AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 20, 2004
REGISTRATION NO. 333-
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
THE LUBRIZOL CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
OHIO 34-0367600
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
29400 Lakeland Boulevard
Wickliffe, Ohio 44092-2298
(440) 943-4200
(Address, Including Zip Code, and Telephone Number, Including
Area Code, of Registrant's Principal Executive Offices)
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Joseph W. Bauer
Vice President and General Counsel
29400 Lakeland Boulevard
Wickliffe, Ohio 44092-2298
(440) 943-4200
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
COPIES TO:
James R. Carlson Michael J. Schiavone
Thompson Hine LLP Shearman & Sterling LLP
3900 Key Center 599 Lexington Avenue
127 Public Square New York, New York 10022
Cleveland, Ohio 44114 (212) 848-4000
(216) 566-5500
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after this registration statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT OFFERING PRICE AGGREGATE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED TO BE REGISTERED(1) PER UNIT(1)(2) PRICE(1) FEE(3)
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Common shares(4)(5).......................... (2) -- (2) (2)
Debt securities(5)........................... (2) -- (2) (2)
Total........................................ $2,000,000,000 -- $2,000,000,000 $253,400
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(1) An indeterminate aggregate principal amount or number of securities is being
registered as may from time to time be issued hereunder at indeterminate
prices. In no event will the aggregate initial offering price of the common
shares and debt securities issued hereunder exceed $2,000,000,000. The
proposed maximum offering prices per unit will be determined from time to
time by the registrant in connection with the issuance by the registrant of
the securities registered hereunder.
(Continued on other side)
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(Continued from other side)
(2) Not specified as to each class of securities to be registered pursuant to
General Instruction II.D. of Form S-3.
(3) Calculated, pursuant to Rule 457(o) under the Securities Act of 1933, by
multiplying 0.00012670 by the proposed maximum aggregate offering price.
(4) Includes the associated common share purchase rights.
(5) Includes such indeterminate number of common shares and such indeterminate
principal amount of debt securities as may be offered pursuant to this
registration statement.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES, AND WE ARE NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES, IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED , 2004
PROSPECTUS
$2,000,000,000
THE LUBRIZOL CORPORATION
COMMON SHARES
DEBT SECURITIES
This prospectus provides you with a general description of the common
shares and debt securities that we may offer and sell from time to time. Each
time we offer securities for sale we will provide a prospectus supplement that
contains specific information about the terms of the offered securities and may
add to, update or change the information contained in this prospectus. We will
also describe in the prospectus supplement any material risk factors that an
investor should consider before purchasing our securities. This prospectus may
not be used to consummate sales of our securities unless it is accompanied by a
prospectus supplement describing the terms of the offering.
Our common shares are listed for trading on the New York Stock Exchange
under the symbol "LZ." The mailing address and telephone number of our principal
executive offices are 29400 Lakeland Boulevard, Wickliffe, Ohio 44092-2298 and
(440) 943-4200.
You should read this prospectus, the documents that are incorporated herein
by reference and the applicable prospectus supplement carefully before you
decide to invest in our securities.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is , 2004.
TABLE OF CONTENTS
About this Prospectus....................................... 1
About The Lubrizol Corporation.............................. 1
Where You Can Find More Information......................... 1
Forward-Looking Statements.................................. 2
Use of Proceeds............................................. 3
Ratio of Earnings to Fixed Charges.......................... 3
Description of Common Shares................................ 3
Description of Debt Securities.............................. 6
Plan of Distribution........................................ 20
Legal Matters............................................... 22
Experts..................................................... 22
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
SEC utilizing a shelf registration process. Under this shelf process, we may
sell any combination of the securities described in this prospectus in one or
more offerings up to a total dollar amount of $2,000,000,000. This prospectus
provides you with a general description of the securities that we may offer.
Each time we sell securities, we will provide a prospectus supplement that will
contain specific information about the terms of that offering. The prospectus
supplement may also add, update or change information contained in this
prospectus. This prospectus may not be used to consummate sales of our
securities unless it is accompanied by a prospectus supplement describing the
terms of the offering. You should read both this prospectus and any applicable
prospectus supplement together with the additional information described below
under the heading "Where You Can Find More Information."
ABOUT THE LUBRIZOL CORPORATION
We are a leading global fluid technology company that develops, produces
and sells high-performance chemicals, systems and services for transportation
and industry. We create these products by applying advanced chemical and
mechanical technologies to enhance the performance, quality and value and reduce
the environmental impact of the customer products in which our products are
used. Our product lines consist of three principal segments: fluid technologies
for transportation, fluid technologies for industry, and all other, which is
comprised of advanced fluid systems and emulsified products.
On April 16, 2004, we announced that we have entered into an agreement and
plan of merger to acquire Noveon International, Inc. in a transaction valued at
$1.84 billion. Noveon is a leading global producer and marketer of
technologically advanced specialty materials and chemicals used in a broad range
of consumer and industrial applications. Noveon's businesses include a number of
industry-leading product franchises marketed under some of the industry's most
recognized brand names, including Carbopol(R), TempRite(R), Estane(R) and
Hycar(R). The acquisition of Noveon is expected to be completed by June 30,
2004.
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the reporting requirements of the Securities Exchange Act
of 1934, and we file annual, quarterly and current reports and other information
with the SEC. Our reports filed with the SEC may be inspected, without charge,
and copies may be obtained at prescribed rates, at the public reference facility
maintained by the SEC at Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549. You may obtain information regarding the SEC's public reference
facility by calling 1-800-SEC-0330. Our reports and other information filed by
us with the SEC are also available at the SEC's website on the Internet located
at www.sec.gov. Our common shares are listed for trading on the NYSE under the
symbol "LZ." We maintain a website on the Internet located at www.lubrizol.com.
The information on our website is not incorporated by reference in this
prospectus.
The SEC allows us to incorporate by reference in this prospectus the
information that we file with them. Incorporation by reference means that we can
disclose important information to you by referring you to other documents that
are considered to be part of this prospectus, and later information that we file
with the SEC will automatically update and supersede the information in this
prospectus and the documents listed below. We hereby incorporate by reference
our filings listed below and any future filings made by us with the SEC under
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 after
the date of this prospectus until all of the securities offered under this
prospectus are sold:
- Our Annual Report on Form 10-K for the fiscal year ended December 31,
2003;
- Our Quarterly Report on Form 10-Q for the quarterly period ended March
31, 2004;
- Our Current Reports on Form 8-K filed with the SEC on April 16 and May
20, 2004;
- The description of our common shares contained in Item 2 of our Quarterly
Report on Form 10-Q for the quarterly period ended June 30, 1991;
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- Our Registration Statement on Form 8-A filed with the SEC on October 1,
1997; and
- Our Registration Statement on Form 8-A/A filed with the SEC on August 17,
1999.
We will provide without charge to each person to whom a copy of this
prospectus is delivered, including any beneficial owner, upon the written or
oral request of such person, a copy of any or all of the documents incorporated
by reference in this prospectus (other than exhibits to such documents, unless
such exhibits are specifically incorporated by reference into the information
that this prospectus incorporates). Requests should be directed to:
The Lubrizol Corporation
29400 Lakeland Boulevard
Wickliffe, Ohio 44092-2298
(440) 943-4200
Attn: Joanne Wanstreet
You should only rely on the information contained in this prospectus, any
prospectus supplement or any document incorporated by reference. We have not
authorized anyone else to provide you with different or additional information.
We are not making an offer of these securities in any state where the offer is
not permitted. You should not assume that the information contained in this
prospectus, any prospectus supplement or any document incorporated by reference
is accurate as of any date other than the date of the applicable document.
FORWARD-LOOKING STATEMENTS
This prospectus contains, each prospectus supplement may contain and the
documents incorporated by reference herein contain or will contain
forward-looking statements within the meaning of the federal securities laws. As
a general matter, forward-looking statements are those focused upon future
plans, objectives or performance as opposed to historical items and include
statements of anticipated events or trends and expectations and beliefs relating
to matters not historical in nature. Forward-looking statements are subject to
uncertainties and factors relating to our operations and business environment,
all of which are difficult to predict and many of which are beyond our control.
These uncertainties and factors could cause our actual results to differ
materially from those matters expressed in or implied by any forward-looking
statements.
We believe that the following factors, among others, could affect our
future performance and cause our actual results to differ materially from those
expressed or implied by the forward-looking statements made by us:
- the overall global economic environment and the overall demand for our
products on a worldwide basis;
- the demand for our products in developing regions such as China and
India, which geographic areas are an announced focus of our activities;
- technology developments that affect longer-term trends for our products;
- the extent to which we are successful in expanding our business in new
and existing markets;
- our ability to identify, complete and integrate acquisitions for
profitable growth;
- our success at continuing to develop proprietary technology to meet or
exceed new industry performance standards and individual customer
expectations;
- our ability to continue to reduce complexities and conversion costs and
modify our cost structure to maintain and enhance our competitiveness;
- our success in retaining and growing the business that we do with our
largest customers;
- the cost, availability and quality of raw materials, including
petroleum-based products;
- the cost and availability of energy, including natural gas and
electricity;
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- the effects of fluctuations in currency exchange rates upon our reported
results from international operations, together with non-currency risks
of investing in and conducting significant operations in foreign
countries, including those relating to political, social, economic and
regulatory factors;
- the extent to which we achieve market acceptance of our commercial
development programs;
- significant changes in government regulations affecting environmental
compliance; and
- the ability to identify, understand and manage risks inherent in new
markets in which we choose to expand.
USE OF PROCEEDS
Unless otherwise disclosed in the applicable prospectus supplement, we
intend to use the net proceeds from the sale of our securities to repay
outstanding indebtedness, including debt that we expect to incur or assume in
connection with the acquisition of Noveon.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth our consolidated ratio of earnings to fixed
charges on an historical basis for the periods indicated.
YEAR ENDED DECEMBER 31, THREE MONTHS
------------------------------------- ENDED
1999 2000 2001 2002 2003 MARCH 31, 2004
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Ratio of earnings to fixed charges(1)...................... 7.71X 7.66X 6.97X 9.29X 6.19X 10.12X
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(1) Our ratio of earnings to fixed charges has been computed by dividing
earnings (including distributed income of equity investees) before income
taxes plus fixed charges (excluding capitalized interest expense) by fixed
charges. Fixed charges consist of interest expense on debt (including
amortization of debt expense and capitalized interest).
DESCRIPTION OF COMMON SHARES
COMMON SHARES
The following is a summary of the provisions of our common shares. The
rights of our common shares are defined by our Amended Articles of Incorporation
and our Code of Regulations, as amended, and the provisions of the Ohio General
Corporation Law. You should refer to those documents and provisions for more
complete information regarding our common shares.
