<PAGE>
PROSPECTUS SUPPLEMENT
- ---------------------
(TO PROSPECTUS DATED AUGUST 1, 1996)
$450,000,000
[LOGO OF AIRGAS APPEARS HERE]
MEDIUM-TERM NOTES
DUE NINE MONTHS OR MORE FROM DATE OF ISSUE
Airgas, Inc. ("Airgas" or the "Company") may offer from time to time its
Medium-Term Notes, Series A (the "Notes") in an aggregate initial offering
price of up to $450,000,000. Such amount is subject to reduction as a result
of the sale by the Company of other Securities described in the accompanying
Prospectus. Each Note will mature on a day nine months or more from the date
of issue, as specified in the applicable Pricing Supplement attached hereto,
and may be subject to redemption at the option of the Company or repayment at
the option of the Holder thereof, in each case, in whole or in part, prior to
its Stated Maturity Date, as specified in the applicable Pricing Supplement.
The Notes will be issued in minimum denominations of $1,000 and integral
multiples thereof, unless otherwise specified in the applicable Pricing
Supplement. Each Note will be represented either by a Global Security
registered in the name of The Depository Trust Company, as depositary, or a
nominee thereof, or by a certificate issued in definitive form, as set forth
in the applicable Pricing Supplement. Beneficial interests in Book-Entry Notes
will be shown on, and transfers thereof will be effected only through, records
maintained by the Depositary and its participants. Book-Entry Notes will not
be exchangeable for Certificated Notes except under the circumstances
described under "Description of Notes--Book-Entry Notes" herein.
Interest rates and interest rate formulae are subject to change by the
Company but no such change will affect any Note already issued or which the
Company has agreed to issue. Unless otherwise indicated in the applicable
Pricing Supplement, each Note will bear interest at a fixed rate or at a
floating rate determined by reference to the CD Rate, the CMT Rate, the
Commercial Paper Rate, the Eleventh District Cost of Funds Rate, the Federal
Funds Rate, LIBOR, the Prime Rate or the Treasury Rate, as adjusted by the
Spread and/or Spread Multiplier, if any, applicable to such Note (as such
terms are defined herein). Certain Notes issued at a discount from the
principal amount payable at maturity thereof may provide that holders of such
Notes will not receive periodic payments of interest. Notes also may be issued
that do not bear any interest currently or that bear interest at a below
market rate. See "Description of Notes" herein.
Unless otherwise indicated in the applicable Pricing Supplement, interest on
Fixed Rate Notes will be payable each January 15 and July 15 and at maturity
or upon any earlier redemption or repayment and interest on Floating Rate
Notes will be payable as specified in the applicable Pricing Supplement (in
each case, as such terms are defined herein). See "Description of Notes--
Interest" herein.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT, THE PROSPECTUS OR ANY
SUPPLEMENT HERETO. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
--------------
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<TABLE>
<CAPTION>
PRICE TO AGENTS' DISCOUNTS PROCEEDS TO
PUBLIC(1) AND COMMISSIONS(2)(3) COMPANY(2)(4)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Note................ 100% 0.125%-0.750% 99.875%-99.250%
- --------------------------------------------------------------------------------
$449,437,500-
Total(4)................ $450,000,000 $562,500-$3,375,000 $446,625,000
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(1) Unless otherwise indicated in a Pricing Supplement, Notes will be issued
at 100% of their principal amount.
(2) Distribution of the Notes will be made by or through NationsBanc Capital
Markets, Inc., Donaldson, Lufkin & Jenrette Securities Corporation, Morgan
Stanley & Co. Incorporated, First Union Capital Markets Corp. and William
Blair & Company (the "Agents"). Notes may be purchased by the Agents, as
principals, from the Company for resale at varying prices relating to
prevailing market prices as determined by the Agents, or, if so specified
in the applicable Pricing Supplement, for resale at a fixed offering
price. Unless otherwise specified in the applicable Pricing Supplement,
any Note sold to an Agent as principal will be purchased by such Agent at
a price equal to 100% of the principal amount thereof less a percentage of
the principal amount equal to the commission applicable to an agency sale
(as described below) of a Note of identical maturity. Alternatively, and
if agreed to by the Company and the Agent, an Agent may utilize its
reasonable efforts on an agency basis to solicit offers to purchase the
Notes at 100% of the principal amount thereof, unless specified in the
applicable Pricing Supplement. The Company will pay a commission to the
Agents, ranging from 0.125% to 0.750% of the principal amount of a Note,
depending upon its stated maturity, sold through the Agents. Commissions
with respect to Notes with stated maturities in excess of 30 years that
are sold through the Agents will be negotiated between the Company and the
Agents at the time of such sale. Under certain circumstances described
herein commissions (and discounts) may be increased. See "Plan of
Distribution" herein.
(3) The Company has agreed to indemnify the Agents against, and to provide
contribution with respect to, certain liabilities, including liabilities
under the Securities Act of 1933, as amended. See "Plan of Distribution"
herein.
(4) Before deducting expenses payable by the Company estimated at $350,000.
The Notes are being offered on a continuing basis by the Company to or
through the Agents. Unless otherwise specified in the applicable Pricing
Supplement, the Notes will not be listed on any securities exchange and there
can be no assurance that the Notes offered hereby will be sold or that there
will be a secondary market for the Notes or that there will be liquidity in
such market if one develops. The Company reserves the right to withdraw,
cancel or modify the offer made hereby without notice. The Company or any
Agent may reject any offer to purchase Notes, in whole or in part. See "Plan
of Distribution" herein.
NATIONSBANC CAPITAL MARKETS, INC.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
FIRST UNION CAPITAL MARKETS CORP.
MORGAN STANLEY & CO.
INCORPORATED
WILLIAM BLAIR & COMPANY
THE DATE OF THIS PROSPECTUS SUPPLEMENT IS AUGUST 1, 1996.
<PAGE>
IN CONNECTION WITH AN OFFERING OF NOTES PURCHASED BY AN AGENT AS PRINCIPAL
ON A FIXED OFFERING PRICE BASIS, SUCH AGENT MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF NOTES AT A LEVEL
ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING,
IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
----------------
DESCRIPTION OF NOTES
The Notes will be issued as a series of Debt Securities with the designation
"Series A" under an Indenture, dated as of August 1, 1996, as amended or
supplemented from time to time (the "Indenture"), between the Company and The
Bank of New York, as trustee (the "Trustee"). The Indenture is subject to, and
governed by, the Trust Indenture Act of 1939, as amended. The following
summary of certain provisions of the Notes and the Indenture does not purport
to be complete and is qualified in its entirety by reference to the actual
provisions of the Notes and the Indenture. Capitalized terms used but not
defined herein shall have the meanings given to them in the accompanying
Prospectus, the Notes or the Indenture, as the case may be. The term "Debt
Securities," as used in this Prospectus Supplement, refers to all debt
securities, including the Notes, issued and issuable from time to time under
the Indenture. The following description of Notes will apply to each Note
offered hereby unless otherwise specified in the applicable pricing supplement
(each, a "Pricing Supplement").
GENERAL
All Debt Securities, including the Notes, issued and to be issued under the
Indenture will be direct, unsecured obligations of the Company and will rank
equally with all other unsecured and unsubordinated indebtedness of the
Company. The Indenture does not limit the aggregate initial offering price of
Debt Securities that may be issued thereunder and Debt Securities may be
issued thereunder from time to time in one or more series up to the aggregate
initial offering price from time to time authorized by the Company for each
series or as established in one or more indentures supplemental to the
Indenture. The Company may, from time to time, without the consent of the
Holders of the Notes, provide for the issuance of Notes or other Debt
Securities under the Indenture in addition to the $450,000,000 aggregate
initial amount of Notes offered hereby. At the election of the Company, the
Notes will be subject to defeasance and/or covenant defeasance as described
under "Description of the Debt Securities--Discharge, Defeasance and Covenant
Defeasance" in the accompanying Prospectus.
The Notes are currently limited to $450,000,000 aggregate initial amount.
The Notes will be offered on a continuous basis and will mature on any day
nine months or more from their dates of issue (each, a "Stated Maturity
Date"), as specified in the applicable Pricing Supplement. Unless otherwise
specified in the applicable Pricing Supplement, interest-bearing Notes will
bear interest at fixed rates ("Fixed Rate Notes") or at floating rates
("Floating Rate Notes"), as specified in the applicable Pricing Supplement.
Notes may also be issued that do not bear any interest currently or that bear
interest at a below market rate. The Notes will be denominated in, and
payments of principal, premium, if any, and/or interest, if any, will be made
in, United States dollars.
Interest rates or yields offered by the Company with respect to the Notes
may differ depending upon, among other things, the aggregate initial offering
price of Notes purchased in any single transaction. Notes with similar
variable terms but different interest rates or yields, as well as Notes with
different variable terms, may be offered concurrently to different investors.
Interest rates or formulas and other terms of Notes are subject to change by
the Company from time to time, but no such change will affect any Note already
issued or as to which an offer to purchase has been accepted by the Company.
Payments of principal of, and premium, if any, and interest, if any, on,
Book-Entry Notes (as defined herein) will be made by the Company through the
Trustee to the Depositary (as defined herein). See "--Book-Entry Notes"
herein. In the case of Certificated Notes (as defined herein), payment of
principal and premium, if any, due on the Stated Maturity Date or any prior
date on which the principal, or an installment of principal, of each
Certificated Note becomes due and payable, whether by the declaration of
acceleration, notice of redemption at the option of the Company, notice of the
Holder's option to elect repayment or otherwise (the Stated Maturity Date or
such prior date, as the case may be, is herein referred to as the "Maturity
Date" with respect to the
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<PAGE>
principal of the applicable Note repayable on such date) will be made in
immediately available funds upon presentation and surrender thereof (and, in
the case of any repayment on an Optional Repayment Date (as defined herein),
upon submission of a duly completed election form in accordance with the
provisions described below) at the office or agency maintained by the Company
for such purpose in the Borough of Manhattan, The City of New York. Currently
the corporate trust office of the Trustee is located at 101 Barclay Street,
New York, New York 10286. Payment of interest, if any, due on the Maturity
Date of each Certificated Note will be made to the person to whom payment of
the principal and premium, if any, shall be made. Payment of interest, if any,
due on each Certificated Note on any Interest Payment Date (as defined herein)
other than the Maturity Date will be made by check mailed to the address of
the Holder entitled thereto as such address shall appear in the Security
Register of the Company. Notwithstanding the foregoing, a Holder of
$10,000,000 or more in aggregate principal amount of Notes (whether having
identical or different terms and provisions) will be entitled to receive
interest payments, if any, on any Interest Payment Date other than the
Maturity Date by wire transfer of immediately available funds if appropriate
wire transfer instructions have been received in writing by the Trustee not
less than 15 days prior to such Interest Payment Date. Any such wire transfer
instructions received by the Trustee shall remain in effect until revoked by
such Holder.
As used herein, "Business Day" means any day, other than a Saturday or
Sunday, that is neither a legal holiday nor a day on which banking
institutions are authorized or required by law, regulation or executive order
to close in The City of New York; provided, however, that, with respect to
Notes as to which LIBOR is an applicable Interest Rate Basis (as hereinafter
defined), such day is also a London Business Day. "London Business Day" means
(i) if the Index Currency (as hereinafter defined) is other than European
Currency Units ("ECU"), any day on which dealings in such Index Currency are
transacted in the London interbank market or (ii) if the Index Currency is
ECU, any day that does not appear as an ECU non-settlement day on the display
designated as "ISDE" on the Reuter Monitor Money Rates Service (or a day so
designated by the ECU Banking Association) or, if ECU non-settlement days do
not appear on that page (and are not so designated), is not a day on which
payments in ECU cannot be settled in the international interbank market.
Each Note will be issued in fully registered book-entry form (a "Book-Entry
Note") or in certificated form (a "Certificated Note"), as specified in the
applicable Pricing Supplement. Each Book-Entry Note will be represented by one
or more fully registered global securities (the "Global Securities") deposited
with or on behalf of The Depository Trust Company (the "Depositary") and
registered in the name of the Depositary or the Depositary's nominee.
Interests in the Global Securities will be shown on, and transfers thereof
will be effected only through, records maintained by the Depositary (with
respect to its participants) and the Depositary's participants (with respect
to beneficial owners). The authorized denominations of each Note will be
$1,000 and integral multiples thereof, unless otherwise specified in the
applicable Pricing Supplement. Registration of transfer or exchange of
Certificated Notes will be made at the office or agency maintained by the
Company for such purpose in the Borough of Manhattan, The City of New York at
the address indicated above. No service charge will be made by the Company or
the Trustee for any such registration of transfer or exchange of Notes, but
the Company may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith (other than
exchanges pursuant to the Indenture not involving any transfer).
REDEMPTION AT THE OPTION OF THE COMPANY
Unless otherwise specified in the applicable Pricing Supplement, the Notes
will not be subject to any sinking fund. The Notes will be redeemable at the
option of the Company prior to the Stated Maturity Date only if an "Initial
Redemption Date" is specified in the applicable Pricing Supplement. If so
specified, the Notes will be subject to redemption at the option of the
Company on any date on and after the applicable Initial Redemption Date in
whole or from time to time in part in increments of $1,000 or such other
minimum denomination specified in such Pricing Supplement (provided that any
remaining principal amount thereof shall be at least $1,000 or such minimum
denomination), at the applicable Redemption Price (as defined herein),
together with unpaid interest accrued to the date of redemption, on notice
given not more than 60 nor less than 30 calendar days prior to the date of
redemption and in accordance with the provisions of the Indenture. "Redemption
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<PAGE>
Price", with respect to a Note, means an amount equal to the Initial
Redemption Percentage specified in the applicable Pricing Supplement (as
adjusted by the Annual Redemption Percentage Reduction, if applicable)
multiplied by the unpaid principal amount to be redeemed. The Initial
Redemption Percentage, if any, applicable to a Note shall decline at each
anniversary of the Initial Redemption Date by an amount equal to the
applicable Annual Redemption Percentage Reduction, if any, until the
Redemption Price is equal to 100% of the unpaid principal amount to be
redeemed. See also "--Original Issue Discount Notes" herein.
REPAYMENT AT THE OPTION OF THE HOLDER
The Notes will be repayable by the Company at the option of the Holders
thereof prior to the Stated Maturity Date only if one or more Optional
Repayment Dates are specified in the applicable Pricing Supplement. If so
specified, the Notes will be subject to repayment at the option of the Holders
thereof on any Optional Repayment Date in whole or from time to time in part
in increments of $1,000 or such other minimum denomination specified in the
applicable Pricing Supplement (provided that any remaining principal amount
thereof shall be at least $1,000 or such other minimum denomination), at a
repayment price equal to 100% of the unpaid principal amount to be repaid,
together with unpaid interest accrued to the date of repayment. For any Note
to be repaid, such Note must be received, together with the form thereon
entitled "Option to Elect Repayment" duly completed, by the Trustee at its
Corporate Trust Office (or such other address of which the Company shall from
time to time notify the Holders) not more than 60 nor less than 30 calendar
days prior to the date of repayment. Exercise of such repayment option by the
Holder will be irrevocable. See also "--Original Issue Discount Notes" herein.
Only the Depositary may exercise the repayment option in respect of Global
Securities representing Book-Entry Notes. Accordingly, Beneficial Owners (as
hereinafter defined) of Global Securities that desire to have all or any
portion of the Book-Entry Notes represented by such Global Securities repaid
must instruct the Participant (as hereinafter defined) through which they own
their interest to direct the Depositary to exercise the repayment option on
their behalf by delivering the related Global Security and duly completed
election form to the Trustee as aforesaid. In order to ensure that such Global
Security and election form are received by the Trustee on a particular day,
the applicable Beneficial Owner must so instruct the Participant through which
it owns its interest before such Participant's deadline for accepting
instructions for that day. Different firms may have different deadlines for
accepting instructions from their customers. Accordingly, Beneficial Owners
should consult the Participants through which they own their interest for the
respective deadlines for such Participants. All instructions given to
Participants from Beneficial Owners of Global Securities relating to the
option to elect repayment shall be irrevocable. In addition, at the time such
instructions are given, each such Beneficial Owner shall cause the Participant
through which it owns its interest to transfer such Beneficial Owner's
interest in the Global Security or Securities representing the related Book-
Entry Notes, on the Depositary's records, to the Trustee. See "--Book-Entry
Notes" herein.
If applicable, the Company will comply with the requirements of Rule 14e-1
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and any other securities laws or regulations in connection with any such
repayment.
The Company may at any time purchase Notes at any price or prices in the
open market or otherwise. Notes so purchased by the Company may, at the
discretion of the Company, be held, resold or surrendered to the Trustee for
cancellation.
INTEREST
General
Unless otherwise specified in the applicable Pricing Supplement, each
interest-bearing Note will bear interest from its date of issue at the rate
per annum, in the case of a Fixed Rate Note, or pursuant to the interest rate
formula, in the case of a Floating Rate Note, in each case as specified in the
applicable Pricing Supplement,
S-4
<PAGE>
until the principal thereof is paid or duly made available for payment. Unless
otherwise specified in the applicable Pricing Supplement, interest payments in
respect of Fixed Rate Notes and Floating Rate Notes will equal the amount of
interest accrued from and including the immediately preceding Interest Payment
Date in respect of which interest has been paid or duly made available for
payment (or from and including the date of issue, if no interest has been paid
or duly made available for payment) to but excluding the applicable Interest
Payment Date or the Maturity Date, as the case may be (each, an "Interest
Period").
Interest on Fixed Rate Notes and Floating Rate Notes will be payable in
arrears on each Interest Payment Date and on the Maturity Date. Unless
otherwise specified in the applicable Pricing Supplement, the first payment of
interest on any such Note originally issued between a Record Date (as
hereinafter defined) and the related Interest Payment Date will be made on the
Interest Payment Date immediately following the next succeeding Record Date to
the Holder on such next succeeding Record Date. Unless otherwise specified in
the applicable Pricing Supplement, a "Record Date" shall be the fifteenth
calendar day (whether or not a Business Day) immediately preceding the related
Interest Payment Date.
Fixed Rate Notes
Unless otherwise specified in the applicable Pricing Supplement, interest on
Fixed Rate Notes will be payable on January 15 and July 15 of each year (each,
an "Interest Payment Date") and on the Maturity Date. Unless otherwise
specified in the applicable Pricing Supplement, interest on Fixed Rate Notes
will be computed on the basis of a 360-day year of twelve 30-day months.
If any Interest Payment Date or the Maturity Date of a Fixed Rate Note falls
on a day that is not a Business Day, the required payment of principal,
premium, if any, and/or interest will be made on the next succeeding Business
Day as if made on the date such payment was due, and no interest will accrue
on such payment for the period from and after such Interest Payment Date or
the Maturity Date, as the case may be, to the date of such payment on the next
succeeding Business Day.
Floating Rate Notes
Unless otherwise specified in the applicable Pricing Supplement, Floating
Rate Notes will be issued as described below. The applicable Pricing
Supplement will specify certain terms with respect to which each Floating Rate
Note is being delivered, including: whether such Floating Rate Note is a
"Regular Floating Rate Note," a "Floating Rate/Fixed Rate Note" or an "Inverse
Floating Rate Note," the Fixed Rate Commencement Date, if applicable, Fixed
Interest Rate, if applicable, Interest Rate Basis or Bases, Initial Interest
Rate, if any, Initial Interest Reset Date, Interest Reset Period and Dates,
Interest Payment Period and Dates, Index Maturity, Maximum Interest Rate
and/or Minimum Interest Rate, if any, and Spread and/or Spread Multiplier, if
any, as such terms are defined below. If one or more of the applicable
Interest Rate Bases is LIBOR or the CMT Rate, the applicable Pricing
Supplement will also specify the Index Currency and Designated LIBOR Page or
the Designated CMT Maturity Index and Designated CMT Telerate Page,
respectively, as such terms are defined below.
The interest rate borne by the Floating Rate Notes will be determined as
follows:
(i) Unless such Floating Rate Note is designated as a "Floating
Rate/Fixed Rate Note" or an "Inverse Floating Rate Note", or as having an
Addendum attached or having "Other/Additional Provisions" apply, in each
case relating to a different interest rate formula, such Floating Rate Note
will be designated as a "Regular Floating Rate Note" and, except as
described below or in the applicable Pricing Supplement, will bear interest
at the rate determined by reference to the applicable Interest Rate Basis
or Bases (a) plus or minus the applicable Spread, if any, and/or (b)
multiplied by the applicable Spread Multiplier, if any. Commencing on the
Initial Interest Reset Date, the rate at which interest on such Regular
Floating Rate Note shall be payable shall be reset as of each Interest
Reset Date; provided, however, that the interest rate in effect for the
period, if any, from the date of issue to the Initial Interest Reset Date
will be the Initial Interest Rate.
