<PAGE>
<PAGE> 1 UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
Form 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 1997
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______
Commission File No. 1-9344
AIRGAS, INC.
(Exact name of registrant as specified in its charter)
Delaware 56-0732648
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
259 Radnor-Chester Road, Suite 100
Radnor, Pennsylvania 19087-5240
(Address of principal executive offices) (Zip Code)
(610) 687-5253
(Registrant's telephone number, including area code)
Securities Registered Pursuant to Section 12 (b) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
______________________________________ _____________________
Common Stock, par value $.01 per share New York Stock Exchange
Securities registered pursuant to Section 12 (g) of the Act: None.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES X NO
_____ ____
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the 57,075,279 shares of voting stock held
by non-affiliates of the registrant on May 30, 1997 was approximately $970
million. For purposes of this calculation, only executive officers and
directors were deemed to be affiliates.
The number of shares of Common Stock outstanding as of May 30, 1997 was
66,818,522.
DOCUMENTS INCORPORATED BY REFERENCE
The Company's Proxy Statement for the Annual Meeting of Stockholders to be
held August 4, 1997 is partially incorporated by reference into Part III.
Those portions of the Proxy Statement included in response to Item 402(k) and
Item 402(l) of Regulation S-K are not incorporated by reference into Part III.
<PAGE> 2
AIRGAS, INC.
TABLE OF CONTENTS
PART I
ITEM PAGE NO.
_____ ________
1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
3. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . . .13
4. Submission of Matters to a Vote of Security Holders . . . . . . . . . .13
PART II
5. Market for the Company's Common Stock and Related Stockholder Matters . 14
6. Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . 15
7. Management's Discussion and Analysis of Financial Condition and Results
of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8. Financial Statements and Supplementary Data . . . . . . . . . . . . . . 27
9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . 27
PART III
10. Directors and Executive Officers of the Company . . . . . . . . . . . . 27
11. Executive Compensation. . . . . . . . . . . . . . . . . . . . . . . . . 27
12. Security Ownership of Certain Beneficial Owners and Management. . . . . 27
13. Certain Relationships and Related Transactions. . . . . . . . . . . . . 27
PART IV
14. Exhibits, Financial Statement Schedule, and Reports on Form 8-K . . . . 27
<PAGE>
<PAGE> 3 PART I
ITEM 1. BUSINESS.
GENERAL
Airgas, Inc. ("Airgas" or the "Company") classifies its operations into
three business segments: Distribution, Direct Industrial and Manufacturing.
Sales for Airgas were $1.16 billion in fiscal 1997, and $838 and $688 million
in fiscal 1996, and 1995, respectively. Distribution sales represented 88% of
total sales and 85% of Airgas' operating income in fiscal 1997. Financial
information by business segment can be found in 1) Item 7 "Management's
Discussion and Analysis of Financial Condition and Results of Operations",
"Financial Statements and Supplementary Data", and 2) Note 22 to the Company's
consolidated financial statements for the three years ended March 31, 1997
under Item 8.
The Distribution business is conducted through approximately 600 locations
in 41 states, Canada and Mexico. Principal products distributed include:
industrial, medical and specialty gases and a wide selection of name-brand
welding equipment, accessories and industrial protective equipment
("hardgoods"), including electrode holders, welding wire, cable lugs and
connectors, hard hats, welding helmets, hearing protectors, goggles, face
shields, safety glasses, welding machines and electrodes. In connection with
the distribution of gases, Airgas rents industrial gas cylinders and bulk
storage tanks to its customers. Additionally, acetylene gas is manufactured
and sold as part of the Company's Distribution business. Since its formation,
the Company's strategy has been to expand through the acquisition of
independent distributors. The Company believes that it is the largest
distributor of industrial, medical and specialty gases and related equipment in
North America.
During fiscal 1997, the Company acquired IPCO Safety Products Company
(IPCO) and Rutland Tool & Supply Co., Inc. (Rutland), which had historical
combined annual sales of approximately $120 million. IPCO and Rutland formed
the basis for the Company's Direct Industrial segment, Airgas Direct Industrial
("ADI"). ADI sells an expansive line of welding, metalworking, safety and
other MRO (Maintenance, Repair and Operations) products directly to end-users.
The Company believes ADI will help enable it to be a low cost supplier and
increase sales of other products and services by leveraging the Company's
strong local presence and the relationships with its existing customer base and
distribution network. Many of Airgas' customers use the same types of safety
products sold by IPCO. Rutland targets the same metal fabrication market which
also accounts for a large part of Airgas' current Distribution gas and
hardgoods sales.
Manufacturing operations include the production of carbon products,
calcium carbide, nitrous oxide and carbon dioxide. In connection with its
carbon dioxide business, Airgas has implemented a strategy to expand the
distribution of carbon dioxide. During 1997, the Company acquired Shell Land &
Energy Company's (Shell) interest in unitized leases producing carbon dioxide,
including Shell's 183 mile pipeline. In June 1997, the Company closed the
acquisition of Carbonic Industries Corporation ("CIC"), the fourth largest
producer of carbon dioxide in the United States.
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THE DISTRIBUTION BUSINESS
Industry Background
The industrial gas distribution market is broad and includes customers
from most major industries. Airgas sells nitrogen, oxygen, argon, helium,
acetylene, carbon dioxide, nitrous oxide, hydrogen and welding gases and a
variety of medical and specialty gases to a diverse customer base. Gases are
distributed and stored in industrial gas cylinders and bulk storage tanks.
Hardgoods sold through its distribution network include: protective equipment,
such as hard hats, welding helmets, goggles, face shields and protective
glasses; welding machines and welding consumables; and accessories, such as
electrodes, electrode holders and cable connectors.
The United States market for industrial gases is approximately $7 billion
annually. Sales to major users of industrial gases that have the capacity to
accept large bulk shipments or pipeline deliveries are generally serviced
directly by industrial gas producers and account for approximately $3.5 billion
of such market. The remaining $3.5 billion of annual industrial gas sales are
made to small bulk users and cylinder gas customers. These small bulk users and
cylinder gas customers are also believed to purchase approximately $3.5 billion
of hardgoods annually. Small bulk users and cylinder gas customers are
primarily served by a fragmented distribution system of approximately 1,000
distributors, the majority of which are independently owned. The Company
concentrates on the small bulk, cylinder gas, welding and
protective equipment segment of the market. This segment is less capital
intensive, in part, because of the long useful lives of the fixed assets,
principally cylinders.
Acquisition Strategy
Since May 1986, the Company has acquired over 225 distributors of
industrial gases and related equipment. These distributors are organized into
three divisions with approximately 600 locations in 41 states, Canada and
Mexico which provide a national distribution network.
Based on the terms of a joint venture agreement, the Company acquired 47%
of the voting capital stock of National Welders Supply Company ("National
Welders"), the largest independent distributor of industrial, medical and
specialty gases and related equipment in the United States based in Charlotte,
North Carolina. The purpose of the joint venture is to carry on the business
of National Welders, enhanced by its association with the Company and its
financial, purchasing and national marketing strengths, and to pursue
acquisition opportunities in the area currently served by National Welders.
Inasmuch as National Welders is a joint venture, it represents a departure from
Airgas' usual method of expansion which is acquisitions.
The Company's principal business strategy is to continue to expand its
distribution network through a program of acquiring independent distributors.
The industrial gas distribution industry continues to undergo a consolidation
process which Airgas believes will continue to present it with opportunities to
acquire industrial gas distributors.
The Company believes that its principal competitive advantages in
acquiring distributors are its extensive distribution network, its well-
organized acquisition program, flexibility in structuring acquisitions to meet
sellers' needs and the ability to offer sellers and their employees a
continuing management role in a decentralized entrepreneurial environment. In
seeking to acquire distributors, the Company competes with industrial gas
producers and other independent distributors.
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The Company has made investments in industrial gas operations in Poland,
India and Thailand. At March 31, 1997, the total investment in these foreign
operations was approximately 1% of total assets. The Company will continue to
evaluate foreign industrial gas opportunities, although its principal focus
remains on North American expansion.
The Company has financed distributor acquisitions primarily with
internally generated funds and debt. The Company has been able to obtain debt
financing due, in part, to its ability to generate cash flow from operating
activities and the long useful lives and relatively stable market values of the
fixed assets, principally cylinders.
Operating Policies
The Company believes that its operations are best managed at the local
level by entrepreneurial, incentive-driven executives with backgrounds
principally in the industrial gas industry. The president of each distribution
subsidiary is typically a former owner or key employee of the acquired business
or an experienced executive recruited by management. The continuity afforded
by retaining the key employees of an acquired business combined with local
management is essential because the Company's distribution business is local in
nature and is dependent upon satisfied repeat customers.
Customer Base
The majority of the Company's gases are generally stored in bulk tanks at
the Company's cylinder fill plants and are pumped into cylinders for distribu-
tion to customers or, in the case of bulk customers, in tanker trucks or tube
trailers for delivery into bulk tanks at the customer's business location. The
Company emphasizes sales to cylinder and small bulk gas customers.
The distribution of industrial gases historically has been to customers
engaged in the business of welding and metal fabrication. In order to better
serve these customers, industrial gas distributors have traditionally sold
hardgood items through their distribution branch locations. As certain sectors
of the economy have grown, such as the electronics and chemicals industries,
and as new applications for gases have developed, the customer base of the gas
distribution business has broadened significantly to include businesses in
almost every major industry, from medical and high technology to consumer and
basic industries. For example, the food and beverage industry uses carbon
dioxide and nitrogen; the electronics industry uses oxygen, nitrogen, argon,
and hydrogen; the healthcare industry uses oxygen, nitrogen, and nitrous oxide;
and the chemical and fiber industries use nitrogen.
