco on a total enterprise basis
(unaudited)................................................................... 3.45 2.89 3.04 3.96 4.40(a) 3.14
- ------------
(a) Excluding the gains from the sale of Texaco Canada Inc. and the sale of a
20% stock interest in a subsidiary, as well as the 1989 restructuring
charges, the ratio of earnings to fixed charges on a total enterprise basis
approximated 2.55.
TEXACO CAPITAL INC.
Texaco Capital Inc., a wholly owned subsidiary of Texaco Inc., is a Delaware
corporation which was incorporated on June 24, 1983. Its principal executive
offices are located at 32 Loockerman Square, Suite L-100, Dover, Delaware 19901;
telephone: (302) 674-1221. The Company is engaged principally in the business of
lending funds borrowed from unrelated persons to Texaco Inc. and its
subsidiaries for general corporate purposes.
USE OF PROCEEDS
The net proceeds from the sale of the Securities will be lent to Texaco Inc.
or its subsidiaries to be used for working capital, for retirement of debt and
for other general corporate purposes.
PLAN OF DISTRIBUTION
The Securities may be sold in any one or more of the following ways: (1)
directly to investors, (2) to investors through agents, (3) to dealers, (4)
through underwriting syndicates led by one or more managing underwriters as the
Company may select from time to time, or (5) through one or more underwriters
acting alone.
If underwriters are utilized in the sale, the obligations of the
underwriters will be subject to certain conditions precedent and the
underwriters will be obligated to purchase all Securities, if any are purchased.
The specific managing underwriter or underwriters, if any, with respect to the
offer and sale of the Securities are set forth on the cover of the Prospectus
Supplement relating to such Securities and the members of the underwriting
syndicate, if any, are named in such Prospectus Supplement. Only underwriters so
named in the Prospectus Supplement are deemed to be underwriters in connection
with the Securities offered thereby and any firms not named in the Prospectus
Supplement are not parties to the Underwriting Agreement in respect of such
Securities, will not be purchasing any of the Securities from the Company and
will have no direct or indirect participation in the underwriting of such
Securities, although they may participate in the distribution of such Securities
under circumstances where they may be entitled to a dealer's commission. The
Prospectus Supplement also describes the discounts and commissions to be allowed
or paid to the underwriters, all other items constituting underwriting
compensation, the discounts and commissions to be allowed or paid to dealers, if
any, and the exchanges, if any, on which the Securities will be listed.
If offers to purchase Securities are to be solicited by agents designated by
the Company, any such agent may be deemed to be an underwriter as that term is
defined in the Securities Act of 1933, as amended (the "Securities Act"). Agents
involved in the offer or sale of the Securities in respect of which
4
this Prospectus is delivered will be named, and any commissions payable by the
Company to such agents set forth, in the Prospectus Supplement. Unless otherwise
indicated in the Prospectus Supplement, any such agent will be acting on a best
efforts basis for the period of its appointment.
If a dealer is utilized in the sale of the Securities in respect of which
this Prospectus is delivered, the Company will sell such Securities to the
dealer as principal. The dealer may then resell such Securities to the public at
varying prices to be determined by such dealer at the time of resale.
Securities may also be offered and sold, if so indicated in the Prospectus
Supplement, in connection with a remarketing upon their purchase, in accordance
with a redemption or repayment pursuant to their terms, or otherwise, by one or
more firms ("remarketing firms"), acting as principals for their own accounts or
as agents for the Company. Any remarketing firm will be identified and the terms
of its agreement, if any, with the Company and its compensation will be
described in the Prospectus Supplement. Remarketing firms may be deemed to be
underwriters in connection with the Securities remarketed thereby.
If so indicated in the Prospectus Supplement, the Company will authorize
underwriters, dealers or agents to solicit offers by certain institutions to
purchase the Securities from the Company at the price set forth in the
Prospectus Supplement pursuant to Delayed Delivery Contracts providing for
payment and delivery at a future date.