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(ii) If such Floating Rate Note is designated as a "Floating Rate/Fixed
Rate Note," then, except as described below or in the applicable Pricing
Supplement, such Floating Rate Note will bear interest at the rate
determined by reference to the applicable Interest Rate Basis or Bases (a)
plus or minus the applicable Spread, if any, and/or (b) multiplied by the
applicable Spread Multiplier, if any. Commencing on the Initial Interest
Reset Date, the rate at which interest on such Floating Rate/Fixed Rate
Note shall be payable shall be reset as of each Interest Reset Date;
provided, however, that (y) the interest rate in effect for the period, if
any, from the date of issue to the Initial Interest Reset Date will be the
Initial Interest Rate and (z) the interest rate in effect for the period
commencing on the Fixed Rate Commencement Date to the Maturity Date shall
be the Fixed Interest Rate, if such rate is specified in the applicable
Pricing Supplement or, if no such Fixed Interest Rate is specified, the
interest rate in effect thereon on the day immediately preceding the Fixed
Rate Commencement Date.
(iii) If such Floating Rate Note is designated as an "Inverse Floating
Rate Note," then, except as described below or in the applicable Pricing
Supplement, such Floating Rate Note will bear interest at the Fixed
Interest Rate minus the rate determined by reference to the applicable
Interest Rate Basis or Bases (a) plus or minus the applicable Spread, if
any, and/or (b) multiplied by the applicable Spread Multiplier, if any;
provided, however, that, unless otherwise specified in the applicable
Pricing Supplement, the interest rate thereon will not be less than zero.
Commencing on the Initial Interest Reset Date, the rate at which interest
on such Inverse Floating Rate Note shall be payable shall be reset as of
each Interest Reset Date; provided, however, that the interest rate in
effect for the period, if any, from the date of issue to the Initial
Interest Reset Date will be the Initial Interest Rate.
The "Spread" is the number of basis points to be added to or subtracted from
the related Interest Rate Basis or Bases applicable to such Floating Rate
Note. The "Spread Multiplier" is the percentage of the related Interest Rate
Basis or Bases applicable to such Floating Rate Note by which such Interest
Rate Basis or Bases will be multiplied to determine the applicable interest
rate on such Floating Rate Note. The "Index Maturity" is the period to
maturity of the instrument or obligation with respect to which the related
Interest Rate Basis or Bases will be calculated.
Unless otherwise specified in the applicable Pricing Supplement, the
interest rate with respect to each Interest Rate Basis will be determined in
accordance with the applicable provisions below. Except as set forth above or
in the applicable Pricing Supplement, the interest rate in effect on each day
shall be (i) if such day is an Interest Reset Date, the interest rate
determined as of the Interest Determination Date (as hereinafter defined)
immediately preceding such Interest Reset Date or (ii) if such day is not an
Interest Reset Date, the interest rate determined as of the Interest
Determination Date immediately preceding the most recent Interest Reset Date.
Interest on Floating Rate Notes will be determined by reference to the
applicable interest rate basis (the "Interest Rate Basis") or interest rate
bases (the "Interest Rate Bases"), which may, as described below, include (i)
the CD Rate, (ii) the CMT Rate, (iii) the Commercial Paper Rate, (iv) the
Eleventh District Cost of Funds Rate, (v) the Federal Funds Rate, (vi) LIBOR,
(vii) the Prime Rate, (viii) the Treasury Rate, or (ix) such other Interest
Rate Basis or interest rate formula as may be specified in the applicable
Pricing Supplement; provided, however, that the interest rate in effect on a
Floating Rate Note for the period, if any, from the date of issue to the
Initial Interest Reset Date will be the Initial Interest Rate; provided,
further, that with respect to a Floating Rate/Fixed Rate Note the interest
rate in effect for the period commencing on the Fixed Rate Commencement Date
to the Maturity Date shall be the Fixed Interest Rate, if such rate is
specified in the applicable Pricing Supplement or, if no such Fixed Interest
Rate is specified, the interest rate in effect thereon on the day immediately
preceding the Fixed Rate Commencement Date.
The applicable Pricing Supplement will specify whether the rate of interest
on the related Floating Rate Note will be reset daily, weekly, monthly,
quarterly, semiannually or annually or on such other specified basis (each, an
"Interest Reset Period") and the dates on which such rate of interest will be
reset (each, an "Interest Reset Date"). Unless otherwise specified in the
applicable Pricing Supplement, the Interest Reset Dates will be, in the case
of Floating Rate Notes which reset: (i) daily, each Business Day; (ii) weekly,
the Wednesday of each
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week (with the exception of weekly reset Floating Rate Notes as to which the
Treasury Rate is an applicable Interest Rate Basis, which will reset the
Tuesday of each week, except as described below); (iii) monthly, the third
Wednesday of each month (with the exception of monthly reset Floating Rate
Notes as to which the Eleventh District Cost of Funds Rate is an applicable
Interest Rate Basis, which will reset on the first calendar day of the month);
(iv) quarterly, the third Wednesday of March, June, September and December of
each year; (v) semiannually, the third Wednesday of the two months specified
in the applicable Pricing Supplement; and (vi) annually, the third Wednesday
of the month specified in the applicable Pricing Supplement; provided however,
that, with respect to Floating Rate/Fixed Rate Notes, the rate of interest
thereon will not reset after the applicable Fixed Rate Commencement Date. If
any Interest Reset Date for any Floating Rate Note would otherwise be a day
that is not a Business Day, such Interest Reset Date will be postponed to the
next succeeding Business Day, except that in the case of a Floating Rate Note
as to which LIBOR is an applicable Interest Rate Basis and such Business Day
falls in the next succeeding calendar month, such Interest Reset Date will be
the immediately preceding Business Day. In addition, in the case of a Floating
Rate Note as to which the Treasury Rate is an applicable Interest Rate Basis
and the Interest Determination Date would otherwise fall on an Interest Reset
Date, then such Interest Reset Date will be postponed to the next succeeding
Business Day.
The interest rate applicable to each Interest Reset Period commencing on the
related Interest Reset Date will be the rate determined as of the applicable
Interest Determination Date and calculated on or prior to the Calculation Date
(as hereinafter defined), except with respect to LIBOR and the Eleventh
District Cost of Funds Rate, which will be calculated on such Interest
Determination Date. The "Interest Determination Date" with respect to the CD
Rate, the CMT Rate, the Commercial Paper Rate, the Federal Funds Rate and the
Prime Rate will be the second Business Day immediately preceding the
applicable Interest Reset Date; the "Interest Determination Date" with respect
to the Eleventh District Cost of Funds Rate will be the last working day of
the month immediately preceding the applicable Interest Reset Date on which
the Federal Home Loan Bank of San Francisco (the "FHLB of San Francisco")
publishes the Index (as hereinafter defined); and the "Interest Determination
Date" with respect to LIBOR will be the second London Business Day immediately
preceding the applicable Interest Reset Date, unless the Index Currency is
British pounds sterling, in which case the "Interest Determination Date" will
be the applicable Interest Reset Date. With respect to the Treasury Rate, the
"Interest Determination Date" will be the day in the week in which the
applicable Interest Reset Date falls on which day Treasury Bills (as
hereinafter defined) are normally auctioned (Treasury Bills are normally sold
at an auction held on Monday of each week, unless that day is a legal holiday,
in which case the auction is normally held on the following Tuesday, except
that such auction may be held on the preceding Friday); provided, however,
that if an auction is held on the Friday of the week preceding the applicable
Interest Reset Date, the Interest Determination Date will be such preceding
Friday. The "Interest Determination Date" pertaining to a Floating Rate Note
the interest rate of which is determined by reference to two or more Interest
Rate Bases will be the most recent Business Day which is at least two Business
Days prior to the applicable Interest Reset Date for such Floating Rate Note
on which each Interest Rate Basis is determinable. Each Interest Rate Basis
will be determined as of such date, and the applicable interest rate will take
effect on the applicable Interest Reset Date.
A Floating Rate Note may also have either or both of the following: (i) a
Maximum Interest Rate, or ceiling, that may accrue during any Interest Period
and (ii) a Minimum Interest Rate, or floor, that may accrue during any
Interest Period. In addition to any Maximum Interest Rate that may apply to
any Floating Rate Note, the interest rate on Floating Rate Notes will in no
event be higher than the maximum rate permitted by New York law, as the same
may be modified by United States law of general application.
Except as provided below or in the applicable Pricing Supplement, interest
will be payable, in the case of Floating Rate Notes which reset: (i) daily,
weekly or monthly, on the third Wednesday of each month or on the third
Wednesday of March, June, September and December of each year, as specified in
the applicable Pricing Supplement; (ii) quarterly, on the third Wednesday of
March, June, September and December of each year; (iii) semiannually, on the
third Wednesday of the two months of each year specified in the applicable
Pricing Supplement; and (iv) annually, on the third Wednesday of the month of
each year specified in the applicable Pricing Supplement (each, an "Interest
Payment Date") and, in each case, on the Maturity Date. If any Interest
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Payment Date other than the Maturity Date for any Floating Rate Note would
otherwise be a day that is not a Business Day, such Interest Payment Date will
be postponed to the next succeeding Business Day, except that in the case of a
Floating Rate Note as to which LIBOR is an applicable Interest Rate Basis and
such Business Day falls in the next succeeding calendar month, such Interest
Payment Date will be the immediately preceding Business Day. If the Maturity
Date of a Floating Rate Note falls on a day that is not a Business Day, the
required payment of principal, premium, if any, and interest will be made on
the next succeeding Business Day as if made on the date such payment was due,
and no interest will accrue on such payment for the period from and after the
Maturity Date to the date of such payment on the next succeeding Business Day.
All percentages resulting from any calculation on Floating Rate Notes will
be rounded to the nearest one hundred-thousandth of a percentage point, with
five-one millionths of a percentage point rounded upwards (e.g., 9.876545% (or
.09876545) would be rounded to 9.87655% (or .0987655)), and all amounts used
in or resulting from such calculation on Floating Rate Notes will be rounded
to the nearest cent.
With respect to each Floating Rate Note, accrued interest is calculated by
multiplying its principal amount by an accrued interest factor. Such accrued
interest factor is computed by adding the interest factor calculated for each
day in the applicable Interest Period. Unless otherwise specified in the
applicable Pricing Supplement, the interest factor for each such day will be
computed by dividing the interest rate applicable to such day by 360, in the
case of Floating Rate Notes for which an applicable Interest Rate Basis is the
CD Rate, the Commercial Paper Rate, the Eleventh District Cost of Funds Rate,
the Federal Funds Rate, LIBOR or the Prime Rate, or by the actual number of
days in the year in the case of Floating Rate Notes for which an applicable
Interest Rate Basis is the CMT Rate or the Treasury Rate. Unless otherwise
specified in the applicable Pricing Supplement, the interest factor for
Floating Rate Notes for which the interest rate is calculated with reference
to two or more Interest Rate Bases will be calculated in each period in the
same manner as if only one of the applicable Interest Rate Bases applied as
specified in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, The Bank of
New York will be the "Calculation Agent." Upon request of the Holder of any
Floating Rate Note, the Calculation Agent will disclose the interest rate then
in effect and, if determined, the interest rate that will become effective as
a result of a determination made for the next succeeding Interest Reset Date
with respect to such Floating Rate Note. Unless otherwise specified in the
applicable Pricing Supplement, the "Calculation Date," if applicable,
pertaining to any Interest Determination Date will be the earlier of (i) the
tenth calendar day after such Interest Determination Date, or, if such day is
not a Business Day, the next succeeding Business Day or (ii) the Business Day
immediately preceding the applicable Interest Payment Date or the Maturity
Date, as the case may be.
Unless otherwise specified in the applicable Pricing Supplement, the
Calculation Agent shall determine each Interest Rate Basis in accordance with
the following provisions.
CD Rate. Unless otherwise specified in the applicable Pricing Supplement,
"CD Rate" means, with respect to any Interest Determination Date relating to a
Floating Rate Note for which the interest rate is determined with reference to
the CD Rate (a "CD Rate Interest Determination Date"), the rate on such date
for negotiable United States dollar certificates of deposit having the Index
Maturity specified in the applicable Pricing Supplement as published by the
Board of Governors of the Federal Reserve System in "Statistical Release
H.15(519), Selected Interest Rates" or any successor publication ("H.15(519)")
under the heading "CDs (Secondary Market)," or, if not published by 3:00 P.M.
New York City time, on the related Calculation Date, the rate on such CD Rate
Interest Determination Date for negotiable United States dollar certificates
of deposit of the Index Maturity specified in the applicable Pricing
Supplement as published by the Federal Reserve Bank of New York in its daily
statistical release "Composite 3:30 P.M. Quotations for U.S. Government
Securities" or any successor publication ("Composite Quotations") under the
heading "Certificates of Deposit." If such rate is not yet published in either
H.15(519) or Composite Quotations by 3:00 P.M., New York City time, on the
related Calculation Date, then the CD Rate on such CD Rate Interest
Determination Date will be calculated by the Calculation Agent and will be the
arithmetic mean of the secondary market offered rates as of 10:00 A.M., New
York City time, on such CD Rate Interest Determination Date, of three leading
nonbank
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dealers in negotiable United States dollar certificates of deposit in The City
of New York (which may include the Agents or their affiliates) selected by the
Calculation Agent for negotiable United States dollar certificates of deposit
of major United States money center banks for negotiable certificates of
deposit with a remaining maturity closest to the Index Maturity specified in
the applicable Pricing Supplement in an amount that is representative for a
single transaction in that market at that time; provided, however, that if the
dealers so selected by the Calculation Agent are not quoting as mentioned in
this sentence, the CD Rate determined as of such CD Rate Interest
Determination Date will be the CD Rate in effect on such CD Rate Interest
Determination Date.
CMT Rate. Unless otherwise specified in the applicable Pricing Supplement,
"CMT Rate" means, with respect to any Interest Determination Date relating to
a Floating Rate Note for which the interest rate is determined with reference
to the CMT Rate (a "CMT Rate Interest Determination Date"), the rate displayed
on the Designated CMT Telerate Page under the caption ". . .Treasury Constant
Maturities . . . Federal Reserve Board Release H.15 . . . Mondays
Approximately 3:45 P.M.," under the column for the Designated CMT Maturity
Index for (i) if the Designated CMT Telerate Page is 7055, the rate on such
CMT Rate Interest Determination Date and (ii) if the Designated CMT Telerate
Page is 7052, the weekly or monthly average, as specified in the applicable
Pricing Supplement, for the week or the month, as applicable, ended
immediately preceding the week or the month, as applicable, in which the
related CMT Rate Interest Determination Date falls. If such rate is no longer
displayed on the relevant page or is not displayed by 3:00 P.M., New York City
time, on the related Calculation Date, then the CMT Rate for such CMT Rate
Interest Determination Date will be such treasury constant maturity rate for
the Designated CMT Maturity Index as published in H.15(519). If such rate is
no longer published or is not published by 3:00 P.M., New York City time, on
the related Calculation Date, then the CMT Rate on such CMT Rate Interest
Determination Date will be such treasury constant maturity rate for the
Designated CMT Maturity Index (or other United States Treasury rate for the
Designated CMT Maturity Index) for the CMT Rate Interest Determination Date
with respect to such Interest Reset Date as may then be published by either
the Board of Governors of the Federal Reserve System or the United States
Department of the Treasury that the Calculation Agent determines to be
comparable to the rate formerly displayed on the Designated CMT Telerate Page
and published in H.15(519). If such information is not provided by 3:00 P.M.,
New York City time, on the related Calculation Date, then the CMT Rate on the
CMT Rate Interest Determination Date will be calculated by the Calculation
Agent and will be a yield to maturity, based on the arithmetic mean of the
secondary market closing offer side prices as of approximately 3:30 P.M., New
York City time, on such CMT Rate Interest Determination Date reported,
according to their written records, by three leading primary United States
government securities dealers (each, a "Reference Dealer") in The City of New
York (which may include the Agents or their affiliates) selected by the
Calculation Agent (from five such Reference Dealers selected by the
Calculation Agent and eliminating the highest quotation (or, in the event of
equality, one of the highest) and the lowest quotation (or, in the event of
equality, one of the lowest)), for the most recently issued direct noncallable
fixed rate obligations of the United States ("Treasury Notes") with an
original maturity of approximately the Designated CMT Maturity Index and a
remaining term to maturity of not less than such Designated CMT Maturity Index
minus one year. If the Calculation Agent is unable to obtain three such
Treasury Note quotations, the CMT Rate on such CMT Rate Interest Determination
Date will be calculated by the Calculation Agent and will be a yield to
maturity based on the arithmetic mean of the secondary market offer side
prices as of approximately 3:30 P.M., New York City time, on such CMT Rate
Interest Determination Date of three Reference Dealers in The City of New York
(from five such Reference Dealers selected by the Calculation Agent and
eliminating the highest quotation (or, in the event of equality, one of the
highest) and the lowest quotation (or, in the event of equality, one of the
lowest)), for Treasury Notes with an original maturity of the number of years
that is the next highest to the Designated CMT Maturity Index and a remaining
term to maturity closest to the Designated CMT Maturity Index and in an amount
of at least $100 million. If three or four (and not five) of such Reference
Dealers are quoting as described above, then the CMT Rate will be based on the
arithmetic mean of the offer prices obtained and neither the highest nor the
lowest of such quotes will be eliminated; provided, however, that if fewer
than three Reference Dealers so selected by the Calculation Agent are quoting
as mentioned herein, the CMT Rate determined as of such CMT Rate Interest
Determination Date will be the CMT Rate in effect on such CMT Rate Interest
Determination Date. If two
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Treasury Notes with an original maturity as described in the second preceding
sentence have remaining terms to maturity equally close to the Designated CMT
Maturity Index, the Calculation Agent will obtain quotations for the Treasury
Note with the shorter remaining term to maturity.
"Designated CMT Telerate Page" means the display on the Dow Jones Telerate
Service (or any successor service) on the page specified in the applicable
Pricing Supplement (or any other page as may replace such page on such
service) for the purpose of displaying Treasury Constant Maturities as
reported in H.15(519). If no such page is specified in the applicable Pricing
Supplement, the Designated CMT Telerate Page shall be 7052 for the most recent
week.
"Designated CMT Maturity Index" means the original period to maturity of the
U.S. Treasury securities (either 1, 2, 3, 5, 7, 10, 20 or 30 years) specified
in the applicable Pricing Supplement with respect to which the CMT Rate will
be calculated. If no such maturity is specified in the applicable Pricing
Supplement, the Designated CMT Maturity Index shall be 2 years.
Commercial Paper Rate. Unless otherwise specified in the applicable Pricing
Supplement, "Commercial Paper Rate" means, with respect to any Interest
Determination Date relating to a Floating Rate Note for which the interest
rate is determined with reference to the Commercial Paper Rate (a "Commercial
Paper Rate Interest Determination Date"), the Money Market Yield (as
hereinafter defined) on such date of the rate for commercial paper having the
Index Maturity specified in the applicable Pricing Supplement as published in
H.15(519) under the heading "Commercial Paper." In the event that such rate is
not published by 3:00 P.M., New York City time, on the related Calculation
Date, then the Commercial Paper Rate on such Commercial Paper Rate Interest
Determination Date will be the Money Market Yield of the rate for commercial
paper having the Index Maturity specified in the applicable Pricing Supplement
as published in Composite Quotations under the heading "Commercial Paper"
(with an Index Maturity of one month or three months being deemed to be
equivalent to an Index Maturity of 30 days or 90 days, respectively). If such
rate is not yet published in either H.15(519) or Composite Quotations by 3:00
P.M., New York City time, on the related Calculation Date, then the Commercial
Paper Rate on such Commercial Paper Rate Interest Determination Date will be
calculated by the Calculation Agent and will be the Money Market Yield of the
arithmetic mean of the offered rates at approximately 11:00 A.M., New York
City time, on such Commercial Paper Rate Interest Determination Date of three
leading dealers of commercial paper in The City of New York (which may include
the Agents or their affiliates) selected by the Calculation Agent for
commercial paper having the Index Maturity specified in the applicable Pricing
Supplement placed for an industrial issuer whose bond rating is "AA", or the
equivalent, from a nationally recognized statistical rating organization;
provided, however, that if the dealers so selected by the Calculation Agent
are not quoting as mentioned in this sentence, the Commercial Paper Rate
determined as of such Commercial Paper Rate Interest Determination Date will
be the Commercial Paper Rate in effect on such Commercial Paper Rate Interest
Determination Date.
"Money Market Yield" means a yield (expressed as a percentage) calculated in
accordance with the following formula:
D X 360
Money Market Yield = ------------- X 100
360 - (D X M)
where "D" refers to the applicable per annum rate for commercial paper quoted
on a bank discount basis and expressed as a decimal, and "M" refers to the
actual number of days in the Interest Period for which interest is being
calculated.
Eleventh District Cost of Funds Rate. Unless otherwise specified in the
applicable Pricing Supplement, "Eleventh District Cost of Funds Rate" means,
with respect to any Interest Determination Date relating to a Floating Rate
Note for which the interest rate is determined with reference to the Eleventh
District Cost of Funds Rate (an "Eleventh District Cost of Funds Rate Interest
Determination Date"), the rate equal to the monthly weighted average cost of
funds for the calendar month immediately preceding the month in which such
Eleventh District Cost of Funds Rate Interest Determination Date falls, as set
forth under the caption "11th District" on
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Telerate Page 7058 as of 11:00 A.M., San Francisco time, on such Eleventh
District Cost of Funds Rate Interest Determination Date. If such rate does not
appear on Telerate Page 7058 on such Eleventh District Cost of Funds Rate
Interest Determination Date, then the Eleventh District Cost of Funds Rate on
such Eleventh District Cost of Funds Rate Interest Determination Date shall be
the monthly weighted average cost of funds paid by member institutions of the
Eleventh Federal Home Loan Bank District that was most recently announced (the
"Index") by the FHLB of San Francisco as such cost of funds for the calendar
month immediately preceding such Eleventh District Cost of Funds Rate Interest
Determination Date. If the FHLB of San Francisco fails to announce the Index
on or prior to such Eleventh District Cost of Funds Rate Interest
Determination Date for the calendar month immediately preceding such Eleventh
District Cost of Funds Rate Interest Determination Date, the Eleventh District
Cost of Funds Rate determined as of such Eleventh District Cost of Funds Rate
Interest Determination Date will be the Eleventh District Cost of Funds Rate
in effect on such Eleventh District Cost of Funds Rate Interest Determination
Date.