Specialty gases, which are used in numerous industries and in electronic
and laboratory applications, include rare gases, high-purity gases, and blended
multi-component gas mixtures. In fiscal 1997, the Company formed a new
subsidiary, Airgas Specialty Gases ("ASG"). ASG is a national organization
within Airgas that assists in the management of the Company's network of 24
specialty gas laboratories in the U.S., sourcing specialty gas through the
Company's hubs and branches. ASG operates four "A" laboratories, which produce
complicated gas mixtures, and oversees the Company's twenty (20) "B" Labs,
which produce simple, pure gases and certain common mixtures. ASG also assists
the hubs in growing their specialty gas business and improving the
responsiveness and quality of the hubs' specialty gas operations. The
principal drivers for market growth include: (1) environmental regulations,
such as the Clean Air Act, water testing and pollution remediation and testing
and monitoring; (2) quality control services using in-line chromatography and
spectrography to analyze samples; and (3) the growth of environmental, research
and clinical laboratories.
<PAGE> 6
The Company continues to concentrate its efforts in the small bulk gas
market. The primary gases that Airgas sells in bulk are liquid oxygen,
nitrogen, argon, and carbon dioxide, and gaseous hydrogen, helium and nitrogen.
The Company charges customers rent for the use of bulk tanks and tube trailers
which are placed on the customer's property. The Company believes there are
growth opportunities in marketing to these small bulk customers, which it can
serve more effectively than industrial gas producers.
The Company has undertaken selected initiatives to develop further its
industrial gas customer base to include customers which require large-volume
supplies of gases, such as nitrogen. The Company has entered into long-term
supply agreements with two customers which require the construction of two air
separation plants which will begin production late in calendar 1997. These two
plants will also produce liquid oxygen and argon which will be sold to Airgas'
Distribution customers. The Company views these investments as opportunities
and not as its principal investment strategy.
The Company's same-store sales, a comparison of current period sales to
the prior period's sales, adjusted for acquisitions, has historically followed
the real gross domestic product annual growth rate as published by the Commerce
Department. Management believes the Company's broad customer base and geo-
graphic diversity help to reduce the adverse effects of an economic downturn on
the Company. Also, management believes that the gas portion of its distri-
bution business is somewhat resistant to economic downturns due to the follow-
ing factors: 1) gases frequently represent a fixed cost of operations that do
not necessarily decline with production levels; 2) gases are required for main-
tenance and renovation activities which tend to increase during an economic
downturn; 3) industries less subject to the effects of an economic downturn,
such as the medical field, are major purchasers of gases; and 4) gas purchases
often represent a small portion of a typical user's overall cost of operation
and, therefore, do not typically represent a large cost-cutting item. Manage-
ment further believes that sales of certain lower margin nonconsumable hard-
goods equipment, such as welding machines, are more adversely impacted during a
downturn in the economy and are typically the fastest to rebound during an
economic recovery.
Products
Gases distributed by Airgas include oxygen, nitrogen, hydrogen, argon,
helium, acetylene, carbon dioxide, nitrous oxide and specialty gases. In addi-
tion to gases, the Company distributes a wide selection of name-brand hard-
goods, including electrode holders, welding wire, cable lugs and connectors,
hard hats, welding helmets, hearing protectors, goggles, face shields, safety
glasses, welding machines and electrodes. Of Airgas' fiscal 1997 sales from
the Distribution segment, approximately 50% represent sales of gases and
rentals of cylinders and bulk tanks, and 50% represent hardgood sales.
The Company intends to strategically broaden its product line in order to
increase sales in existing locations and to take advantage of its distribution
network. Recent product line additions have included returnable containers,
specialty gases and additional hardgoods (such as industrial safety products
and coatings). The Company believes the selective addition of complementary
product offerings through its distribution network and ADI will enable it to
better serve its diverse, expanding customer base.
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<PAGE> 7
Suppliers
The Company purchases industrial, medical and specialty gases pursuant to
requirements contracts from all four of the major producers of industrial gases
in the United States and three regional producers. The Company believes that
if a contractual arrangement with any supplier of gases were terminated, it
would be able to locate alternative sources of supply without significant cost
increases and with no disruption of service.
The Company purchases hardgoods from name-brand manufacturers and
suppliers. For certain products, the Company has negotiated favorable pricing
based on national purchasing arrangements and is reducing its investment in
hardgood inventories by consolidating vendors.
DIRECT INDUSTRIAL BUSINESS
During fiscal 1997, the Company acquired IPCO and Rutland. IPCO and
Rutland provided an industrial distribution infrastructure, additional product
lines and management talent to form the basis for ADI. IPCO is a distributor
of safety, industrial and environmental supplies, and utilizes a system of
regional warehouses and telemarketing centers to market its products. Rutland
is a distributor of industrial tools, MRO supplies and welding and safety
equipment, and markets its products through direct mail, catalogs and monthly
fliers. ADI's principal thrust is to sell directly to customers, through
outbound telemarketing and catalogs, and to build on Airgas' existing base of
approximately 650,000 Airgas customers and strong customer relationships. To
serve its customers, ADI has distribution centers located in key industrial
distribution markets. ADI targets the same metal fabrication market that
accounts for a large part of Airgas' current Distribution gas and hardgoods
equipment sales. The safety and metalworking tools market represents
approximately $55 billion in annual revenues.
The Company's acquisition strategy with respect to ADI is to acquire
additional industrial distribution companies which comprise this highly
fragmented industry. Such acquisitions may provide for enhanced warehouse
logistics, information systems, new product lines, geographic expansion and
unique marketing concepts.
MANUFACTURING AND RELATED BUSINESS
Nitrous Oxide
The Company produces nitrous oxide which is used in various medical and
commercial applications. Nitrous oxide is used as an anesthetic in the medical
and dental fields, as a propellant in the packaged food business and is
utilized in the manufacturing process of certain high technology electronic
industries. The Company's nitrous oxide manufacturing facilities are located
in Yazoo City, Mississippi and Donora, Pennsylvania.
<PAGE> 8
Carbon Products
The Company manufactures carbon electrode paste, carbon ramming paste and
electrically calcined anthracite ("ECA") at its manufacturing facility located
in Keokuk, Iowa. The Company is the nation's primary manufacturer of carbon
electrode paste which is used as a consumable electrode in the production of
special alloy steel, nickel and other metals. ECA is used as an ingredient in
carbon mixes used in the aluminum industry and as an additive in the production
of certain metals.
Calcium Carbide
The Company is a partner with Elkem Metals Company ("Elkem") in a joint
venture (Elkem-American Carbide Company) which primarily sells calcium carbide
which is used in the production of acetylene gas. The Company and Elkem
receive certain fees, based on net sales, for acting as agents for the joint
venture. Additionally, as general manager of the joint venture, Elkem receives
a management fee based on net sales. The Company operates a manufacturing
facility in Pryor, Oklahoma which sells calcium carbide to the joint venture.
Carbon Dioxide
The Company is implementing a strategy to expand its carbon dioxide
business. In December 1996, the Company acquired Shell's interest in unitized
leases producing carbon dioxide, including Shell's 183 mile pipeline stretching
from the Northeast Jackson Dome area of Mississippi to White Castle, Louisiana
(the "Jackson Dome" properties). The pipeline services three major liquid
carbon dioxide producers (including CIC) and a major methanol producer, each
pursuant to a long-term supply contract, as well as a group of enhanced oil
recovery fields. Carbon dioxide is used in refrigeration, food processing,
beverage carbonation, chemical processing, crude oil recovery, metal
fabrication and agricultural fumigation.
As part of its carbon dioxide strategy, the Company also made related
acquisitions of liquid carbon dioxide distributors and carbon dioxide beverage
companies during 1997. In June 1997, the Company closed the acquisition of
CIC, merged into a newly-formed subsidiary of the Company in exchange for a
combination of the Company's common stock and cash.
COMPETITION
Each of the major business areas in which the Company participates is
highly competitive. Some competitors are larger than the Company and have
greater resources.
The Company's industrial gas distribution operations compete with
independent distributors and vertically integrated gas producers such as Air
Products and Chemicals, Inc. ("Air Products"), Praxair, Inc. ("Praxair"),
Liquid Air Corporation of America ("Air Liquide"), BOC Gases Group ("BOC
Gases") and others, all of which have distribution operations. The Company
also purchases industrial gases pursuant to requirements contracts from all
four of the above major producers of industrial gases.
Competition in the distribution market is based on customer service,
prompt delivery, price, consistent product quality, attention to safety
procedures, and employee and customer training in the uses of gases and
hardgoods. The Company believes its decentralized system allows competitive
decisions to be made on the local level which results in reduced costs and/or
improved service. In addition, the Company's distribution network allows it to
realize economies of scale in purchasing, training, marketing and information
systems.
<PAGE> 9
Regarding the Company's carbon dioxide business strategy, the carbon
dioxide market includes suppliers of crude CO2 and three major carbon dioxide
companies: Praxair, BOC Gases and Air Liquide. These three companies produce
over 80% of the United States merchant carbon dioxide, develop most of the new
applications, and handle much of the distribution.
The ADI segment competes with small branch-based industrial distribution
companies at the local level. In addition, ADI also competes nationally with
large, branch-based and direct marketers, which include W.W. Grainger, Inc. and
MSC Industrial Direct, Inc. which sell through catalogs and stores, and Vallen
Corporation, a safety equipment distributor.