Holders of our common shares are entitled to one vote per share on all
matters upon which our shareholders are entitled to vote, including the election
of directors. The holders of common shares are entitled to dividends when, as
and if declared by our Board of Directors out of legally available funds. In the
event of any liquidation, dissolution or winding up of our business, each holder
of common shares is entitled to share ratably in all of our assets remaining
after the payment of liabilities. Holders of common shares have no preemptive
right to purchase any of our securities or any securities that are convertible
into or exchangeable for any of our securities. The common shares are not
subject to any provisions relating to redemption. The common shares have no
conversion rights and are not subject to further calls or assessments by us. All
of our common shares now outstanding, and all of our common shares that are
issued in an offering under this prospectus, are or will be when issued fully
paid and non-assessable.
As of the date hereof, we have 120,000,000 common shares authorized for
issuance under our Amended Articles of Incorporation, common shares issued
and outstanding, and common shares reserved for issuance pursuant to our
Employees' Profit Sharing and Savings Plan.
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Our common shares are listed for trading on the NYSE under the symbol "LZ."
As of the date hereof, we have shareholders of record. This number excludes
beneficial owners of common shares held in street name. Based on requests from
brokers and other nominees, we estimate there are approximately an additional
beneficial owners of our common shares.
PROVISIONS RELATING TO TAKEOVER MATTERS
Our Board of Directors must have at least nine, and no more than thirteen,
directors and is currently fixed at eleven directors, who are divided into three
classes. Two classes have four directors, and the other class has three
directors. Directors of each class serve for three-year terms, with one class
being elected each year. The authorized number of directors and the number of
directors in each class may be changed only by the affirmative vote of the
holders of at least a majority of the shares entitled to vote for the election
of directors that are represented at a meeting of shareholders called for the
purpose of electing directors or by the affirmative vote of a majority of the
directors then in office.
Under the Ohio General Corporation Law, if a corporation's Board of
Directors is divided into classes, then directors may be removed by the
shareholders only for cause. Under our Code of Regulations, a director may be
removed upon the vote of the holders of two-thirds of the shares that are
represented at an annual meeting or any special meeting of shareholders duly
called for that purpose. Unless all of the directors of a class are removed, a
director may not be removed if the number of shares voted against the director's
removal would be sufficient, if cumulatively voted at an election of all of the
directors or all of the directors of a particular class, to elect one director.
If any director is removed, the resulting vacancy may be filled by a majority
vote of the Board of Directors. Any director elected to fill a vacancy will hold
office until the expiration of the term of office for the class to which the
director was elected.
Nominations of persons for election as directors may be made at a meeting
of shareholders by or at the direction of the Board of Directors, by any
nominating committee or person appointed by the Board of Directors, or by any
shareholder entitled to vote for the election of directors who gives timely
notice. To be timely, a shareholder's notice must be received at our principal
executive offices not less than 60 days nor more than 90 days prior to the
meeting; except that, if less than 75 days' notice or prior public disclosure of
the date of the meeting is given to shareholders, notice by the shareholder will
be timely if it is received not later than the 15th day following the earlier of
the day on which such notice of the date of the meeting was mailed or such
public disclosure was made.
A special meeting of shareholders may be called by the chairman of the
board, the president, a majority of the directors acting with or without a
meeting, or by shareholders holding 50% or more of the outstanding shares
entitled to vote at the special meeting.
Our Code of Regulations provides that holders of shares entitling them to
exercise at least a majority of our voting power will constitute a quorum at any
meeting of shareholders; except that, whether or not a quorum is present, the
holders of a majority of the voting shares represented at a meeting may adjourn
the meeting without notice other than by announcement at the meeting.
Our Code of Regulations may be amended, repealed or superseded by new
regulations by the affirmative vote of the holders of a majority of the shares
represented at an annual meeting or any special meeting of shareholders duly
called for that purpose. The provisions of our Code of Regulations regarding the
number, classification and removal of directors, however, may be amended or
repealed only with the affirmative vote of the holders of at least two-thirds of
our voting power, unless the amendment or repeal has been recommended by at
least two-thirds of the directors then in office.
Section 1704.02 of the Ohio General Corporation Law (also known as the
Merger Moratorium Law) prohibits Chapter 1704 transactions (as defined below)
for a period of three years from the date on which a shareholder first becomes
an interested shareholder unless the directors of the corporation prior to the
shareholder becoming an interested shareholder approved the transaction or
approved the transaction pursuant to which the shareholder became an interested
shareholder. "Chapter 1704 transactions" include mergers, consolidations,
combinations, majority share acquisitions or sales of substantial assets between
an Ohio corporation and an
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interested shareholder or an affiliate or associate of an interested
shareholder. An "interested shareholder" is defined generally as any person that
beneficially owns 10% or more of the outstanding voting shares of the
corporation. After the three-year period, a Chapter 1704 transaction is
prohibited unless certain fair price provisions are complied with or the
shareholders of the corporation approve the transaction by the affirmative vote
of two-thirds of the voting power of the corporation, including at least a
majority of the disinterested shareholders.
Under Ohio securities law, any person making a "control bid" pursuant to a
tender offer for the securities of certain publicly held companies, including
our company, must file upon commencement of the bid certain information relating
to the bid with the Ohio Division of Securities. The Division may within five
calendar days suspend the bid if the required information has not been filed, if
material information regarding the bid has not been provided to the shareholders
of the company, or if there has been any other violation of the Ohio Securities
Act.
Under the Ohio General Corporation Law, the approval by the affirmative
vote of holders of two-thirds of the voting power of a corporation entitled to
vote on the matter is required for mergers, consolidations, majority share
acquisitions, combinations involving the issuance of shares with one-sixth or
more of the voting power of the corporation, and any transfers of all or
substantially all of the assets of a corporation unless the articles of
incorporation of the corporation specify a different proportion (which cannot be
less than a majority). Our Amended Articles of Incorporation provide that these
actions generally can be authorized by the holders of a majority of the
outstanding shares.
Our Amended Articles of Incorporation include provisions that require prior
shareholder approval for any acquisition of shares in which a person or group
obtains voting power of our company in one of the following ranges: one-fifth or
more but less than one-third, one-third or more but less than a majority, or a
majority. Any such acquisition must be approved at a special meeting of
shareholders, at which a quorum is present, by the affirmative vote of both (1)
the holders of a majority of the outstanding voting shares and (2) the holders
of a majority of the outstanding voting shares after excluding interested
shares. For this purpose, "interested shares" includes shares held by the
directors who are employees and certain officers of our company and shares held
by the person or group acquiring the shares. Our company has "opted out" of a
similar provision that is set forth in the Ohio General Corporation Law.
Our Amended Articles of Incorporation contain provisions that require
certain related-party transactions to be approved by the affirmative vote of the
holders of both a majority of the outstanding voting shares and a majority of
such shares after excluding the shares owned by the related party involved in
the transaction, unless certain fair price provisions are complied with. For
this purpose, a "related party" means any person that beneficially owns 10% or
more, but less than 90%, of our outstanding voting shares and any of such
person's affiliates or associates. A "related-party transaction" includes any
merger or consolidation, any sale, purchase, lease, exchange or transfer of
substantial assets, the issuance or transfer of any securities, any
reclassification of securities or recapitalization or the adoption of any plan
or proposal for liquidation or dissolution, in each case with, to or for the
benefit of a related party.
Our Amended Articles of Incorporation may be amended, repealed or
superseded by new articles of incorporation by the affirmative vote of the
holders of at least two-thirds of the outstanding voting shares.
Our company has a shareholder rights plan. Under that plan, rights have
been distributed to all of our shareholders. If any person or group acquires 20%
or more of our common shares, these rights will "flip in" and permit all
holders, other than the acquiring person, to purchase additional shares at a
discounted price.
Some or all of these provisions of our Amended Articles of Incorporation,
Code of Regulations and Ohio law and our shareholder rights plan may have the
effect of delaying, hindering or preventing a change in control of our company
that is not supported by our Board of Directors, including a change in control
that might result in the receipt by shareholders of a purchase price in excess
of then current market prices.
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DESCRIPTION OF DEBT SECURITIES
The following description of the debt securities sets forth the material
terms and provisions of the debt securities to which any prospectus supplement
may relate. The debt securities are to be issued under an indenture (the
"indenture") among Lubrizol and Wells Fargo Bank, National Association, as
trustee, the form of which is filed as an exhibit to the registration statement
of which this prospectus forms a part. The particular terms of the debt
securities offered by any prospectus supplement, and the extent to which the
general provisions described below may apply to the offered debt securities,
will be described in the prospectus supplement.
Because the following is a summary of the material terms and provisions of
the indenture and the debt securities, you should refer to the indenture and the
debt securities for complete information regarding the terms and provisions of
the indenture and the debt securities, including the definitions of some of the
terms used below. You should also refer to the Trust Indenture Act of 1939,
certain terms of which are made a part of the indenture by reference. Wherever
particular articles, sections or defined terms of the indenture are referred to,
such articles, sections or defined terms are incorporated herein by reference,
and the statement in connection with which such reference is made is qualified
in its entirety by such reference. For purposes of this description of debt
securities, references to "Lubrizol" include only The Lubrizol Corporation and
not its subsidiaries.
GENERAL
The indenture does not limit the aggregate principal amount of debt
securities which Lubrizol may issue thereunder and provides that Lubrizol may
issue debt securities thereunder from time to time in one or more series.
(Section 3.1) The indenture does not limit the amount of other Debt (as defined
below) or debt securities, other than certain secured Debt as described below,
which Lubrizol or its subsidiaries may issue.
Unless otherwise provided in a prospectus supplement, the debt securities
will be unsecured obligations of Lubrizol, ranking senior in right of payment to
all future obligations of Lubrizol that are, by their terms, expressly
subordinated in right of payment to the debt securities and equally in right of
payment with all existing and future unsecured obligations of Lubrizol that are
not so subordinated.