Federal Funds Rate. Unless otherwise specified in the applicable Pricing
Supplement, "Federal Funds Rate" means, with respect to any Interest
Determination Date relating to a Floating Rate Note for which the interest
rate is determined with reference to the Federal Funds Rate (a "Federal Funds
Rate Interest Determination Date"), the rate on such date for United States
dollar federal funds as published in H.15(519) under the heading "Federal
Funds (Effective)" or, if not published by 3:00 P.M., New York City time, on
the related Calculation Date, the rate on such Federal Funds Rate Interest
Determination Date as published in Composite Quotations under the heading
"Federal Funds/Effective Rate." If such rate is not published in either
H.15(519) or Composite Quotations by 3:00 P.M., New York City time, on the
related Calculation Date, then the Federal Funds Rate on such Federal Funds
Rate Interest Determination Date will be calculated by the Calculation Agent
and will be the arithmetic mean of the rates for the last transaction in
overnight United States dollar federal funds arranged by three leading brokers
of federal funds transactions in The City of New York (which may include the
Agents or their affiliates) selected by the Calculation Agent prior to 9:00
A.M., New York City time, on such Federal Funds Rate Interest Determination
Date; provided, however, that if the brokers so selected by the Calculation
Agent are not quoting as mentioned in this sentence, the Federal Funds Rate
determined as of such Federal Funds Rate Interest Determination Date will be
the Federal Funds Rate in effect on such Federal Funds Rate Interest
Determination Date.
LIBOR. Unless otherwise specified in the applicable Pricing Supplement,
"LIBOR" means the rate determined in accordance with the following provisions:
(i) With respect to any Interest Determination Date relating to a
Floating Rate Note for which the interest rate is determined with reference
to LIBOR (a "LIBOR Interest Determination Date"), LIBOR will be either: (a)
if "LIBOR Reuters" is specified in the applicable Pricing Supplement, the
arithmetic mean of the offered rates (unless the Designated LIBOR Page by
its terms provides only for a single rate, in which case such single rate
shall be used) for deposits in the Index Currency having the Index Maturity
specified in such Pricing Supplement, commencing on the applicable Interest
Reset Date, that appear (or, if only a single rate is required as
aforesaid, appears) on the Designated LIBOR Page as of 11:00 A.M., London
time, on such LIBOR Interest Determination Date, or (b) if "LIBOR Telerate"
is specified in the applicable Pricing Supplement or if neither "LIBOR
Reuters" nor "LIBOR Telerate" is specified in the applicable Pricing
Supplement as the method for calculating LIBOR, the rate for deposits in
the Index Currency having the Index Maturity specified in such Pricing
Supplement, commencing on such Interest Reset Date, that appears on the
Designated LIBOR Page as of 11:00 A.M., London time, on such LIBOR Interest
Determination Date. If fewer than two such offered rates so appear, or if
no such rate so appears, as applicable, LIBOR on such LIBOR Interest
Determination Date will be determined in accordance with the provisions
described in clause (ii) below.
(ii) With respect to a LIBOR Interest Determination Date on which fewer
than two offered rates appear, or no rate appears, as the case may be, on
the Designated LIBOR Page as specified in clause (i) above, the Calculation
Agent will request the principal London offices of each of four major
reference banks in the London interbank market, as selected by the
Calculation Agent, to provide the Calculation Agent
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with its offered quotation for deposits in the Index Currency for the
period of the Index Maturity specified in the applicable Pricing
Supplement, commencing on the applicable Interest Reset Date, to prime
banks in the London interbank market at approximately 11:00 A.M., London
time, on such LIBOR Interest Determination Date and in a principal amount
that is representative for a single transaction in such Index Currency in
such market at such time. If at least two such quotations are so provided,
then LIBOR on such LIBOR Interest Determination Date will be the arithmetic
mean of such quotations. If fewer than two such quotations are so provided,
then LIBOR on such LIBOR Interest Determination Date will be the arithmetic
mean of the rates quoted at approximately 11:00 A.M., in the applicable
Principal Financial Center, on such LIBOR Interest Determination Date by
three major banks in such Principal Financial Center selected by the
Calculation Agent for loans in the Index Currency to leading European
banks, having the Index Maturity specified in the applicable Pricing
Supplement and in a principal amount that is representative for a single
transaction in such Index Currency in such market at such time; provided,
however, that if the banks so selected by the Calculation Agent are not
quoting as mentioned in this sentence, LIBOR determined as of such LIBOR
Interest Determination Date will be LIBOR in effect on such LIBOR Interest
Determination Date.
"Index Currency" means the currency or composite currency specified in the
applicable Pricing Supplement as to which LIBOR shall be calculated. If no
such currency or composite currency is specified in the applicable Pricing
Supplement, the Index Currency shall be United States dollars. "Principal
Financial Center" means the capital city of the country issuing the related
Index Currency, except that with respect to United States dollars, Australian
dollars, Deutsche marks, Dutch guilders, Italian lire, Swiss francs and ECUs,
the Principal Financial Center shall be The City of New York, Sydney,
Frankfurt, Amsterdam, Milan, Zurich and Luxembourg, respectively.
"Designated LIBOR Page" means (a) if "LIBOR Reuters" is specified in the
applicable Pricing Supplement, the display on the Reuter Monitor Money Rates
Service (or any successor service) on the page specified in such Pricing
Supplement (or any other page as may replace such page on such service) for
the purpose of displaying the London interbank rates of major banks for the
applicable Index Currency, or (b) if "LIBOR Telerate" is specified in the
applicable Pricing Supplement or neither "LIBOR Reuters" nor "LIBOR Telerate"
is specified in the applicable Pricing Supplement as the method for
calculating LIBOR, the display on the Dow Jones Telerate Service (or any
successor service) on the page specified in such Pricing Supplement (or any
other page as may replace such page on such service) for the purpose of
displaying the London interbank rates of major banks for the applicable Index
Currency.
Prime Rate. Unless otherwise specified in the applicable Pricing Supplement,
"Prime Rate" means, with respect to any Interest Determination Date relating
to a Floating Rate Note for which the interest rate is determined with
reference to the Prime Rate (a "Prime Rate Interest Determination Date"), the
rate on such date as such rate is published in H.15(519) under the heading
"Bank Prime Loan." If such rate is not published prior to 3:00 P.M., New York
City time, on the related Calculation Date, then the Prime Rate shall be the
arithmetic mean of the rates of interest publicly announced by each bank that
appears on the Reuters Screen USPRIME1 Page (as hereinafter defined) as such
bank's prime rate or base lending rate as in effect for such Prime Rate
Interest Determination Date. If fewer than four such rates appear on the
Reuters Screen USPRIME1 Page for such Prime Rate Interest Determination Date,
then the Prime Rate shall be the arithmetic mean of the prime rates quoted on
the basis of the actual number of days in the year divided by a 360-day year
as of the close of business on such Prime Rate Interest Determination Date by
four major money center banks in The City of New York selected by the
Calculation Agent. If fewer than four such quotations are so provided, then
the Prime Rate shall be the arithmetic mean of four prime rates quoted on the
basis of the actual number of days in the year divided by a 360-day year as of
the close of business on such Prime Rate Interest Determination Date as
furnished in The City of New York by the major money center banks, if any,
that have provided such quotations and by a reasonable number of substitute
banks or trust companies to obtain four such prime rate quotations, provided
such substitute banks or trust companies are organized and doing business
under the laws of the United States, or any State thereof, each having total
equity capital of at least $500 million and being
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subject to supervision or examination by Federal or State authority, selected
by the Calculation Agent to provide such rate or rates; provided, however,
that if the banks or trust companies so selected by the Calculation Agent are
not quoting as mentioned in this sentence, the Prime Rate determined as of
such Prime Rate Interest Determination Date will be the Prime Rate in effect
on such Prime Rate Interest Determination Date.
"Reuters Screen USPRIME1 Page" means the display on the Reuter Monitor Money
Rates Service (or any successor service) on the "USPRIME1" page (or such other
page as may replace the USPRIME1 page on such service) for the purpose of
displaying prime rates or base lending rates of major United States banks.
Treasury Rate. Unless otherwise specified in the applicable Pricing
Supplement, "Treasury Rate" means, with respect to any Interest Determination
Date relating to a Floating Rate Note for which the interest rate is
determined by reference to the Treasury Rate (a "Treasury Rate Interest
Determination Date"), the rate from the auction held on such Treasury Rate
Interest Determination Date (the "Auction") of direct obligations of the
United States ("Treasury Bills") having the Index Maturity specified in the
applicable Pricing Supplement, as such rate is published in H.15(519) under
the heading "Treasury Bills-auction average (investment)" or, if not published
by 3:00 P.M., New York City time, on the related Calculation Date, the auction
average rate of such Treasury Bills (expressed as a bond equivalent on the
basis of a year of 365 or 366 days, as applicable, and applied on a daily
basis) as otherwise announced by the United States Department of the Treasury.
In the event that the results of the Auction of Treasury Bills having the
Index Maturity specified in the applicable Pricing Supplement are not reported
as provided by 3:00 P.M., New York City time, on the related Calculation Date,
or if no such Auction is held, then the Treasury Rate will be calculated by
the Calculation Agent and will be a yield to maturity (expressed as a bond
equivalent on the basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis) of the arithmetic mean of the secondary market bid
rates, as of approximately 3:30 P.M., New York City time, on such Treasury
Rate Interest Determination Date, of three leading primary United States
government securities dealers (which may include the Agents or their
affiliates) selected by the Calculation Agent, for the issue of Treasury Bills
with a remaining maturity closest to the Index Maturity specified in the
applicable Pricing Supplement; provided, however, that if the dealers so
selected by the Calculation Agent are not quoting as mentioned in this
sentence, the Treasury Rate determined as of such Treasury Rate Interest
Determination Date will be the Treasury Rate in effect on such Treasury Rate
Interest Determination Date.
OTHER/ADDITIONAL PROVISIONS; ADDENDUM
Any provisions with respect to the Notes, including the specification and
determination of one or more Interest Rate Bases, the calculation of the
interest rate applicable to a Floating Rate Note, the Interest Payment Dates,
the Maturity Date or any other term relating thereto, may be modified and/or
supplemented as specified under "Other/Additional Provisions" on the face
thereof or in an Addendum relating thereto, if so specified on the face
thereof. Such provisions will be described in the applicable Pricing
Supplement.
AMORTIZING NOTES
The Company may from time to time offer Amortizing Notes. Unless otherwise
specified in the applicable Pricing Supplement, interest on each Amortizing
Note will be computed on the basis of a 360-day year of twelve 30-day months.
Payments with respect to Amortizing Notes will be applied first to interest
due and payable thereon and then to the reduction of the unpaid principal
amount thereof. Further information concerning additional terms and provisions
of Amortizing Notes will be specified in the applicable Pricing Supplement,
including a table setting forth repayment information for such Amortizing
Notes.
ORIGINAL ISSUE DISCOUNT NOTES
The Company may offer Notes ("Original Issue Discount Notes") from time to
time that have an Issue Price (as specified in the applicable Pricing
Supplement) that is less than 100% of the principal amount thereof (i.e. par).
Original Issue Discount Notes may not bear any interest currently or may bear
interest at a rate that is below market rates at the time of issuance. The
difference between the Issue Price of an Original Issue Discount
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Note and par is referred to herein as the "Discount." In the event of
redemption, repayment or acceleration of maturity of an Original Issue
Discount Note, the amount payable to the Holder of such Original Issue
Discount Note will be equal to the sum of (i) the Issue Price (increased by
any accruals of Discount) and, in the event of any redemption of such Original
Issue Discount Note (if applicable), multiplied by the Initial Redemption
Percentage specified in the applicable Pricing Supplement (as adjusted by the
Annual Redemption Percentage Reduction, if applicable) and (ii) any unpaid
interest on such Original Issue Discount Note accrued from the date of issue
to the date of such redemption, repayment or acceleration of maturity, as the
case may be.
Unless otherwise specified in the applicable Pricing Supplement, for
purposes of determining the amount of Discount that has accrued as of any date
on which a redemption, repayment or acceleration of maturity occurs for an
Original Issue Discount Note, such Discount will be accrued using a constant
yield method. The constant yield will be calculated using a 30-day month, 360-
day year convention, a compounding period that, except for the Initial Period
(as hereinafter defined), corresponds to the shortest period between Interest
Payment Dates for the applicable Original Issue Discount Note (with ratable
accruals within a compounding period), a coupon rate equal to the initial
coupon rate applicable to such Original Issue Discount Note and an assumption
that the maturity of such Original Issue Discount Note will not be
accelerated. If the period from the date of issue to the initial Interest
Payment Date for an Original Issue Discount Note (the "Initial Period") is
shorter than the compounding period for such Original Issue Discount Note, a
proportionate amount of the yield for an entire compounding period will be
accrued. If the Initial Period is longer than the compounding period, then
such period will be divided into a regular compounding period and a short
period with the short period being treated as provided in the preceding
sentence. The accrual of the applicable Discount may differ from the accrual
of original issue discount for purposes of the Internal Revenue Code of 1986,
as amended (the "Code"), certain Original Issue Discount Notes may not be
treated as having original issue discount within the meaning of the Code, and
Notes other than Original Issue Discount Notes may be treated as issued with
original issue discount for federal income tax purposes. See "Certain United
States Federal Income Tax Considerations" herein.
BOOK-ENTRY NOTES
The Company has established a depositary arrangement with The Depository
Trust Company with respect to the Book-Entry Notes, the terms of which are
summarized below. Any additional or differing terms of the depositary
arrangement with respect to the Book-Entry Notes will be described in the
applicable Pricing Supplement.
Upon issuance, all Book-Entry Notes up to $200,000,000 aggregate principal
amount bearing interest (if any) at the same rate or pursuant to the same
formula and having the same date of issue, Interest Payment Dates (if any),
Stated Maturity Date, redemption provisions (if any), repayment provisions (if
any) and other terms will be represented by a single Global Security. Each
Global Security representing Book-Entry Notes will be deposited with, or on
behalf of, the Depositary and will be registered in the name of the Depositary
or a nominee of the Depositary. No Global Security may be transferred except
as a whole by a nominee of the Depositary to the Depositary or to another
nominee of the Depositary, or by the Depositary or such nominee to a successor
of the Depositary or a nominee of such successor.
So long as the Depositary or its nominee is the registered owner of a Global
Security, the Depositary or its nominee, as the case may be, will be the sole
Holder of the Book-Entry Notes represented thereby for all purposes under the
Indenture. Except as otherwise provided in this section, the Beneficial Owners
of the Global Security or Securities representing Book-Entry Notes will not be
entitled to receive physical delivery of Certificated Notes and will not be
considered the Holders thereof for any purpose under the Indenture, and no
Global Security representing Book-Entry Notes shall be exchangeable or
transferable. Accordingly, each Beneficial Owner must rely on the procedures
of the Depositary and, if such Beneficial Owner is not a Participant, on the
procedures of the Participant through which such Beneficial Owner owns its
interest in order to exercise any rights of a Holder under such Global
Security or the Indenture. The laws of some jurisdictions require that certain
purchasers of securities take physical delivery of such securities in
certificated form. Such
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limits and such laws may impair the ability to transfer beneficial interests
in a Global Security representing Book-Entry Notes.
Unless otherwise specified in the applicable Pricing Supplement, each Global
Security representing Book-Entry Notes will be exchangeable for Certificated
Notes of like tenor and terms and of differing authorized denominations
aggregating a like principal amount, only if (i) the Depositary notifies the
Company that it is unwilling or unable to continue as Depositary for the
Global Securities, (ii) the Depositary ceases to be a clearing agency
registered under the Exchange Act, (iii) the Company in its sole discretion
determines that the Global Securities shall be exchangeable for Certificated
Notes or (iv) there shall have occurred and be continuing an Event of Default
under the Indenture with respect to the Notes. Upon any such exchange, the
Certificated Notes shall be registered in the names of the Beneficial Owners
of the Global Security or Securities representing Book-Entry Notes, which
names shall be provided by the Depositary's relevant Participants (as
identified by the Depositary) to the Trustee.
The following is based on information furnished by the Depositary:
The Depositary will act as securities depository for the Book-Entry
Notes. The Book-Entry Notes will be issued as fully registered securities
registered in the name of Cede & Co. (the Depositary's partnership
nominee). One fully registered Global Security will be issued for each
issue of Book-Entry Notes, each in the aggregate principal amount of such
issue, and will be deposited with the Depositary. If, however, the
aggregate principal amount of any issue exceeds $200,000,000, one Global
Security will be issued with respect to each $200,000,000 of principal
amount and an additional Global Security will be issued with respect to any
remaining principal amount of such issue.
The Depositary is a limited-purpose trust company organized under the New
York Banking Law, a "banking organization" within the meaning of the New
York Banking Law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code,
and a "clearing agency" registered pursuant to the provisions of Section
17A of the Exchange Act. The Depositary holds securities that its
participants ("Participants") deposit with the Depositary. The Depositary
also facilitates the settlement among Participants of securities
transactions, such as transfers and pledges, in deposited securities
through electronic computerized book-entry changes in Participants'
accounts, thereby eliminating the need for physical movement of securities
certificates. Direct Participants of the Depositary ("Direct Participants")
include securities brokers and dealers (including the Agents), banks, trust
companies, clearing corporations and certain other organizations. The
Depositary is owned by a number of its Direct Participants and by the New
York Stock Exchange, Inc., the American Stock Exchange, Inc., and the
National Association of Securities Dealers, Inc. Access to the Depositary's
system is also available to others such as securities brokers and dealers,
banks and trust companies that clear through or maintain a custodial
relationship with a Direct Participant, either directly or indirectly
("Indirect Participants"). The rules applicable to the Depositary and its
Participants are on file with the Securities and Exchange Commission.
Purchases of Book-Entry Notes under the Depositary's system must be made
by or through Direct Participants, which will receive a credit for such
Book-Entry Notes on the Depositary's records. The ownership interest of
each actual purchaser of each Book-Entry Note represented by a Global
Security ("Beneficial Owner") is in turn to be recorded on the records of
Direct Participants and Indirect Participants. Beneficial Owners will not
receive written confirmation from the Depositary of their purchase, but
Beneficial Owners are expected to receive written confirmations providing
details of the transaction, as well as periodic statements of their
holdings, from the Direct Participants or Indirect Participants through
which such Beneficial Owner entered into the transaction. Transfers of
ownership interests in a Global Security representing Book-Entry Notes are
to be accomplished by entries made on the books of Participants acting on
behalf of Beneficial Owners. Beneficial Owners of a Global Security
representing Book-Entry Notes will not receive Certificated Notes
representing their ownership interests therein, except in the event that
use of the book-entry system for such Book-Entry Notes is discontinued.
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To facilitate subsequent transfers, all Global Securities representing
Book-Entry Notes which are deposited with, or on behalf of, the Depositary
are registered in the name of the Depositary's nominee, Cede & Co. The
deposit of Global Securities with, or on behalf of, the Depositary and
their registration in the name of Cede & Co. effect no change in beneficial
ownership. The Depositary has no knowledge of the actual Beneficial Owners
of the Global Securities representing the Book-Entry Notes; the
Depositary's records reflect only the identity of the Direct Participants
to whose accounts such Book-Entry Notes are credited, which may or may not
be the Beneficial Owners. The Participants will remain responsible for
keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by the Depositary to
Direct Participants, by Direct Participants to Indirect Participants, and
by Direct Participants and Indirect Participants to Beneficial Owners will
be governed by arrangements among them, subject to any statutory or
regulatory requirements as may be in effect from time to time.
Neither the Depositary nor Cede & Co. will consent or vote with respect
to the Global Securities representing the Book-Entry Notes. Under its usual
procedures, the Depositary mails an Omnibus Proxy to the Company as soon as
possible after the applicable record date. The Omnibus Proxy assigns Cede &
Co.'s consenting or voting rights to those Direct Participants to whose
accounts the Book-Entry Notes are credited on the applicable record date
(identified in a listing attached to the Omnibus Proxy).