REGULATORY AND ENVIRONMENTAL MATTERS
The businesses of the Company's subsidiaries are subject to federal and
state laws and regulations adopted for the protection of the environment and
the health and safety of employees and users of the Company's products. The
Company has programs for the operation and design of its facilities to achieve
compliance with applicable environmental rules and regulations. The Company
believes that it is in compliance in all material respects with such laws and
regulations. Expenditures for environmental purposes during the fiscal year
ended March 31, 1997 were not material.
INSURANCE
The Company's policy is to obtain liability and property insurance
coverage that is currently available at what management determines to be a fair
and reasonable price. As of March 31, 1997, the Company had a liability
insurance limit of $100 million. The liability insurance is subject to per-
occurrence deductible amounts of $1 million for product liability, general
liability and workers' compensation claims, and $500 thousand for motor vehicle
liability.
The nature of the Company's business may subject it to product and general
liability lawsuits. To the extent that the Company is subject to claims which
exceed its liability insurance coverage, such suits could have a material
adverse effect on the Company's financial position, results of operations or
liquidity.
EMPLOYEES
On March 31, 1997, the Company employed approximately 6,400 people of whom
approximately 6% were covered by collective bargaining agreements. The Company
believes it has good relations with its employees and has not experienced a
strike or work stoppage in the past 10 years.
PATENTS, TRADEMARKS AND LICENSES
The Company holds trademark registrations for "Airgas", "Dyna-Switch" and
"Va-Weld", and a patent registration for the purification of acetonitrile. The
Company believes that its businesses as a whole are not materially dependent
upon any single patent, trademark or license.
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<PAGE> 10
EXECUTIVE OFFICERS OF THE COMPANY
The executive officers of the Company are as follows:
Name Age Position
Peter McCausland (1) 47 Chairman of the Board, President and Chief
Executive Officer
Hermann Knieling 59 Executive Vice President and Group President -
Manufacturing, Business Engineering and
International Group
E. Pat Baker 57 Group President - Distribution
William A. Rice, Jr. 50 Group President - Airgas Direct Industrial
Alfred B. Crichton 49 Division President - West
Ronald B. Rush 53 Division President - South
John Musselman 48 Division President - East
Thomas C. Deas, Jr. 47 Vice President-Finance & Chief Financial Officer
Gordon L. Keen, Jr. 52 Senior Vice President - Law and Corporate
Development
William E. Sanford 36 Executive Vice President of Airgas Direct
Industrial
Thomas Mason 63 Senior Vice President
Scott M. Melman 40 Vice President - Administration
Rudi G. Endres 53 Vice President - International
Samuel H. Goldstein 38 Vice President - Information Systems
Andrew R. Cichocki 34 Vice President - Corporate Development
__________________
(1) Member of the Board of Directors
Mr. McCausland has been a Director of the Company since June 1986, the
Chairman of the Board and Chief Executive Officer of the Company since May
1987, President from June 1986 to August 1988, from April 1, 1993 to November
30, 1995, and since April 1, 1997. Mr. McCausland has been Chairman and Chief
Executive Officer of US Airgas since its organization in February 1982. From
January 1982 until June 1990, Mr. McCausland was a partner in the law firm of
McCausland, Keen & Buckman, Radnor, Pennsylvania, which provides legal services
to the Company. In May 1997, Mr. McCausland was elected to the board of
directors of Hercules Inc., a worldwide manufacturer of chemical specialty
products.
Mr. Knieling has been Executive Vice President of the Company and Group
President - Manufacturing, Business Engineering and International since April
1, 1997. Prior to that, Mr. Knieling served as the President and Chief
Operating Officer of Airgas from December 1, 1995 to March 1997. Mr. Knieling
served as Division President - Southern Division from April 1, 1995 to November
30, 1995 and as Division President - Eastern Division from February 3, 1993 to
March 1995. Mr. Knieling served as a Regional Vice President from June 1990 to
February 1993 and as President of Gulf States Airgas from June 1989 to February
1993. Mr. Knieling owned and operated an industrial gas distributor which was
sold to the Company in 1989. Also, Mr. Knieling served in various capacities
for Hoechst AG during a period of 18 years, and, prior to his leaving Hoechst
in 1982 was President and Chief Executive Officer of its subsidiary, MG Burdett
Gas Products Company.
Mr. Baker has been Group President - Distribution since April 1, 1997.
Prior to that, Mr. Baker served as the Company's Division President - Eastern
Division from April 1, 1995 to March 1997. Mr. Baker served as a Regional Vice
President from May 1991 to February 1993 and President of Southwest Airgas
since the acquisition of Southwest Airgas (formerly West Texas Welders Supply),
in October 1988, to March 1995. Prior to joining the Company, Mr. Baker was
President and owner of West Texas Welders Supply from August 1981 to October
1988.
<PAGE> 11
Mr. Rice has been Group President - Airgas Direct Industrial since April
1, 1997. Prior to that he served as Airgas' Division President - Industrial
Distribution and Purchasing from April 1, 1995 to March 1997 and served as Vice
President - Purchasing from August 1, 1993 to March 1995. Until August 1993,
Mr. Rice was President of Virginia Welding Supply, which was acquired by
the Company in July 1992. Mr. Rice has over 20 years of industry experience
and serves on the boards of various companies.
Mr. Crichton has been the Company's Division President - West since
February 3, 1993. Mr. Crichton served as a Regional Vice President from May
1991 to February 1993 and as President of Sierra Airgas since the acquisition
of Sierra Airgas (formerly Moore Bros.) in January 1987. Mr. Crichton was
employed by Union Carbide Industrial Gases (UCIG) from 1969 through 1986, and
prior to joining Moore Bros., was President of a subsidiary of UCIG.
Mr. Rush has been the Company's Division President - South since December
1, 1995. Mr. Rush served as President of Sooner Airgas from June 1, 1991 to
November 30, 1995 and as Vice President of Sales for Southwest Airgas from
September 1990 to May 31, 1991.
Mr. Musselman has been Division President - East since April 1, 1997.
Prior to that, Mr. Musselman served as President of Northeast Airgas from
January 1989 to March 1997.
Mr. Deas has been the Vice President-Finance & Chief Financial Officer
since February 17, 1997. From March 1996 to February 1997, Mr. Deas served as
Chief Financial Officer of Maritrans, Inc., a New York Stock Exchange listed
shipping company headquartered in Philadelphia. Prior to that, Mr. Deas served
for 18 years in various positions at Scott Paper Company, a manufacturer of
tissue products, including Vice President, Treasury and Assistant Treasurer
from October 1988 to February 1996.
Mr. Keen has been Senior Vice President - Law and Corporate Development
since April 1, 1997. Prior to that, Mr. Keen served as Vice President -
Corporate Development from January 1, 1992 to March 1997. From January 1982
until December 1991, Mr. Keen was a partner in the law firm of McCausland, Keen
& Buckman, Radnor, Pennsylvania, which provides legal services to the Company.
Mr. Sanford has been Executive Vice President of Airgas Direct Industrial
since April 1, 1997. Prior to that, he served as the Company's Executive Vice
President from December 1, 1995 to March 1997 and Vice President - Sales and
Marketing since February 3, 1993. Mr. Sanford served as President of Cascade
Airgas from March 1989 to February 1993. From May 1984 to February 1989 Mr.
Sanford served as Vice President -- Sales and Marketing for Midwest Carbide.
Mr. Mason has been Senior Vice President since December 1, 1995. Mr.
Mason served as Assistant to the Chairman from January 1993 to November 1995.
Prior to that, Mr. Mason served as Executive Vice President of the Company from
March 1990 until January 1993 and served as President from August 1988 until
February 1990.
Mr. Melman has been Vice President - Administration since April 1, 1995.
Mr. Melman served as Vice President - Corporate Controller from August 1994 to
March 1995 and Corporate Controller from August 1986 to July 1994. Prior to
joining the Company, Mr. Melman was the Controller for Integrated Circuit
Systems, Inc. from November 1983 to July 1986, and prior to joining Integrated
Circuit Systems, Inc., was a Tax Manager for KPMG Peat Marwick LLP.
<PAGE>
<PAGE> 12
Mr. Endres has been Vice President - International since January 1993.
Mr. Endres served as Vice President - Marketing from July 1991 until December
1992. From February 1987, Mr. Endres served as General Manager and Vice
President for the western region of Airgas. Prior to joining Airgas, Mr.
Endres served for 18 years in various positions nationally and internationally
for Messer Griesheim, a major producer of industrial gases headquartered in
Germany. His last position was Vice President for Specialty Gases and
Chemicals at MG Industries in Valley Forge, PA.
Mr. Goldstein has been the Vice President-Information Systems of Airgas
since September 9, 1996. He joined Airgas from KPMG Peat Marwick LLP (KPMG)
where he served as a National Service Leader for their Consulting Division
since June 1991. Prior to 1991, he was a Senior Manager at KPMG. Mr.
Goldstein held a variety of consulting positions at Coopers & Lybrand LLP from
June 1986 to July 1989.
Mr. Cichocki has been Vice President - Corporate Development of Airgas
since April 1, 1997. Mr. Cichocki served as Assistant Vice President -
Corporate Development from August 1992 to March 1997. Prior to that, he served
in various corporate development and finance positions from April 1988 to July
1992.
ITEM 2. PROPERTIES.
The Company has offices, manufacturing and distribution facilities in 41
states, Canada and Mexico. The principal executive offices of the Company are
located in leased space in Radnor, Pennsylvania.