The prospectus supplement relating to the particular debt securities
offered thereby will describe the following terms of the offered debt
securities:
- the title of such debt securities and the series in which such debt
securities will be included, which may include medium-term notes;
- any limit upon the aggregate principal amount of such debt securities;
- the date or dates, or the method or methods, if any, by which such date
or dates will be determined, on which the principal of such debt
securities will be payable;
- the rate or rates at which such debt securities will bear interest, if
any, which rate may be zero in the case of certain debt securities issued
at an issue price representing a discount from the principal amount
payable at maturity, or the method by which such rate or rates will be
determined (including, if applicable, any remarketing option or similar
method), and the date or dates from which such interest, if any, will
accrue or the method by which such date or dates will be determined;
- the date or dates on which interest, if any, on such debt securities will
be payable and any regular record dates applicable to the date or dates
on which interest will be so payable;
- whether and under what circumstances additional amounts in respect of
certain taxes, fees, duties, assessments or governmental charges that
might be imposed on holders of such debt securities will be payable and,
if so, whether and on what terms Lubrizol will have the option to redeem
such debt securities in lieu of paying such additional amounts (and the
terms of such option);
- the place or places where the principal of, any premium or interest on or
any additional amounts with respect to such debt securities will be
payable, any of such debt securities that are issued in registered form
may be surrendered for registration of transfer or exchange, and any such
debt securities may be surrendered for conversion or exchange;
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- whether any of such debt securities are to be redeemable at the option of
Lubrizol and, if so, the date or dates on which, the period or periods
within which, the price or prices at which and the other terms and
conditions upon which such debt securities may be redeemed, in whole or
in part, at the option of Lubrizol;
- whether Lubrizol will be obligated to redeem or purchase any of such debt
securities pursuant to any sinking fund or analogous provision or at the
option of any holder thereof and, if so, the date or dates on which, the
period or periods within which, the price or prices at which and the
other terms and conditions upon which such debt securities will be
redeemed or purchased, in whole or in part, pursuant to such obligation,
and any provisions for the remarketing of such debt securities so
redeemed or purchased;
- if other than denominations of $1,000 and any integral multiple thereof,
the denominations in which any debt securities to be issued in registered
form will be issuable and, if other than a denomination of $5,000, the
denominations in which any debt securities to be issued in bearer form
will be issuable;
- whether the debt securities will be convertible into other securities of
Lubrizol and/or exchangeable for securities of other issuers and, if so,
the terms and conditions upon which such debt securities will be so
convertible or exchangeable;
- if other than the principal amount, the portion of the principal amount
(or the method by which such portion will be determined) of such debt
securities that will be payable upon declaration of acceleration of the
maturity thereof;
- if other than United States dollars, the currency of payment, including
composite currencies, of the principal of, any premium or interest on or
any additional amounts with respect to any of such debt securities;
- whether the principal of, any premium or interest on or any additional
amounts with respect to such debt securities will be payable, at the
election of Lubrizol or a holder, in a currency other than that in which
such debt securities are stated to be payable and the date or dates on
which, the period or periods within which, and the other terms and
conditions upon which, such election may be made;
- any index, formula or other method used to determine the amount of
payments of principal of, any premium or interest on or any additional
amounts with respect to such debt securities;
- whether such debt securities are to be issued in the form of one or more
global securities and, if so, the identity of the depositary for such
global security or securities;
- any deletions from, modifications of or additions to the Events of
Default or covenants of Lubrizol with respect to such debt securities;
- whether the provisions described below under "Discharge, Defeasance and
Covenant Defeasance" will be applicable to such debt securities;
- whether any of such debt securities are to be issued upon the exercise of
warrants, and the time, manner and place for such debt securities to be
authenticated and delivered; and
- any other terms of such debt securities and any other deletions from or
modifications or additions to the indenture in respect of such debt
securities. (Section 3.1)
Lubrizol will have the ability under the indenture to "reopen" a previously
issued series of debt securities and issue additional debt securities of that
series or establish additional terms of that series. Lubrizol is also permitted
to issue debt securities with the same terms as previously issued debt
securities. (Section 3.1)
Unless otherwise provided in the related prospectus supplement, principal,
premium, interest and additional amounts, if any, with respect to any debt
securities will be payable at the office or agency maintained by Lubrizol for
such purposes (initially the designated corporate trust office of the trustee).
In the case of debt securities issued in registered form, interest may be paid
by check mailed to the persons entitled thereto at their addresses appearing on
the security register or by transfer to an account maintained by the payee with
a bank located in the United States. Interest on debt securities issued in
registered form will be payable on any interest payment date to
7
the persons in whose names the debt securities are registered at the close of
business on the regular record date with respect to such interest payment date.
All paying agents initially designated by Lubrizol for the debt securities will
be named in the related prospectus supplement. Lubrizol may at any time
designate additional paying agents or rescind the designation of any paying
agent or approve a change in the office through which any paying agent acts,
except that Lubrizol will be required to maintain a paying agent in each place
where the principal of, any premium or interest on or any additional amounts
with respect to the debt securities are payable. (Sections 3.7 and 10.2)
Unless otherwise provided in the related prospectus supplement, the debt
securities may be presented for transfer (duly endorsed or accompanied by a
written instrument of transfer, if so required by Lubrizol or the security
registrar) or exchanged for other debt securities of the same series (containing
identical terms and provisions, in any authorized denominations, and of a like
aggregate principal amount) at the office or agency maintained by Lubrizol for
such purposes (initially the designated corporate trust office of the trustee).
Such transfer or exchange will be made without service charge, but Lubrizol may
require payment of a sum sufficient to cover any tax or other governmental
charge and any other expenses then payable. Lubrizol will not be required to (1)
issue, register the transfer of, or exchange, debt securities during a period
beginning at the opening of business 15 days before the day of mailing of a
notice of redemption of any such debt securities and ending at the close of
business on the day of such mailing or (2) register the transfer of or exchange
any debt security so selected for redemption in whole or in part, except the
unredeemed portion of any debt security being redeemed in part. (Section 3.5)
Lubrizol has appointed the trustee as security registrar. Any transfer agent (in
addition to the security registrar) initially designated by Lubrizol for any
debt securities will be named in the related prospectus supplement. Lubrizol may
at any time designate additional transfer agents or rescind the designation of
any transfer agent or approve a change in the office through which any transfer
agent acts, except that Lubrizol will be required to maintain a transfer agent
in each place where the principal of, any premium or interest on or any
additional amounts with respect to the debt securities are payable. (Section
10.2)
Unless otherwise provided in the related prospectus supplement, the debt
securities will be issued only in fully registered form without coupons in
minimum denominations of $1,000 and any integral multiple thereof. (Section 3.2)
The debt securities may be represented in whole or in part by one or more global
debt securities registered in the name of a depositary or its nominee and, if so
represented, interests in such global debt security will be shown on, and
transfers thereof will be effected only through, records maintained by the
designated depositary and its participants as described below. Where debt
securities of any series are issued in bearer form, the special restrictions and
considerations, including special offering restrictions and special United
States federal income tax considerations, applicable to such debt securities and
to payment on and transfer and exchange of such debt securities will be
described in the related prospectus supplement.
The debt securities may be issued as original issue discount securities
(bearing no interest or bearing interest at a rate which at the time of issuance
is below market rates) to be sold at a substantial discount below their
principal amount. Special United States federal income tax and other
considerations applicable to original issue discount securities will be
described in the related prospectus supplement.
If the purchase price of any debt securities is payable in one or more
foreign currencies or currency units or if any debt securities are denominated
in one or more foreign currencies or currency units or if the principal of, or
any premium or interest on, or any additional amounts with respect to, any debt
securities is payable in one or more foreign currencies or currency units, the
restrictions, elections, certain United States federal income tax
considerations, specific terms and other information with respect to such debt
securities and such foreign currency or currency units will be set forth in the
related prospectus supplement.
Lubrizol will comply with Section 14(e) of the Exchange Act and any tender
offer rules under the Exchange Act, to the extent applicable, in connection with
any obligation of Lubrizol to purchase debt securities at the option of the
holders. Any such obligation applicable to a series of debt securities will be
described in the related prospectus supplement.
Unless otherwise described in a prospectus supplement relating to any debt
securities, other than as described below under "-- Limitation on Liens" and
"-- Limitation on Sale/Leaseback Transactions," the indenture does not contain
any provisions that would limit the ability of Lubrizol to incur indebtedness or
that
8
would afford holders of debt securities protection in the event of a sudden and
significant decline in the credit quality of Lubrizol or a takeover,
recapitalization or highly leveraged or similar transaction involving Lubrizol.
Accordingly, Lubrizol could in the future enter into transactions that could
increase the amount of indebtedness outstanding at that time or otherwise affect
Lubrizol's capital structure or credit rating. You should refer to the
prospectus supplement relating to a particular series of debt securities for
information regarding any deletions from, modifications of or additions to the
Events of Defaults described below or covenants of Lubrizol contained in the
indenture, including any addition of a covenant or other provisions providing
event risk or similar protection.
CONVERSION AND EXCHANGE
The terms, if any, on which debt securities of any series are convertible
into or exchangeable for other securities, whether or not issued by Lubrizol,
property or cash, or a combination of any of the foregoing, will be set forth in
the related prospectus supplement. Such terms may include provisions for
conversion or exchange, either mandatory, at the option of the holder, or at the
option of Lubrizol, in which the securities, property or cash to be received by
the holders of the debt securities would be calculated according to the factors
and at such time as described in the related prospectus supplement.
GLOBAL SECURITIES
The debt securities of a series may be issued in whole or in part in the
form of one or more global debt securities that will be deposited with, or on
behalf of, a depositary identified in the prospectus supplement relating to such
series.
The specific terms of the depositary arrangement with respect to a series
of debt securities will be described in the prospectus supplement relating to
such series. Lubrizol anticipates that the following provisions will apply to
all depositary arrangements.
Upon the issuance of a global security, the depositary for such global
security or its nominee will credit, on its book-entry registration and transfer
system, the respective principal amounts of the debt securities represented by
such global security. Such accounts will be designated by the underwriters or
agents with respect to such debt securities, or by Lubrizol if such debt
securities are offered and sold directly by Lubrizol. Ownership of beneficial
interests in a global security will be limited to 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 or its nominee (with respect
to interests of participants) and on the records of participants (with respect
to interests of persons other than participants). The laws of some states
require that certain purchasers of securities take physical delivery of such
securities in definitive form. Such limits and such laws may impair the ability
to transfer beneficial interests in a global security.
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 described below, owners of beneficial interests in a global
security will not be entitled to have debt securities of the series represented
by such global security registered in their names and will not receive or be
entitled to receive physical delivery of debt securities of that series in
definitive form.
Principal of, any premium and interest on, and any additional amounts with
respect to, debt securities registered in the name of a depositary or its
nominee will be made to the depositary or its nominee, as the case may be, as
the registered owner of the global security representing such debt securities.
None of Lubrizol, the trustee, any paying agent or the security registrar will
have any responsibility or liability for any aspect of the records relating to
or payments made on account of beneficial ownership interests of the global
security for such debt securities or for maintaining, supervising or reviewing
any records relating to such beneficial ownership interests.