Underwriters, agents, dealers and remarketing firms may be entitled under
agreements which may be entered into with the Company and Texaco Inc. to
indemnification by the Company and Texaco Inc. against certain civil
liabilities, including liabilities under the Securities Act and may be customers
of, engage in transactions with or perform services for the Company or Texaco
Inc. in the ordinary course of business.
DESCRIPTION OF THE DEBT SECURITIES
The Debt Securities offered hereby are to be issued under an indenture dated
as of August 24, 1984 as supplemented and restated by a First Supplemental
Indenture dated as of January 31, 1990 (a copy of which is filed as Exhibit 4.1
to Registration Statement Nos. 33-33303 and 33-33303-01, filed on February 1,
1990), and as further amended by the First Supplement to the First Supplemental
Indenture dated as of October 11, 1990 (a copy of which is filed as Exhibit
4.1(a) to Texaco Inc.'s Current Report on Form 8-K, dated October 12, 1990 and
filed on October 15, 1990), (as so supplemented and amended, the "Indenture")
among the Company, Texaco Inc. and The Chase Manhattan Bank (National
Association), as Trustee (the "Trustee"). The following summary of certain
provisions of the Indenture does not purport to be complete and is subject to,
and is qualified in its entirety by reference to, all provisions of the
Indenture. Unless otherwise defined herein, all capitalized terms shall have the
definitions set forth in the Indenture.
GENERAL
The Indenture provides that, in addition to the Debt Securities offered
hereby, additional Debt Securities may be issued thereunder without limitation
as to aggregate principal amount, but subject to limitations from time to time
established by the Company's Board of Directors.
Unless specified in the Prospectus Supplement, Debt Securities offered
hereby will rank equally and ratably with all other unsecured and unsubordinated
indebtedness of the Company. The Guaranties will rank equally with all other
unsecured and unsubordinated indebtedness of Texaco Inc.
Reference is made to the Prospectus Supplement for the following terms of
the Debt Securities being offered hereby: (1) the designation of such Debt
Securities; (2) the aggregate principal amount and currency or currency unit of
such Debt Securities; (3) the denominations in which such Debt Securities are
5
authorized to be issued; (4) the percentage of their principal amount at which
such Debt Securities will be issued; (5) the date on which such Debt Securities
will mature; (6) if the Debt Securities are to bear interest, the rate per annum
at which such Debt Securities will bear interest (or the method by which such
rate will be determined); (7) the times at which such interest, if any, will be
payable or the manner of determining the same; (8) the date, if any, after which
such Debt Securities may be redeemed or purchased and the redemption or purchase
price; (9) the sinking fund requirements, if any; (10) special United States
federal income tax considerations, if any; (11) whether such Debt Securities are
to be issued in the form of one or more temporary or permanent Global Securities
and, if so, the identity of the Depositary for such Global Securities; (12)
information with respect to book-entry procedures, if any; (13) the manner in
which the amount of any payments of principal and interest on the Debt
Securities determined by reference to an index are determined; and (14) any
other terms of the Debt Securities not inconsistent with the Indenture.
The Indenture does not contain any provisions which may afford holders of
the Securities protection in the event of a highly leveraged transaction,
although such a provision could be added to the Indenture in the future with
respect to the Securities or any series thereof, in which event a description
thereof will be included in the applicable Prospectus Supplement.
DENOMINATIONS, REGISTRATION, TRANSFER AND PAYMENT
The Debt Securities of a Series will be issuable in registered form without
coupons ("Registered Securities") or in the form of one or more global
securities ("Global Securities"), as described below under "Global Securities".
Unless otherwise provided in an applicable Prospectus Supplement with respect to
a Series of Debt Securities, Registered Securities denominated in U.S. dollars
will be issued only in denominations of $1,000 or any integral multiple thereof.
One or more Global Securities will be issued in a denomination or aggregate
denominations equal to the aggregate principal amount of outstanding Debt
Securities of the Series represented by such Global Security. The Prospectus
Supplement relating to a Series of Debt Securities denominated in a foreign or
composite currency will specify the denominations thereof.