Principal, premium, if any, and/or interest, if any, payments on the
Global Securities representing the Book-Entry Notes will be made in
immediately available funds to the Depositary. The Depositary's practice is
to credit Direct Participants' accounts on the applicable payment date in
accordance with their respective holdings shown on the Depositary's records
unless the Depositary has reason to believe that it will not receive
payment on such date. Payments by Participants to Beneficial Owners will be
governed by standing instructions and customary practices, as is the case
with securities held for the accounts of customers in bearer form or
registered in "street name", and will be the responsibility of such
Participant and not of the Depositary, the Trustee or the Company, subject
to any statutory or regulatory requirements as may be in effect from time
to time. Payment of principal, premium, if any, and/or interest, if any, to
the Depositary is the responsibility of the Company or the Trustee,
disbursement of such payments to Direct Participants shall be the
responsibility of the Depositary, and disbursement of such payments to the
Beneficial Owners shall be the responsibility of Direct Participants and
Indirect Participants.
If applicable, redemption notices shall be sent to Cede & Co. If less
than all of the Book-Entry Notes within an issue are being redeemed, the
Depositary's practice is to determine by lot the amount of the interest of
each Direct Participant in such issue to be redeemed.
A Beneficial Owner shall give notice of any option to elect to have its
Book-Entry Notes repaid by the Company, through its Participant, to the
Trustee, and shall effect delivery of such Book-Entry Notes by causing the
Direct Participant to transfer the Participant's interest in the Global
Security or Securities representing such Book-Entry Notes, on the
Depositary's records, to the Trustee. The requirement for physical delivery
of Book-Entry Notes in connection with a demand for repayment will be
deemed satisfied when the ownership rights in the Global Security or
Securities representing such Book-Entry Notes are transferred by Direct
Participants on the Depositary's records.
The Depositary may discontinue providing its services as securities
depository with respect to the Book-Entry Notes at any time by giving
reasonable notice to the Company or the Trustee. Under such circumstances,
in the event that a successor securities depository is not obtained,
Certificated Notes are required to be printed and delivered.
The Company may decide to discontinue use of the system of book-entry
transfers through the Depositary (or a successor securities depository). In
that event, Certificated Notes will be printed and delivered.
The information in this section concerning the Depositary and the
Depositary's system has been obtained from sources that the Company believes
to be reliable, but the Company takes no responsibility for the accuracy
thereof.
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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
Set forth below is the opinion of Brown & Wood llp, special tax counsel to
the Company, as to certain United States Federal income tax consequences of
the purchase, ownership and disposition of the Notes. Such opinion is based
upon laws, regulations, rulings and decisions now in effect, all of which are
subject to change (including changes in effective dates) or possible differing
interpretations. It deals only with Notes held as capital assets and does not
purport to deal with persons in special tax situations, such as financial
institutions, insurance companies, regulated investment companies, dealers in
securities or currencies, persons holding Notes as a hedge against currency
risks or as a position in a "straddle" for tax purposes, or persons whose
functional currency is not the United States dollar. It also does not deal
with holders other than original purchasers (except where otherwise
specifically noted). Persons considering the purchase of the Notes should
consult their own tax advisors concerning the application of United States
Federal income tax laws to their particular situations as well as any
consequences of the purchase, ownership and disposition of the Notes arising
under the laws of any other taxing jurisdiction.
As used herein, the term "U.S. Holder" means a beneficial owner of a Note
that is for United States Federal income tax purposes (i) a citizen or
resident of the United States, (ii) a corporation, partnership or other entity
created or organized in or under the laws of the United States or of any
political subdivision thereof, (iii) an estate or trust the income of which is
subject to United States Federal income taxation regardless of its source or
(iv) any other person whose income or gain in respect of a Note is effectively
connected with the conduct of a United States trade or business. As used
herein, the term "non-U.S. Holder" means a beneficial owner of a Note that is
not a U.S. Holder.
U.S. HOLDERS
Payments of Interest
Payments of interest on a Note generally will be taxable to a U.S. Holder as
ordinary interest income at the time such payments are accrued or are received
(in accordance with the U.S. Holder's regular method of tax accounting).
Original Issue Discount
The following summary is a general discussion of the United States Federal
income tax consequences to U.S. Holders of the purchase, ownership and
disposition of Notes issued with original issue discount ("Discount Notes").
The following summary is based upon final Treasury regulations (the "OID
Regulations") released by the Internal Revenue Service ("IRS") on January 27,
1994 under the original issue discount provisions of the Code.
For United States Federal income tax purposes, original issue discount is
the excess of the stated redemption price at maturity of a Note over its issue
price, if such excess equals or exceeds a de minimis amount (generally 1/4 of
1% of the Note's stated redemption price at maturity multiplied by the number
of complete years to its maturity from its issue date or, in the case of a
Note providing for the payment of any amount other than qualified stated
interest (as hereinafter defined) prior to maturity, multiplied by the
weighted average maturity of such Note). The issue price of each Note in an
issue of Notes equals the first price at which a substantial amount of such
Notes has been sold (ignoring sales to bond houses, brokers, or similar
persons or organizations acting in the capacity of underwriters, placement
agents, or wholesalers). The stated redemption price at maturity of a Note is
the sum of all payments provided by the Note other than "qualified stated
interest" payments. The term "qualified stated interest" generally means
stated interest that is unconditionally payable in cash or property (other
than debt instruments of the issuer) at least annually at a single fixed rate.
In addition, under the OID Regulations, if a Note bears interest for one or
more accrual periods at a rate below the rate applicable for the remaining
term of such Note (e.g., Notes with teaser rates or interest holidays), and if
the greater of either the resulting foregone interest on such Note or any
"true" discount on such Note (i.e., the excess of the Note's
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stated principal amount over its issue price) equals or exceeds a specified de
minimis amount, then the stated interest on the Note would be treated as
original issue discount rather than qualified stated interest.
Payments of qualified stated interest on a Note are taxable to a U.S. Holder
as ordinary interest income at the time such payments are accrued or are
received (in accordance with the U.S. Holder's regular method of tax
accounting). A U.S. Holder of a Discount Note must include original issue
discount in income as ordinary interest for United States Federal income tax
purposes as it accrues under a constant yield method in advance of receipt of
the cash payments attributable to such income, regardless of such U.S.
Holder's regular method of tax accounting. In general, the amount of original
issue discount included in income by the initial U.S. Holder of a Discount
Note is the sum of the daily portions of original issue discount with respect
to such Discount Note for each day during the taxable year (or portion of the
taxable year) on which such U.S. Holder held such Discount Note. The "daily
portion" of original issue discount on any Discount Note is determined by
allocating to each day in any accrual period a ratable portion of the original
issue discount allocable to that accrual period. An "accrual period" may be of
any length and the accrual periods may vary in length over the term of the
Discount Note, provided that each accrual period is no longer than one year
and each scheduled payment of principal or interest occurs either on the final
day of an accrual period or on the first day of an accrual period. The amount
of original issue discount allocable to each accrual period is generally equal
to the difference between (i) the product of the Discount Note's adjusted
issue price at the beginning of such accrual period and its yield to maturity
(determined on the basis of compounding at the close of each accrual period
and appropriately adjusted to take into account the length of the particular
accrual period) and (ii) the amount of any qualified stated interest payments
allocable to such accrual period. The "adjusted issue price" of a Discount
Note at the beginning of any accrual period is the sum of the issue price of
the Discount Note plus the amount of original issue discount allocable to all
prior accrual periods minus the amount of any prior payments on the Discount
Note that were not qualified stated interest payments. Under these rules, U.S.
Holders generally will have to include in income increasingly greater amounts
of original issue discount in successive accrual periods.
A U.S. Holder who purchases a Discount Note for an amount that is greater
than its adjusted issue price as of the purchase date and less than or equal
to the sum of all amounts payable on the Discount Note after the purchase date
other than payments of qualified stated interest, will be considered to have
purchased the Discount Note at an "acquisition premium." Under the acquisition
premium rules, the amount of original issue discount which such U.S. Holder
must include in its gross income with respect to such Discount Note for any
taxable year (or portion thereof in which the U.S. Holder holds the Discount
Note) will be reduced (but not below zero) by the portion of the acquisition
premium properly allocable to the period.
Under the OID Regulations, Floating Rate Notes ("Variable Notes") are
subject to special rules whereby a Variable Note will qualify as a "variable
rate debt instrument" if (a) its issue price does not exceed the total
noncontingent principal payments due under the Variable Note by more than a
specified de minimis amount and (b) it provides for stated interest, paid or
compounded at least annually, at current values of (i) one or more qualified
floating rates, (ii) a single fixed rate and one or more qualified floating
rates, (iii) a single objective rate, or (iv) a single fixed rate and a single
objective rate that is a qualified inverse floating rate.
A "qualified floating rate" is any variable rate where variations in the
value of such rate can reasonably be expected to measure contemporaneous
variations in the cost of newly borrowed funds in the currency in which the
Variable Note is denominated. Although a multiple of a qualified floating rate
will generally not itself constitute a qualified floating rate, a variable
rate equal to the product of a qualified floating rate and a fixed multiple
that is greater than zero but not more than 1.35 will constitute a qualified
floating rate. A variable rate equal to the product of a qualified floating
rate and a fixed multiple that is greater than zero but not more than 1.35,
increased or decreased by a fixed rate, will also constitute a qualified
floating rate. In addition, under the OID Regulations, two or more qualified
floating rates that can reasonably be expected to have approximately the same
values throughout the term of the Variable Note (e.g., two or more qualified
floating rates with values within 25 basis points of each other as determined
on the Variable Note's issue date) will be treated as a single qualified
floating rate. Notwithstanding the foregoing, a variable rate that would
otherwise constitute a qualified floating rate but which is subject to one or
more restrictions such as a maximum numerical limitation (i.e., a cap)
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or a minimum numerical limitation (i.e., a floor) may, under certain
circumstances, fail to be treated as a qualified floating rate under the OID
Regulations unless such cap or floor is fixed throughout the term of the Note.
An "objective rate" is a rate that is not itself a qualified floating rate but
which is determined using a single fixed formula and which is based upon (i)
one or more qualified floating rates, (ii) one or more rates where each rate
would be a qualified floating rate for a debt instrument denominated in a
currency other than the currency in which the Variable Note is denominated,
(iii) either the yield or changes in the price of one or more items of
actively traded personal property (other than stock or debt of the issuer or a
related party) or (iv) a combination of objective rates. The OID Regulations
also provide that other variable interest rates may be treated as objective
rates if so designated by the IRS in the future. Despite the foregoing, a
variable rate of interest on a Variable Note will not constitute an objective
rate if it is reasonably expected that the average value of such rate during
the first half of the Variable Note's term will be either significantly less
than or significantly greater than the average value of the rate during the
final half of the Variable Note's term. A "qualified inverse floating rate" is
any objective rate where such rate is equal to a fixed rate minus a qualified
floating rate, as long as variations in the rate can reasonably be expected to
inversely reflect contemporaneous variations in the cost of newly borrowed
funds. The OID Regulations also provide that if a Variable Note provides for
stated interest at a fixed rate for an initial period of less than one year
followed by a variable rate that is either a qualified floating rate or an
objective rate and if the variable rate on the Variable Note's issue date is
intended to approximate the fixed rate (e.g., the value of the variable rate
on the issue date does not differ from the value of the fixed rate by more
than 25 basis points), then the fixed rate and the variable rate together will
constitute either a single qualified floating rate or objective rate, as the
case may be.
If a Variable Note that provides for stated interest at either a single
qualified floating rate or a single objective rate throughout the term thereof
qualifies as a "variable rate debt instrument" under the OID Regulations, then
any stated interest on such Note which is unconditionally payable in cash or
property (other than debt instruments of the issuer) at least annually will
constitute qualified stated interest and will be taxed accordingly. Thus, a
Variable Note that provides for stated interest at either a single qualified
floating rate or a single objective rate throughout the term thereof and that
qualifies as a "variable rate debt instrument" under the OID Regulations will
generally not be treated as having been issued with original issue discount
unless the Variable Note is issued at a "true" discount (i.e., at a price
below the Note's stated principal amount) in excess of a specified de minimis
amount. Original issue discount on such a Variable Note arising from "true"
discount is allocated to an accrual period using the constant yield method
described above by assuming that the variable rate is a fixed rate equal to
(i) in the case of a qualified floating rate or qualified inverse floating
rate, the value as of the issue date, of the qualified floating rate or
qualified inverse floating rate, or (ii) in the case of an objective rate
(other than a qualified inverse floating rate), a fixed rate that reflects the
yield that is reasonably expected for the Variable Note.
In general, any other Variable Note that qualifies as a "variable rate debt
instrument" will be converted into an "equivalent" fixed rate debt instrument
for purposes of determining the amount and accrual of original issue discount
and qualified stated interest on the Variable Note. The OID Regulations
generally require that such a Variable Note be converted into an "equivalent"
fixed rate debt instrument by substituting any qualified floating rate or
qualified inverse floating rate provided for under the terms of the Variable
Note with a fixed rate equal to the value of the qualified floating rate or
qualified inverse floating rate, as the case may be, as of the Variable Note's
issue date. Any objective rate (other than a qualified inverse floating rate)
provided for under the terms of the Variable Note is converted into a fixed
rate that reflects the yield that is reasonably expected for the Variable
Note. In the case of a Variable Note that qualifies as a "variable rate debt
instrument" and provides for stated interest at a fixed rate in addition to
either one or more qualified floating rates or a qualified inverse floating
rate, the fixed rate is initially converted into a qualified floating rate (or
a qualified inverse floating rate, if the Variable Note provides for a
qualified inverse floating rate). Under such circumstances, the qualified
floating rate or qualified inverse floating rate that replaces the fixed rate
must be such that the fair market value of the Variable Note as of the
Variable Note's issue date is approximately the same as the fair market value
of an otherwise identical debt instrument that provides for either the
qualified floating rate or qualified inverse floating rate rather than the
fixed rate. Subsequent to converting the fixed rate into either a qualified
floating rate
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or a qualified inverse floating rate, the Variable Note is then converted into
an "equivalent" fixed rate debt instrument in the manner described above.
Once the Variable Note is converted into an "equivalent" fixed rate debt
instrument pursuant to the foregoing rules, the amount of original issue
discount and qualified stated interest, if any, are determined for the
"equivalent" fixed rate debt instrument by applying the general original issue
discount rules to the "equivalent" fixed rate debt instrument and a U.S.
Holder of the Variable Note will account for such original issue discount and
qualified stated interest as if the U.S. Holder held the "equivalent" fixed
rate debt instrument. Each accrual period appropriate adjustments will be made
to the amount of qualified stated interest or original issue discount assumed
to have been accrued or paid with respect to the "equivalent" fixed rate debt
instrument in the event that such amounts differ from the actual amount of
interest accrued or paid on the Variable Note during the accrual period.
U.S. Holders should be aware that on June 11, 1996, the IRS released final
amendments to the OID Regulations which would slightly modify the definition
of a qualified floating rate, broaden the definition of an objective rate and
would further clarify certain other provisions contained in the OID
Regulations. In general, under these amendments, the definition of a qualified
floating rate is slightly modified such that a variable rate equal to either
(a) the product of a qualified floating rate and a fixed multiple that is
greater than .65 but not more than 1.35 or (b) the product of a qualified
floating rate and a fixed multiple that is greater than .65 but not more than
1.35, increased or decreased by a fixed rate will each constitute a qualified
floating rate. In addition, under these amendments, an objective rate is
redefined as a rate (other than a qualified floating rate) that is determined
using a single fixed formula that is based on objective financial or economic
information. A rate will not qualify as an objective rate if it is based on
information that is within the control of the issuer (or a related party) or
that is unique to the circumstances of the issuer (or a related party), such
as dividends, profits, or the value of the issuer's stock (although a rate
does not fail to be an objective rate merely because it is based on the credit
quality of the issuer). These amendments to the OID Regulations generally
apply to debt instruments issued on or after August 13, 1996.
If a Variable Note does not qualify as a "variable rate debt instrument"
under the OID Regulations, then the Variable Note would be treated as a
contingent payment debt obligation. It is not entirely clear under current law
how a Variable Note would be taxed if such Note were treated as a contingent
payment debt obligation. The proper United States Federal income tax treatment
of Variable Notes that are treated as contingent payment debt obligations will
be more fully described in the applicable Pricing Supplement. Furthermore, any
other special United States Federal income tax considerations, not otherwise
discussed herein, which are applicable to any particular issue of Notes will
be discussed in the applicable Pricing Supplement.
Certain of the Notes (i) may be redeemable at the option of the Company
prior to their stated maturity (a "call option") and/or (ii) may be repayable
at the option of the holder prior to their stated maturity (a "put option").
Notes containing such features may be subject to rules that differ from the
general rules discussed above. Investors intending to purchase Notes with such
features should consult their own tax advisors, since the original issue
discount consequences will depend, in part, on the particular terms and
features of the purchased Notes.
U.S. Holders may generally, upon election, include in income all interest
(including stated interest, acquisition discount, original issue discount, de
minimis original issue discount, market discount, de minimis market discount,
and unstated interest, as adjusted by any amortizable bond premium or
acquisition premium) that accrues on a debt instrument by using the constant
yield method applicable to original issue discount, subject to certain
limitations and exceptions.
Short-Term Notes
Notes that have a fixed maturity of one year or less ("Short-Term Notes")
will be treated as having been issued with original issue discount. In
general, an individual or other cash method U.S. Holder is not required to
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accrue such original issue discount unless the U.S. Holder elects to do so. If
such an election is not made, any gain recognized by the U.S. Holder on the
sale, exchange or maturity of the Short-Term Note will be ordinary income to
the extent of the original issue discount accrued on a straight-line basis, or
upon election under the constant yield method (based on daily compounding),
through the date of sale or maturity, and a portion of the deductions
otherwise allowable to the U.S. Holder for interest on borrowings allocable to
the Short-Term Note will be deferred until a corresponding amount of income is
realized. U.S. Holders who report income for United States Federal income tax
purposes under the accrual method, and certain other holders including banks
and dealers in securities, are required to accrue original issue discount on a
Short-Term Note on a straight-line basis unless an election is made to accrue
the original issue discount under a constant yield method (based on daily
compounding).
Market Discount
If a U.S. Holder purchases a Note, other than a Discount Note, for an amount
that is less than its issue price (or, in the case of a subsequent purchaser,
its stated redemption price at maturity) or, in the case of a Discount Note,
for an amount that is less than its adjusted issue price as of the purchase
date, such U.S. Holder will be treated as having purchased such Note at a
"market discount," unless such market discount is less than a specified de
minimis amount.
Under the market discount rules, a U.S. Holder will be required to treat any
partial principal payment (or, in the case of a Discount Note, any payment
that does not constitute qualified stated interest) on, or any gain realized
on the sale, exchange, retirement or other disposition of, a Note as ordinary
income to the extent of the lesser of (i) the amount of such payment or
realized gain or (ii) the market discount which has not previously been
included in income and is treated as having accrued on such Note at the time
of such payment or disposition. Market discount will be considered to accrue
ratably during the period from the date of acquisition to the maturity date of
the Note, unless the U.S. Holder elects to accrue market discount on the basis
of semiannual compounding.
A U.S. Holder may be required to defer the deduction of all or a portion of
the interest paid or accrued on any indebtedness incurred or maintained to
purchase or carry a Note with market discount until the maturity of the Note
or certain earlier dispositions, because a current deduction is only allowed
to the extent the interest expense exceeds an allocable portion of market
discount. A U.S. Holder may elect to include market discount in income
currently as it accrues (on either a ratable or semiannual compounding basis),
in which case the rules described above regarding the treatment as ordinary
income of gain upon the disposition of the Note and upon the receipt of
certain cash payments and regarding the deferral of interest deductions will
not apply. Generally, such currently included market discount is treated as
ordinary interest for United States Federal income tax purposes. Such an
election will apply to all debt instruments acquired by the U.S. Holder on or
after the first day of the taxable year to which such election applies and may
be revoked only with the consent of the IRS.
Premium
If a U.S. Holder purchases a Note for an amount that is greater than the sum
of all amounts payable on the Note after the purchase date other than payments
of qualified stated interest, such U.S. Holder will be considered to have
purchased the Note with "amortizable bond premium" equal in amount to such
excess. A U.S. Holder may elect to amortize such premium using a constant
yield method over the remaining term of the Note and may offset interest
otherwise required to be included in respect of the Note during any taxable
year by the amortized amount of such excess for the taxable year. However, if
the Note may be optionally redeemed after the U.S. Holder acquires it at a
price in excess of its stated redemption price at maturity, special rules
would apply which could result in a deferral of the amortization of some bond
premium until later in the term of the Note. Any election to amortize bond
premium applies to all taxable debt obligations then owned and thereafter
acquired by the U.S. Holder and may be revoked only with the consent of the
IRS.
S-21
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Disposition of a Note
Except as discussed above, upon the sale, exchange or retirement of a Note,
a U.S. Holder generally will recognize taxable gain or loss equal to the
difference between the amount realized on the sale, exchange or retirement
(other than amounts representing accrued and unpaid interest) and such U.S.
Holder's adjusted tax basis in the Note. A U.S. Holder's adjusted tax basis in
a Note generally will equal such U.S. Holder's initial investment in the Note
increased by any original issue discount included in income (and accrued
market discount, if any, if the U.S. Holder has included such market discount
in income) and decreased by the amount of any payments, other than qualified
stated interest payments, received and amortizable bond premium taken with
respect to such Note. Such gain or loss generally will be long-term capital
gain or loss if the Note were held for more than one year.