Lubrizol expects that the depositary for a series of debt securities or its
nominee, upon receipt of any payment with respect to such debt securities, will
credit immediately participants' accounts with payments in
9
amounts proportionate to their respective beneficial interest in the principal
amount of the global security for such debt securities as shown on the records
of such depositary or its nominee. Lubrizol also expects that payments by
participants to owners of beneficial interests in such global security held
through such participants will be governed by standing instructions and
customary practices, as is now the case with securities held for the accounts of
customers registered in "street name," and will be the responsibility of such
participants.
The indenture provides that if (1) the depositary for a series of debt
securities notifies Lubrizol that it is unwilling or unable to continue as
depositary or if such depositary ceases to be eligible under the indenture and a
successor depositary is not appointed by Lubrizol within 90 days of written
notice or (2) Lubrizol determines that debt securities of a particular series
will no longer be represented by global securities and executes and delivers to
the trustee a company order to such effect, the global securities will be
exchanged for debt securities of such series in definitive form of like tenor
and of an equal aggregate principal amount, in authorized denominations. Such
definitive debt securities will be registered in such name or names as the
depositary shall instruct the trustee. (Section 3.5) It is expected that such
instructions may be based upon directions received by the depositary from
participants with respect to ownership of beneficial interests in global
securities.
CERTAIN COVENANTS
LIMITATION ON LIENS
Under the indenture, Lubrizol will covenant that, so long as any debt
securities are outstanding, it will not, nor will it permit any Restricted
Subsidiary to, create, incur, assume, guarantee or otherwise permit to exist any
Debt secured by any mortgage, pledge, lien, security interest or other
encumbrance (a "Lien") on any property (including shares of capital stock or
Debt) of Lubrizol or any Restricted Subsidiary, whether now owned or hereafter
acquired, without in any such case effectively providing, concurrently with the
creation, incurrence, assumption or guarantee of any such Debt, that the debt
securities (and, if Lubrizol shall so determine, any other Debt of Lubrizol or
any Restricted Subsidiary that is not subordinate to the debt securities and
with respect to which the governing instruments require, or pursuant to which
Lubrizol or such Restricted Subsidiary is otherwise obligated to provide, such
security) shall be secured equally and ratably with or prior to such Debt for at
least the time period such other Debt is so secured; provided that Debt secured
by such Liens may be created, incurred, assumed or guaranteed, without equally
and ratably securing outstanding debt securities, if the aggregate principal
amount of all Debt then outstanding secured by Liens on property (including
shares of capital stock and Debt) of Lubrizol and of any Restricted Subsidiary
(not including Debt described in clauses (1) through (8) below) plus
Attributable Debt of Lubrizol and its Restricted Subsidiaries in respect of
sale/leaseback transactions described under "-- Limitation on Sale/Leaseback
Transactions" below that would otherwise be subject to the restrictions
described under "-- Limitation on Sale/Leaseback Transactions," does not at the
time the principal amount of such Debt is incurred exceed 10% of Consolidated
Net Tangible Assets. If a secured revolving credit facility is established or
increased without equally and ratably securing outstanding debt securities in
compliance with the proviso in the immediately preceding sentence, then all
subsequent borrowings under such revolving credit facility shall be deemed to be
permissible under the limitation contained in the proviso in the immediately
preceding sentence. (Section 10.5)
The foregoing restrictions shall not apply to Debt secured by:
(1) Liens on property of Lubrizol or any Restricted Subsidiary
existing on the date of original issuance of the applicable series of debt
securities or such other date as may be specified for such series in
accordance with the indenture;
(2) Liens on property acquired by Lubrizol or any Restricted
Subsidiary (including acquisition through merger or consolidation),
provided that such Liens were in existence prior to and were not created in
contemplation of such acquisition and shall not extend to any other
property of Lubrizol or any Restricted Subsidiary;
(3) Liens on property (including in the case of a plant or facility,
the land on which it is erected and fixtures comprising a part thereof) of
Lubrizol or any Restricted Subsidiary securing the payment of all or any
part of the purchase price or construction cost thereof or securing any
Debt created, incurred, assumed
10
or guaranteed prior to, at the time of or within 120 days after the latest
of the acquisition of such property or the completion of such construction,
for the purpose of financing all or any portion of the purchase price or
construction cost thereof (provided, in the case of Liens securing the
payment of all or any part of the purchase price of property of Lubrizol or
any Restricted Subsidiary, as the case may be, or securing any Debt
created, incurred, assumed or guaranteed for the purposes of financing all
or any part of such purchase price, such Liens are limited to the property
then being acquired and fixed improvements thereon and the capital stock of
any Person formed to acquire such property and provided further, in the
case of Liens securing the payment of all or any part of the construction
cost of any property of Lubrizol or any Restricted Subsidiary, as the case
may be, or securing Debt created, incurred, assumed or guaranteed for the
purpose of financing all or any part of such construction cost, such Liens
are limited to the assets or property then being constructed and the land
on which such property is erected and fixtures comprising a part thereof);
(4) Liens on property of Lubrizol or any Restricted Subsidiary to
secure all or any part of the cost of development, construction,
alteration, repair or improvement of all or any part of such property, or
to secure Debt created, incurred, assumed or guaranteed prior to, at the
time of or within 120 days after the latest of the completion of such
development, construction, alteration, repair or improvement, for the
purpose of financing all or any part of such cost (provided such Liens do
not extend to or cover any property of Lubrizol or any Restricted
Subsidiary other than the property then being developed, constructed,
altered, repaired or improved and the land on which such property is
erected and fixtures comprising a part thereof);
(5) Liens in favor of Lubrizol or a Restricted Subsidiary securing
Debt of Lubrizol or a Restricted Subsidiary;
(6) Liens created in connection with tax assessments or legal
proceedings and mechanic's and materialman's liens and other similar liens
created in the ordinary course of business;
(7) Liens on property of Lubrizol or any Restricted Subsidiary (except
Liens on the capital stock or Debt of Lubrizol or any Restricted
Subsidiary) in favor of the United States of America or any State thereof,
or any department, agency or instrumentality or political subdivision of
either, or in favor of any other country, or any department, agency or
instrumentality or political subdivision thereof, in each case to secure
payments pursuant to contract or statute or to secure Debt created,
incurred, assumed or guaranteed for the purpose of financing all or any
part of the purchase price or the cost of construction or improvement of
the property subject to such Liens, including Liens created in connection
with pollution control, industrial revenue bond or other similar financing;
and
(8) Certain permitted extensions, renewals or replacements (or
successive extensions, renewals or replacements), in whole or in part, of
any Lien referred to in the foregoing clauses (1) through (7), inclusive.
For purposes of the "Limitation on Liens" covenant described above, the
creation of a Lien on property (including shares of capital stock or Debt) of
Lubrizol or any Restricted Subsidiary to secure Debt which existed prior to the
creation of such Lien will be deemed to involve the creation of Debt secured by
a Lien in an amount equal to the principal amount secured by such Lien.
LIMITATION ON SALE/LEASEBACK TRANSACTIONS
The indenture provides that neither Lubrizol nor any Restricted Subsidiary
will enter into any arrangement after the date of original issuance of the
applicable series of debt securities, or such other date as may be specified for
such series in accordance with the indenture, with any Person (other than
Lubrizol or a Restricted Subsidiary) providing for the leasing to Lubrizol or a
Restricted Subsidiary for a period of more than three years of any property
which has been, or is to be, sold or transferred by Lubrizol or such Restricted
Subsidiary to such Person or to any Person (other than Lubrizol or a Restricted
Subsidiary) to which funds have been or are to be advanced by such Person on the
security of the leased property unless:
(a) Lubrizol or such Restricted Subsidiary would be permitted,
pursuant to the provisions described under "-- Limitation on Liens"
above, to incur Debt in a principal amount equal to or exceeding the
Attributable Debt in respect of such sale/leaseback transaction, secured
by a Lien on the
11
property to be leased, without equally and ratably securing all
outstanding debt securities issued under the indenture;
(b) since the date of the indenture and within a period commencing
within six months prior to the consummation of such arrangement and
ending six months after the consummation thereof, Lubrizol or such
Restricted Subsidiary has expended or will expend for any property
(including amounts expended for the acquisition thereof and for
additions, alterations, improvements and repairs thereto) an amount up
to the net proceeds of such arrangement and Lubrizol elects to designate
such amount as a credit against such arrangement (with any such amount
not being so designated to be applied as set forth in (c) below); or
(c) Lubrizol, during or immediately after the expiration of the 12
months after the consummation of such transaction, applies or causes
such Restricted Subsidiary to apply to the voluntary retirement,
redemption or defeasance of debt securities of any series or other
Funded Debt of Lubrizol (other than Funded Debt subordinated to the debt
securities) or Funded Debt of such Restricted Subsidiary an amount equal
to the greater of the net proceeds of the sale or transfer of the
property leased in such transaction and the fair value, in the opinion
of the Board of Directors of Lubrizol, of such property at the time of
entering into such transaction (in either case adjusted to reflect the
remaining term of the lease and any amount utilized by Lubrizol as set
forth in (b) above), less an amount equal to the principal amount of any
such Funded Debt of Lubrizol or such Restricted Subsidiary, other than
debt securities, voluntarily retired by Lubrizol or such Restricted
Subsidiary during such 12 month period. (Section 10.6)
ISSUANCE OF SUBSIDIARY GUARANTEES
Lubrizol will not cause or permit any of its Restricted Subsidiaries,
directly or indirectly, to guarantee any Debt of Lubrizol unless such Restricted
Subsidiary:
(1) executes and delivers to the trustee a supplemental indenture in
form reasonably satisfactory to the trustee pursuant to which such
Restricted Subsidiary shall unconditionally guarantee all of Lubrizol's
obligations under the debt securities and the indenture on the terms set
forth in the indenture; and
(2) delivers to the trustee an opinion of counsel (which may contain
customary exceptions) that such supplemental indenture has been duly
authorized, executed and delivered by such Restricted Subsidiary and
constitutes a legal, valid, binding and enforceable obligation of such
Restricted Subsidiary.