The Company's Manufacturing segment produces carbon products at its
Keokuk, Iowa, facility; calcium carbide at its Pryor, Oklahoma, facility;
nitrous oxide at its Donora, Pennsylvania and Yazoo City, Mississippi
facilities; and carbon dioxide at the Jackson Dome production facility located
in Jackson, Mississippi. Manufacturing facility utilization, based on market
demand, has ranged from 65% to 100%.
The Keokuk and Pryor facilities are owned by the Company. The Donora
plant is located on property leased through the year 2006. The Yazoo City
property is owned by the Company; however, it will revert to the local
municipality if the plant terminates operations. The Keokuk, Pryor and Donora
facilities are pledged as collateral under industrial development board revenue
bonds.
The Company's Distribution segment conducts business from approximately
600 locations in 41 states, Canada and Mexico. These locations are either
owned or are leased from third parties or from employees of the Company who
were previous owners of businesses acquired on terms consistent with commercial
rental rates prevailing in the surrounding rental market. Fifteen (15)
distribution locations in eleven (11) states have acetylene manufacturing
plants. The Company's acetylene plants operate at an average production
capacity of approximately 65%.
The Company's Direct Industrial segment conducts its business from
locations strategically located throughout the United States. IPCO's principal
offices are located in leased space in Langhorne, Pennsylvania, with additional
warehouse locations in Pennsylvania, Texas, and California. Rutland's principal
offices are located in leased space in the City of Industry, California, and
also include warehouse locations in California, Arizona, Texas, Illinois, Ohio
and South Carolina.
The Company believes that its facilities are adequate for its present
needs and that its properties are generally in good condition, well maintained
and suitable for their intended use.
<PAGE> 13
ITEM 3. LEGAL PROCEEDINGS.
The Company and its subsidiaries are parties to pending legal proceedings
arising out of their business operations. The proceedings involve claims for
personal injuries, breach of contract, product warranty and product design,
and claims involving employee relations and certain administrative
proceedings. Management does not believe that the eventual outcome of any
litigation to which the Company or its subsidiaries are parties would have a
material adverse effect on the consolidated financial position, results of
operations or liquidity.
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 with respect to Praxair's
Right of First Refusal contract with the majority shareholders of National
Welders by the Company in connection with the Company's formation of a joint
venture with National Welders. Praxair is seeking compensatory damages in
excess of $100 million and punitive damages. On February 24, 1997, the court
entered an order denying the Company's motion to dismiss for forum non
conveniens. The Company has filed a petition for writ of mandamus with the
Alabama Supreme Court requesting that the lower court's order be vacated or set
aside. The Company believes that Praxair's claims are without merit and
intends to defend vigorously against such claims.
On September 9, 1996, the Company filed suit against Praxair in the Court
of Common Pleas of Philadelphia County, Pennsylvania. The complaint alleges
breach of contract, fraud, conversion and misappropriation of trade secrets
with respect to an agreement between Praxair and the Company, pursuant to which
Praxair induced the Company to provide Praxair valuable information and
conclusions developed by the Company concerning CBI Industries, Inc. ("CBI") in
exchange for Praxair's promise not to acquire CBI without the Company's
participation. The Company has alleged that it became entitled, pursuant to
such agreement, to acquire certain of CBI's assets having a value in excess of
$800 million. The Company is seeking compensatory and punitive damages. On
January 2, 1997, the court entered an order overruling Praxair's preliminary
objections to the Company's complaint and ordering Praxair to file an answer to
the complaint. Praxair has since filed an answer and asserted various
defenses.
The fraudulent breach of contract by a third-party supplier of refrigerant
gas was reported by the Company on December 23, 1996. On February 12, 1997,
the Company filed a lawsuit in the United States District Court for the
Southern District of Georgia against Discount Auto Parts, Inc. ("Discount"), an
employee of Discount and certain other business and individual defendants,
alleging that Discount and the other defendants engaged in racketeering
activity involving the fraudulent sale of smuggled and counterfeit R-12
refrigerant gas. The Company's complaint alleges that the racketeering
activity of the defendants caused damages to the Company in an amount not less
than $20 million. The complaint seeks treble damages under the Federal RICO
and Georgia RICO statutes, as well as monetary damages under other counts
alleging fraud, conspiracy and related wrongful conduct. The Company believes
there will be future recoveries, including cash in bank accounts frozen under
restraining orders, net assets of the refrigerant supplier which breached the
contract and insurance proceeds under Airgas' and the refrigerant supplier's
policies. The Company will continue to pursue vigorously all possible sources
of recovery.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
<PAGE>
<PAGE> 14
PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS.
The Company's Common Stock is listed on the New York Stock Exchange
(ticker symbol: ARG). The following table sets forth, for each quarter during
the last two fiscal years, the high and low sales prices as reported by the
New York Stock Exchange.
High Low
---- ---
1997 Fiscal (1)
First Quarter $22.38 $18.75
Second Quarter 25.50 17.38
Third Quarter 27.13 21.13
Fourth Quarter 24.50 16.50
1996 Fiscal (1)
First Quarter $13.88 $12.50
Second Quarter 15.00 13.31
Third Quarter 16.63 15.69
Fourth Quarter 20.06 19.81
________________
(1) Adjusted to reflect a two-for-one stock split effective on April 15, 1996
(See Note 10 to the Company's consolidated financial statements under Item
8). On May 30, 1997, there were approximately 13,000 holders of record of
the Company's Common Stock.
The present policy of the Company is to retain earnings to provide funds
for the operation and expansion of its business and not to pay cash dividends
on its Common Stock. Any payment of future dividends and the amounts thereof
will depend upon the Company's earnings, financial condition, loan covenants,
capital requirements and other factors deemed relevant by the Board of
Directors (See Note 9 to the Company's consolidated financial statements).
<PAGE>
<PAGE> 15
ITEM 6. SELECTED FINANCIAL DATA
Selected financial data for the Company is presented in the table below
and should be read in conjunction with Management's Discussion and Analysis of
Financial Condition and Results of Operations included in Item 7 and the
Company's consolidated financial statements included in Item 8 herein.
(amounts in thousands except per share amounts):
Years Ended March 31, (5)
___________________________________________
1997 1996 1995 1994 1993
(6)
____ ____ ____ ____ ____
Operating Results:
Net sales $1,158,894 $838,144 $687,983 $519,349 $410,771
Depreciation, depletion &
amortization(2) 62,491 45,762 36,868 30,571 28,045
Operating income 82,285 92,985 72,600 48,667 34,367
Interest expense, net 39,752 24,862 17,625 12,486 11,403
Income taxes(1) 21,080 28,522 23,894 16,027 10,811
Net earnings 23,266 39,720 31,479 20,290 12,469
Earnings Per Share(3) $ .34 $ .60 $ .48 $ .31 $ .19
Balance Sheet Data:
Working capital $ 124,849 $ 81,588 $ 54,084 $ 47,071 $ 40,253
Total assets 1,291,031 883,642 645,637 514,897 399,477
Current portion of long-term
debt 25,158 12,179 11,780 10,304 9,923
Long-term debt 629,931 385,832 259,970 205,311 158,629
Other non-current liabilities 29,565 34,490 11,116 6,635 762
Stockholders' equity(4) $ 336,657 $236,209 $189,652 $156,867 $127,571
_______________
(1) The Company retroactively adopted Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" as of April 1, 1992.
(2) Effective April 1, 1993, the Company changed its estimate of the useful
lives of its acetylene and high pressure cylinders from 20 to 30 years.
This change was made to better reflect the estimated periods during which
these assets will remain in service. The change had the effect of
reducing depreciation expense in 1994 by approximately $3.1 million and
increasing net earnings by $1.9 million or $.03 per share.
(3) See Notes 4 and 10 to the Company's consolidated financial statements for
information regarding earnings per share calculations and adjustment for
the stock split effective April 15, 1996.
(4) The Company has not paid any dividends on its common stock.
(5) During the fiscal years 1993 through 1997, the Company acquired 127
distributors.
(6) As discussed in Note 3 to the Company's consolidated financial statements,
during the fourth quarter of fiscal 1997, the Company recorded special
charges totaling $31.4 million ($20.2 million after tax) and incurred a
net loss of $780 thousand related to the sale of a medical home-care
business. Excluding the effects of the special charges and the loss,
operating income, net earnings and earnings per share were $113.7 million,
$44.3 million, and $.65 per share, respectively.<PAGE>
<PAGE> 16
AIRGAS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Item 7.
OVERVIEW
The Company's sales for the year ended March 31, 1997 increased 38% to a
record $1.16 billion, compared to $838.1 million in the prior year. Net
earnings for the year, before fourth-quarter special charges and a loss
related to the sale of a medical business, increased by 11% to $44.3 million,
or $.65 per share, compared to $39.7 million or $.60 per share in the prior
year. Net earnings were $23.3 million or $.34 per share, after including the
special charges and loss. Cash flow, excluding the special charges and the
loss, also increased to record levels. After-tax cash flow (net earnings plus
depreciation, amortization and deferred income taxes) for the year, before
special charges and the loss, increased 22% to $117.3 million compared to $96.4
million in the prior year. These increases were attributable to the continued
success of the Company's acquisition growth strategies combined with internal
sales growth and continuous improvement in other areas. Offsetting this growth
was lower-than-expected performances at certain Distribution subsidiaries
caused by difficult consolidations, costs associated with an accelerated rate
of new branch start-ups and planned expenses related to the expansion of Airgas
Direct Industrial ("ADI"). Since April 1, 1995, the Company has completed 65
acquisitions with a combined annual revenue base of approximately $420 million.