NON-U.S. HOLDERS
A non-U.S. Holder will not be subject to United States Federal income taxes
on payments of principal, premium (if any) or interest (including original
issue discount, if any) on a Note, unless such non-U.S. Holder is a direct or
indirect 10% or greater shareholder of the Company, a controlled foreign
corporation related to the Company or a bank receiving interest described in
section 881(c)(3)(A) of the Code. To qualify for the exemption from taxation,
the last United States payor in the chain of payment prior to payment to a
non-U.S. Holder (the "Withholding Agent") must have received in the year in
which a payment of interest or principal occurs, or in either of the two
preceding calendar years, a statement that (i) is signed by the beneficial
owner of the Note under penalties of perjury, (ii) certifies that such owner
is not a U.S. Holder and (iii) provides the name and address of the beneficial
owner. The statement may be made on an IRS Form W-8 or a substantially similar
form, and the beneficial owner must inform the Withholding Agent of any change
in the information on the statement within 30 days of such change. If a Note
is held through a securities clearing organization or certain other financial
institutions, the organization or institution may provide a signed statement
to the Withholding Agent. However, in such case, the signed statement must be
accompanied by a copy of the IRS Form W-8 or the substitute form provided by
the beneficial owner to the organization or institution. The Treasury
Department is considering implementation of further certification requirements
aimed at determining whether the issuer of a debt obligation is related to
holders thereof.
Generally, a non-U.S. Holder will not be subject to Federal income taxes on
any amount which constitutes capital gain upon retirement or disposition of a
Note, provided the gain is not effectively connected with the conduct of a
trade or business in the United States by the non-U.S. Holder. Certain other
exceptions may be applicable, and a non-U.S. Holder should consult its tax
advisor in this regard.
The Notes will not be includible in the estate of a non-U.S. Holder unless
the individual is a direct or indirect 10% or greater shareholder of the
Company or, at the time of such individual's death, payments in respect of the
Notes would have been effectively connected with the conduct by such
individual of a trade or business in the United States.
BACKUP WITHHOLDING
Backup withholding of United States Federal income tax at a rate of 31% may
apply to payments made in respect of the Notes to registered owners who are
not "exempt recipients" and who fail to provide certain identifying
information (such as the registered owner's taxpayer identification number) in
the required manner. Generally, individuals are not exempt recipients, whereas
corporations and certain other entities generally are exempt recipients.
Payments made in respect of the Notes to a U.S. Holder must be reported to the
IRS, unless the U.S. Holder is an exempt recipient or establishes an
exemption. Compliance with the identification procedures described in the
preceding section would establish an exemption from backup withholding for
those non-U.S. Holders who are not exempt recipients.
In addition, upon the sale of a Note to (or through) a broker, the broker
must withhold 31% of the entire purchase price, unless either (i) the broker
determines that the seller is a corporation or other exempt recipient or
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(ii) the seller provides, in the required manner, certain identifying
information and, in the case of a non-U.S. Holder, certifies that such seller
is a non-U.S. Holder (and certain other conditions are met). Such a sale must
also be reported by the broker to the IRS, unless either (i) the broker
determines that the seller is an exempt recipient or (ii) the seller certifies
its non-U.S. status (and certain other conditions are met). Certification of
the registered owner's non-U.S. status would be made normally on an IRS Form
W-8 under penalties of perjury, although in certain cases it may be possible
to submit other documentary evidence.
Any amounts withheld under the backup withholding rules from a payment to a
beneficial owner would be allowed as a refund or a credit against such
beneficial owner's United States Federal income tax provided the required
information is furnished to the IRS.
PLAN OF DISTRIBUTION
Under the terms of the Distribution Agreement (the "Distribution Agreement")
the Notes are being offered on a continuing basis for sale by the Company to
or through NationsBanc Capital Markets, Inc., Donaldson, Lufkin & Jenrette
Securities Corporation, First Union Capital Markets Corp., Morgan Stanley &
Co. Incorporated and William Blair & Company (the "Agents"). The Agents may
purchase Notes, as principals, from the Company from time to time for resale
to investors and other purchasers at varying prices relating to prevailing
market prices at the time of resale as determined by the Agents, or, if so
specified in the applicable Pricing Supplement, for resale at a fixed offering
price. Alternatively, and if agreed to by the Company and an Agent, such agent
may utilize its reasonable efforts on an agency basis to solicit offers to
purchase the Notes at 100% of the principal amount thereof, unless otherwise
specified in the Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, any Note
sold to an Agent as principal will be purchased by such Agent at a price equal
to 100% of the principal amount thereof less a percentage equal to the
commission applicable to any agency sale of a Note of identical maturity. In
connection with any Note sold on any agency basis, the Company will pay to the
related Agent a commission ranging (except as otherwise provided in a Pricing
Supplement with respect to certain Original Issue Discount Notes) from 0.125%
to 0.750% of the principal amount of such Note, depending on its maturity;
provided, however, that commissions with respect to Notes with maturities of
greater than thirty years will be negotiated at the time of sale of such
Notes. In the event that a nationally recognized credit rating agency assigns
a rating to a Note below such agency's lowest investment grade category, the
commission otherwise applicable to the sale of such Note will be increased by
0.125%.
The Agents may sell Notes to any dealer at a discount and, unless otherwise
indicated in the applicable Pricing Supplement, such discount allowed to any
dealer may include all or part of the discount to be received from the
Company. After the initial public offering of Notes to be resold to investors
and other purchasers on a fixed public offering price basis, the public
offering price, concession and discount may be changed.
The Notes may also be sold by the Company directly to investors (other than
broker-dealers) in those jurisdictions in which the Company is permitted to do
so. No commission will be paid on Notes sold directly by the Company.
The Company reserves the right to withdraw, cancel or modify the offer made
hereby without notice and may reject offers in whole or in part (whether
placed directly with the Company or through an Agent). An Agent will have the
right, in its discretion reasonably exercised, to reject in whole or in part
any offer to purchase Notes received by it on an agency basis.
Unless otherwise specified in the applicable Pricing Supplement, payment of
the purchase price of the Notes will be required to be made in immediately
available funds in United States dollars in The City of New York on the date
of settlement. See "Description of Notes--General" herein.
S-23
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Upon issuance, the Notes will not have an established trading market. The
Notes will not be listed on any securities exchange. The Agents may from time
to time purchase and sell Notes in the secondary market, but an Agent is not
obligated to do so, and there can be no assurance that there will be a
secondary market for the Notes or that there will be liquidity in the
secondary market if one develops. From time to time, the Agents may make a
market in the Notes, but the Agents are not obligated to do so and may
discontinue any market-making activity at any time.
An Agent may be deemed to be an "underwriter" within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"). The Company has
agreed to indemnify each Agent against, and to provide contribution with
respect to, certain liabilities (including liabilities under the Securities
Act). The Company has agreed to reimburse the Agents for certain other
expenses.
In the ordinary course of their businesses, the Agents and their affiliates
have engaged and may in the future engage in investment and commercial banking
transactions with the Company and certain of its affiliates. NationsBank,
N.A., an affiliate of NationsBanc Capital Markets, Inc., is the agent bank
under a revolving credit facility with the Company. In addition, such
affiliate currently provides bridge financing to the Company. See "Use of
Proceeds" in the accompanying Prospectus and any applicable Pricing
Supplement.
From time to time, the Company may issue and sell other Securities described
in the accompanying Prospectus, and such sales shall reduce the aggregate
initial offering price of the Notes offered hereby.
S-24
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PROSPECTUS
- ----------
[LOGO OF AIRGAS APPEARS HERE]
$450,000,000
DEBT SECURITIES, PREFERRED STOCK AND COMMON STOCK
Airgas, Inc. ("Airgas" or the "Company") may from time to time offer in one
or more classes or series (i) its unsecured debt securities (the "Debt
Securities"), (ii) shares of its preferred stock, par value $.01 per share
(the "Preferred Stock") or (iii) shares of its common stock, par value $.01
per share (the "Common Stock"), with an aggregate public offering price of up
to $450,000,000 on terms to be determined at the time of offering. The Debt
Securities, Preferred Stock and Common Stock (collectively, the "Offered
Securities") may be offered separately, together or as units, in separate
classes or series in amounts, at prices and on terms to be set forth in a
supplement to this Prospectus (each, a "Prospectus Supplement").
The specific terms of the Offered Securities in respect of which this
Prospectus is being delivered will be set forth in the applicable Prospectus
Supplement and will include, where applicable: (i) in the case of Debt
Securities, the specific title, aggregate principal amount, form (which may be
registered or bearer, or certificated or global), authorized denominations,
maturity, rate (or manner of calculation thereof) and time of payment of
interest, terms for redemption at the option of the Company or repayment at
the option of the Holder, terms for sinking fund payments, terms for
conversion into Preferred Stock or Common Stock, and any initial public
offering price; (ii) in the case of Preferred Stock, the specific title and
stated value, any dividend, liquidation, redemption, conversion, voting and
other rights, and any initial public offering price; and (iii) in the case of
Common Stock, any initial public offering price.
---------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
---------------
The applicable Prospectus Supplement will also contain information, where
applicable, about certain United States federal income tax considerations
relating to, and any listing on a securities exchange of, the Offered
Securities covered by such Prospectus Supplement.
The Offered Securities may be offered directly, through agents designated
from time to time by the Company, or to or through underwriters or dealers or
as provided herein or in the related Prospectus Supplement. If any agents or
underwriters are involved in the sale of any of the Offered Securities, their
names, and any applicable purchase price, fee, commission or discount
arrangement between or among them, will be set forth, or will be calculable
from the information set forth, in the applicable Prospectus Supplement. See
"Plan of Distribution" herein. No Offered Securities may be sold without
delivery of the applicable Prospectus Supplement describing the method and
terms of the offering of such series of Offered Securities.
The date of this Prospectus is August 1, 1996
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). The Registration
Statement, the exhibits and schedules forming a part thereof and the reports,
proxy statements and other information filed by the Company with the
Commission in accordance with the Exchange Act can be inspected and copied at
the Commission's Public Reference Section, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the following regional offices of the Commission: Seven
World Trade Center, 13th Floor, New York, New York 10048 and 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. Copies of such material can be
obtained from the Public Reference Section of the Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. In addition,
certain of the Company's securities are listed on the New York Stock Exchange
and similar information concerning the Company can be inspected and copied at
the offices of the New York Stock Exchange, Inc., 20 Broad Street, New York,
New York 10005.
The Company has filed with the Commission a registration statement (the
"Registration Statement") (of which this Prospectus is a part) under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
Offered Securities. This Prospectus does not contain all of the information
set forth in the Registration Statement, certain portions of which have been
omitted as permitted by the rules and regulations of the Commission.
Statements contained in this Prospectus as to the contents of any contract or
other document are not necessarily complete, and in each instance reference is
made to the copy of such contract or other document filed as an exhibit to the
Registration Statement, each such statement being qualified in all respects by
such reference and the exhibits and schedules thereto. For further information
regarding the Company and the Offered Securities, reference is hereby made to
the Registration Statement and such exhibits and schedules which may be
obtained from the Commission at its principal office in Washington, D.C. upon
payment of the fees prescribed by the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The documents listed below have been filed by the Company under the Exchange
Act with the Commission and are incorporated herein by reference:
a. Annual Report on Form 10-K for the year ended March 31, 1996 as amended
by the Company's Amended Annual Report on Form 10-K/A1 filed on June 26,
1996;
b. Current Report on Form 8-K, filed on May 7, 1996; and
c. Current Report on Form 8-K, filed on June 28, 1996 and as amended by the
Company's Amended Current Report on Form 8-K/A filed on July 11, 1996.
d. Current Report on Form 8-K filed on July 31, 1996.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 and
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offering of the Offered Securities shall be deemed
to be incorporated by reference in this Prospectus and the applicable
Prospectus Supplement and to be part hereof and thereof from the date of
filing such documents. Any statement contained herein or therein or in a
document incorporated or deemed to be incorporated by reference herein or
therein shall be deemed to be modified or superseded for purposes of this
Prospectus and the applicable Prospectus Supplement to the extent that a
statement contained herein or therein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus or the applicable Prospectus Supplement.
Copies of all documents which are incorporated herein by reference (not
including the exhibits to such information, unless such exhibits are
specifically incorporated by reference in such information) will be provided
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without charge to each person, including any beneficial owner of the Offered
Securities, to whom this Prospectus and the applicable Prospectus Supplement
are delivered, upon written or oral request.
THE COMPANY
GENERAL
Airgas is the largest independent distributor of industrial, medical and
specialty gases and related equipment in North America. The Company's
distribution business is conducted through over 500 locations throughout North
America. Principal products distributed include: nitrogen, oxygen, argon,
helium, acetylene, carbon dioxide, nitrous oxide, hydrogen and welding gases
and a variety of medical and specialty gases as well as a wide selection of
name-brand welding equipment, accessories and industrial protective equipment
("hardgoods"). In connection with its gas distribution business, the Company
rents industrial gas cylinders and bulk storage tanks to its customers. The
Company also manufactures and sells acetylene gas as part of its distribution
business. In addition to its distribution business, the Company operates three
manufacturing businesses which produce carbon products, calcium carbide and
nitrous oxide.
THE MARKET
The United States market for industrial gases is approximately $6.5 billion
per year and includes customers from most major industries. Major consumers of
industrial gases, which have the ability to accept large bulk shipments or
pipeline deliveries, account for approximately $3.5 billion of annual sales
and are generally serviced directly by industrial gas producers. This segment
of the market has historically been very capital intensive and requires
significant investment in plant and equipment. The Company focuses on the
remaining $3 billion of annual industrial gas sales which are made to smaller
bulk users and cylinder gas customers. This market generally involves delivery
of liquid product in units of under 3,000 gallons and gaseous product in
cylinders, as opposed to the large bulk market where the minimum delivery size
is often 6,000 gallons or more.
Although the cylinder and small bulk gas segment accounts for less than 5%
of the industry's volume, it represents over 40% of the total value of the
industry's shipments. Cylinder and small bulk gas customers are currently
served by a fragmented distribution system of approximately 1,000
distributors, the majority of which are independently owned. This segment of
the market is less capital intensive than the industrial gas production
business, in part, due to the long useful lives of the fixed assets owned or
acquired, principally cylinders. The cylinder and small bulk gas segment
typically offers higher margins than the bulk gas segment due to the higher
value-added products sold and services provided.
Leveraging off its established distribution network and in order to better
serve its customers, Airgas has also traditionally sold hardgoods through its
distribution branch locations. The total estimated market for such hardgoods
is approximately $3.5 billion annually, resulting in a combined total market
of approximately $6.5 billion for the industrial gas and hardgoods market
segments the Company targets.
BUSINESS STRATEGIES
The Company's principal business strategies include continued profitable
growth through an active acquisition program, selective expansion of its
product lines and providing high value-added products and services at the
lowest possible cost to its customers.
Active Acquisition Program
The industrial gas distribution industry has undergone a period of
consolidation, and since 1986, the Company has acquired over 200 distributors
of industrial gases and related equipment. Airgas believes the industry will
continue to undergo a consolidation process, which it believes will continue
to present it with opportunities to acquire industrial gas distributors. In
addition, the Company believes that its extensive
3
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distribution network and large and diverse customer base positions it to
selectively expand its hardgoods business through new product offerings and
related acquisitions of distributors of industrial safety equipment and other
industrial equipment and supplies. In April 1996 the Company acquired IPCO
Safety Products Company, a $55 million distributor of industrial safety
equipment and supplies, which now forms the basis of the Company's Industrial
Distribution Division ("IDD"). The Company believes IPCO's system of regional
warehouses and telemarketing centers enhances the Company's distribution
infrastructure and will facilitate the growth of sales of safety products and
other industrial supplies to existing customers.
To properly manage acquired gas distribution companies, existing management
is often retained and is motivated through the use of an incentive-driven
compensation system and, in some cases, ownership interests. The president of
a distribution subsidiary is typically a former owner or general manager of
the acquired business or an experienced industrial gas executive recruited by
management. The continuity afforded by retaining key employees of an acquired
business combined with local management is important since the industrial gas
distribution business is local in nature and is dependent upon satisfied
repeat customers.
While managers are given a high degree of autonomy and operating control,
Airgas has developed standardized management reporting and operations review
systems to monitor profitability and internal growth. Operations personnel and
the Company's internal audit department periodically perform in-depth reviews
of subsidiary operations and prepare reports containing, among other things,
recommendations regarding operating efficiencies, financial controls, cost
containment, marketing, personnel and safety. These personnel monitor the
implementation of their recommendations through follow-up systems and visits.
Product Line Expansion
The Company intends to broaden its product line by taking advantage of its
broad distribution network, and through additional acquisitions by its new
IDD. Recent product line additions have included returnable containers,
specialty gases (such as refrigerants and sterilizing gases) and additional
hardgoods (such as industrial safety products, fire protection products and
industrial coatings). The Company believes the selective addition of
complementary product offerings will enable it to better serve its expanding
customer base.
Cost-Effective Provider
The Company believes its acquisition strategy enables it to achieve
economies of scale. Because transportation represents a significant portion of
distributors' costs, rationalizing delivery routes and store locations between
anchor and add-on acquisitions usually provides significant cost savings.
Savings through reduction of overhead at the local level further improves the
profitability of the combined operations. Airgas is able to realize
significant economies of scale integrating new acquisitions, particularly as a
result of defined training, safety, sales and marketing programs, design and
engineering, management information systems, lower cost of capital, greater
purchasing power and reduced costs of regulatory and environmental compliance.
The Company has recently undertaken initiatives to further develop its
industrial gas customer base to selectively include customers which require
large volume supplies of gases, such as nitrogen. For each of these customers,
the Company will enter into a long-term supply contract and will construct an
air separation plant near the customer's facility or facilities. The Company
has entered into agreements with two customers and is constructing two air
separation plants which will begin production during fiscal 1998. In addition,
terms related to the agreements provide for additional sales of cylinder gases
and supplies. The Company has also installed "fast fill" plants where the
Company has developed a sufficient market base to make such plants economical.
Air separation facilities provide for the manufacture of atmospheric gases by
using cryogenic processes to separate air into its principal components
(nitrogen, oxygen and argon); "fast fill" plants provide for high speed, cost
efficient re-filling of gas cylinders. The Company is also taking steps to
reduce the cost of the hardgoods it distributes by reducing its investment in
inventories through the consolidation of vendors and the negotiation of
favorable pricing based on national purchasing arrangements.
4
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PRODUCTS
The Company classifies its operations into two business segments:
distribution and manufacturing. Distribution revenues represented
approximately 96% of total revenues and approximately 93% of operating income
in fiscal 1996. Through its distribution business, Airgas distributes two main
types of products: gases and hardgoods. Of the Company's fiscal 1996
distribution sales, approximately 51% represented the sale of gases and 49%
represented the sale of hardgoods.
Gases
Gases distributed by the Company include oxygen, nitrogen, hydrogen, argon,
helium, acetylene, carbon dioxide, nitrous oxide and specialty gases. These
gases are used in a variety of applications and industries by a large number
of customers in metal processing, metal fabrication, farming, food service and
processing, health care and other industries made up primarily of small
manufacturers as well as larger electronic, chemical, pharmaceutical, consumer
and other companies using various gases in the smaller volumes the Company
provides.
Airgas also has the ability to provide customers with specialty gases
including ultra high purity gases and multiple component gas blends, which
require sensitive analytical equipment to produce. These specialty gases are
blended at over 20 of the Company's specialty gas laboratories located
throughout the United States. While sales of specialty gases are relatively
small as a percentage of total sales, they represent an area of strong growth
potential.
Cylinder and Tank Rentals
The industrial gas industry is locally-oriented and is logistically dictated
by the economies of transporting heavy steel cylinders containing compressed
gases. In order to ensure a steady supply of gas, many customers carry an
inventory of cylinders on site. Since empty cylinders are picked up
periodically and replaced with full cylinders, customers will also typically
have empty cylinders on site. In order to generate a return on their capital
investment, gas distributors such as the Company charge a rental fee for
cylinders at customers' locations, irrespective of whether these cylinders are
full, empty or in inventory. The Company estimates it currently owns over 2.6
million cylinders, of which approximately 80% are in use by customers at any
one time with the remaining 20% held in inventory or in transit.
Hardgoods
To leverage off the sale of its gases and to more effectively utilize its
distribution network, the Company also distributes a wide selection of name-
brand welding equipment, accessories and industrial protective equipment,
including electrode holders, welding wire, cable lugs and connectors, hard
hats, welding helmets, hearing protectors, goggles, face shields, safety
glasses, welding machines and electrodes. Through its IDD, Airgas also
supplies additional complementary hardgood products.
Manufacturing Operations
The Company operates three main manufacturing businesses which produce
carbon products, calcium carbide and nitrous oxide.
CUSTOMERS
The Company sells its products to over 600,000 customers throughout North
America with an average customer invoice of approximately $130, and with no
single customer accounting for more than 0.5% of total sales. While the
Company distributes to a broad array of customers in a diverse mix of
industries, the distribution of industrial gases had historically been to
customers engaged in the business of welding and metal fabrication. As certain
sectors of the economy have grown, such as the electronics and chemicals
industries, and as new
5
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applications for gases have developed, Airgas' gas distribution customer base
has broadened significantly to include businesses in almost every major
industry. For example, the food and beverage industry uses carbon dioxide and
nitrogen; the electronics industry uses oxygen, nitrogen, argon and hydrogen;
the health care industry uses oxygen, nitrogen and nitrous oxide; and the
chemical industry uses nitrogen. A large number of industries also use
specialty gases, including high-purity gases. This broad customer and industry
mix has created a stable base for Airgas to serve, mitigating reliance on any
specific industry and insulating it somewhat from cyclicality.