Thereafter, such Restricted Subsidiary shall be a guarantor for all
purposes of the indenture until such guarantee is released in accordance with
the provisions of the indenture. Lubrizol may cause any other Restricted
Subsidiary of Lubrizol to become a guarantor under the indenture. (Section 10.7)
CONSOLIDATION, MERGER AND SALE OF ASSETS
The indenture provides that Lubrizol may not, in a single transaction or a
series of related transactions, (1) consolidate or merge with or into any Person
or sell, assign, transfer, lease, convey or otherwise dispose of (or cause or
permit any Restricted Subsidiary to sell, assign, transfer, lease, convey or
otherwise dispose of) all or substantially all of Lubrizol's properties and
assets (determined on a consolidated basis for Lubrizol and its Restricted
Subsidiaries) to any Person, unless (a) Lubrizol shall be the surviving or
continuing corporation or the Person (if other than Lubrizol) formed by such
consolidation or into which Lubrizol is merged or the Person to which such sale,
assignment, transfer, lease, conveyance or other disposition has been made shall
be a corporation organized and existing under the laws of the United States of
America, any State thereof or the District of Columbia and shall expressly
assume, by supplemental indenture satisfactory in form and substance to the
trustee, the due and punctual payment of the principal of, any premium and
interest on and any additional amounts with respect to all of the debt
securities issued thereunder, and the performance of Lubrizol's obligations
under such indenture and the debt securities issued thereunder, and provides for
conversion or exchange rights in accordance with the provisions of the debt
securities of any series that are convertible or exchangeable into common stock
or other securities; (b) immediately before and after giving effect to such
transaction and treating
12
any Debt which becomes an Obligation of Lubrizol or one of its Subsidiaries as a
result of such transaction as having been incurred by Lubrizol or such
Subsidiary at the time of such transaction, no Event of Default, and no event
which after notice or lapse of time or both would become an Event of Default,
shall have happened and be continuing; and (c) certain other conditions are met.
(Section 8.1)
For purposes of the foregoing, the transfer (by lease, assignment, sale or
otherwise, in a single transaction or series of transactions) of all or
substantially all of the properties and assets of one or more Restricted
Subsidiaries, the Capital Stock of which constitutes all or substantially all of
the properties and assets of Lubrizol shall be deemed to be the transfer of all
or substantially all of the properties and assets of Lubrizol.
No guarantor (other than any guarantor whose guarantee is to be released in
accordance with the terms of the guarantee and the indenture) will, and Lubrizol
will not cause or permit any guarantor to, consolidate or merge with or into any
Person other than Lubrizol or any other guarantor unless (a) the entity formed
by or surviving any such consolidation or merger (if other than the guarantor)
is a corporation organized and existing under the laws of the United States of
America, any State thereof or the District of Columbia and shall expressly
assume, by supplemental indenture satisfactory in form and substance to the
trustee, all of the obligations of the guarantor under the indenture and such
guarantor's guarantee; (b) immediately after giving effect to such transaction,
no Event of Default, and no event which after notice or lapse of time or both
would become an Event of Default, shall have happened and be continuing; and (c)
certain other conditions are met. (Section 8.3)
DEFINITION OF CERTAIN TERMS
The term "Attributable Debt" as used in the indenture means, in respect of
any sale/leaseback transaction described under "-- Limitation on Sale/Leaseback
Transactions" above, at any date as of which the amount thereof is to be
determined, the total net amount of rent required to be paid by the lessee of
the property subject to such sale/leaseback transaction under the lease included
in such transaction during the remaining term thereof (including any period for
which such lease has been extended), discounted from the respective due dates
thereof to such date at the rate per annum equal to the weighted average of the
interest rate(s) of the debt securities, or, in the case of original issue
discount securities, the yield to maturity, compounded semi-annually. The net
amount of rent required to be paid under any such lease for any such period
shall be the aggregate amount of the rent payable by the lessee with respect to
such period after excluding amounts required to be paid on account of
maintenance and repairs, services, insurance, taxes, assessments, water rates
and similar charges and contingent rents (such as those based on sales). In the
case of any lease which is terminable by the lessee upon the payment of a
penalty, such net amount of rent shall include the lesser of (i) the total
discounted net amount of rent required to be paid from the later of the first
date upon which such lease may be so terminated or the date of the determination
of such amount of rent, as the case may be, and (ii) the amount of such penalty
(in which event no rent shall be considered as required to be paid under such
lease subsequent to the first date upon which it may be so terminated). (Section
1.1)
The term "Capital Stock" as used in the indenture means (1) with respect to
any Person that is a corporation, any and all shares, interests, participations
or other equivalents (however designated and whether or not voting) of corporate
stock, including each class of common stock and preferred stock of such Person,
and (2) with respect to any Person that is not a corporation, any and all
partnership or other equity interests of such Person. (Section 1.1)
The term "Capitalized Lease Obligation" as used in the indenture means, as
to any Person, the obligations of such Person under a lease that are required to
be classified and accounted for as capitalized lease obligations under generally
accepted accounting principles and, for purposes of this definition, the amount
of such obligations at any date shall be the capitalized amount of such
obligations at such date, determined in accordance with generally accepted
accounting principles. (Section 1.1)
The term "Consolidated Net Tangible Assets" as used in the indenture means,
as of any particular time, the aggregate amount of the Consolidated Assets (as
defined in the indenture) of Lubrizol and its Subsidiaries (less depreciation,
amortization and other applicable reserves and other items deductible therefrom
under generally accepted accounting principles) after deducting therefrom (i)
all current liabilities (excluding any which are by their terms extendible or
renewable at the option of the obligor to a time more than 12 months after the
time as of
13
which the amount is being computed), (ii) all goodwill, tradenames, trademarks,
patents and other intangibles, in each case net of applicable amortization, and
(iii) appropriate adjustments on account of minority interests of other Persons
holding stock of Subsidiaries, all as would be shown on a consolidated balance
sheet of Lubrizol and its Subsidiaries, prepared in accordance with generally
accepted accounting principles, as of the date of the most recent quarterly
consolidated balance sheet of Lubrizol and its Subsidiaries, prepared in
accordance with generally accepted accounting principles, provided that, in the
case of the balance sheet as of the end of the first, second or fourth quarterly
fiscal periods of Lubrizol, the date of such balance sheet is not more than 125
days prior to the date of determination (130 days for quarterly fiscal periods
for fiscal years ending on or after December 15, 2004 and before December 15,
2005) and, in the case of a balance sheet as of the end of the third quarterly
fiscal period of Lubrizol, the date of such balance sheet is not more than 150
days prior to the date of determination (165 days for quarterly fiscal periods
for fiscal years ending on or after December 15, 2004 and before December 15,
2005). (Section 1.1)
The term "Debt" as used in the indenture means, with respect to any Person,
without duplication (1) Obligations of such Person for money borrowed (2)
Obligations of such Person evidenced by notes, debentures, bonds or other
similar instruments; (3) all Capitalized Lease Obligations of such Person; (4)
all Obligations of such Person issued or assumed as the deferred purchase price
of property, all conditional sale obligations and all Obligations under any
title retention agreement (but excluding trade accounts payable and other
accrued liabilities arising in the ordinary course of business); (5) all
Obligations of such Person for the reimbursement of any obligor on any letter of
credit, banker's acceptance or similar credit transaction (other than
Obligations with respect to letters of credit securing Obligations (other than
Obligations described in (1) through (4) above) entered into in the ordinary
course of business of such Person to the extent such letters of credit are not
drawn upon or, if and to the extent drawn upon, such drawing is reimbursed no
later than the third Business Day following receipt by such Person of a demand
for reimbursement following payment on the letter of credit); (6) all
Obligations under Hedging Obligations of such Person, (7) all Obligations of the
type referred to in clauses (1) through (6) of other Persons and all dividends
of other Persons for the payment of which, in either case, such Person is
responsible or liable as obligor, guarantor or otherwise; (8) all Obligations of
the type referred to in clauses (1) through (7) of other Persons secured by any
mortgage, pledge, lien, security interest or other encumbrance on any property
or asset of such Person (whether or not such Obligation is assumed by such
Person), the amount of such Obligation being deemed to be the lesser of the
value of such property or assets or the amount of the Obligation so secured; and
(9) any amendments, modifications, refundings, renewals or extensions of any
indebtedness or obligation described as Debt in clauses (1) through (8) above.