Unless otherwise indicated in the Prospectus Supplement, Registered
Securities (other than a Global Security) may be presented for registration of
transfer (with the form of transfer duly executed), at the office of the
Registrar or at the office of any transfer agent designated by the Company for
such purpose with respect to any series of Debt Securities and referred to in an
applicable Prospectus Supplement, without service charge and upon payment of any
taxes and other governmental charges as described in the Indenture. Such
transfer or exchange will be effected upon the Registrar or such transfer agent,
as the case may be, being satisfied with the documents of title and identity of
the person making the request. The Company has initially appointed the Trustee
as Registrar under the Indenture. If a Prospectus Supplement refers to any
transfer agents (in addition to the Registrar) initially designated by the
Company with respect to any series of Registered Securities, the Company may at
any time rescind the designation of any such transfer agent or approve a change
in the location through which any such transfer agent acts, except that, the
Company will maintain a transfer agent in The City of New York. The Company may
at any time designate additional transfer agents with respect to any series of
Debt Securities.
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of principal of (and premium, if any) and interest, if any, on Registered
Securities (other than a Global Security) will be made at the office of such
Paying Agent or Paying Agents as the Company may designate from time to time,
except that at the option of the Company, payment of any interest may be made
(i) by check mailed to the address of the person entitled thereto as such
address shall appear in the register or (ii) by wire transfer to an account
maintained by the person entitled thereto as specified in the register. Unless
otherwise indicated in an applicable Prospectus Supplement, payment of any
installment of interest on Registered
6
Securities will be made to the person in whose name such Debt Security is
registered at the close of business on the regular Record Date for such interest
payment.
Unless otherwise indicated in an applicable Prospectus Supplement, the
principal office of the Trustee in The City of New York will be designated as
the Company's sole Paying Agent for payments with respect to Registered
Securities.
All moneys paid by the Company to a Paying Agent for the payment of
principal of (and premium, if any) and interest, if any, on any Debt Security
which remains unclaimed at the end of two years after such principal, premium or
interest shall have become due and payable will be repaid to the Company and the
Holder of such Debt Security will thereafter look only to the Company for
payment thereof.
GUARANTIES
The Guarantor will unconditionally guarantee the due and punctual payment of
the principal of, (and premium, if any) and interest, if any, on the Debt
Securities, when and as the same shall become due and payable, whether at
maturity or upon redemption, declaration or otherwise.
GLOBAL SECURITIES
The Debt Securities of a series may be issued in the form of one or more
fully registered global Debt Securities (a "Global Security") that will be
deposited with a depositary (the "Depositary"), or with a nominee for a
Depositary identified in the Prospectus Supplement relating to such series. In
such case, one or more Global Securities will be issued in a denomination or
aggregate denominations equal to the portion of the aggregate principal amount
of outstanding Debt Securities of such series. Unless and until it is exchanged
in whole or in part for Debt Securities in definitive registered form, a Global
Security may not be transferred except as a whole by the Depositary for such
Global Security to a nominee of such Depositary or by a nominee of such
Depositary to such Depositary or another nominee of such Depositary or by such
Depositary or any such nominee to a successor of such Depositary or a nominee of
such successor.
The specific terms of the depositary arrangement with respect to any portion
of a series of Debt Securities to be represented by a Global Security will be
described in the Prospectus Supplement relating to such series. The Company
anticipates that the following provisions will apply to all depositary
arrangements.
Upon the issuance of a Global Security, the Depositary for such Global
Security will credit, on its book-entry registration and transfer system, the
respective principal amounts of the Debt Securities represented by such Global
Security to the accounts of persons that have accounts with such Depositary
("participants"). The accounts to be credited shall be designated by any
underwriters or agents participating in the distribution of such Debt
Securities. Ownership of beneficial interests in a Global Security will be
limited to participants or persons that may hold interests through participants.