SUPPLIERS
Airgas purchases the majority of its gases locally from the four main North
American producers of gases (BOC Gases Group, Praxair, Inc., Air Products and
Chemicals, Inc. and Liquid Air Corporation of America) as well as several
regional manufacturers. The Company's distribution subsidiaries generally
maintain one-to two- year supply contracts with these suppliers. Although most
contracts are entered into on a local level, centralized buying power is
achieved through Airgas' national gas purchasing program. These contracts
generally specify price, but not volume, and are standard practice in the gas
distribution industry. Management initiated a national hardgoods procurement
program in fiscal 1993 which has resulted in reduced operating costs in its
hardgoods business.
RECENT DEVELOPMENTS
On June 28, 1996, the Company announced that it had entered into a joint
venture with, and had acquired 45% of the voting capital stock of, National
Welders Supply Company, Inc. ("National Welders"), a major distributor of
industrial, medical and specialty gases and related equipment based in
Charlotte, North Carolina. See the Company's reports described under
subparagraph c. of "Incorporation of Certain Documents By Reference" herein.
On July 26, 1996, Praxair, Inc. ("Praxair") filed suit against the Company in
the Circuit Court of Mobile County, Alabama. The complaint alleges tortious
interference with business or contractual relations by the Company in
connection with the formation of the joint venture with National Welders.
Praxair is seeking compensatory damages in excess of $100 million and punitive
damages. The Company believes that Praxair's claims are without merit and
intends to defend vigorously against such claims.
USE OF PROCEEDS
Unless otherwise described in the applicable Prospectus Supplement, the
Company intends to use the net proceeds from the sale of the Offered
Securities for general corporate purposes.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities are to be issued under an Indenture, dated as of August
1, 1996 (the "Indenture"), between the Company and The Bank of New York, as
Trustee (the "Trustee"). The Indenture has been filed as an exhibit to the
Registration Statement of which this Prospectus is a part and is available for
inspection at the corporate trust office of the Trustee at 101 Barclay Street,
New York, New York 10286 or as described above under "Available Information."
The Indenture is subject to, and governed by, the Trust Indenture Act of 1939,
as amended (the "TIA"). The statements made hereunder relating to the
Indenture and the Debt Securities to be issued thereunder are summaries of
certain provisions thereof and do not purport to be complete and are subject
to, and are qualified in their entirety by reference to, all provisions of the
Indenture and such Debt Securities. All section references appearing herein
are to sections of the Indenture, and capitalized terms used but not defined
herein shall have the respective meanings set forth in the Indenture.
GENERAL
The Debt Securities will be direct, unsecured obligations of the Company and
will rank equally with all other unsecured and unsubordinated indebtedness of
the Company. The Indenture provides that the Debt Securities may be issued
without limit as to aggregate principal amount, in one or more series, in each
case as established from time to time in or pursuant to authority granted by a
resolution of the Board of Directors of the Company or as established in one
or more indentures supplemental to the Indenture. All Debt Securities of one
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series need not be issued at the same time and, unless otherwise provided, a
series may be reopened, without the consent of the Holders of the Debt
Securities of such series, for issuances of additional Debt Securities of such
series (Section 301).
The Indenture provides that there may be more than one Trustee thereunder,
each with respect to one or more series of Debt Securities. Any Trustee under
the Indenture may resign or be removed with respect to one or more series of
Debt Securities, and a successor Trustee may be appointed to act with respect
to such series (Section 608). In the event that two or more persons are acting
as Trustee with respect to different series of Debt Securities, each such
Trustee shall be a Trustee of a trust under the Indenture separate and apart
from the trust administered by any other Trustee (Section 609), and, except as
otherwise indicated herein, any action described herein to be taken by the
Trustee may be taken by each such Trustee with respect to, and only with
respect to, the one or more series of Debt Securities for which it is Trustee
under the Indenture.
Reference is made to the Prospectus Supplement relating to the series of
Debt Securities being offered for the specific terms thereof, including:
(1) the title of such Debt Securities;
(2) the aggregate principal amount of such Debt Securities and any limit
on such aggregate principal amount;
(3) if other than the principal amount thereof, the portion of the
principal amount thereof payable upon declaration of acceleration of
the maturity thereof, or (if applicable) the portion of the principal
amount of such Debt Securities which is convertible into Common Stock
or Preferred Stock, or the method by which any such portion shall be
determined;
(4) the date or dates, or the method for determining such date or dates,
on which the principal of such Debt Securities will be payable;
(5) the rate or rates (which may be fixed or variable), or the method by
which such rate or rates shall be determined, at which such Debt
Securities will bear interest, if any;
(6) the date or dates, or the method for determining such date or dates,
from which any interest will accrue, the Interest Payment Dates on
which any such interest will be payable, the Regular Record Dates for
such Interest Payment Dates, or the method by which any such Date
shall be determined, the Person to whom such interest shall be
payable, and the basis upon which interest shall be calculated if
other than that of a 360-day year of twelve 30-day months;
(7) the place or places where the principal of (and premium, if any) and
interest, if any, on such Debt Securities will be payable, such Debt
Securities may be surrendered for conversion or registration of
transfer or exchange and notices or demands to or upon the Company in
respect of such Debt Securities and the Indenture may be served;
(8) the period or periods within which, the price or prices at which and
the terms and conditions upon which such Debt Securities may be
redeemed, as a whole or in part, at the option of the Company, if the
Company is to have such an option;
(9) the obligation, if any, of the Company to redeem, repay or purchase
such Debt Securities pursuant to any sinking fund or analogous
provision or at the option of a Holder thereof, and the period or
periods within which, the price or prices at which and the terms and
conditions upon which such Debt Securities will be redeemed, repaid or
purchased, as a whole or in part, pursuant to such obligation;
(10) whether the amount of payments of principal of (and premium, if any)
or interest, if any, on such Debt Securities may be determined with
reference to an index, formula or other method (which index, formula
or method may, but need not be, based on a currency, currencies,
currency unit or units or composite currency or currencies) and the
manner in which such amounts shall be determined;
(11) any additions to, modifications of or deletions from the terms of such
Debt Securities with respect to the Events of Default or covenants set
forth in the Indenture;
(12) whether such Debt Securities will be issued in certificated and/or
book-entry form;
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(13) whether such Debt Securities will be in registered or bearer form and,
if in registered form, the denominations thereof if other than $1,000
and any integral multiple thereof and, if in bearer form, the
denominations thereof and terms and conditions relating thereto;
(14) the applicability, if any, of the defeasance and covenant defeasance
provisions of Article XIV of the Indenture;
(15) the terms, if any, upon which such Debt Securities may be convertible
into Common Stock or Preferred Stock of the Company and the terms and
conditions upon which such conversion will be effected, including,
without limitation, the initial conversion price or rate and the
conversion period;
(16) whether and under what circumstances the Company will pay Additional
Amounts as contemplated in the Indenture on such Debt Securities in
respect of any tax, assessment or governmental charge and, if so,
whether the Company will have the option to redeem such Debt
Securities in lieu of making such payment; and
(17) any other terms of such Debt Securities not inconsistent with the
provisions of the Indenture (Section 301).
The Debt Securities may provide for less than the entire principal amount
thereof to be payable upon declaration of acceleration of the maturity thereof
("Original Issue Discount Securities"). If applicable, special U.S. federal
income tax, accounting and other considerations applicable to Original Issue
Discount Securities will be described in the applicable Prospectus Supplement.
The Indenture does not contain any provisions that limit the ability of the
Company to incur indebtedness or to substantially reduce or eliminate the
Company's assets or that afford Holders of the Debt Securities protection in
the event of (i) a highly leveraged or similar transaction involving the
Company, the management of the Company, or any Affiliate of either such party,
(ii) a change of control, or (iii) a reorganization, restructuring, merger or
similar transaction involving the Company that may adversely affect the
Holders of the Debt Securities.
A significant amount of the Company's assets are owned through its
subsidiaries. Therefore, the rights of the Company and its creditors,
including Holders of Debt Securities, to participate in the assets of such
subsidiaries upon the liquidation or recapitalization of such subsidiaries or
otherwise will be subject to the prior claims of such subsidiaries' respective
creditors.
DENOMINATIONS, INTEREST, REGISTRATION AND TRANSFER
Unless otherwise described in the applicable Prospectus Supplement, the Debt
Securities of any series will be issuable in denominations of $1,000 and
integral multiples thereof (Section 302).
Unless otherwise specified in the applicable Prospectus Supplement, the
principal of (and premium, if any) and interest on any series of Debt
Securities will be payable at the corporate trust office of the Trustee,
initially located at 101 Barclay Street, New York, New York 10286, provided
that, at the option of the Company, payment of interest may be made by check
mailed to the address of the Person entitled thereto as it appears in the
Security Register or by wire transfer of funds to such Person at an account
maintained within the United States (Sections 301, 305, 306, 307 and 1002).
Any interest not punctually paid or duly provided for on any Interest
Payment Date with respect to a Debt Security ("Defaulted Interest") will
forthwith cease to be payable to the Holder on the applicable Regular Record
Date and may either be paid to the person in whose name such Debt Security is
registered at the close of business on a special record date (the "Special
Record Date") for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to the Holder of such Debt Security not
less than 10 days prior to such Special Record Date, or may be paid at any
time in any other lawful manner, all as more completely described in the
Indenture.
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Subject to certain limitations imposed upon Debt Securities issued in book-
entry form, the Debt Securities of any series will be exchangeable for other
Debt Securities of the same series and of a like aggregate principal amount
and tenor of different authorized denominations upon surrender of such Debt
Securities at the corporate trust office of the Trustee referred to above. In
addition, subject to certain limitations imposed upon Debt Securities issued
in book-entry form, the Debt Securities of any series may be surrendered for
conversion or registration of transfer or exchange thereof at the corporate
trust office of the Trustee referred to above. Every Debt Security surrendered
for conversion, registration of transfer or exchange shall be duly endorsed or
accompanied by a written instrument of transfer. No service charge will be
made for any registration of transfer or exchange of any Debt Securities, but
the Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith (Section 305). If the
applicable Prospectus Supplement refers to any transfer agent (in addition to
the Trustee) initially designated by the Company with respect to any series of
Debt Securities, the Company may at any time rescind the designation of any
such transfer agent or approve a change in the location through which any such
transfer agent acts, except that the Company will be required to maintain a
transfer agent in each place of payment for such series. The Company may at
any time designate additional transfer agents with respect to any series of
Debt Securities (Section 1002).
Neither the Company nor the Trustee shall be required to (i) issue, register
the transfer of or exchange Debt Securities of any series during a period
beginning at the opening of business 15 days before any selection of Debt
Securities of that series to be redeemed and ending at the close of business
on the day of mailing of the relevant notice of redemption; (ii) register the
transfer of or exchange any Debt Security, or portion thereof, called for
redemption, except the unredeemed portion of any Debt Security being redeemed
in part; or (iii) issue, register the transfer of or exchange any Debt
Security which has been surrendered for repayment at the option of the Holder,
except the portion, if any, of such Debt Security not to be so repaid (Section
305).
MERGER, CONSOLIDATION OR SALE
The Company may consolidate with, or sell, lease or convey all or
substantially all of its assets to, or merge with or into, any other
corporation, provided that (a) either the Company shall be the continuing
corporation, or the successor corporation (if other than the Company) formed
by or resulting from any such consolidation or merger or which shall have
received the transfer of such assets shall expressly assume payment of the
principal of (and premium, if any) and interest on all of the Debt Securities
and the due and punctual performance and observance of all of the covenants
and conditions contained in the Indenture; (b) immediately after giving effect
to such transaction and treating any indebtedness which becomes an obligation
of the Company or any Subsidiary as a result thereof as having been incurred
by the Company or such Subsidiary at the time of such transaction, no Event of
Default under the Indenture, and no event which, after notice or the lapse of
time, or both, would become such an Event of Default, shall have occurred and
be continuing; and (c) an officer's certificate and legal opinion covering
such conditions shall be delivered to the Trustee (Sections 801 and 803).
CERTAIN COVENANTS
Limitation on Liens. For the benefit of each series of Debt Securities
issued under the indenture, the Company will not, nor will it permit any
Restricted Subsidiary (as defined hereafter) to, incur, issue, assume or
guarantee any indebtedness for money borrowed or any other indebtedness
evidenced by notes, bonds, debentures or other similar evidences of
indebtedness for money borrowed (hereinafter called "Debt") other than
guarantees arising in connection with the sale, discount, guarantee or pledge
of notes, chattel mortgages, leases, accounts receivable, trade acceptances
and other paper arising, in the ordinary course of business, out of
installment or conditional sales to or by, or transactions involving title
retention with, distributors, dealers or other customers, of merchandise,
equipment or services, secured by a pledge of, or mortgage, deed of trust or
other lien on, any Principal Property owned by the Company or any Restricted
Subsidiary, or any shares of stock or Debt of any Restricted Subsidiary (such
pledges, mortgages, deeds of trust and other liens being hereinafter called
"Mortgage" or "Mortgages"), except with respect to each series of Debt
Securities any Debt so secured on the date of issuance of such series, without
effectively providing that the Debt Securities of all series (together with,
if the Company shall so determine, any other Debt of the Company or such
Restricted Subsidiary then
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existing or thereafter created which is not subordinate to the Debt
Securities) shall be secured equally and ratably with (or prior to) such
secured Debt, so long as such secured Debt shall be so secured, unless, after
giving effect thereto, the aggregate principal amount of all such secured Debt
which would otherwise be prohibited, plus all Attributable Debt of the Company
and its Restricted Subsidiaries in respect of sale and leaseback transactions
(as defined below) which would otherwise be prohibited by the covenant
limiting sale and leaseback transactions described below would not exceed the
sum of 10% of the Consolidated Net Tangible Assets of the Company and each
then Restricted Subsidiary; provided, however, that these restrictions shall
not apply to, and there shall be excluded from secured Debt in any computation
under these restrictions, Debt secured by: (i) Mortgages to secure
indebtedness of any Restricted Subsidiary to the Company or to another
Restricted Subsidiary; (ii) Mortgages for taxes, assessments or governmental
charges or levies in each case (a) not then due and delinquent or (b) the
validity of which is being contested in good faith by appropriate proceedings,
and materialmen's, mechanics', carriers', workmen's, repairmen's, landlord's
or other like Mortgages, or deposits to obtain the release of such Mortgages;
(iii) Mortgages arising under an order of attachment or distraint or similar
legal process so long as the execution or enforcement thereof is effectively
stayed and the claims secured thereby are being contested in good faith; (iv)
Mortgages to secure public or statutory obligations or to secure payment of
workmen's compensation or to secure performance in connection with tenders,
leases of real property, bids or contracts or to secure (or in lieu of) surety
or appeal bonds and Mortgages made in the ordinary course of business for
similar purposes; (v) Mortgages in favor of the United States of America or
any State thereof, or any department, agency or instrumentality or political
subdivision of the United States of America or any State thereof, or in favor
of any other country, or any political subdivision thereof, to secure partial,
progress, advance or other payments pursuant to any contract or statute
(including Debt of the Pollution Control or Industrial Revenue Bond type) or
to secure any indebtedness incurred for the purpose of financing all or any
part of the purchase price or the cost of construction of the property subject
to such Mortgages; (vi) Mortgages on property (including any lease which
should be capitalized on the lessee's balance sheet in accordance with
generally accepted accounting principles), shares of stock or Debt existing at
the time of acquisition thereof (including acquisition through merger or
consolidation or through purchase or transfer of the properties of a
corporation as an entirety or substantially as an entirety) or to secure the
payment of all or any part of the purchase price or construction cost or
improvement cost thereof or to secure any Debt incurred prior to, at the time
of, or within one year after, the acquisition of such property or shares or
Debt or the completion of any such construction (including any improvements on
an existing property) or the commencement of commercial operation of such
property, whichever is later, for the purpose of financing all or any part of
the purchase price or construction cost thereof; (vii) Mortgages existing at
the date of the Indenture; and (viii) any extension, renewal or replacement
(or successive extensions, renewals or replacements), as a whole or in part,
of any Mortgage referred to in the foregoing clauses (i) to (vii), inclusive;
provided, however, that (a) such extension, renewal or replacement Mortgage
shall be limited to all or a part of the same property, shares of stock or
Debt that secured the Mortgage extended, renewed or replaced (plus
improvements on such property) and (b) the Debt secured by such Mortgage at
such time is not increased.
Limitation on Sales and Leasebacks. For the benefit of each series of Debt
Securities issued under the Indenture, the Company will not, nor will it
permit any Restricted Subsidiary to, enter into any arrangement with any bank,
insurance company or other lender or investor (not including the Company or
any Restricted Subsidiary) or to which any such lender or investor is a party,
providing for the leasing by the Company or any such Restricted Subsidiary for
a period, including renewals in excess of three years, of any Principal
Property owned by the Company or such Restricted Subsidiary which has been or
is to be sold or transferred more than one year after the acquisition thereof
or after the completion of construction and commencement of full operation
thereof, by the Company or any such Restricted Subsidiary to such lender or
investor or to any person to whom funds have been or are to be advanced by
such lender or investor on the security of such Principal Property (herein
referred to as a "sale and leaseback transaction") unless either: (i) the
Company or such Restricted Subsidiary could create Debt secured by a Mortgage
on the Principal Property to be leased back in an amount equal to the
Attributable Debt with respect to such sale and leaseback transaction without
equally and ratably securing the Debt Securities of all series pursuant to the
provisions of the covenant on limitation on liens described above (which
provisions include the exceptions set forth in clauses (i) through (viii) of
such covenant) or (ii) the Company within 270 days after the sale or transfer
shall have been made by the Company or by any
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such Restricted Subsidiary, applies an amount equal to the greater of (a) the
net proceeds of the sale of the Principal Property sold and leased back
pursuant to such arrangement or (b) the fair market value of the Principal
Property so sold and leased back at the time of entering into such arrangement
(as determined by any two of the following: the chairman of the Board of
Directors of the Company, its president, any vice president, its treasurer and
its controller) to (x) the purchase of property, facilities or equipment
(other than the property, facilities or equipment involved in such sale)
having a value at least equal to the net proceeds of such sale or (y) the
retirement of Funded Debt of the Company; provided, however, that the amount
to be applied to the retirement of Funded Debt of the Company shall be reduced
by (a) the principal amount of any Debt Securities of any series (or, if the
Debt Securities of any series are original issue discount Debt Securities,
such portion of the principal amount as may be due and payable with respect to
such series pursuant to a declaration in accordance with the Indenture)
delivered within 270 days after such sale to the Trustee for retirement and
cancellation and (b) the principal amount of Funded Debt, other than the Debt
Securities of any series, voluntarily retired by the Company within 270 days
after such sale. Notwithstanding the foregoing, no retirement referred to in
clause (ii) of the preceding sentence may be effected by payment at maturity
or pursuant to any mandatory sinking fund payment or any mandatory prepayment
provision.
Absence of Other Restrictions. The Indenture does not contain (i) any
restrictions on the declaration of dividends; (ii) any requirements concerning
the maintenance of any asset ratio; or (iii) any requirement for the creation
of maintenance of reserves.
CERTAIN DEFINITIONS APPLICABLE TO COVENANTS
"Attributable Debt" shall mean, as to any particular lease under which the
Company is at the time liable, at any date as of which the amount thereof is
to be determined, the lesser of (i) the fair value of the property subject to
such lease (as determined by certain officers of the Company as set forth in
the Indenture) or (ii) the total net amount of rent required to be paid by the
Company under such lease during the remaining term thereof, discounted from
the respective due dates thereof to such date at the rate of interest per
annum implicit in the terms of such lease, as determined by certain officers
of the Company as set forth in the Indenture, compounded semiannually. The net
amount of rent required to be paid under any such lease for any such period
shall be the amount of the rent payable by the lessee with the respect to such
period, after excluding amounts required to be paid on account of maintenance
and repairs, insurance, taxes, assessment, water rates and similar charges. In
the case of any lease which is terminable by the lessee upon the payment of a
penalty, such net amount shall also include the amount of such penalty, but 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.
"Consolidated Net Tangible Assets" shall mean, as of any date of
determination, the aggregate amount of assets of the entity or entities so
specified (less applicable reserves and other properly deductible items) after
deducting therefrom (i) all current liabilities (excluding any thereof which
are by their terms extendible or renewable at the option of the obligor
thereon to a time more than 12 months after the time as of which the amount
thereof is being computed and excluding current maturities of long-term
indebtedness and capital lease obligations) and (ii) all goodwill, all as
shown in the audited consolidated balance sheet of such entity or entities
contained in the Company's then most recent annual report to stockholders.
"Funded Debt" shall mean all indebtedness for money borrowed having a
maturity of more than 12 months from the date as of which the amount thereof
is to be determined or having a maturity of less than 12 months but by its
terms being renewable or extendible beyond 12 months from such date at the
option of the borrower.