(Section 1.1)
The term "Funded Debt" as used in the indenture means indebtedness created,
assumed or guaranteed by a Person for money borrowed which matures by its terms,
or is renewable by the borrower to a date, more than 12 months after the date of
original creation, assumption or guarantee. (Section 1.1)
The term "Hedging Obligations" as used in the indenture means, with respect
to any Person, the obligations of such Person under (1) any interest rate
protection agreements including, without limitation, interest rate swap
agreements, interest rate cap agreements and interest rate collar agreements,
(2) any foreign exchange contracts, currency swap agreements or other agreements
or arrangements designed to protect such Person against fluctuations in interest
rates or foreign exchange rates, (3) any commodity futures contract, commodity
option or other similar agreement or arrangement designed to protect such Person
against fluctuations in prices of commodities; and (4) indemnity agreements and
arrangements entered into in connection with the agreements and arrangements
described in clauses (1), (2) and (3). (Section 1.1)
The term "Obligations" as used in the indenture means all obligations for
principal, premium, interest, penalties, fees, indemnifications, reimbursements,
damages and other liabilities payable under the documentation governing any
Debt. (Section 1.1)
The term "Person" as used in the indenture means an individual,
partnership, limited liability company, corporation, unincorporated
organization, trust or joint venture, or a governmental agency or political
subdivision thereof. (Section 1.1)
The term "Restricted Subsidiary" as used in the indenture means (1) any
Wholly Owned Subsidiary of Lubrizol substantially all of the assets of which are
located in the United States (excluding territories or
14
possessions) and (2) any Wholly Owned Subsidiary of Lubrizol which owns,
directly or indirectly, any stock or indebtedness of any other Restricted
Subsidiary. (Section 1.1)
The term "Subsidiary" as used in the indenture means, with respect to any
Person, (1) any corporation of which the outstanding Capital Stock having at
least a majority of the votes entitled to be cast in the election of directors
under ordinary circumstances shall at the time be owned, directly or indirectly,
by such Person and (2) any other Person of which at least a majority of the
voting interest under ordinary circumstances is at the time, directly or
indirectly, owned by such Person. (Section 1.1)
The term "Wholly Owned Subsidiary" means, with respect to Lubrizol, any
Subsidiary of which all the outstanding voting securities are owned by Lubrizol
or any other Wholly Owned Subsidiary of Lubrizol. (Section 1.1)
EVENTS OF DEFAULT
Each of the following events will constitute an Event of Default under the
indenture with respect to any series of debt securities issued thereunder
(whatever the reason for such Event of Default and whether it shall be voluntary
or involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(1) default in the payment of any interest on any debt security of
such series, or any additional amounts payable with respect thereto, when
such interest becomes or such additional amounts become due and payable,
and continuance of such default for a period of 30 days;
(2) default in the payment of the principal of or any premium on any
debt security of such series, or any additional amounts payable with
respect thereto, when such principal or premium becomes or such additional
amounts become due and payable either at maturity, upon any redemption, by
declaration of acceleration or otherwise;
(3) default in the deposit of any sinking fund payment, when and as
due by the terms of any debt security of such series;
(4) default in the performance, or breach, of any covenant or warranty
contained in the indenture for the benefit of such series or in the debt
securities of such series, and the continuance of such default or breach
for a period of 60 days after there has been given written notice as
provided in the indenture;
(5) if any event of default as defined in any mortgage, indenture or
instrument under which there may be issued, or by which there may be
secured or evidenced, any Debt of Lubrizol or any of its Restricted
Subsidiaries (or the payment of which is guaranteed by Lubrizol or any of
its Restricted Subsidiaries), including an Event of Default under any other
series of debt securities, whether such Debt now exists or is hereafter
created or incurred, happens and consists of default in the payment of more
than $50,000,000 in principal amount of such Debt at the maturity thereof
(after giving effect to any applicable grace period) or results in such
Debt in principal amount in excess of $50,000,000 becoming or being
declared due and payable prior to the date on which it would otherwise
become due and payable, and such default is not cured or such acceleration
is not rescinded or annulled within a period of 30 days after there has
been given written notice as provided in the indenture;
(6) Lubrizol shall fail within 60 days to pay, bond or otherwise
discharge any uninsured judgment or court order for the payment of money in
excess of $50,000,000, which is not stayed on appeal or is not otherwise
being appropriately contested in good faith;
(7) certain events in bankruptcy, insolvency or reorganization of
Lubrizol;
(8) any guarantee of any guarantor ceases to be in full force and
effect or any guarantee of such guarantor is declared to be null and void
and unenforceable or any guarantee of such guarantor is found to be invalid
or any guarantor denies its liability under its guarantee (other than the
release of such guarantor in accordance with the terms of the indenture);
and
15
(9) any other Event of Default provided in or pursuant to the
indenture with respect to debt securities of such series. (Section 5.1)
If an Event of Default with respect to the debt securities of any series
(other than an Event of Default described in (7) of the preceding paragraph)
occurs and is continuing, either the trustee or the holders of not less than 25%
in principal amount of the outstanding debt securities of such series by written
notice as provided in the indenture may declare the principal amount (or such
lesser amount as may be provided for in the debt securities of such series) of
all outstanding debt securities of such series to be due and payable
immediately. At any time after a declaration of acceleration has been made, but
before a judgment or decree for payment of money has been obtained by the
trustee, and subject to applicable law and certain other provisions of the
indenture, the holders of not less than a majority in principal amount of the
outstanding debt securities of such series may, under certain circumstances,
rescind and annul such declaration of acceleration. An Event of Default
described in (7) of the preceding paragraph shall cause the principal amount and
accrued interest (or such lesser amount as provided for in the debt securities
of such series) to become immediately due and payable without any declaration or
other act by the trustee or any holder. (Section 5.2)
The indenture provides that, within 90 days after the occurrence of any
event which is, or after notice or lapse of time or both would become, an Event
of Default with respect to the debt securities of any series (a "default"), the
trustee must transmit, in the manner set forth in such indenture, notice of such
default to the holders of the debt securities of such series unless such default
has been cured or waived; provided, however, that except in the case of a
default in the payment of principal of, or premium, if any, or interest, if any,
on, or additional amounts or any sinking fund installment with respect to, any
debt security of such series, the trustee may withhold such notice if and so
long as the board of directors, the executive committee or a trust committee of
directors and/or responsible officers of the trustee in good faith determine
that the withholding of such notice is in the best interest of the holders of
debt securities of such series; and provided, further, that in the case of any
default of the character described in (4) of the second preceding paragraph, no
such notice to holders will be given until at least 30 days after the default
occurs. (Section 6.2)
If an Event of Default occurs and is continuing with respect to the debt
securities of any series, the trustee may in its discretion proceed to protect
and enforce its rights and the rights of the holders of debt securities of such
series by all appropriate judicial proceedings. (Section 5.3) The indenture
provides that, subject to the duty of the trustee during any default to act with
the required standard of care, the trustee will be under no obligation to
exercise any of its rights or powers under such indenture at the request or
direction of any of the holders of debt securities, unless such holders shall
have offered to the trustee reasonable indemnity. (Section 6.1) Subject to such
provisions for the indemnification of the trustee, and subject to applicable law
and certain other provisions of the indenture, the holders of a majority in
principal amount of the outstanding debt securities of any series will have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the trustee, or exercising any trust or power conferred on
the trustee, with respect to the debt securities of such series. (Section 5.12)
MODIFICATION AND WAIVER
Lubrizol and the trustee may modify or amend the indenture with the consent
of the holders of not less than a majority in principal amount of the
outstanding debt securities of each series affected thereby; provided, however,
that no such modification or amendment may, without the consent of the holder of
each outstanding debt security affected thereby,
- change the stated maturity of the principal of, or any premium or
installment of interest on, or any additional amounts with respect to,
any debt security,
- reduce the principal amount of, or the rate (or modify the calculation of
such rate) of interest on, or any additional amounts with respect to, or
any premium payable upon the redemption of, any debt security,
- change the obligation of Lubrizol to pay additional amounts with respect
to any debt security,
- reduce the amount of the principal of an original issue discount security
that would be due and payable upon a declaration of acceleration of the
maturity thereof or the amount thereof provable in bankruptcy,
16
- change the redemption provisions of any debt security or the right of
repayment at the option of any holder of any debt security, in either
case, in a manner adverse to the holder,
- change the place of payment or the coin or currency in which the
principal of, any premium or interest on or any additional amounts with
respect to any debt security is payable,
- impair the right to institute suit for the enforcement of any payment on
or after the stated maturity of any debt security (or, in the case of
redemption, on or after the redemption date or, in the case of repayment
at the option of any holder, on or after the repayment date),
- reduce the percentage in principal amount of the outstanding debt
securities, the consent of whose holders is required in order to take
specific actions,
- reduce the requirements for quorum or voting by holders of debt
securities in Section 15.4 of the indenture,
- modify any of the provisions in the indenture regarding the waiver of
past defaults and the waiver of certain covenants by the holders of debt
securities except to increase any percentage vote required or to provide
that other provisions of such indenture cannot be modified or waived
without the consent of the holder of each debt security affected thereby,
- make any change that adversely affects the right to convert or exchange
any debt security into or for other securities of Lubrizol or other
securities, cash or property in accordance with its terms,
- release any guarantor from any of its obligations under its guarantee or
the indenture otherwise in accordance with the terms of the indenture, or
- modify any of the above provisions. (Section 9.2)
Lubrizol and the trustee may modify or amend the indenture and the debt
securities of any series without the consent of any holder in order to, among
other things:
- provide for a successor to Lubrizol or a guarantor pursuant to a
consolidation, merger or sale of assets;
- add to the covenants of Lubrizol for the benefit of the holders of all or
any series of debt securities or to surrender any right or power
conferred upon Lubrizol by the indenture;
- provide for a successor trustee with respect to the debt securities of
all or any series;
- cure any ambiguity or correct or supplement any provision in the
indenture which may be defective or inconsistent with any other
provision, or to make any other provisions with respect to matters or
questions arising under the indenture which will not materially adversely
affect the interests of the holders of debt securities of any series;
- change the conditions, limitations and restrictions on the authorized
amount, terms or purposes of issue, authentication and delivery of debt
securities under the indenture;
- add any additional Events of Default with respect to all or any series of
debt securities;
- secure the debt securities;
- provide for conversion or exchange rights of the holders of any series of
debt securities; or
- make any other change that does not materially adversely affect the
interests of the holders of any debt securities then outstanding under
the indenture. (Section 9.1)
The holders of at least a majority in principal amount of the outstanding
debt securities of any series may, on behalf of the holders of all debt
securities of that series, waive compliance by Lubrizol with certain covenants
of the indenture. (Section 10.8) The holders of not less than a majority in
principal amount of the outstanding debt securities of any series on behalf of
the holders of all debt securities of that series may waive any past default and
its consequences under the indenture with respect to the debt securities of that
series, except a default (1) in the payment of principal, any premium or
interest on or any additional amounts with respect to debt securities of such
17
series or (2) in respect of a covenant or provision of the indenture that cannot
be modified or amended without the consent of the holder of each outstanding
debt security of any series affected. (Section 5.13)
Under the indenture, Lubrizol is required to furnish the trustee annually a
statement as to its performance of certain of its obligations under that
indenture and as to any default in such performance. Lubrizol is also required
to deliver to the trustee, within five days after knowledge of the occurrence
thereof, written notice of any Event of Default, or any event which after notice
or lapse of time or both would constitute an Event of Default, resulting from
the failure to perform or breach of any covenant or warranty contained in the
indenture or the debt securities of any series. (Sections 10.9 and 10.10)
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
Lubrizol and/or any guarantors may discharge certain obligations to holders
of any series of debt securities that have not already been delivered to the
trustee for cancellation and that either have become due and payable or will
become due and payable within one year (or scheduled for redemption within one
year) by depositing with the trustee, in trust, funds in U.S. dollars or in the
Foreign Currency in which such debt securities are payable in an amount
sufficient to pay the entire indebtedness on such debt securities with respect
to principal and any premium, interest and additional amounts to the date of
such deposit (if such debt securities have become due and payable) or to the
maturity thereof, as the case may be. (Section 4.1)
The indenture provides that, unless the provisions of Section 4.2 thereof
are made inapplicable to the debt securities of or within any series pursuant to
Section 3.1 thereof, Lubrizol may elect either (1) to defease and discharge
itself and each guarantor from any and all obligations with respect to such debt
securities (except for, among other things, obligations to register the transfer
or exchange of such debt securities, to replace temporary or mutilated,
destroyed, lost or stolen debt securities, to maintain an office or agency with
respect to such debt securities and to hold moneys for payment in trust)
("defeasance") or (2) to release itself from its obligations with respect to
such debt securities under certain covenants as described in the related
prospectus supplement, and any omission or failure to comply with such
obligations shall not constitute a default or an Event of Default with respect
to such debt securities ("covenant defeasance"). Defeasance or covenant
defeasance, as the case may be, shall be conditioned upon the irrevocable
deposit by Lubrizol with the Trustee, in trust, of an amount in U.S. dollars or
in the Foreign Currency in which such debt securities are payable at stated
maturity, or Government Obligations (as defined below), or both, applicable to
such debt securities which through the scheduled payment of principal and
interest in accordance with their terms will provide money in an amount
sufficient to pay the principal of, any premium and interest on, and any
additional amounts with respect to, such debt securities on the scheduled due
dates. (Section 4.2)
Such a trust may only be established if, among other things, (1) the
applicable defeasance or covenant defeasance does not result in a breach or
violation of, or constitute a default under, the indenture or any other material
agreement or instrument to which Lubrizol is a party or by which it is bound,
(2) no Event of Default or event which with notice or lapse of time or both
would become an Event of Default with respect to the debt securities to be
defeased shall have occurred and be continuing on the date of establishment of
such a trust and, with respect to defeasance only, at any time during the period
ending on the 123rd day after such date and (3) Lubrizol has delivered to the
trustee an opinion of counsel (as specified in the indenture) to the effect that
the holders of such debt securities will not recognize income, gain or loss for
United States federal income tax purposes as a result of such defeasance or
covenant defeasance and will be subject to United States federal income tax on
the same amounts, in the same manner and at the same times as would have been
the case if such defeasance or covenant defeasance had not occurred, and such
opinion of counsel, in the case of defeasance, must refer to and be based upon a
letter ruling of the Internal Revenue Service received by Lubrizol, a Revenue
Ruling published by the Internal Revenue Service or a change in applicable
United States federal income tax law occurring after the date of the indenture.