Ownership of beneficial interests in such Global Security will be shown on, and
the transfer of that ownership will be effected only through, records maintained
by the Depositary for such Global Security (with respect to interests of
participants) or by participants or persons that hold through participants (with
respect to interests of persons other than participants).
So long as the Depositary for a Global Security, or its nominee, is the
registered owner of such Global Security, such Depositary or such nominee, as
the case may be, will be considered the sole owner or Holder of the Debt
Securities represented by such Global Security for all purposes under the
Indenture. Except as set forth below, owners of beneficial interests in a Global
Security will not be entitled to have the Debt Securities represented by such
Global Security registered in their names, will not receive or be entitled to
7
receive physical delivery of such Debt Securities in definitive form and will
not be considered the owners or holders thereof under the Indenture.
Payments of principal (and premium, if any) and interest, if any, on Debt
Securities represented by a Global Security registered in the name of a
Depositary or its nominee will be made to such Depositary or its nominee, as the
case may be, as the registered owner of such Global Security. None of the
Company, the Trustee or any Paying Agent for such Debt Securities will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in such Global
Security or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
The Company expects that the Depositary for any Debt Securities represented
by a Global Security, upon receipt of any payment of principal, premium or
interest, will immediately credit participants' accounts with payments in
amounts proportionate to their respective beneficial interests in the principal
amount of such Global Security as shown on the records of such Depositary. The
Company also expects that payments by participants to owners of beneficial
interest in such Global Security held through such participants will be governed
by standing instructions and customary practices, as is now the case with the
securities held for the accounts of customers registered in "street names" and
will be the responsibility of such participants.
If the Depositary for any Debt Securities represented by a Global Security
is at any time unwilling or unable to continue as Depositary and a successor
Depositary is not appointed by the Company within ninety days, the Company will
issue such Debt Securities in definitive form in exchange for such Global
Security. In addition, the Company may at any time and in its sole discretion
determine not to have any of the Debt Securities of a series represented by one
or more Global Securities and, in such event, will issue Debt Securities of such
series in definitive form in exchange therefor.
CERTAIN LIMITATIONS ON LIENS
The Indenture provides that Texaco Inc. shall not, and it shall not permit
any Principal Subsidiary (defined as a Subsidiary (i) substantially all of the
assets of which are located, and substantially all of the operations of which
are conducted, in the United States, (ii) which owns a Principal Property,
defined as an important oil and gas producing property onshore or offshore the
United States or any important refinery or manufacturing plant located in the
United States and (iii) in which Texaco Inc.'s direct or indirect net investment
exceeds $100,000,000) to, incur a Lien to secure a Long-Term Debt on a Principal
Property, any Capital Stock or a Long-Term Debt ("Debt") of a Principal
Subsidiary unless: (1) the Lien equally and ratably secures the Debt Securities
and the secured Debt; (2) the Lien is in existence at the time a corporation
merges into or consolidates with Texaco Inc. or a Principal Subsidiary or
becomes a Principal Subsidiary; (3) the Lien is on a Principal Property at the
time Texaco Inc. or a Principal Subsidiary acquires the Principal Property; (4)
the Lien secures Debt incurred to finance all or some of the purchase price of a
Principal Property or a Principal Subsidiary; (5) the Lien secures Debt incurred
to finance all or some of the costs of Improvements on a Principal Property; (6)
the Lien secures Debt of a Principal Subsidiary owing to Texaco Inc. or another
Principal Subsidiary; (7) the Lien extends, renews or replaces in whole or in
part a Lien permitted by any of clauses (1) through (6); or (8) the secured Debt
plus all other Debt secured by Liens on Principal Properties, Capital Stock or
Debt of a Principal Subsidiary at the time does not exceed 10% of Texaco's
Consolidated Net Tangible Assets. However, Debt secured by a Lien permitted by
any of clauses (1) through (7) shall be excluded from all other Debt in the
determination.