During 1997, the Company completed 24 acquisitions with annual sales of $230
million.
The Company has successfully acquired, integrated and consolidated more
than 250 businesses over the past 15 years, creating a national network of hubs
and branches that form the largest distributor of industrial, medical and
specialty gases and welding-related equipment and supplies in North America.
With over 600 locations in 41 states, Canada and Mexico, the Company has
established a strong local presence and has developed high value-added
relationships with its 650,000 customers. The Company continues to remain
focused on improved profitability and cash flow fueled by operational
efficiencies, improved pricing and business development opportunities,
including acquisitions.
Growth in the Company's industrial gas distribution business during 1997
was helped by the acquisition of 21 businesses with annual sales of $102
million. Internal development and expansion of existing product
lines resulted in same-store sales growth of 3.4% and same-store gross profit
growth of 3.9%.
Among the Company's other initiatives which are helping to build its
industrial gas business include the acquisition of Shell Land & Energy
Company's Jackson Dome carbon dioxide reserves and 183-mile pipeline in the
Southeastern United States. Additionally, in June 1997, the Company closed the
Carbonic Industries Corporation acquisition, the fourth largest producer of
carbon dioxide in the United States. These two key acquisitions, combined with
related acquisitions of liquid carbon dioxide distributors and carbon dioxide
beverage companies, complement the Company's existing industrial gas business
and provide opportunities for future growth.
In addition, the Company entered into a 47% joint venture with
National Welders Supply Company, a premier independent distributor with annual
sales of $125 million.
<PAGE> 17
AIRGAS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
During 1997, the Company entered a new business segment and formed its ADI
Group with the acquisitions of IPCO Safety Products ("IPCO", effective April
1, 1996) and Rutland Tool & Supply Co., Inc. ("Rutland", effective September 1,
1996). These two ADI companies offer a multi-channel, direct mail, national
distribution infrastructure which broadens the line of hardgoods and positions
the Company for entry into the $55 billion safety and metalworking industrial
segment of the Maintenance, Repair and Operations ("MRO") market. The MRO
market encompasses the same metal fabrication market that also accounts for
approximately 28% of Airgas' current gas and hardgoods equipment sales. The
Company believes that ADI's direct channel of delivery will lower the costs to
customers by leveraging the Company's purchasing power, taking advantage of
economies of scale and reducing the number of times an order is handled before
products reach the customer.
ADI's focus is to build on the Company's existing base of 650,000 local
customers and strong customer relationships by selling more products to
existing customers. The Company believes ADI will also provide improved
customer services, such as next-day delivery, and will enhance the Company's
branch-based network's ability to obtain and service national accounts.
During the fourth quarter of fiscal 1997, the Company recorded special
charges totaling $31.4 million and a net loss of $780 thousand related to the
sale of a medical home-care business. The special charges consist of a non-
recurring charge of $26.4 million ($17 million after tax) for product losses
and costs associated with the Company's investigation into the fraudulent
breach of contract by a third-party supplier of refrigerant gas and a $5
million ($3.2 million after tax)non-cash charge related to the impairment
write-down of certain machinery and equipment, goodwill and other intangible
assets of two non-core product-line businesses.
The fraudulent breach of contract by a third-party supplier of refrigerant
gas was reported by the Company on December 23, 1996. On February 12, 1997, the
Company disclosed it had filed a lawsuit in the United States District Court
against Discount Auto Parts, Inc. ("Discount"), an employee of Discount, and
certain other business and individual defendants, alleging that Discount and
the other defendants engaged in racketeering activity involving the fraudulent
sale of smuggled and counterfeit R-12 refrigerant gas. Airgas' complaint
alleges that the racketeering activity of the defendants caused damages to
Airgas in an amount not less than $20 million. The complaint seeks treble
damages under the Federal RICO and Georgia RICO statutes, as well as monetary
damages under other counts alleging fraud, conspiracy and related wrongful
conduct. The Company believes there will be future recoveries, including cash
in bank accounts frozen under restraining orders, net assets of the refrigerant
supplier which breached the contract and insurance proceeds under Airgas' and
the refrigerant supplier's policies. The Company will continue to pursue
vigorously all possible sources of recovery. See Item 3, "Legal Proceedings,"
and Notes 3 and 19 to the Company's Consolidated Financial Statements under
Item 8.
<PAGE> 18
AIRGAS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
RESULTS OF OPERATIONS: 1997 COMPARED TO 1996
____________________________________________
Net sales increased 38% in 1997, compared to 1996:
<TABLE>
(in thousands)
<CAPTION> 1997 1996 Increase
____ ____ __________
<S> <C> <C> <C>
Distribution $1,018,704 $801,552 $217,152
Direct Industrial 99,216 -- 99,216
Manufacturing 40,974 36,592 4,382
_______ _______ _______
$1,158,894 $838,144 $320,750
======= ======= =======
</TABLE>
For the year ended March 31, 1997, Distribution sales increased
approximately $181 million resulting from the acquisition of 62 distributors
since April 1, 1995 and approximately $36 million from same-store sales growth.
The Company estimates that had all acquisitions during the year ended March 31,
1997 been consummated on April 1, 1996, sales for 1997 would have been
approximately $1.050 billion. The increase in same-store Distribution sales
of 3.4% was a result of growth in all three product groups: gases, hardgoods
and rent. The internal growth was attributable to higher sales volume and from
improved pricing. The Company continues to focus on internal sales growth
through the development of new gas products and product-line extensions,
including specialty gases, small bulk gases, carbon dioxide, replacement
refrigerants in returnable containers, expansion of rental welder fleets and
increased hardgoods business through ADI. The Company believes its same-store
sales growth is slightly understated since it does not reflect the Company's
decision to cease unprofitable sales to certain customers and other sales lost
during acquisition consolidation and integration activity. Airgas subsidiaries
without significant acquisition activity averaged approximately 5% same-store
sales growth. The Company estimates same-store sales based on a comparison of
current period sales to the prior period's sales, adjusted for acquisitions.
Future same-store sales growth is dependent on the economy and the Company's
ability to expand markets for new and existing products and to increase prices.
ADI's sales include welding, metalworking, safety and other MRO hardgoods.
The internal sales growth rate for ADI was approximately 12% during fiscal
1997. Pro forma unaudited sales for ADI, assuming that the Rutland acquisition
had been completed on April 1, 1996, would have been approximately $120
million. Sales to the Distribution segment totaled approximately $1 million.
The Manufacturing segment's sales increased 12% during fiscal 1997
primarily as a result of the December 1, 1996 acquisition of the Jackson Dome
carbon dioxide business. Sales related to carbide, carbon products and nitrous
oxide were essentially flat. Sales to the Distribution segment totaled
approximately $1.5 million.
The increase in Distribution gross profits of approximately $100 million
compared to the prior year resulted from acquisitions which contributed
approximately $81 million and from same-store gross profit growth of 3.9% or
<PAGE> 19
AIRGAS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
approximately $19 million. Same-store gross profit growth resulted from margin
improvement of $2 million and sales volume growth of $17 million. On a same-
store basis, the Distribution gross margin was 50.9% which represented an
improvement of .2% compared to the prior year. Same-store gross margins
improved as a result of selective price increases to customers, leveraging the
Company's purchasing power through national purchasing programs and
improvements in rent margins. Compared to the prior year, the Distribution
gross margin of 49.7% is down 100 basis points due primarily to acquisitions
which have an average gross margin of approximately 45%. Acquisitions have had
an average sales mix of 53% hardgoods/47% gas and rent compared to the
Company's sales mix for fiscal 1996 of 49% hardgoods/51% gas and rent.
The gross profit margin of 26.9% for ADI does not reflect a full year of
Rutland's operations which has historically had gross margins of approximately
40%. Gross margins for the fourth quarter of fiscal 1997 for ADI were 29.5%,
reflecting Rutland's operations for the full period.
Selling, distribution and administrative expenses ("SG&A") increased $91.4
million compared to the prior year primarily due to acquisitions. As a
percentage of net sales, SG&A expenses decreased 140 basis points to 32%
compared to the prior year. Excluding ADI which has a lower SG&A
expense-to-sales ratio, SG&A expenses as a percentage of net sales decreased
30 basis points compared to the prior year. The improvement in the SG&A
expenses relative to sales was somewhat offset by higher operating expenses
associated with the consolidation and integration of certain Distribution
acquisitions, costs associated with the start-up of new Distribution branches
and expenses related to the expansion of ADI. As the Company continues to
integrate such acquisitions and complete such start-up and expansion
activities, SG&A expenses relative to net sales should improve, although such
increased expenses could recur as a result of future acquisitions and expansion
activities.
Depreciation and amortization increased $16.7 million compared to the
prior year primarily due to acquisitions and from increased capital
expenditures. Of the $33.1 million increase in capital expenditures,
approximately 60% of the increase resulted from purchases of cylinders, bulk
tanks and machinery and equipment which are necessary to facilitate gas sales
growth and the integration of acquisitions. Depreciation, depletion and
amortization as a percentage of sales decreased 10 basis points as a result of
ADI which has depreciation and amortization relative to sales of 2.9% compared
to the Distribution segment of 5.7%.