(Section 4.2)
"Foreign Currency" means any currency, currency unit or composite currency,
including, without limitation, the euro, issued by the government of one or more
countries other than the United States of America or by any recognized
confederation or association of such governments. (Section 1.1)
18
"Government Obligations" means debt securities which are (1) direct
obligations of the United States of America or the government or the governments
which issued the Foreign Currency in which the debt securities of a particular
series are payable, for the payment of which its full faith and credit is
pledged or (2) obligations of a Person controlled or supervised by and acting as
an agency or instrumentality of the United States of America or such government
or governments which issued the Foreign Currency in which the debt securities of
such series are payable, the timely payment of which is unconditionally
guaranteed as a full faith and credit obligation by the United States of America
or such other government or governments, and which, in the case of clauses (1)
and (2), are not callable or redeemable at the option of the issuer or issuers
thereof, and shall also include a depository receipt issued by a bank or trust
company as custodian with respect to any such Government Obligation or a
specific payment of interest on or principal of or any other amount with respect
to any such Government Obligation held by such custodian for the account of the
holder of such depository receipt, provided that (except as required by law)
such custodian is not authorized to make any deduction from the amount payable
to the holder of such depository receipt from any amount received by the
custodian with respect to the Government Obligation or the specific payment of
interest on or principal of or any other amount with respect to the Government
Obligation evidenced by such depository receipt. (Section 1.1)
If after Lubrizol has deposited funds and/or Government Obligations to
effect defeasance or covenant defeasance with respect to debt securities of any
series, (1) the holder of a debt security of that series is entitled to, and
does, elect pursuant to Section 3.1 of the indenture or the terms of such debt
security to receive payment in a currency other than that in which such deposit
has been made in respect of such debt security, or (2) a Conversion Event occurs
in respect of the Foreign Currency in which such deposit has been made, the
indebtedness represented by such debt security shall be deemed to have been, and
will be, fully discharged and satisfied through the payment of the principal of,
any premium and interest on, and any additional amounts with respect to, such
debt security as such debt security becomes due out of the proceeds yielded by
converting the amount or other properties so deposited in respect of such debt
security into the currency in which such debt security becomes payable as a
result of such election or such Conversion Event based on (a) in the case of
payments made pursuant to clause (1) above, the applicable market exchange rate
for such currency in effect on the second business day prior to such payment
date, or (b) with respect to a Conversion Event, the applicable market exchange
rate for such Foreign Currency in effect (as nearly as feasible) at the time of
the Conversion Event. (Section 4.2)
"Conversion Event" means the cessation of use of (1) a Foreign Currency
both by the government of the country or countries which issued such Foreign
Currency and for the settlement of transactions by a central bank or other
public institutions of or within the international banking community or (2) any
currency unit or composite currency for the purposes for which it was
established. All payments of principal of, any premium and interest on, and any
additional amounts with respect to, any debt security that are payable in a
Foreign Currency that ceases to be used by the government or governments of
issuance shall be made in U.S. dollars. (Section 1.1)
In the event Lubrizol effects covenant defeasance with respect to any debt
securities and such debt securities are declared due and payable because of the
occurrence of any Event of Default other than an Event of Default with respect
to any covenant as to which there has been covenant defeasance, the amount in
such Foreign Currency in which such debt securities are payable, and Government
Obligations on deposit with the trustee, will be sufficient to pay amounts due
on such debt securities at the time of the stated maturity but may not be
sufficient to pay amounts due on such debt securities at the time of the
acceleration resulting from such Event of Default. However, Lubrizol would
remain liable to make payment of such amounts due at the time of acceleration.
NEW YORK LAW TO GOVERN
The indenture, the debt securities and any guarantees will be governed by,
and construed in accordance with, the laws of the State of New York applicable
to agreements made or instruments entered into and, in each case, performed in
that state. (Section 1.13).
19
PLAN OF DISTRIBUTION
We may sell our securities from time to time by any method permitted by the
Securities Act of 1933, including in the following ways:
- through one or more underwriters on a firm commitment or best-efforts
basis;
- directly to one or more purchasers;
- through agents;
- through broker-dealers, who may act as agents or principals, including a
block trade in which a broker or dealer so engaged will attempt to sell
the securities as agent but may position and resell a portion of the
block as principal to facilitate the transaction;
- in privately negotiated transactions; and
- in any combination of these methods of sale.
We may also make direct sales through subscription rights distributed to
our shareholders on a pro rata basis, which may or may not be transferable. In
any distribution of subscription rights to shareholders, if all of the
underlying securities are not subscribed for, we may then sell the unsubscribed
securities directly to third parties or may engage the services of one or more
underwriters, dealers or agents, including standby underwriters, to sell the
unsubscribed securities to third parties.
The applicable prospectus supplement will set forth the specific terms of
the offering of our securities including the name or names of any underwriters,
dealers or agents; the purchase price of the securities and the proceeds to us
from the sale; any underwriting discounts and commissions or agency fees and
other items constituting underwriters' or agents' compensation; the initial
offering price to the public and any discounts or concessions allowed or
reallowed or paid to dealers; and any securities exchange on which the
securities may be listed. Any public offering price, discounts or concessions
allowed or reallowed or paid to dealers may be changed from time to time.
Unless otherwise specified in the applicable prospectus supplement, each
series of securities will be a new issue with no established trading market,
other than our common shares, which are currently listed on the NYSE. We expect
that any common shares sold pursuant to a prospectus supplement will be listed
on the NYSE. We may elect to list any series of debt securities on an exchange,
but we are not obligated to do so. It is possible that one or more underwriters
may make a market in a series of securities, but such underwriters will not be
obligated to do so and may discontinue any market making at any time without
notice. Therefore, no assurance can be given as to the liquidity of, or the
trading market for, any series of debt securities that we may issue.
The distribution of the securities may be effected from time to time in one
or more transactions at a fixed price or prices (which may be changed), at
market prices prevailing at the time of sale, at prices related to the
prevailing market prices or at negotiated prices.
Offers to purchase our securities may be solicited by agents designated by
us from time to time. Broker-dealers or agents may receive compensation in the
form of commissions, discounts or concessions from us. Broker-dealers or agents
may also receive compensation from the purchasers of the securities for whom
they sell as principals. Each particular broker-dealer will receive compensation
in amounts negotiated in connection with the sale, which might be in excess of
customary commissions. Broker-dealers or agents and any other participating
broker-dealers participating in the distribution of our securities may be deemed
to be underwriters, and any discounts and commissions received by them and any
profit realized by them on resale of the securities may be deemed to be
underwriting discounts and commissions.
If required under applicable state securities laws, we will sell the
securities only through registered or licensed brokers or dealers. In addition,
in some states, we may not sell securities unless they have been registered or
qualified for sale in the applicable state or an exemption from the registration
or qualification requirement is available and complied with.
20
If the securities are sold by means of an underwritten offering, we will
execute an underwriting agreement with an underwriter or underwriters, and the
names of the specific managing underwriter or underwriters, as well as any other
underwriters, and the terms of the transaction, including commissions, discounts
and any other compensation of the underwriters and dealers, if any, will be set
forth in the applicable prospectus supplement, which will be used by the
underwriters to make resales of the securities. Under agreements into which we
may enter, underwriters, dealers and agents who participate in the distribution
of the securities may be entitled to indemnification by us against some
liabilities, including liabilities under the Securities Act of 1933.
If we use underwriters for an offering of securities, the underwriters may
acquire the securities for their own accounts. The underwriters may resell the
securities from time to time in one or more transactions at a fixed price or
prices, which may be changed, at varying prices determined by the underwriters
at the time of sale, or at negotiated prices. We also may, from time to time,
authorize underwriters acting as our agents to offer and sell the securities
upon the terms and conditions as will be set forth in the applicable prospectus
supplement. In connection with the sale of the securities, underwriters may be
deemed to have received compensation from us in the form of underwriting
discounts or commissions and also may receive commissions from purchasers of the
securities. Underwriters may sell the securities to or through dealers, who may
receive compensation in the form of discounts, concessions from the underwriters
and/or commissions from the purchasers of the securities.
Any underwriting compensation paid by us to underwriters or agents in
connection with any offering of the securities and any discounts, concessions or
commissions allowed by underwriters to participating dealers will be set forth
in the applicable prospectus supplement. Underwriters, dealers and agents
participating in the distribution of our securities may be deemed to be
underwriters, and any discounts and commissions received by them and any profit
realized by them on resale of the securities may be deemed to be underwriting
discounts and commissions.
If so indicated in the applicable prospectus supplement, we may authorize
underwriters, dealers or agents to solicit offers from certain types of
institutions to purchase securities from us at the public offering price set
forth in the applicable prospectus supplement pursuant to delayed delivery
contracts providing for payment and delivery on a future date. Institutions with
which delayed delivery contracts may be made include commercial and savings
banks, insurance companies, pension funds, investment companies, educational and
charitable institutions, and other institutions. The applicable prospectus
supplement will set forth the commission payable for solicitation of such
offers.
Our securities may be offered to the public either through underwriting
syndicates represented by managing underwriters or directly by the managing
underwriters. If any underwriters are utilized in the sale of the securities,
the underwriting agreement will provide that the obligations of the underwriters
are subject to specified conditions precedent. If we sell our securities to one
or more underwriters on a firm commitment basis, then the underwriters will be
obligated to purchase all of the securities offered if any are purchased.
We may grant to the underwriters options to purchase additional securities
to cover over-allotments, if any, at the public offering price with additional
underwriting discounts or commissions, as may be set forth in the applicable
prospectus supplement. If we grant any over-allotment option, the terms of the
over-allotment option will be set forth in the applicable prospectus supplement.
