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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): DECEMBER 14, 1998
PENNZOIL PRODUCTS COMPANY
(BEING RENAMED "PENNZOIL-QUAKER STATE COMPANY")
(Exact name of registrant as specified in its charter)
DELAWARE 001-14501 76-0200625
(State or other jurisdiction (Commission File Number) (IRS Employer Identification No.)
of incorporation)
PENNZOIL PLACE, P.O. BOX 2967
HOUSTON, TEXAS 77252-2967
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 546-4000
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ITEM 5. OTHER EVENTS
On December 14, 1998, the Board of Directors of Pennzoil-Quaker State
Company (the "Company") declared a dividend of one right to purchase preferred
stock ("Right") for each outstanding share of the Company's Common Stock, par
value $0.10 per share ("Common Stock"), to stockholders of record at the close
of business on December 18, 1998. Each Right entitles the registered holder to
purchase from the Company a unit consisting of one one-hundredth of a share (a
"Fractional Share") of Series A Junior Participating Preferred Stock, par value
$1.00 per share (the "Preferred Stock"), at a purchase price of $90 per
Fractional Share, subject to adjustment (the "Purchase Price"). The description
and terms of the Rights are set forth in a Rights Agreement dated as of December
18, 1998 as it may from time to time be supplemented or amended (the "Rights
Agreement") between the Company and The Chase Manhattan Bank, as Rights Agent.
Initially, the Rights will be attached to all certificates representing
outstanding shares of Common Stock, and no separate certificates for the Rights
("Rights Certificates") will be distributed. The Rights will separate from the
Common Stock and a "Distribution Date" will occur, with certain exceptions, upon
the earlier of (i) ten days following a public announcement that a person or
group of affiliated or associated persons (an "Acquiring Person") has acquired,
or obtained the right to acquire, beneficial ownership of 15% or more of the
outstanding shares of Common Stock (the date of the announcement being the
"Stock Acquisition Date"), or (ii) ten business days following the commencement
of a tender offer or exchange offer that would result in a person's becoming an
Acquiring Person. However, neither Pennzoil Company, a Delaware corporation
("Pennzoil") nor any Affiliate or Associate of Pennzoil shall be an Acquiring
Person by virtue of Pennzoil's being the beneficial owner of Common Stock on
December 18, 1998 or at any time prior to ceasing to be the beneficial owner of
such Common Stock in the spin-off distribution of all the issued and outstanding
Common Stock, together with associated Rights, to the holders of the outstanding
Common Stock of Pennzoil. In certain circumstances, the Distribution Date may be
deferred by the Board of Directors. Certain inadvertent acquisitions will not
result in a person's becoming an Acquiring Person if the person promptly divests
itself of sufficient Common Stock. Until the Distribution Date, (a) the Rights
will be evidenced by the Common Stock certificates (together with a copy of a
Summary of Rights or bearing the notation referred to below) and will be
transferred with and only with such Common Stock certificates, (b) new Common
Stock certificates issued after December 18, 1998 will contain a notation
incorporating the Rights Agreement by reference and (c) the surrender for
transfer of any certificate for Common Stock (with or without a copy of a
Summary of Rights) will also constitute the transfer of the Rights associated
with the Common Stock represented by such certificate.
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on December 18, 2008, unless earlier redeemed or
exchanged by the Company as described below.
As soon as practicable after the Distribution Date, Rights Certificates
will be mailed to holders of record of Common Stock as of the close of business
on the Distribution Date and, from
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and after the Distribution Date, the separate Rights Certificates alone will
represent the Rights. All shares of Common Stock issued prior to the
Distribution Date will be issued with Rights. Shares of Common Stock issued
after the Distribution Date in connection with certain employee benefit plans or
upon conversion of certain securities will be issued with Rights. Except as
otherwise determined by the Board of Directors, no other shares of Common Stock
issued after the Distribution Date will be issued with Rights.
In the event (a "Flip-In Event") that a person becomes an Acquiring
Person (except pursuant to a tender or exchange offer for all outstanding shares
of Common Stock at a price and on terms that a majority of the independent
directors of the Company determines to be fair to and otherwise in the best
interests of the Company and its stockholders (a "Permitted Offer")), each
holder of a Right will thereafter have the right to receive, upon exercise of
such Right, a number of shares of Common Stock (or, in certain circumstances,
cash, property or other securities of the Company) having a Current Market Price
(as defined in the Rights Agreement) equal to two times the exercise price of
the Right. Notwithstanding the foregoing, following the occurrence of any
Triggering Event, all Rights that are, or (under certain circumstances specified
in the Rights Agreement) were, beneficially owned by or transferred to an
Acquiring Person (or by certain related parties) will be null and void in the
circumstances set forth in the Rights Agreement. However, Rights are not
exercisable following the occurrence of any Flip-In Event until such time as the
Rights are no longer redeemable by the Company as set forth below.
For example, at an exercise price of $90 per Right, each Right not
owned by an Acquiring Person (or by certain related parties) following an event
set forth in the preceding paragraph would entitle its holder to purchase $180
worth of Common Stock (or other consideration, as noted above), based upon its
then Current Market Price, for $90. Assuming that the Common Stock had a Current
Market Price of $20 per share at such time, the holder of each valid Right would
be entitled to purchase 9 shares of Common Stock for $90.