"Principal Property" shall mean any building, structure or other facility,
together with the land upon which it is erected and fixtures comprising a part
thereof, used primarily for conducting the operations of the Company or a
Subsidiary and located in the United States of America.
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"Restricted Subsidiary" shall mean (i) each Subsidiary of the Company as of
the date of the Indenture and (ii) each Subsidiary that became such after the
date of the Indenture; provided, however, that at any time the Company shall
have the right, by notice to the Trustee, to exclude from this definition one
or more Subsidiaries if (x) after giving effect to such exclusion, the Company
would be permitted to issue at least one dollar of secured Debt without
providing that the Debt Securities of all series be secured equally and
ratably with (or prior to) such Debt and (y) the aggregate Consolidated Net
Tangible Assets represented by such excluded Subsidiaries (and all such
Subsidiaries previously so excluded) at the time of exclusion does not exceed
ten percent of the current Consolidated Net Tangible Assets of the Company and
its Restricted Subsidiaries.
"Subsidiary" shall mean any corporation of which at least a majority of the
outstanding stock having by the terms thereof ordinary voting power for the
election of directors of such corporation (irrespective of whether or not at
the time stock of any other class or classes of such corporation shall have or
might have voting power by reason of the happening of any contingency) is at
the time directly or indirectly owned by the Company, or by one or more other
Subsidiaries, or by the Company and one or more other Subsidiaries.
EVENTS OF DEFAULT, NOTICE AND WAIVER
The Indenture provides that the following events are "Events of Default"
with respect to any series of Debt Securities issued thereunder: (a) default
for 10 days in the payment of any installment of interest on any Debt Security
of such series; (b) default in the payment of the principal of (or premium, if
any, on) any Debt Security of such series at its Maturity; (c) default in
making any sinking fund payment as required for any Debt Security of such
series; (d) default in the performance of any other covenant of the Company
contained in the Indenture (other than a covenant added to the Indenture
solely for the benefit of a series of Debt Securities issued thereunder other
than such series), continued for 90 days after written notice as provided in
the Indenture; (e) default in the payment of an aggregate principal amount
exceeding $25,000,000 of any evidence of indebtedness of the Company or any
mortgage, indenture or other instrument under which such indebtedness is
issued or by which such indebtedness is secured, such default having occurred
after the expiration of any applicable grace period and having resulted in the
acceleration of the maturity of such indebtedness, but only if such
indebtedness is not discharged or such acceleration is not rescinded or
annulled within 30 days after written notice as provided in the Indenture; (f)
certain events of bankruptcy, insolvency or reorganization, or court
appointment of a receiver, liquidator or trustee of the Company or any
Significant Subsidiary or either of its property; and (g) any other Event of
Default provided with respect to a particular series of Debt Securities
(Section 501). The term "Significant Subsidiary" means each significant
subsidiary (as defined in Regulation S-X promulgated under the Securities Act)
of the Company.
If an Event of Default under the Indenture with respect to Debt Securities
of any series at the time Outstanding (as such term is defined in the
Indenture) occurs and is continuing, then in every such case the Trustee or
the Holders of not less than 25% in principal amount of the Outstanding Debt
Securities of that series may declare the principal amount (or, if the Debt
Securities of that series are Original Issue Discount Securities or Indexed
Securities, such portion of the principal amount as may be specified in the
terms thereof) of all of the Debt Securities of that series to be due and
payable immediately by written notice thereof to the Company (and to the
Trustee if given by the Holders). However, at any time after such a
declaration of acceleration with respect to Debt Securities of such series (or
of all Debt Securities then Outstanding under the Indenture, as the case may
be) has been made, but before a judgment or decree for payment of the money
due has been obtained by the Trustee, the Holders of not less than a majority
in principal amount of Outstanding Debt Securities of such series (or of all
Debt Securities then Outstanding under the Indenture, as the case may be) may
rescind and annul such declaration and its consequences if (a) the Company
shall have deposited with the Trustee all required payments of the principal
of (and premium, if any) and interest on the Debt Securities of such series
(or of all Debt Securities then Outstanding under the Indenture, as the case
may be), plus certain fees, expenses, disbursements and advances of the
Trustee and (b) all Events of Default, other than the non-payment of
accelerated principal (or specified portion thereof), with respect to Debt
Securities of such series (or of all Debt Securities then Outstanding under
the Indenture, as the case may be) have been cured or waived as provided in
the Indenture (Section 502). The Indenture also provides that the Holders of
not less than a majority in principal amount of the Outstanding Debt
Securities of any series (or of all Debt Securities then Outstanding under the
Indenture, as the
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case may be) may waive any past default with respect to such series and its
consequences, except a default (x) in the payment of the principal of (or
premium, if any) or interest on any Debt Security of such series or (y) in
respect of a covenant or provision contained in the Indenture that cannot be
modified or amended without the consent of the Holder of each Outstanding Debt
Security affected thereby (Section 513).
The Trustee is required to give notice to the Holders of Debt Securities
within 90 days of a default under the Indenture; provided, however, that the
Trustee may withhold notice to the Holders of any series of Debt Securities of
any default with respect to such series (except a default in the payment of
the principal of (or premium, if any) or interest on any Debt Security of such
series or in the payment of any sinking fund installment in respect of any
Debt Security of such series) if the Responsible Officers of the Trustee
consider such withholding to be in the interest of such Holders (Section 601).
The Indenture provides that no Holders of Debt Securities of any series may
institute any proceedings, judicial or otherwise, with respect to the
Indenture or for any remedy thereunder, except in the case of failure of the
Trustee, for 60 days, to act after it has received a written request to
institute proceedings in respect of an Event of Default from the Holders of
not less than 25% in principal amount of the Outstanding Debt Securities of
such series, as well as an offer of indemnity reasonably satisfactory to it
(Section 507). This provision will not prevent, however, any Holder of Debt
Securities from instituting suit for the enforcement of payment of the
principal of (and premium, if any) and interest on such Debt Securities at the
respective due dates thereof (Section 508).
Subject to provisions in the Indenture relating to its duties in case of
default, the Trustee is under no obligation to exercise any of its rights or
powers under the Indenture at the request or direction of any Holders of any
series of Debt Securities then Outstanding under the Indenture, unless such
Holders shall have offered to the Trustee reasonable security or indemnity
(Section 602). The Holders of not less than a majority in principal amount of
the Outstanding Debt Securities of any series (or of all Debt Securities then
Outstanding under the Indenture, as the case may be) shall have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or of exercising any trust or power conferred upon
the Trustee. However, the Trustee may refuse to follow any direction which is
in conflict with any law or the Indenture, which may involve the Trustee in
personal liability or which may be unduly prejudicial to the Holders of Debt
Securities of such series not joining therein (Section 512).
Within 120 days after the close of each fiscal year, the Company must
deliver to the Trustee a certificate, signed by one of several specified
officers, stating whether or not such officer has knowledge of any default
under the Indenture and, if so, specifying each such default and the nature
and status thereof (Section 1010).
MODIFICATION
Modifications and amendments of the Indenture and Debt Securities may be
made only with the consent of the Holders of not less than a majority in
principal amount of all Outstanding Debt Securities which are affected by such
modification or amendment; provided, however, that no such modification or
amendment may, without the consent of the Holder of each such Debt Security
affected thereby, (a) change the Stated Maturity of the principal of, or any
installment of interest (or premium, if any) on, any such Debt Security; (b)
reduce the principal amount of, or the rate or amount of interest on, or any
premium payable on redemption of, any such Debt Security, or reduce the amount
of principal of an Original Issue Discount Security that would be due and
payable upon declaration of acceleration of the maturity thereof or would be
provable in bankruptcy, or adversely affect any right of repayment of the
Holder of any such Debt Security; (c) change the Place of Payment, or the coin
or currency, for payment of principal of (or premium, if any) or interest on
any such Debt Security; (d) impair the right to institute suit for the
enforcement of any payment on or with respect to any such Debt Security; (e)
reduce the above-stated percentage of Outstanding Debt Securities of any
series necessary to modify or amend the Indenture, to waive compliance with
certain provisions thereof or certain defaults and consequences thereunder or
to reduce the quorum or voting requirements set forth in the Indenture; or (f)
modify any of the foregoing provisions or any of the provisions relating to
the waiver of certain past defaults or certain covenants,
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except to increase the required percentage to effect such action or to provide
that certain other provisions may not be modified or waived without the
consent of the Holder of such Debt Security (Section 902).
The Holders of not less than a majority in principal amount of Outstanding
Debt Securities have the right to waive compliance by the Company with certain
covenants in the Indenture (Section 1013).
Modifications and amendments of the Indenture may be made by the Company and
the Trustee without the consent of any Holder of Debt Securities for any of
the following purposes: (i) to evidence the succession of another Person to
the Company as obligor under the Indenture; (ii) to add to the covenants of
the Company for the benefit of the Holders of all or any series of Debt
Securities or to surrender any right or power conferred upon the Company in
the Indenture; (iii) to add Events of Default for the benefit of the Holders
of all or any series of Securities; (iv) to add or change any provisions of
the Indenture to facilitate the issuance of, or to liberalize certain terms
of, Debt Securities in bearer form, or to permit or facilitate the issuance of
Debt Securities in uncertificated form, provided that such action shall not
adversely affect the interests of the Holders of the Debt Securities of any
series in any material respect; (v) to change or eliminate any provisions of
the Indenture, provided that any such change or elimination shall become
effective only when there are no Debt Securities Outstanding of any series
created prior thereto which are entitled to the benefit of such provision;
(vi) to secure the Debt Securities; (vii) to establish the form or terms of
Debt Securities of any series, including the provisions and procedures, if
applicable, for the conversion of such Debt Securities into Common Stock or
Preferred Stock of the Company; (viii) to provide for the acceptance of
appointment by a successor Trustee or facilitate the administration of the
trusts under the Indenture by more than one Trustee; (ix) to cure any
ambiguity, defect or inconsistency in the Indenture, provided that such action
shall not adversely affect the interests of Holders of Debt Securities of any
series in any material respect; or (x) to supplement any of the provisions of
the Indenture to the extent necessary to permit or facilitate defeasance and
discharge of any series of such Debt Securities, provided that such action
shall not adversely affect the interests of the Holders of the Debt Securities
of any series in any material respect (Section 901).
The Indenture provides that in determining whether the Holders of the
requisite principal amount of Outstanding Debt Securities of a series have
given any request, demand, authorization, direction, notice, consent or waiver
thereunder or whether a quorum is present at a meeting of Holders of Debt
Securities, (i) the principal amount of an Original Issue Discount Security
that shall be deemed to be outstanding shall be the amount of the principal
thereof that would be due and payable as of the date of such determination
upon declaration of acceleration of the maturity thereof, (ii) the principal
amount of an Indexed Security that shall be deemed outstanding shall be the
principal face amount of such Indexed Security at original issuance, unless
otherwise provided with respect to such Indexed Security pursuant to Section
301 of the Indenture, and (iii) Debt Securities owned by the Company or any
other obligor upon the Debt Securities or any Affiliate of the Company or of
such other obligor shall be disregarded (Section 101).
The Indenture contains provisions for convening meetings of the Holders of
Debt Securities of a series (Section 1501). A meeting may be called at any
time by the Trustee, and also, upon request, by the Company or the Holders of
at least 10% in principal amount of the Outstanding Debt Securities of such
series, in any such case upon notice given as provided in the Indenture
(Section 1502). Except for any consent that must be given by the Holder of
each Debt Security affected by certain modifications and amendments of the
Indenture, any resolution presented at a meeting or adjourned meeting duly
reconvened at which a quorum is present may be adopted by the affirmative vote
of the Holders of a majority in principal amount of the Outstanding Debt
Securities of that series; provided, however, that, except as referred to
above, any resolution with respect to any request, demand, authorization,
direction, notice, consent, waiver or other action that may be made, given or
taken by the Holders of a specified percentage, which is less than a majority,
in principal amount of the Outstanding Debt Securities of a series may be
adopted at a meeting or adjourned meeting duly reconvened at which a quorum is
present by the affirmative vote of the Holders of such specified percentage in
principal amount of the Outstanding Debt Securities of that series. Any
resolution passed or decision taken at any meeting of
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Holders of Debt Securities of any series duly held in accordance with the
Indenture will be binding on all Holders of Debt Securities of that series.
The quorum at any meeting called to adopt a resolution, and at any reconvened
meeting, will be Persons holding or representing a majority in principal
amount of the Outstanding Debt Securities of a series; provided, however, that
if any action is to be taken at such meeting with respect to a consent or
waiver which may be given by the Holders of not less than a specified
percentage in principal amount of the Outstanding Debt Securities of a series,
the Persons holding or representing such specified percentage in principal
amount of the Outstanding Debt Securities of such series will constitute a
quorum (Section 1504).
Notwithstanding the foregoing provisions, if any action is to be taken at a
meeting of Holders of Debt Securities of any series with respect to any
request, demand, authorization, direction, notice, consent, waiver or other
action that the Indenture expressly provides may be made, given or taken by
the Holders of a specified percentage in principal amount of all Outstanding
Debt Securities affected thereby, or of the Holders of such series and one or
more additional series: (i) there shall be no minimum quorum requirement for
such meeting and (ii) the principal amount of the Outstanding Debt Securities
of such series that vote in favor of such request, demand, authorization,
direction, notice, consent, waiver or other action shall be taken into account
in determining whether such request, demand, authorization, direction, notice,
consent, waiver or other action has been made, given or taken under the
Indenture (Section 1504).
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
The Company 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
irrevocably depositing with the Trustee, in trust, funds in such currency or
currencies, currency unit or units or composite currency or currencies in
which such Debt Securities are payable in an amount sufficient to pay the
entire indebtedness on such Debt Securities in respect of principal (and
premium, if any) and interest to the date of such deposit (if such Debt
Securities have become due and payable) or to the Stated Maturity or
Redemption Date, as the case may be (Section 401).
The Indenture provides that, if the provisions of Article Fourteen are made
applicable to the Debt Securities of or within any series pursuant to Section
301 of the Indenture, the Company may elect either (a) to defease and be
discharged from any and all obligations with respect to such Debt Securities
(except for the obligation to pay Additional Amounts, if any, upon the
occurrence of certain events of tax, assessment or governmental charge with
respect to payments on such Debt Securities and the 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 in respect of such Debt Securities and to hold moneys for payment in
trust) ("defeasance") (Section 1402) or (b) to be released from its
obligations with respect to such Debt Securities under Sections 1004 to 1009,
inclusive, and the restrictions described under "Certain Covenants" herein or,
if provided pursuant to Section 301 of the Indenture, its obligations with
respect to any other covenant, and any omission to comply with such
obligations shall not constitute a default or an Event of Default with respect
to such Debt Securities ("covenant defeasance") (Section 1403), in either case
upon the irrevocable deposit by the Company with the Trustee, in trust, of an
amount, in such currency or currencies, currency unit or units or composite
currency or currencies 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 (and premium, if any) and interest on such
Debt Securities, and any mandatory sinking fund or analogous payments thereon,
on the scheduled due dates therefor.
Such a trust may only be established if, among other things, the Company 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 U.S. federal income tax purposes as a result of such
defeasance or covenant
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defeasance and will be subject to U.S. 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 ruling
of the Internal Revenue Service or a change in applicable United States
federal income tax law occurring after the date of the Indenture (Section
1404).
"Government Obligations" means securities which are (i) direct obligations
of the United States of America, for the payment of which its full faith and
credit is pledged or (ii) obligations of a Person controlled or supervised by
and acting as an agency or instrumentality of the United States of America,
the payment of which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America, which are not callable or
redeemable at the option of the issuer 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 any such Government Obligation held by such custodian for the
account of the holder of a 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 in respect of the Government Obligation or the
specific payment of interest on or principal of the Government Obligation
evidenced by such depository receipt (Section 101).
CONVERSION RIGHTS
The terms and conditions, if any, upon which the Debt Securities are
convertible into other Debt Securities, Common Stock or Preferred Stock will
be set forth in the applicable Prospectus Supplement relating thereto. Such
terms will include whether such Debt Securities are convertible into other
Debt Securities, Common Stock or Preferred Stock, the conversion price (or
manner of calculation thereof), the conversion period, provisions as to
whether conversion will be at the option of the Holders or the Company, the
events requiring an adjustment of the conversion Price and provisions
affecting conversion in the event of the redemption of such Debt Securities.
GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more global securities (the "Global Securities") that will be
deposited with, or on behalf of, a depositary (the "Depositary") identified in
the applicable Prospectus Supplement relating to such series. Global
Securities may be issued in either registered or bearer form and in either
temporary or permanent form. The specific terms of the depositary arrangement
with respect to a series of Debt Securities will be described in the
applicable Prospectus Supplement relating to such series.
DESCRIPTION OF COMMON STOCK
The Company has the authority to issue 200,000,000 shares of common stock,
par value $.01 per share. At June 30, 1996, the Company had outstanding
64,320,845 shares of common stock.
The following description of the Common Stock sets forth certain general
terms and provisions of the Common Stock to which any Prospectus Supplement
may relate, including a Prospectus Supplement providing that Common Stock will
be issuable upon conversion of Debt Securities or Preferred Stock of the
Company. The statements below describing the Common Stock are in all respects
subject to and qualified in their entirety by reference to the applicable
provisions of the Company's Amended and Restated Certificate of Incorporation
and Bylaws.
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Holders of the Company's Common Stock will be entitled to receive dividends
when, as and if declared by the Board of Directors of the Company, out of
assets legally available therefor. Payment and declaration of dividends on the
Common Stock and purchases of shares thereof by the Company may be subject to
certain restrictions if the Company fails to pay dividends on the preferred
stock. See "Description of Preferred Stock" herein. Upon any liquidation,
dissolution or winding up of the Company, holders of Common Stock will be
entitled to share equally and ratably in any assets available for distribution
to them, after payment or provision for payment of the debts and other
liabilities of the Company and the preferential amounts owing with respect to
any outstanding preferred stock. The Common Stock will possess ordinary voting
rights for the election of directors and in respect of other corporate
matters, with each share entitling the holder thereof to one vote. Holders of
shares of Common Stock will not have preemptive rights, which means they have
no right to acquire any additional shares of Common Stock that may be issued
by the Company at a subsequent date. The Common Stock will, when issued, be
fully paid and nonassessable and will not be subject to preemptive or similar
rights.
As a corporation under the laws of the State of Delaware, the Company is
subject to Section 203 of the Delaware General Corporation Law, which
restricts certain business combinations between the Company and an "interested
stockholder" (in general, a stockholder owning 15% or more of the Company's
outstanding voting stock) or such stockholder's affiliates or associates for a
period of three years following the date on which the stockholder becomes an
"interested stockholder." The restrictions do not apply if (i) prior to an
interested stockholder becoming such, the Board of Directors approves either
the business combination or the transaction in which the stockholder becomes
an interested stockholder, (ii) upon consummation of the transaction in which
such stockholder becomes an interested stockholder, such interested
stockholder owns at least 85% of the voting stock of the Company outstanding
at the time the transaction commenced (excluding shares owned by certain
employee stock ownership plans and persons who are both directors and officers
of the Company), or (iii) on or subsequent to the date an interested
stockholder becomes such, the business combination is both approved by the
Board of Directors and authorized at an annual or special meeting of the
Company's stockholders (and not by written consent) by the affirmative vote of
at least 66 2/3% of the outstanding voting stock not owned by the interested
stockholder. The Company's Amended and Restated Certificate of Incorporation
also includes a provision requiring the affirmative vote of at least 67% of
the outstanding voting stock for certain business combinations involving an
interested stockholder, except under the circumstances provided therein. For
purposes of such provisions, an "interested stockholder" means generally a
stockholder owning 20% or more of the outstanding voting stock of the Company
or an affiliate of the Company that, at any time within the two year period
preceding the related business combination, held 20% of the outstanding voting
stock of the Company. In addition, the Company's Amended and Restated
Certificate of Incorporation requires the affirmative vote of a majority of
the outstanding shares of capital stock of the Company for the purchase by the
Company of its equity securities (as defined in such Amended and Restated
Certificate of Incorporation) from any interested stockholder (as defined in
the preceding sentence) who has beneficially owned such securities for less
than a two year period.
DESCRIPTION OF PREFERRED STOCK
The Company is authorized to issue 20,000,000 shares of preferred stock, par
value $.01 per share. As of June 30, 1996, no shares of preferred stock of the
Company were outstanding.
Under the Company's Amended and Restated Certificate of Incorporation, the
Board of Directors may from time to time establish and issue one or more
classes or series of preferred stock and fix the designations, powers,
preferences and rights of the shares of such classes or series and the
qualifications, limitations or restrictions thereon, including, but not
limited to, the fixing of the dividend rights, dividend rate or rates,
conversion rights, voting rights, rights and terms of redemption (including
sinking fund provisions) and the liquidation preferences.
The following description of the Preferred Stock sets forth certain general
terms and provisions of the Preferred Stock to which any Prospectus Supplement
may relate. The statements below describing the Preferred Stock are in all
respects subject to and qualified in their entirety by reference to the
applicable provisions of the
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Company's Amended and Restated Certificate of Incorporation (including the
applicable articles supplementary) and Bylaws.