Excluding special charges of $31.4 million, operating income increased 22%
in 1997 compared to 1996:
<TABLE>
(in thousands)
<CAPTION> 1997 1996 Increase
____ ____ __________
<S> <C> <C> <C>
Distribution $102,571 $ 86,130 $ 16,441
Direct Industrial 3,076 -- 3,076
Manufacturing 8,063 6,855 1,208
_______ _______ _______
$113,710 $ 92,985 $ 20,725
======= ======= =======
</TABLE>
<PAGE> 20
AIRGAS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
The Distribution segment's operating income margin decreased 60 basis
points to 10.1% compared to the prior year. The decrease was primarily the
result of recent industrial gas distribution acquisitions which have operating
margins averaging around 8% and from an increase in operating costs associated
with the integration and consolidation of certain acquisitions and new branch
start-ups. Excluding three subsidiaries undergoing difficult consolidations, a
product-line company which was written down during the Company's fourth quarter
and the new branch start-ups, the Distribution operating income margin
reflected a slight improvement compared to the prior year. Subject to the
effects of future acquisitions and the Company's ability to increase sales and
expand margins, the Company believes that its Distribution operating income
margin should improve.
The operating income margin for ADI was 3.1%. The Company believes that
ADI's operating income margin will continue to be impacted in the foreseeable
future by expansion costs related to information systems, logistics and
facility enhancements.
The Manufacturing segment's operating income increased $1.2 million
compared to the prior year primarily as a result of the Jackson Dome
acquisition. Higher operating margins related to the Jackson Dome acquisition
also accounted for the 100 basis point increase in operating margins compared
to the prior year.
Interest expense, net, increased $14.9 million compared to the prior year
primarily as a result of the increase in average outstanding debt associated
with the acquisition of businesses acquired since April 1, 1995, the joint
venture investment in National Welders Supply Company, costs associated with
the fraudulent breach of contract by a third-party refrigerant gas supplier and
the repurchase of Airgas common stock. As discussed in "Liquidity and Capital
Resources" below, the Company has hedged floating interest rates under certain
borrowings with interest rate swap agreements.
Equity in earnings of unconsolidated affiliates of $958 thousand is
primarily attributable to the Company's 45% interest in National Welders Supply
Company.
Income tax expense, excluding the special charges and the loss related to
the sale of a medical home-care business represented 41% of pre-tax earnings
for the year ended March 31, 1997 compared to 41.8% in the prior year. The
decrease in the effective income tax rate is primarily a result of equity
affiliate income which is recorded net-of-tax.
Net earnings for the year ended March 31, 1997, before fourth quarter
special charges and the loss on the sale of a medical home-care business,
increased 11% to $44.3 million, or $.65 per share, from $39.7 million, or $.60
per share in 1996. Net earnings for the year, after the special charges and the
loss, were $23.3 million, or $.34 per share.
<PAGE> 21
AIRGAS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
RESULTS OF OPERATIONS: 1996 COMPARED TO 1995
____________________________________________
Net sales increased 22% in 1996 compared to 1995:
<TABLE>
(in thousands)
<CAPTION> 1996 1995 Increase
____ ____ __________
<S> <C> <C> <C>
Distribution $801,552 $654,381 $147,171
Manufacturing 36,592 33,602 2,990
_______ _______ _______
$838,144 $687,983 $150,161
======= ======= =======
</TABLE>
For the year ended March 31, 1996, Distribution sales increased
approximately $133 million resulting from the acquisition of 66 distributors
of industrial, medical and specialty gases and related equipment since April
1, 1994 and approximately $14 million from same-store sales growth. The
Company estimates that had all acquisitions during the year ended March 31,
1996 been consummated on April 1, 1995, distribution sales for the year ended
March 31, 1996 would have increased by an additional $100 million. The
increase in same-store sales of approximately 2% was the result of slightly
higher prices based on selected price increases to certain customers and
increased volume within its gas, rental and hardgoods businesses. During 1996,
the Company's same-store sales increased 3% in the first quarter, 2% in the
second and third quarters and 1% in the fourth quarter. Excluding the impact
of the inclement weather, the Company estimates same-store sales growth during
the fourth quarter would have been approximately 2%. The Company estimates
same-store sales based on a comparison of current period sales to the prior
period's sales, adjusted for acquisitions.
Sales for the Company's Manufacturing operations increased 9% during the
year ended March 31, 1996 compared to the prior year, primarily as a result of
an increase in the volume of lower margin exports and increased demand for
carbon products and nitrous oxide.
The increase in Distribution gross profit of $72.6 million over 1995 was
attributable to increases associated with acquisitions of $62.7 million and
same-store gross profit growth of $9.9 million. The majority of the $9.9
million same-store gross profit growth was derived from volume growth in gas
and increases in cylinder rent. Higher gas volumes were partially attributable
to the success of gas marketing programs, principally small bulk and specialty
gases. On a same-store basis, distribution gross margins increased an
estimated 0.3% compared to 1995 primarily due to improved rent gross margins
combined with slightly higher margins in gases and hardgoods. Increased
volumes of lower margin bulk gases partially offset the gas margin
improvements.
<PAGE> 22
AIRGAS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
Selling, distribution and administrative expenses decreased as a
percentage of sales to 33.4% in 1996 compared to 34.3% in 1995. The decrease
was a result of acquisition consolidation efforts and lower operating costs,
such as a reduction in business insurance costs through improved claims
management and reduced incident rates. In addition, certain operating costs,
such as occupancy costs, are relatively fixed and do not increase proportion-
ately with the increase in same-store sales. Partially offsetting these
improvements were normal salary increases and slightly higher distribution
costs.
Operating income increased 28% in 1996 compared to 1995:
<TABLE>
(in thousands)
<CAPTION> 1996 1995 Increase
____ ____ __________
<S> <C> <C> <C>
Distribution $86,130 $66,521 $19,609
Manufacturing 6,855 6,079 776
______ ______ ______
$92,985 $72,600 $20,385
====== ====== ======
</TABLE>
Distribution operating income as a percentage of net distribution sales
increased to 10.7% for the year ended March 31, 1996 compared to 10.2% in 1995.
The increase in distribution operating income in 1996 was the result of the
increase in gross profits from higher same-store sales, improved gross profit
margins and operating income provided by acquisitions.
Manufacturing operating income increased $776 thousand in 1996 compared
to 1995 due to strong demand for carbon products and nitrous oxide, and lower
production and delivery costs related to calcium carbide and nitrous oxide
business, partially offset by an increase in lower margin sales of carbon
products.
Interest expense, net, increased $7.2 million in 1996 compared to 1995
primarily as a result of the increase in average outstanding debt associated
with the acquisition of industrial gas distributors since April 1, 1994,
interest costs associated with the repurchase of Company common stock and
slightly higher interest rates, partially offset by an increase in positive
cash flow. As discussed in "Liquidity and Capital Resources" below, the
Company has hedged floating interest rates under certain borrowings with
interest rate swap agreements.
Income tax expense represented 41.8% of pre-tax earnings in 1996 compared
to 43.2% in 1995. The decrease in the effective income tax rate was primarily
due to an increase in pre-tax earnings relative to permanent differences and
as a result of the implementation of certain tax planning strategies.
Net earnings increased 26% to $39.7 million or $.60 per share in 1996 from
$31.5 million or $.48 per share in 1995.
<PAGE> 23
AIRGAS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
LIQUIDITY AND CAPITAL RESOURCES
_______________________________
The Company has primarily financed its operations, capital expenditures,
stock repurchases, and acquisitions with borrowings, the issuance of common
stock and funds provided by operating activities.
Cash flows from operating activities totaled $81.2 million ($106.5 million
excluding the special charges and loss related to the sale of a medical home-
care business) for the year ended March 31, 1997. Depreciation, depletion and
amortization represented $62.5 million of cash flows from operating activities.
Cash flows from working capital components increased $1.7 million as a result
of a decrease in prepaid expenses and other current assets, an increase in
accounts payable and an increase in accrued expenses and other current
liabilities partially offset by an increase in accounts receivable associated
with higher same-store sales and an increase in inventory levels to meet
increased hardgoods and gas sales volumes. The increase in other assets and
liabilities, net, primarily related to amounts paid in connection with securing
product-supply agreements and a decrease in deferred interest related to
interest rate swap agreements. Days' sales outstanding and distribution
hardgoods days' supply of inventory improved slightly compared to March 31,
1996 levels. Total inventories have increased primarily as a result of an
increase in distribution inventories of approximately $3 million to support
sales growth and gases of approximately $9 million associated with specialty
gas sales initiatives.
Cash used by investing activities totaled $276.0 million in fiscal 1997,
which was primarily comprised of capital expenditures of $74.4 million and
acquisitions and investments totaling $202.7 million.
The Company's use of cash for capital expenditures was attributable to the
continued assimilation of certain acquisitions requiring capital expenditures
for combining cylinder fill plants, improving truck fleets and purchasing
cylinders in order to return cylinders which were rented from third parties.
Additionally, capital expenditures include the purchase of cylinders and bulk
tanks necessary to facilitate gas sales growth. Approximately 60% of fiscal
1997's capital expenditures were for the purchase of cylinders, bulk tanks and
machinery and equipment. The Company estimates that its Distribution
maintenance capital expenditures are approximately 2% of net sales. The
Company considers the replacement of existing capital assets to be maintenance
capital expenditures.
The Company has undertaken initiatives to develop further its industrial
gas customer base to include customers which require large-volume supplies of
gases, such as nitrogen. For these customers, the Company plans to enter into
long-term supply contracts in conjunction with air separation plants which will
be built near customers' facilities. The Company has entered into agreements
with two customers which require the construction of two air separation plants
which will begin production late in calendar 1997. Capital costs incurred
during fiscal 1998 associated with these plants are estimated to total $40
million.
Financing activities provided cash of $194.8 million with total debt out-
standing increasing by $257.1 million from March 31, 1996. Funds from
financing activities were used primarily for the purchase of distributors,
equity investments, capital expenditures and the repurchase of Airgas common
stock.