8
LIMITATIONS ON SALE AND LEASEBACK
The Indenture provides that Texaco Inc. shall not, and it shall not permit
any Principal Subsidiary to, enter into a Sale-Leaseback Transaction unless: (1)
the lease has a term of three years or less; (2) the lease is between Texaco
Inc. and a Principal Subsidiary or between Principal Subsidiaries; (3) Texaco
Inc. or a Principal Subsidiary under the terms of the Indenture could create a
Lien on the Principal Property to secure a Debt at least equal in amount to the
Attributable Debt for the lease; or (4) Texaco Inc. or a Principal Subsidiary
within 120 days of the effective date of the Sale-Leaseback Transaction (i)
retires Debt of Texaco Inc. or of a Principal Subsidiary at least equal in
amount to the fair value (as determined by Texaco Inc.'s Board of Directors) of
the Principal Property at the time the Principal Property is leased or (ii) if
the net proceeds of the Sale-Leaseback Transaction equal or exceed the fair
value of the Principal Property (as determined by Texaco Inc.'s Board of
Directors), applies the net proceeds to fund investment in other Principal
Properties which investments were made within twelve months prior to or
subsequent to the transaction.
CONSOLIDATION AND MERGER
The Indenture provides that either the Company or Texaco Inc. may
consolidate or merge into, or transfer its properties and assets substantially
as an entirety to, another person without the consent of the Holders of any of
the Debt Securities outstanding under the Indenture, provided the person assumes
by supplemental indenture all the obligations of the Company or Texaco Inc., as
the case may be, under the Debt Securities and the Indenture and immediately
after the transaction no Default exists. Thereafter all such obligations of the
Company or Texaco Inc., as the case may be, shall terminate.
DEFAULT
The Indenture defines an "Event of Default" with respect to any Series of
the Debt Securities as being any one of the following events: (1) default for 30
days in the payment of interest on any Debt Security of that Series; (2) default
in the payment of the principal of, or premium, if any, on, or in the making of
any sinking fund payments on any Debt Security of that Series when due; (3)
failure to comply with any other agreements in the Debt Securities of that
Series, the Indenture or any supplemental indenture under which the Debt
Securities may have been issued and continuation of the default for the period
and after the notice specified below; and (4) certain events in bankruptcy,
insolvency, or reorganization.
A default under clause (3) is not an Event of Default until the Trustee or
the Holders of at least 25% in principal amount of all of the Debt Securities of
that Series outstanding notify the Company of the default and the default is not
cured within 90 days after receipt of the notice.
If an Event of Default occurs with respect to the Debt Securities of any
Series and is continuing, the Trustee by notice to the Company, or the Holders
of at least 25% in principal amount of all of the Debt Securities of that Series
outstanding by notice to the Company and the Trustee, may declare the principal
of and premium and accrued interest, if any, on all the Debt Securities of that
Series to be due and payable immediately. The Holders of a majority in principal
amount of all of the Debt Securities of that Series by notice to the Trustee may
rescind an acceleration and its consequences if the rescission would not
conflict with any judgment or decree by a court of competent jurisdiction and if
all existing Events of Default have been cured or waived except nonpayment of
principal or premium or interest, if any, that has become due solely because of
the acceleration.
If an Event of Default occurs and is continuing, the Trustee may pursue any
available remedy by proceeding at law or in equity to collect the payment of
principal or premium or interest, if any, on the Debt Securities of the Series
that is in default or to enforce the performance of any provision of the Debt
Securities or the Indenture.
9
Subject to certain exceptions, the Holders of a majority in principal amount
of the Debt Securities by notice to the Trustee may waive an existing default
and its consequences.
MODIFICATION OF THE INDENTURE
The Indenture provides that the Company, Texaco Inc. and the Trustee may
enter into a supplemental indenture to amend the Indenture or the Debt
Securities without the consent of any Securityholder: (1) to cure any ambiguity,
defect or inconsistency; (2) to comply with Article 5 of the Indenture to permit
a successor to assume the Company's or Texaco Inc.'s obligations under the
Indenture; (3) to make any change that does not adversely affect the rights of
any Securityholder; or (4) to provide for the issuance of and establish the
terms and conditions of Debt Securities of any Series.