GENERAL
Subject to limitations prescribed by Delaware law and the Company's Amended
and Restated Certificate of Incorporation, the Board of Directors is
authorized to fix the number of shares constituting each class or series of
Preferred Stock and the designations and powers, preferences and relative,
participating, optional or other special rights and qualifications,
limitations or restrictions thereof, including such provisions as may be
desired concerning voting, redemption, dividends, dissolution or the
distribution of assets, conversion or exchange, and such other subjects or
matters as may be fixed by resolution of the Board of Directors or duly
authorized committee thereof. The Preferred Stock will, when issued, be fully
paid and nonassessable and will not have, or be subject to, any preemptive or
similar rights.
Reference is made to the Prospectus Supplement relating to the class or
series of Preferred Stock offered thereby for specific terms, including:
(1) The class or series, title and stated value of such Preferred Stock;
(2) The number of shares of such Preferred Stock offered, the liquidation
preference per share and the offering price of such Preferred Stock;
(3) The dividend rate(s), period(s) and/or payment date(s) or method(s) of
calculation thereof applicable to such Preferred Stock;
(4) Whether dividends on such Preferred Stock shall be cumulative or not
and, if cumulative, the date from which dividends on such Preferred
Stock shall accumulate;
(5) The procedures for any auction and remarketing, if any, for such
Preferred Stock;
(6) Provisions for a sinking fund, if any, for such Preferred Stock;
(7) Provisions for redemption, if applicable, of such Preferred Stock;
(8) Any listing of such Preferred Stock on any securities exchange;
(9) The terms and conditions, if applicable, upon which such Preferred
Stock will be convertible into Common Stock of the Company, including
the conversion price (or manner of calculation thereof);
(10) A discussion of certain federal income tax considerations applicable
to such Preferred Stock; and
(11) Any other material terms, preferences, rights, limitations or
restrictions of such Preferred Stock.
RANK
Unless otherwise specified in the Prospectus Supplement, the Preferred Stock
will, with respect to (as applicable) dividend rights and rights upon
liquidation, dissolution or winding up of the Company, rank (i) senior to all
classes or series of common stock of the Company and to all equity securities
of the Company the terms of which provide that such equity securities are
subordinated to the Preferred Stock; (ii) on a parity with all equity
securities of the Company other than those referred to in clause (i); and
(iii) junior to all equity securities of the Company which the terms of such
Preferred Stock provide will rank senior to it.
DIVIDENDS
Holders of shares of the Preferred Stock of each class or series shall be
entitled to receive, when, as and if declared by the Board of Directors of the
Company, out of assets of the Company legally available for payment, cash
dividends at such rates and on such dates as will be set forth in the
applicable Prospectus Supplement. Each such dividend shall be payable to
holders of record as they appear on the stock transfer books of the Company on
such record dates as shall be fixed by the Board of Directors of the Company.
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Dividends on any class or series of the Preferred Stock may be cumulative or
non-cumulative, as provided in the applicable Prospectus Supplement.
Dividends, if cumulative, will accumulate from and after the date set forth in
the applicable Prospectus Supplement. If the Board of Directors of the Company
fails to declare a dividend payable on a dividend payment date on any class or
series of the Preferred Stock for which dividends are noncumulative, then the
holders of such class or series of the Preferred Stock will have no right to
receive a dividend in respect of the dividend period ending on such dividend
payment date, and the Company will have no obligation to pay the dividend
accrued for such period whether or not dividends on such class or series are
declared payable on any future dividend payment date.
If any shares of the Preferred Stock of any class or series are outstanding,
no full dividends shall be declared or paid or set apart for payment on the
preferred stock of the Company of any other class or series ranking, as to
dividends, on a parity with or junior to the Preferred Stock of such class or
series for any period unless (i) if such class or series of Preferred Stock
has a cumulative dividend, full cumulative dividends have been or
contemporaneously are declared and paid or declared and a sum sufficient for
the payment thereof set apart for such payment on the Preferred Stock of such
class or series for all past dividend periods and the then current dividend
period or (ii) if such class or series of Preferred Stock does not have a
cumulative dividend, full dividends for the then current dividend period have
been or contemporaneously are declared and paid or declared and a sum
sufficient for the payment thereof set apart for such payment on the Preferred
Stock of such class or series. When dividends are not paid in full (or a sum
sufficient for such full payment is not so set apart) upon the shares of
Preferred Stock of any class or series and the shares of any other class or
series of preferred stock ranking on a parity as to dividends with the
Preferred Stock of such class or series, all dividends declared upon shares of
Preferred Stock of such class or series and any other class or series of
preferred stock ranking on a parity as to dividends with such Preferred Stock
shall be declared pro rata so that the amount of dividends declared per share
on the Preferred Stock of such class or series and such other class or series
of preferred stock shall in all cases bear to each other the same ratio that
accrued and unpaid dividends per share on the shares of Preferred Stock of
such class or series (which shall not include any accumulation in respect of
unpaid dividends for prior dividend periods if such Preferred Stock does not
have a cumulative dividend) and such other class or series of preferred stock
bear to each other. No interest, or sum of money in lieu of interest, shall be
payable in respect of any dividend payment or payments on Preferred Stock of
such series which may be in arrears.
Except as provided in the immediately preceding paragraph, unless (i) if
such class or series of Preferred Stock has a cumulative dividend, full
cumulative dividends on the Preferred Stock of such class or series have been
or contemporaneously are declared and paid or declared and a sum sufficient
for the payment thereof set apart for payment for all past dividend periods
and the then current dividend period and (ii) if such class or series of
Preferred Stock does not have a cumulative dividend, full dividends on the
Preferred Stock of such class or series have been or contemporaneously are
declared and paid or declared and a sum sufficient for the payment thereof set
aside for payment for the then current dividend period, no dividends (other
than in common stock or other stock ranking junior to the Preferred Stock of
such class or series as to dividends and upon liquidation, dissolution or
winding up of the Company) shall be declared or paid or set aside for payment
or other distribution shall be declared or made upon the common stock or any
other stock of the Company ranking junior to or on a parity with the Preferred
Stock of such class or series as to dividends or upon liquidation, nor shall
any common stock or any other capital stock of the Company ranking junior to
or on a parity with the Preferred Stock of such class or series as to
dividends or upon liquidation, dissolution or winding up of the Company be
redeemed, purchased or otherwise acquired for any consideration (or any moneys
be paid to or made available for a sinking fund for the redemption of any
shares of any such stock) by the Company (except by conversion into or
exchange for other stock of the Company ranking junior to the Preferred Stock
of such class or series as to dividends and upon liquidation, dissolution or
winding up of the Company).
Any dividend payment made on shares of a class or series of Preferred Stock
shall first be credited against the earliest accrued but unpaid dividend due
with respect to shares of such class or series which remains payable.
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REDEMPTION
If so provided in the applicable Prospectus Supplement, the shares of
Preferred Stock will be subject to mandatory redemption or redemption at the
option of the Company, as a whole or in part, in each case upon the terms, at
the times and at the redemption prices set forth in such Prospectus
Supplement.
The Prospectus Supplement relating to a class or series of Preferred Stock
that is subject to mandatory redemption will specify the number of shares of
such Preferred Stock that shall be redeemed by the Company in each year
commencing after a date to be specified, at a redemption price per share to be
specified, together with an amount equal to all accrued and unpaid dividends
thereon (which shall not, if such Preferred Stock does not have a cumulative
dividend, include any accumulation in respect of unpaid dividends for prior
dividend periods) to the date of redemption. The redemption price may be
payable in cash or other property, as specified in the applicable Prospectus
Supplement.
Notice of redemption will be mailed at least 30 days but not more than 60
days before the redemption date to each holder of record of a share of
Preferred Stock of any class or series to be redeemed at the address shown on
the stock transfer books of the Company. Each notice shall state: (i) the
redemption date; (ii) the number of shares and class or series of the
Preferred Stock to be redeemed; (iii) the redemption price; (iv) the place or
places where certificates for such Preferred Stock are to be surrendered for
payment of the redemption price; (v) that dividends on the shares to be
redeemed will cease to accrue on such redemption date; and (vi) the date upon
which the holder's conversion rights, if any, as to such shares shall
terminate. If fewer than all the shares of Preferred Stock of any class or
series are to be redeemed, the notice mailed to each such holder thereof shall
also specify the number of shares of Preferred Stock to be redeemed from each
such holder. If notice of redemption of any shares of Preferred Stock has been
given and if the funds necessary for such redemption have been set apart by
the Company in trust for the benefit of the holders of any shares of Preferred
Stock so called for redemption, then from and after the redemption date
dividends will cease to accrue on such shares of Preferred Stock, such shares
of Preferred Stock shall no longer be deemed outstanding and all rights of the
holders of such shares will terminate, except the right to receive the
redemption price.
LIQUIDATION PREFERENCE
Upon any voluntary or involuntary liquidation, dissolution or winding up of
the Company, then, before any distribution or payment shall be made to the
holders of any common stock or any other class or series of stock of the
Company ranking junior to such class or series of Preferred Stock in the
distribution of assets upon any liquidation, dissolution or winding up of the
Company, the holders of each class or series of Preferred Stock shall be
entitled to receive out of assets of the Company legally available for
distribution to stockholders liquidating distributions in the amount of the
liquidation preference per share (set forth in the applicable Prospectus
Supplement), plus an amount equal to all dividends accrued and unpaid thereon
(which shall not include any accumulation in respect of unpaid dividends for
prior dividend periods if such class or series of Preferred Stock does not
have a cumulative dividend). After payment of the full amount of the
liquidating distributions to which they are entitled, the holders of such
class or series of Preferred Stock will have no right or claim to any of the
remaining assets of the Company. In the event that, upon any voluntary or
involuntary liquidation, dissolution or winding up of the Company, the legally
available assets of the Company are insufficient to pay the amount of the
liquidating distributions on all outstanding shares of such class or series of
Preferred Stock and the corresponding amounts payable on all shares of other
classes or series of stock of the Company ranking on a parity with such class
or series of Preferred Stock in the distribution of assets upon any
liquidation, dissolution or winding up of the Company, then the holders of
such class or series of Preferred Stock and all other such classes or series
of stock shall share ratably in any such distribution of assets in proportion
to the full liquidating distributions to which they would otherwise be
respectively entitled.
If liquidating distributions shall have been made in full to all holders of
shares of such class or series of Preferred Stock, the remaining assets of the
Company shall be distributed among the holders of any other classes or series
of stock ranking junior to such class or series of Preferred Stock upon any
liquidation, dissolution or
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winding up of the Company, according to their respective rights and
preferences and in each case according to their respective number of shares.
For such purposes, neither the consolidation or merger of the Company with or
into any other corporation nor the sale, lease, transfer or conveyance of all
or substantially all of the property or business of the Company shall be
deemed to constitute a liquidation, dissolution or winding up of the Company.
VOTING RIGHTS
Holders of such class or series of Preferred Stock will not have any voting
rights, except as set forth below or as otherwise from time to time required
by law or as indicated in the applicable Prospectus Supplement.
Whenever dividends on any shares of such class or series of Preferred Stock
or any other class or series of stock ranking on a parity with the Preferred
Stock with respect to the payment of dividends shall be in arrears for
dividend periods, whether or not consecutive, containing in the aggregate a
number of days equivalent to six or more calendar quarters, the holders of
such shares of such class or series of Preferred Stock, voting separately as a
class with all other series of Preferred Stock upon which like voting rights
have been conferred and are exercisable, will be entitled to vote for the
election of two of the authorized number of directors of the Company at the
next annual meeting of stockholders and at each subsequent meeting until (i)
if such class or series of Preferred Stock has a cumulative dividend, all
dividends accumulated on such shares of Preferred Stock for the past dividend
periods and the then current dividend period shall have been fully paid or
declared and a sum sufficient for the payment thereof set apart for payment or
(ii) if such class or series of Preferred Stock does not have a cumulative
dividend, four consecutive quarterly dividends shall have been fully paid or
declared and a sum sufficient for the payment thereof set apart for payment.
The term of office of all directors elected by the holders of such shares of
such class or series of Preferred Stock shall terminate immediately upon the
termination of the right of the holders of such Preferred Stock to vote for
directors. Holders of such shares of such class or series of Preferred Stock
will have one vote for each share held.
Unless provided otherwise for any series of Preferred Stock, so long as any
shares of Preferred Stock remain outstanding, the Company shall not, without
the consent of holders of at least two-thirds of the shares of each class or
series of Preferred Stock outstanding at the time, voting separately as a
class with all other series of Preferred Stock upon which like voting rights
have been conferred and are exercisable, (i) issue or increase the authorized
amount of any class or series of stock ranking prior to such class or series
of outstanding Preferred Stock as to dividends or upon liquidation or (ii)
amend, alter or repeal the provisions of the Company's Certificate of
Incorporation or of the resolutions contained in the Certificate of
Designation, whether by merger, consolidation or otherwise, so as to
materially adversely affect any power, preference or special right of such
class or series of outstanding Preferred Stock or the holders thereof;
provided, however, that any increase in the amount of the authorized Common
Stock or authorized Preferred Stock or any increase or decrease in the number
of shares of any other class or series of Preferred Stock or the creation and
issuance of other series of Common Stock or Preferred Stock ranking on a
parity with or junior to the Preferred Stock of such class or series as to
dividends and upon liquidation, dissolution or winding up shall not be deemed
to materially adversely affect such powers, preferences or special rights.
The foregoing voting provisions will not apply if, at or prior to the time
when the act with respect to which such vote would otherwise be required shall
be effected, all outstanding shares of such class or series of Preferred Stock
shall have been redeemed or called for redemption upon proper notice and
sufficient funds shall have been irrevocably deposited in trust to effect such
redemption.
CONVERSION RIGHTS
The terms and conditions, if any, upon which shares of any class or series
of Preferred Stock are convertible into Common Stock, Debt Securities or
another series of Preferred Stock will be set forth in the applicable
Prospectus Supplement relating thereto. Such terms will include the number of
shares of Common Stock or such other series of Preferred Stock or the
principal amount of Debt Securities into which the Preferred Stock is
21
<PAGE>
convertible, the conversion price (or manner of calculation thereof), the
conversion period, provisions as to whether conversion will be at the option
of the holders of such class or series of Preferred Stock or the Company, the
events requiring an adjustment of the conversion price and provisions
affecting conversion in the event of the redemption of such class or series of
Preferred Stock.
RATIOS OF EARNINGS TO FIXED CHARGES
The Company's ratio of earnings to fixed charges for the years ended March
31, 1996, 1995, 1994, 1993 and 1992 was 3.17, 3.40, 3.18, 2.57 and 1.96,
respectively.
For purposes of computing these ratios, earnings have been calculated by
adding fixed charges (excluding capitalized interest) to income (loss) before
income taxes and extraordinary items. Fixed charges consist of interest costs,
whether expensed or capitalized, the interest component of rental expense, and
amortization of debt discounts and issue costs, whether expensed or
capitalized.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The federal income tax consequences of Offered Securities will be discussed
in the Prospectus Supplement or Pricing Supplement for such securities.
PLAN OF DISTRIBUTION
The Company may sell the Offered Securities to one or more underwriters for
public offering and sale by them or may sell the Offered Securities to
investors directly or through agents. Any such underwriter or agent involved
in the offer and sale of the Offered Securities will be named in the
applicable Prospectus Supplement.
Underwriters may offer and sell the Offered Securities at a fixed price or
prices, which may be changed, at prices related to the prevailing market
prices at the time of sale or at negotiated prices. The Company also may, from
time to time, authorize underwriters acting as the Company's agents to offer
and sell the Offered Securities upon the terms and conditions as are set forth
in the applicable Prospectus Supplement. In connection with the sale of
Offered Securities, underwriters may be deemed to have received compensation
from the Company in the form of underwriting discounts or commissions and may
also receive commissions from purchasers of Offered Securities for whom they
may act as agent. Underwriters may sell Offered Securities to or through
dealers, and such dealers may receive compensation in the form of discounts,
concessions or commissions from the underwriters and/or commissions from the
purchasers for whom they may act as agent.
Any underwriting compensation paid by the Company to underwriters or agents
in connection with the offering of Offered 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 the Offered 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 Offered Securities
may be deemed to be underwriting discounts and commissions, under the
Securities Act. Underwriters, dealers and agents may be entitled, under
agreements entered into with the Company, to indemnification against and
contribution toward certain civil liabilities, including liabilities under the
Securities Act.
Certain of the underwriters and their affiliates may be customers of, engage
in transactions with and perform services for the Company and its subsidiaries
in the ordinary course of business.
If so specified in the applicable Prospectus Supplement, Debt Securities may
be offered pursuant to Delayed Delivery Contracts, a form of which has been
filed as an exhibit to the Registration Statement.
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<PAGE>
If set forth in the applicable Prospectus Supplement, Common Stock may be
offered for sale hereunder by or on behalf of one or more shareholders
("Selling Shareholders") in one or more transactions, including block
transactions, at a fixed price or prices (which may be changed), at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices or at prices determined on a negotiated or competitive bid
basis. Common Stock may be sold through agents designated from time to time or
to or through broker-dealers designated from time to time or by such other
means as may be specified in the applicable Prospectus Supplement. Such shares
of Common Stock may be sold through a broker-dealer acting as an agent or
broker for the Selling Shareholders, or to a broker-dealer acting as
principal. In the latter case, such broker-dealers may resell such Common
Stock to the public at varying prices to be determined by such broker-dealer
at the time of resale. Sales may also be made in one or more transactions to
be executed on the New York Stock Exchange, or any other exchange on which the
Common Stock may be traded or in the over-the-counter market.
To the extent required in connection with the offerings described in the
previous paragraph, information relating to the number of shares of Common
Stock, the Selling Shareholders, the purchase price, the public offering
price, if applicable, the name of the underwriter, agent or broker-dealer and
any applicable commissions, discounts or other items constituting compensation
to such underwriters, agents or broker-dealers will be set forth in the
accompanying Prospectus Supplement.
EXPERTS
The consolidated financial statements and financial statement schedule of
Airgas, Inc. as of March 31, 1996 and 1995, and for each of the years in the
three year period ended March 31, 1996, have been incorporated by reference
herein and in the Registration Statement in reliance upon the report of KPMG
Peat Marwick LLP, independent certified public accountants, incorporated by
reference herein, and upon the authority of said firm as experts in accounting
and auditing.
The consolidated financial statements of National Welders Supply Company,
Inc. and subsidiary for the years ended September 30, 1995 and September 24,
1994, incorporated by reference in this Prospectus from the Amended Current
Report on Form 8-K/A of Airgas, Inc. dated July 11, 1996, to the extent and
for the periods indicated in their report have been audited by Arthur Andersen
LLP, independent public accountants, and have been incorporated herein in
reliance upon the authority of said firm as experts in accounting and auditing
in giving said report.
LEGAL MATTERS
The validity of the Offered Securities will be passed upon for the Company
by McCausland, Keen & Buckman, Radnor, Pennsylvania and for any underwriters,
dealers or agents by Brown & Wood llp, Washington, D.C. Brown & Wood llp will
also serve as special tax counsel to the Company. As of July 24, 1996, certain
members of McCausland, Keen & Buckman beneficially owned 74,230 shares of the
Company's Common Stock.
23
<PAGE>
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NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY IN-
FORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN CONTAINED OR INCORPORATED
BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT, THE APPLICABLE PRICING SUPPLEMENT
OR THE PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLE-
MENT, THE APPLICABLE PRICING SUPPLEMENT AND THE PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY OR THE AGENTS. NEITHER THE DELIVERY OF THIS
PROSPECTUS SUPPLEMENT, THE APPLICABLE PRICING SUPPLEMENT OR THE PROSPECTUS NOR
ANY SALE MADE HEREUNDER AND THEREUNDER SHALL UNDER ANY CIRCUMSTANCE CREATE AN
IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE AFFAIRS OF THE COMPANY
SINCE THE DATE HEREOF. THIS PROSPECTUS SUPPLEMENT, THE APPLICABLE PRICING SUP-
PLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANY-
ONE IN ANY STATE IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN
WHICH THE PERSON MAKING SUCH OFFER IS NOT QUALIFIED TO DO SO OR TO ANYONE TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
PROSPECTUS SUPPLEMENT
<S> <C>
Description of Notes....................................................... S-2
Certain United States Federal Income Tax Considerations.................... S-17
Plan of Distribution....................................................... S-23
PROSPECTUS
Available Information...................................................... 2
Incorporation of Certain Documents By Reference............................ 2
The Company................................................................ 3
Use of Proceeds............................................................ 6
Description of Debt Securities............................................. 6
Description of Common Stock................................................ 16
Description of Preferred Stock............................................. 17
Ratios of Earnings to Fixed Charges........................................ 22
Certain Federal Income Tax Considerations.................................. 22
Plan of Distribution....................................................... 22
Experts.................................................................... 23
Legal Matters.............................................................. 23
</TABLE>
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$450,000,000
[LOGO OF AIRGAS APPEARS HERE]
MEDIUM-TERM NOTES
DUE NINE MONTHS OR MORE
FROM DATE OF ISSUE
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PROSPECTUS SUPPLEMENT
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NATIONSBANC CAPITAL MARKETS, INC.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
FIRST UNION CAPITAL MARKETS CORP.
MORGAN STANLEY & CO.
INCORPORATED
WILLIAM BLAIR & COMPANY
AUGUST 1, 1996
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