<PAGE> 24
AIRGAS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
The Company's primary source of borrowing is a $500 million unsecured
revolving credit facility with various commercial banks which matures on
September 30, 2001. At March 31, 1997, the Company had approximately $282
million in borrowings under the facility and approximately $76 million
committed under letters of credit, resulting in unused availability under the
facility of approximately $142 million.
On August 8, 1996, the Company commenced a medium-term note program
pursuant to a registration statement filed with the Securities and Exchange
Commission on July 15, 1996, which provides for the issuance of its securities
with an aggregate public offering price of up to $450 million. In September
1996, the Company issued the following long-term debt under the medium-term
note program: $100 million of unsecured notes due September 2006 bearing
interest at a fixed rate of 7.75%; $50 million of unsecured notes due September
2001 bearing interest at a fixed rate of 7.15%. In March 1997, the Company
issued $75 million of unsecured notes due March 2004 at a fixed rate of 7.14%.
The proceeds from the medium-term note issuances were used to repay bank debt.
The Company has a Canadian credit facility totalling C$50 million (US$37
million) with various commercial banks which matures on November 14, 1998. At
March 31, 1997, the Company had approximately C$41 million (US$30 million) in
borrowings outstanding under the facility, resulting in unused availability
under the facility of approximately C$9 million (US$7 million).
The Company also has unsecured line of credit agreements with various com-
mercial banks. At March 31, 1997, these agreements totaled $50 million, under
which the Company had no borrowings outstanding.
At March 31, 1997, the effective interest rate related to outstanding
borrowings under all credit lines was approximately 6.07%.
The Company's loan agreements contain covenants which include the
maintenance of a minimum equity level and maintenance of certain financial
ratios.
In managing interest rate exposure, principally under the Company's
floating rate revolving credit facilities, the Company has entered into 23
interest rate swap agreements during the period from June 1992 through March
31, 1997. The swap agreements are with major financial institutions and
aggregate $358 million in notional principal amount at March 31, 1997.
Approximately $208 million of the notional principal amount of the swap
agreements require fixed interest payments based on an average effective rate
of 6.49% for remaining periods ranging between 1 and 8 years. Five swap
agreements require floating rates ($149.5 million notional amount at 5.72% at
March 31, 1997). Under the terms of seven of the swap agreements, the Company
has elected to receive the discounted value of the counterparty's interest
payments upfront. At March 31, 1997, approximately $18.7 million of such
payments were included in other liabilities. The Company continually monitors
its positions and the credit ratings of its counterparties, and does not
anticipate nonperformance by the counterparties.
The Company will continue to look for appropriate acquisitions and expects
to fund such acquisitions, future capital expenditure requirements and commit-
ments related to foreign investments primarily through the use of cash flow
from operations, debt, common stock for certain acquisition candidates and
other available sources. In connection with the acquisition of Rutland, the
Company issued approximately 3.4 million shares of its common stock, including
approximately 2.4 million treasury shares.
<PAGE> 25
AIRGAS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
In June 1997, the Company closed the acquisition of CIC, which was merged
into a newly-formed subsidiary of the Company in exchange for a combination of
the Company's common stock and cash.
Subsequent to March 31, 1997, the Company has acquired six businesses,
including CIC, with aggregate annual sales of approximately $69 million for an
aggregate purchase price of approximately $82 million. In addition, the
Company has signed letters of intent for nine companies with annual sales of
approximately $107 million and an aggregate purchase price of approximately $56
million.
In December 1996, the Board of Directors authorized the repurchase of up
to 1,600,000 shares of Airgas Common Stock, and on April 16, 1997, the
Board of Directors authorized the repurchase of up to 1,000,000 additional
shares. The Company purchased 800,000 shares of Airgas common stock
during the year ended March 31, 1997. Subsequent to March 31, 1997, the
Company repurchased 1,154,000 shares, leaving a total of 646,000 shares
available under the repurchase programs. The Company's treasury shares will
be used to fund acquisitions and employee benefit programs and will be acquired
in open-market transactions, from time-to-time, depending on market conditions.
The Company does not currently pay dividends.
Other
New Accounting Pronouncements
In the first quarter of fiscal 1997, Airgas adopted SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to Be Disposed Of." The statement requires the recognition of an impairment
loss for an asset held for use when the estimate of undiscounted future cash
flows expected to be generated by the asset is less than its carrying amount.
Measurement of the impairment loss is based on fair value of the asset.(See
Note 3 to the consolidated financial statements of the Company under Item 8.)
The Company accounts for stock options according to the provisions of
Accounting Principles Board Opinion 25 (APB 25), "Accounting for Stock Issued
to Employees." In October 1995, the Financial Accounting Standards Board
issued FASB Statement No. 123, "Accounting for Stock-Based Compensation." The
new standard defines a fair value method of accounting for stock options and
similar equity instruments. Companies may elect to continue to use existing
accounting rules or adopt the fair value method for expense recognition.
Companies that elect to continue to use existing accounting rules are required
to provide pro forma disclosures of net income and earnings per share assuming
the fair value method was adopted. Airgas has elected to continue to use
existing accounting rules under APB 25. Accordingly, Airgas has presented the
required pro forma disclosure provisions for its fiscal year ended March 31,
1997. (See Note 11 to the consolidated financial statements of the Company
under Item 8.) As the Company will continue to account for stockbased
compensation using the intrinsic value method, this statement does not have a
material impact on earnings, financial condition or liquidity of the Company.
In June 1996, the Financial Accounting Standards Board issued SFAS No.
125, "Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities". This statement provides accounting and
reporting standards for transfers and servicing of financial assets and
extinguishments of liabilities based on consistent application of a financial-
components approach that focuses on control. It distinguishes transfers of
<PAGE> 26
AIRGAS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
financial assets that are sales from transfers that are secured borrowings.
Under the financial-components approach, after a transfer of financial assets,
an entity recognizes all financial and servicing assets it controls and
liabilities it has incurred and derecognizes financial assets it no longer
controls and liabilities that have been extinguished. The financial-components
approach focuses on the assets and liabilities that exist after the transfer.
If a transfer does not meet the criteria for a sale, the transfer is accounted
for as a secured borrowing with pledge of collateral. This statement is
effective for transfer and servicing of financial assets and extinguishments
of liabilities for fiscal years beginning after December 15, 1996 and is to be
applied prospectively. Management believes that the adoption of this statement
will not have a material impact on earnings, financial condition or liquidity
of the Company.
In October 1996, the American Institute of Certified Public Accountants
issued Statement of Position 96-1 (SOP), which prescribes generally accepted
accounting principles for environmental remediation liabilities. This SOP more
specifically identifies future, long-term monitoring and administration
expenditures as remediation liabilities that need to be accrued on the balance
sheet as an existing obligation. This SOP is effective for fiscal years
beginning after December 15, 1996. Management believes that the adoption of
this statement will not have a material impact on earnings, financial condition
or liquidity of the Company.
In February 1997, the Financial Accounting Standards Board issued FASB
Statement No. 128 "Earnings Per Share." SFAS No. 128 establishes new standards
for computing and presenting earnings per share, effective for financial
statements issued for periods ending after December 15, 1997, including interim
periods. All prior periods will be restated to reflect the new Basic and
Diluted earnings per share amounts. The Company's Basic earnings per share is
essentially net income divided by the weighted shares outstanding, and the
Diluted earnings per share is not expected to be materially different than
currently reported earnings per share amounts. The Company will adopt SFAS No.
128 in the first quarter of fiscal 1998.
Forward-looking Statements
This report contains forward-looking statements. In connection with the
"safe harbor" provisions of the Private Securities Litigation Reform Act of
1995, there are certain important factors that could cause the Company's actual
results to differ materially from those included in such forward-looking
statements. Some of the important factors which could cause actual results to
differ materially from those projected include, but are not limited to: the
Company's ability to continue to identify, complete and integrate strategic
acquisitions to enter new markets and expand existing business (including CIC);
continued availability of financing to provide additional sources of funding
for future acquisitions; capital expenditure requirements and foreign
investments; the effects of competition from independent distributors and
vertically integrated gas producers on products and pricing, growth and
acceptance of new product lines through the Company's sales and marketing
programs; changes in product prices from gas producers and name-brand
manufacturers and suppliers of hardgoods; uncertainties regarding accidents or
litigation which may arise in the ordinary course of business; the Company's
ability to recover assets in connection with the fraudulent breach of contract
related to refrigerant R-12 purchases; and the effects of, and changes in the
economy, monetary and fiscal policies, laws and regulations, inflation and
monetary fluctuations and fluctuations in interest rates, both on a national
<PAGE> 27
and international basis. The Company does not undertake to update any
forward-looking statement made herein or that may be made from time to time by
or on behalf of the Company.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The consolidated financial statements and financial statement schedule of
the Company are set forth at pages F-1 to F-33 of the report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY.
The biographical information relating to the Company's directors appearing
in the Proxy Statement relating to the Company's 1997 Annual Meeting of
Stockholders is incorporated herein by reference. Biographical information
relating to the Company's executive officers is set forth in Item 1 of Part I
of this Report.
ITEM 11. EXECUTIVE COMPENSATION.
The information under "Board of Directors and Committees" and "Certain
Transactions" appearing in the Proxy Statement relating to the Company's 1997
Annual Meeting of Stockholders is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information required by this Item is set forth in the section headed
"Security Ownership" appearing in the Company's Proxy Statement relating to the
Company's 1997 Annual Meeting of Stockholders and such information is
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information under "Certain Transactions" appearing in the Proxy
Statement relating to the Company's 1997 Annual Meeting of Stockholders is
incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a)(1) and (2):
The response to this portion of Item 14 is submitted as a separate section of
this report beginning on page F-1. All other schedules have been omitted as
inapplicable, or not required, or because the required information is included
in the Consolidated Financial Statements or notes thereto.