In the event (a "Flip-Over Event") that, at any time from and after the
time an Acquiring Person becomes such, (i) the Company is acquired in a merger
or other business combination transaction (other than certain mergers that
follow a Permitted Offer), or (ii) 50% or more of the Company's assets or
earning power is sold or transferred, each holder of a Right (except Rights that
are voided as set forth above) shall thereafter have the right to receive, upon
exercise, a number of shares of common stock of the acquiring company having a
Current Market Price equal to two times the exercise price of the Right. Flip-In
Events and Flip-Over Events are collectively referred to as "Triggering Events."
The number of outstanding Rights associated with a share of Common
Stock, or the number of Fractional Shares of Preferred Stock issuable upon
exercise of a Right and the Purchase Price, are subject to adjustment in the
event of a stock dividend on, or a subdivision, combination or reclassification
of, the Common Stock occurring prior to the Distribution Date. The Purchase
Price payable, and the number of Fractional Shares of Preferred Stock or other
securities or property
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issuable, upon exercise of the Rights are subject to adjustment from time to
time to prevent dilution in the event of certain transactions affecting the
Preferred Stock.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. No fractional shares of Preferred Stock that are not integral multiples
of a Fractional Share are required to be issued and, in lieu thereof, an
adjustment in cash may be made based on the market price of the Preferred Stock
on the last trading date prior to the date of exercise. Pursuant to the Rights
Agreement, the Company reserves the right to require prior to the occurrence of
a Triggering Event that, upon any exercise of Rights, a number of Rights be
exercised so that only whole shares of Preferred Stock will be issued.
At any time until ten days following the first date of public
announcement of the occurrence of a Flip-In Event, the Company may redeem the
Rights in whole, but not in part, at a price of $0.01 per Right, payable, at the
option of the Company, in cash, shares of Common Stock or such other
consideration as the Board of Directors may determine. Immediately upon the
effectiveness of the action of the Board of Directors ordering redemption of the
Rights, the Rights will terminate and the only right of the holders of Rights
will be to receive the $0.01 redemption price.
At any time after the occurrence of a Flip-In Event and prior to a
person's becoming the beneficial owner of 50% or more of the shares of Common
Stock then outstanding or the occurrence of a Flip-Over Event, the Company may
exchange the Rights (other than Rights owned by an Acquiring Person or an
affiliate or an associate of an Acquiring Person, which will have become void),
in whole or in part, at an exchange ratio of one share of Common Stock, and/or
other equity securities deemed to have the same value as one share of Common
Stock, per Right, subject to adjustment.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends. While the distribution of the Rights should not
be taxable to stockholders or to the Company, stockholders may, depending upon
the circumstances, recognize taxable income in the event that the Rights become
exercisable for Common Stock (or other consideration) of the Company or for the
common stock of the acquiring company as set forth above or are exchanged as
provided in the preceding paragraph.
Other than the redemption price, any of the provisions of the Rights
Agreement may be amended by the Board of Directors of the Company as long as the
Rights are redeemable. Thereafter, the provisions of the Rights Agreement other
than the redemption price may be amended by the Board of Directors in order to
cure any ambiguity, defect or inconsistency, to make changes that do not
materially adversely affect the interests of holders of Rights (excluding the
interests of any Acquiring Person), or to shorten or lengthen any time period
under the Rights Agreement; provided, however, that no amendment to lengthen the
time period governing redemption shall be made at such time as the Rights are
not redeemable.
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A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an exhibit to this Report on Form 8-K. This summary
description of the Rights does not purport to be complete and is qualified in
its entirety by reference to the Rights Agreement, which is incorporated herein
by reference.
The Rights will have certain anti-takeover effects. The Rights will
cause substantial dilution to any person or group that attempts to acquire the
Company without the approval of the Company's Board of Directors. As a result,
the overall effect of the Rights may be to render more difficult or discourage
any attempt to acquire the Company even if such acquisition may be favorable to
the interests of the Company's stockholders. Because the Company's Board of
Directors can redeem the Rights or approve a Permitted Offer, the Rights should
not interfere with a merger or other business combination approved by the Board
of Directors of the Company.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
1. Rights Agreement dated as of December 18, 1998
between Pennzoil Products Company and The Chase
Manhattan Bank, as Rights Agent, which includes as
Exhibit A the form of Certificate of Designations of
Series A Junior Participating Preferred Stock setting
forth the terms of the Preferred Stock, as Exhibit B
the form of Rights Certificate and as Exhibit C the
Summary of Rights to Purchase Preferred Stock.
Pursuant to the Rights Agreement, Rights Certificates
will not be mailed until after the Distribution Date
(as defined in the Rights Agreement).
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PENNZOIL PRODUCTS COMPANY
Date: December 18, 1998 By: /s/ David P. Alderson II
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David P. Alderson II
Vice President
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INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
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1 Rights Agreement dated as of December 18, 1998
between Pennzoil Products Company and The Chase
Manhattan Bank, as Rights Agent, which includes as
Exhibit A the form of Certificate of Designations of
Series A Junior Participating Preferred Stock setting
forth the terms of the Preferred Stock, as Exhibit B
the form of Rights Certificate and as Exhibit C the
Summary of Rights to Purchase Preferred Stock.
Pursuant to the Rights Agreement, Rights Certificates
will not be mailed until after the Distribution Date
(as defined in the Rights Agreement).