The Company, Texaco Inc. and the Trustee may enter into a supplemental
indenture to amend the Indenture or the Debt Securities of a Series with the
written consent of the Holders of at least 50.1% in principal amount of the Debt
Securities of the Series affected. The Holders of at least 50.1% in principal
amount of the Debt Securities by notice to the Trustee may waive compliance by
the Company or Texaco Inc. with any provision of the Indenture or the Debt
Securities.
Notwithstanding the foregoing, without the consent of each Securityholder
affected, an amendment or waiver may not: (1) reduce the amount of Debt
Securities whose Holders must consent to an amendment or waiver; (2) reduce the
rate of or extend the time for payment of interest on any Debt Security; (3)
reduce the principal of or extend the fixed maturity of any Debt Security; (4)
waive a default in the payment of the principal, premium or interest, if any, on
any Debt Security; or (5) make any Debt Security payable in money other than
that stated in the Debt Security.
DEFEASANCE AND DISCHARGE
The Indenture provides that the Company may terminate its obligations with
respect to any Series of Debt Securities, on the terms and subject to the
conditions contained in the Indenture, by depositing in trust with the Trustee
money or U.S. Government Obligations sufficient to pay principal, premium and
interest, if any, on such Series to redemption or maturity. Upon the termination
of the Company's obligations with respect to all the Debt Securities of a
Series, the Trustee, at the request of the Company, shall release its rights and
interests with respect to such Series of Debt Securities in any security granted
by the Company or Texaco Inc. As a condition to any such termination, the
Company is required to furnish an opinion of recognized independent tax counsel
to the effect that such proposed deposit and termination will not have any
effect on the Holders of the Debt Securities for Federal income tax purposes.
Such opinion must be based upon a ruling of the Internal Revenue Service or a
change in United States federal income tax law occurring after the date of this
Prospectus since such a result would not occur under current tax law.
DESCRIPTION OF THE WARRANTS
The Company may issue Warrants for the purchase of Debt Securities which may
be issued independently or together with any Debt Securities offered by any
Prospectus Supplement and may be attached to or separate from such Debt
Securities. The Warrants will be issued under a Warrant Agreement to be entered
into between the Company and a bank or trust company, as Warrant Agent, all as
set forth in the Prospectus Supplement relating to the particular issue of
Warrants. The Warrant Agent will act solely as an agent of the Company in
connection with the certificates evidencing the Warrants ("Warrant
Certificates") and will not assume any obligation or relationship of agency or
trust for or with any holders of Warrant Certificates or beneficial owners of
Warrants. The following summaries of certain provisions of the forms of Warrant
Agreement do not purport to be complete and are subject to, and are qualified in
their entirety
10
by reference to, the provisions of the forms of Warrant Agreement (including the
form of Warrant Certificates), copies of which are filed as exhibits to the
Registration Statement.
GENERAL
Reference is made to the Prospectus Supplement for the following terms of
the Warrants offered hereby (to the extent such terms are applicable to such
Warrants): (1) the offering price; (2) the currency or units based on or
relating to currencies (including European Currency Unit) for which Warrants may
be purchased; (3) the date on which the right to exercise the Warrants shall
commence and the date on which such right shall expire; (4) federal income tax
consequences; and (5) any other terms of the Warrants.
The Prospectus Supplement will also describe: (a) the designation, aggregate
principal amount, currency or currency unit and other terms of the Debt
Securities purchasable upon exercise of the Warrants (the "Warrant Securities");
(b) if applicable, the designation and terms of the Debt Securities with which
the Warrants are issued and the number of Warrants issued with each such Debt
Security; and (c) the date on and after which the Warrants and the related Debt
Securities will be separately transferable.
Warrant Certificates may be exchanged for new Warrant Certificates of
different denominations, may be presented for registration of transfer, and may
be exercised at the corporate trust office of the Warrant Agent or any other
office indicated in the Prospectus Supplement. Prior to the exercise of their
Warrants, holders of Warrants will not have any of the rights of holders of the
Warrant Securities purchasable upon such exercise, including the right to
receive payments of principal of, premium, if any, or interest, if any, on the
Warrant Securities purchasable upon such exercise or to enforce covenants in the
Indenture.