In connection with any offering, persons participating in the offering,
such as any underwriters, may purchase and sell the securities in the open
market. These transactions may include over-allotment and stabilizing
transactions and purchases to cover syndicate short positions created in
connection with the offering. Stabilizing transactions consist of bids or
purchases for the purpose of preventing or retarding a decline in the market
price of the securities and syndicate short positions involve the sale by
underwriters of a greater number of securities than they are required to
purchase from us in the offering. Underwriters also may impose a penalty bid,
whereby selling concessions allowed to syndicate members or other broker-dealers
in respect of the securities sold in the offering for their account may be
reclaimed by the syndicate if the securities are repurchased by the syndicate in
stabilizing or covering transactions. These activities may stabilize, maintain
or otherwise affect the market price of the securities, which may be higher than
the price that might prevail in the open market, and these activities, if
commenced, may be discontinued at any time.
21
Any underwriters, dealers or agents involved in any distribution or sale of
our securities may be customers of, engage in transactions with or perform
services for us from time to time.
We will bear all costs, expenses and fees in connection with the
registration of the securities as well as the expense of all commissions and
discounts, if any, attributable to the sales of the securities by us.
LEGAL MATTERS
The validity of the securities that we are offering has been passed upon
for us by Thompson Hine LLP. Shearman & Sterling LLP, New York, New York, may
pass upon legal matters for the underwriters with respect to any underwritten
offering of common shares or debt securities. Shearman & Sterling LLP will rely
upon Thompson Hine LLP with respect to matters of Ohio law.
EXPERTS
The financial statements incorporated in this prospectus by reference from
The Lubrizol Corporation's Annual Report on Form 10-K for the year ended
December 31, 2003 have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report, which is incorporated herein by reference
(which report expresses an unqualified opinion and includes an explanatory
paragraph relating to the adoption of Statement of Financial Accounting
Standards No. 142 in 2002), and have been so incorporated in reliance upon the
report of such firm given upon their authority as experts in accounting and
auditing.
Ernst & Young LLP, independent auditors, have audited the consolidated
financial statements of Noveon International, Inc. at December 31, 2003 and 2002
and for the years ended December 31, 2003 and 2002 and for the ten months ended
December 31, 2001, and the consolidated financial statements of BFGoodrich
Performance Materials (a segment of The Goodrich Corporation) for the two months
ended February 28, 2001, as set forth in their reports, included in The Lubrizol
Corporation's Current Report (Form 8-K) dated May 20, 2004, which is
incorporated by reference in this prospectus. Such consolidated financial
statements are incorporated by reference in reliance on Ernst & Young's reports
given on their authority as experts in accounting and auditing.
22
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth an estimate of the expenses, other than
underwriting discounts and commissions, payable in connection with the sale and
distribution of the securities being registered. All such expenses will be borne
by us.
AMOUNTS TO
ITEM BE PAID
---- ----------
SEC Registration Fee........................................ $ 253,400
Accountants Fees and Expenses............................... 300,000
Legal Fees and Expenses..................................... 1,000,000
Printing Fees and Expenses.................................. 100,000
Rating Agency Fees.......................................... 1,000,000
Miscellaneous............................................... 100,000
----------
Total....................................................... 2,753,400
==========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Code of Regulations of the registrant provides that the registrant
shall indemnify any present or former director or officer of the registrant
against expenses, including attorneys' fees, judgments, fines and amounts paid
in settlement, actually and reasonably incurred by such person by reason of the
fact that such person was a director or officer, in connection with any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, to the full extent permitted by
applicable law.
Ohio Revised Code Section 1701.13 permits indemnification of such persons
with respect to such matters, other than an action by or in the right of the
registrant, if such person acted in good faith and in a manner such person
reasonably believed to be in or not opposed to the best interests of the
registrant and, with respect to any criminal action or proceeding, had no
reasonable cause to believe such person's conduct was unlawful. In the case of
an action brought by or in the right of the registrant, such Ohio Revised Code
section permits indemnification of such persons against expenses, including
attorneys' fees, actually and reasonably incurred by such person in connection
with the settlement or defense of such action if such person acted in good faith
and in a manner that such person reasonably believed to be in or not opposed to
the best interests of the registrant, subject to certain exceptions, including
an exception for a matter as to which such person is adjudged to be liable for
negligence or misconduct in the performance of such person's duty to the
registrant, unless the court in which such action was brought determines that
such person is fairly and reasonably entitled to indemnity for such expenses as
the court shall deem proper.
Each director and officer of the registrant is a party to an
indemnification agreement with the registrant, which agreement provides that the
registrant will indemnify such officer or director against expenses, including,
without limitation, attorneys' fees, judgments, fines and amounts paid in
settlement, in connection with any claim against such officer or director
arising out of such person's being an officer or director of the registrant, to
the full extent provided by (i) the registrant's bylaws, regulations or articles
of incorporation, as in effect on the date of the agreement or at the time
expenses are incurred, (ii) Ohio law or the law governing the registrant at the
time the expenses are incurred, or (iii) insurance maintained by the registrant,
at the option of such officer or director. The registrant has also agreed to
maintain directors' and officers' liability insurance so long as such insurance
is available on a basis acceptable to the registrant, and to advance funds for
expenses, provided the officer or director agrees to reimburse the registrant if
such officer or director is ultimately found not to be entitled to such
indemnifications.
The registrant maintains insurance policies that insure the registrant's
directors and officers against certain liabilities (excluding fines and
penalties imposed by law) which might be incurred by them in such capacities and
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insure the registrant for amounts which may be paid by it (up to the limits of
such policies) to indemnify the directors and officers covered by the policies.
ITEM 16. EXHIBITS
See Exhibit Index.
ITEM 17. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of this registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Securities and Exchange Commission pursuant to Rule 424(b) if,
in the aggregate, the changes in volume and price represent no more than
a 20 percent change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective
registration statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in this registration statement
or any material change to such information in this registration
statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed
with or furnished to the Securities and Exchange Commission by the
registrant pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in this
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to our directors, officers, and controlling persons
pursuant to the foregoing provisions, or otherwise, we have been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by us of expenses incurred or paid by a
director, officer, or controlling person of us in the successful defense of any
action, suit or proceeding) is asserted by such
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director, officer or controlling person in connection with the securities being
registered, we will, unless in the opinion of our counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by us is against public policy as
expressed in the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
(d) The undersigned registrant hereby undertakes that:
(i) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(ii) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(e) The undersigned registrant hereby undertakes to file an application for
the purpose of determining the eligibility of the trustee to act under
subsection (a) of Section 310 of the Trust Indenture Act in accordance with the
rules and regulations prescribed by the Securities and Exchange Commission under
Section 305(b)(2) of the Trust Indenture Act.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Wickliffe, State of Ohio, on May 20, 2004.
THE LUBRIZOL CORPORATION
By: /s/ JAMES L. HAMBRICK
------------------------------------
Name: James L. Hambrick
Title: Chief Executive Officer and
President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
NAME/SIGNATURE TITLE
-------------- -----
/s/ JAMES L. HAMBRICK* Chief Executive Officer, President
------------------------------------------------ and Director
James L. Hambrick (Principal Executive Officer)
/s/ CHARLES P. COOLEY* Vice President and Chief Financial
------------------------------------------------ Officer
Charles P. Cooley (Principal Financial Officer)
/s/ JOHN R. AHERN* Controller -- Accounting and
------------------------------------------------ Financial Reporting
John R. Ahern (Principal Accounting Officer)
/s/ WILLIAM G. BARES* Chairman of the Board and Director
------------------------------------------------
William G. Bares
/s/ JERALD A. BLUMBERG* Director
------------------------------------------------
Jerald A. Blumberg
/s/ FOREST J. FARMER SR.* Director
------------------------------------------------
Forest J. Farmer Sr.
/s/ GORDON D. HARNETT* Director
------------------------------------------------
Gordon D. Harnett
/s/ VICTORIA F. HAYNES* Director
------------------------------------------------
Victoria F. Haynes
/s/ DAVID H. HOAG* Director
------------------------------------------------
David H. Hoag
/s/ WILLIAM P. MADAR* Director
------------------------------------------------
William P. Madar
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NAME/SIGNATURE TITLE
-------------- -----
/s/ PEGGY GORDON MILLER* Director
------------------------------------------------
Peggy Gordon Miller
/s/ RONALD A. MITSCH* Director
------------------------------------------------
Ronald A. Mitsch
/s/ DANIEL E. SOMERS* Director
------------------------------------------------
Daniel E. Somers
*By: /s/ JAMES L. HAMBRICK May 20, 2004
-----------------------------------------
James L. Hambrick, Attorney-in-Fact
for the Officers and Directors
signing in the capacities indicated
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EXHIBIT INDEX
1.1 Form of Underwriting Agreement.*
2.1 Agreement and Plan of Merger, dated April 15, 2004, by and
among The Lubrizol Corporation, Lubrizol Acquisition
Corporation and Noveon International, Inc.
3.1 Amended Articles of Incorporation of The Lubrizol
Corporation, adopted as of September 23, 1991 (incorporated
by reference to Exhibit (3)(a) of the Annual Report on Form
10-K of The Lubrizol Corporation for the year ended December
31, 1999).
3.2 Code of Regulations of The Lubrizol Corporation, as amended
effective April 27, 1992 (incorporated by reference to
Exhibit (3)(b) of the Annual Report on Form 10-K of The
Lubrizol Corporation for the year ended December 31, 1999).
3.3 Amendment to Article Fourth of the Amended Articles of
Incorporation of The Lubrizol Corporation (incorporated by
reference to Exhibit (4)(a) of the Annual Report on Form
10-K of The Lubrizol Corporation for the year ended December
31, 1999).
4.1 Amended and Restated Rights Agreement, dated as of July 26,
1999, by and between The Lubrizol Corporation and American
Stock Transfer & Trust Company (incorporated by reference to
Exhibit 4.l of the Registration Statement on Form 8-A/A of
The Lubrizol Corporation filed with the SEC on August 17,
1999).
4.2 Form of Indenture for Debt Securities of The Lubrizol
Corporation.**
4.3 Form of Debt Security of The Lubrizol Corporation.*
5.1 Opinion of Thompson Hine LLP.
12.1 Calculation of Ratio of Earnings to Fixed Charges.
23.1 Consent of Deloitte & Touche LLP.
23.2 Consent of Ernst & Young LLP.
23.3 Consent of Thompson Hine LLP (included in Exhibit 5.1).
24.1 Power of Attorney.
25.1 Statement of Eligibility of Trustee for Debt Securities of
The Lubrizol Corporation on Form T-1.***
---------------
* To be filed by post-effective amendment to this registration statement or
incorporated by reference from a Current Report on Form 8-K.
** To be filed by amendment to this registration statement.
*** To be filed separately pursuant to Section 305(b)(2) of the Trust Indenture
Act.