EXERCISE OF WARRANTS
Each Warrant will entitle the holder to purchase such principal amount of
Warrant Securities at such exercise price as shall in each case be set forth in,
or calculable from, the Prospectus Supplement relating to the Warrants. Warrants
may be exercised at any time up to 5:00 P.M. New York time on the date set forth
in the Prospectus Supplement relating to such Warrants. After such time on the
date (or such later date to which such date may be extended by the Company),
unexercised Warrants will become void.
Subject to any restrictions and additional requirements that may be set
forth in the Prospectus Supplement relating thereto, Warrants may be exercised
by delivery to the Warrant Agent of the Warrant Certificate evidencing such
Warrants properly completed and duly executed and of payment as provided in the
Prospectus Supplement of the amount required to purchase the Warrant Securities
purchasable upon such exercise. Warrants will be deemed to have been exercised
upon receipt of such Warrant Certificate and payment at the corporate trust
office of the Warrant Agent or any other office indicated in the Prospectus
Supplement and the Company will, as soon as practicable thereafter, issue and
deliver the Warrant Securities purchasable upon such exercise. If fewer than all
of the Warrants represented by such Warrant Certificate are exercised, a new
Warrant Certificate will be issued for the remaining amount of the Warrants.
EXPERTS
The audited consolidated financial statements and schedules included or
incorporated by reference in the Annual Report of Texaco Inc. for the fiscal
year ended December 31, 1992 filed on Form 10-K, incorporated herein by
reference, have been audited by Arthur Andersen & Co., independent public
accountants, as indicated in their reports with respect thereto, and are
incorporated by reference herein in reliance upon the authority of said firm as
experts in accounting and auditing in giving said reports.
11
Reference is made to said report, which includes an explanatory paragraph with
respect to the change in methods of accounting for income taxes and
postretirement benefits other than pensions in 1992, as discussed in Note 2 to
the consolidated financial statements.
LEGAL OPINIONS
The validity of the Securities being offered hereby will be passed upon for
the Company and Texaco Inc. by Arthur G. Taylor, Esq., Associate General Counsel
of Texaco Inc. or such other attorney of Texaco Inc. as the Company and Texaco
Inc. may designate, and for the purchasers by Davis Polk & Wardwell, 450
Lexington Avenue, New York, New York 10017.
12
PRINCIPAL EXECUTIVE OFFICE OF PRINCIPAL EXECUTIVE OFFICE OF
TEXACO CAPITAL INC. TEXACO INC.
1013 Centre Road 2000 Westchester Avenue
Wilmington, DE 19805 White Plains, NY 10650
United States United States
TRUSTEE
THE CHASE MANHATTAN BANK
450 West 33rd Street
New York, NY 10001
United States
CALCULATION AGENT PRINCIPAL PAYING AND
CONVERSION AGENT
CREDIT SUISSE FINANCIAL THE CHASE MANHATTAN BANK
PRODUCTS
One Cabot Square Trinity Tower
London E124 4QJ 9 Thomas More Street
England London E19YT
England
Attention: Global Trust
Services
LEGAL ADVISERS
TO THE UNDERWRITERS
DAVIS POLK & WARDWELL
450 Lexington Avenue
New York, NY 10017
United States
LISTING AGENT LUXEMBOURG PAYING AND
CONVERSION AGENT
BANQUE INTERNATIONALE A THE CHASE MANHATTAN BANK
LUXEMBOURG S.A. LUXEMBOURG S.A.
69, route d'Esch 5 rue Plaetis
L-1470 Luxembourg L-2338 Luxembourg
Luxembourg Luxembourg
AUDITORS OF TEXACO INC.
ARTHUR ANDERSEN LLP
1345 Avenue of the Americas
New York, NY 10105
United States