(a)(3) Exhibits. The exhibits required to be filed as part of this annual
report on Form 10-K are listed in the attached Index to Exhibits.
(b) Reports on Form 8-K.
On January 24,1997, the Company filed a current report on Form 8-K to
announce, under Item 5, that its earnings for the third quarter ended December
31, 1996.
<PAGE> 28
On February 5, 1997, the Company filed a current report on Form 8-K, to
announce, under Item 5, that it named Thomas C. Deas, Jr., as its Chief
Financial Officer, effective February 24, 1997.
On March 18, 1997, the Company filed a current report on Form 8-K to
announce, under Item 5, certain organizational changes and management
appointments.
(c) Index to Exhibits and Exhibits filed as a part of this report.
3.1 Amended and Restated Certificate of Incorporation of Airgas, Inc. dated as
of August 7, 1995 (Incorporated by reference to Exhibit 3.1 to the
Company's September 30, 1995 Quarterly Report on Form 10-Q).
3.2 Airgas, Inc. By-Laws Amended and Restated November 29, 1994. (Incorporated
by reference to Exhibit 3.2 to the Company's March 31, 1996 report on Form
10-K).
4.1 Eighth Amended and Restated Loan Agreement dated September 27, 1996
between Airgas, Inc. and certain banks and Nationsbank of North Carolina,
N.A. ($500,000,000 credit facility).
4.2 Indenture dated as of August 1, 1996 of Airgas, Inc. to Bank of New York,
Trustee. (Incorporated by reference to Exhibit 4.5 to the Company's
Registration Statement on Form S-4 No. 333-23651 dated March 20, 1997).
4.3 Form of Airgas, Inc. Medium-Term Note (Fixed Rate). (Incorporated by
reference to Exhibit 4.6 to the Company's Registration Statement on Form
S-4 No. 333-23651 dated March 20, 1997).
4.4 Form of Airgas, Inc. Medium-Term Note (Floating Rate). (Incorporated by
reference to Exhibit 4.7 to the Company's Registration Statement on Form
S-4 No. 333-23651 dated March 20, 1997).
There are no other instruments with respect to long-term debt of the
Company that involve indebtedness or securities authorized thereunder
exceeding 10 percent of the total assets of the Company and its
subsidiaries on a consolidated basis. The Company agrees to file a copy
of any instrument or agreement defining the rights of holders of long-
term debt of the Company upon request of the Securities and Exchange
Commission.
4.5 Form of Rights Agreement, dated as of August 1, 1988, between Airgas, Inc.
and The Philadelphia National Bank, which includes as Exhibit a thereto
the Form of Rights Certificate: (Incorporated by reference to Exhibit (1)
(2) to the Company's Form 8-A dated August 11, 1988.)
4.6 Rights Agreement, dated as of April 1, 1997, between Airgas, Inc. and The
Bank of New York, N.A., as Rights Agent, which includes as Exhibit B
thereto the Form of Right Certificate. (Incorporated by reference to
Exhibit 1.1 to the Company's Form 8-A filed on April 28, 1997.)
4.7 First Amendment to the Rights Agreement Dated as of August 1, 1988, dated
as of April 1, 1997, between Airgas, Inc. and The Bank of New York.
(Incorporated by reference to Exhibit 1.2 to the Company's Form 8-A filed
on April 28, 1997.)
<PAGE> 29
* 10.1 Agreement between the Company and Peter McCausland, dated January 8,
1991, and form of Common Stock Purchase Warrant. (Incorporated by
reference to Exhibit 10.16 to the Company's March 31, 1992 report on
Form 10-K).
* 10.2 Amended and Restated 1984 Stock Option Plan, as amended effective May
22, 1995 (Incorporated by reference to Exhibit 10.1 to the Company's
September 30, 1995 Quarterly Report on Form 10-Q).
* 10.3 1989 Non-Qualified Stock Option Plan for Directors (Non-Employees),
as amended. (Incorporated by reference to Exhibit 10.7 to the
Company's March 31, 1992 report on Form 10-K).
* 10.4 Amendment to the 1989 Non-Qualified Stock Option Plan for Directors
(Non-Employees) as amended through August 7, 1995 (Incorporated by
reference to Exhibit 10.2 to the Company's September 30, 1995
Quarterly Report on Form 10-Q).
* 10.5 1994 Employee Stock Purchase Plan. (Incorporated by reference to
exhibit 10.19 to the Company's March 31, 1993 report on Form 10-K).
* 10.6 Amended and Restated Joint Venture Agreement dated March 31, 1992
between American Carbide and Carbon Corporation and Elkem Metals
Company. (Incorporated by reference to Exhibit 10.5 to the Company's
March 31, 1992 report on Form 10-K).
* 10.7 Airgas, Inc. Management Incentive Plan (Incorporated by reference to
Exhibit 10.3 to the Company's September 30, 1995 Quarterly Report on
Form 10-Q).
* 10.8 Joint Venture Agreement dated June 28, 1996 between Airgas, Inc. and
National Welders Supply Company, Inc. and J.A. Turner, III, and
Linerieux B. Turner and Molo Limited Partnership, Turner (1996)
Limited partnership, Charitable Remainder Unitrust for James A.
Turner, Jr. and Foundation for the Carolinas (Incorporated by
reference to Exhibit 2.1 to the Company's June 28, 1996 Report on
Form 8-K).
* 10.9 Letter dated July 24, 1992 between Airgas, Inc. (on behalf of
the Nominating and Compensation Committee) and Peter McCausland
regarding the severance agreement between the Company and Peter
McCausland.
<PAGE>
<PAGE> 30
(11) Statement re: computation of earnings per share.
(21) Subsidiaries of the Company.
(23.1) Consent of KPMG Peat Marwick LLP.
(23.2) Consent of KPMG Peat Marwick LLP (to be filed by amendment)
(23.3) Consent of KPMG Peat Marwick LLP (to be filed by amendment)
(23.4) Consent of Arthur Andersen LLP
(23.5) Report of Independent Public Accountants - Arthur Andersen LLP
(27) Financial data schedule
(99.1) Form 11-K for the Registrant's 401(K) Plan (to be filed by amendment)
(99.2) Form 11-K for the Registrant's Employee Stock Purchase Plan (to be
filed by amendment)
_____________
* A management contract or compensatory plan required to be filed by Item
14(c) of this Report.
<PAGE>
<PAGE> 31
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
Dated: June 11, 1997
Airgas, Inc.
By: /s/ Peter McCausland
_________________________
Peter McCausland
Chairman of the Board, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Title Date
_________ _____ ____
/s/ Peter McCausland Director, Chairman of the Board, June 11, 1997
____________________________ President and Chief Executive Officer
(Peter McCausland)
/s/ Thomas C. Deas, Jr. Vice President-Finance and June 11, 1997
____________________________ Chief Financial Officer
(Thomas C. Deas, Jr.)
/s/ Jeffrey P. Cornwell Assistant Vice President and
____________________________ Corporate Controller June 11, 1997
(Jeffrey P. Cornwell)
/s/ W. Thacher Brown Director June 11, 1997
____________________________
(W. Thacher Brown)
/s/ Frank B. Foster, III Director June 11, 1997
____________________________
(Frank B. Foster, III)
/s/ Robert E. Naylor Director June 11, 1997
____________________________
(Robert E. Naylor)
<PAGE>
<PAGE> 32
/s/ Robert L. Yohe Director June 11, 1997
____________________________
(Robert L. Yohe)
/s/ John A.H. Shober Director June 11, 1997
____________________________
(John A.H. Shober)
/s/ Merril L. Stott Director June 11, 1997
____________________________
(Merril L. Stott)
/s/ Erroll C. Sult Director June 11, 1997
____________________________
(Erroll C. Sult)
/s/ Argeris N. Karabelas Director June 11, 1997
_____________________________
(Argeris N. Karabelas)
<PAGE>
<PAGE> 33
AIRGAS, INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES
Page
Reference In
Report on
Form 10-K
_________
Independent Auditors' Report . . . . . . . . . . . . . . . . . . F-2
Statement of Management's Financial Responsibility . . . . . . . F-3
Consolidated Balance Sheets at March 31, 1997 and 1996 . . . . . F-4
Consolidated Statements of Earnings for the Years Ended
March 31, 1997, 1996 and 1995. . . . . . . . . . . . . . . . . F-5
Consolidated Statements of Stockholders' Equity for the
Years Ended March 31, 1997, 1996 and 1995. . . . . . . . . . . F-6
Consolidated Statements of Cash Flows for the Years Ended
March 31, 1997, 1996 and 1995. . . . . . . . . .. . . . . . . . F-7
Notes to Consolidated Financial Statements. . . . . . . . . . . . F-8
Financial Statement Schedule:
Schedule II - Valuation and Qualifying Accounts . . . . . . F-33
All other schedules for which provision is made in the applicable accounting
regulations promulgated by the Securities and Exchange Commission are not
required under the related instructions or are inapplicable and therefore have
been omitted.
F-1
<PAGE>
<PAGE> 34
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Airgas, Inc.:
We have audited the consolidated financial statements of Airgas, Inc. and
subsidiaries as listed in the accompanying index. In connection with our
audits of the consolidated financial statements, we also have audited the
financial statement schedule as listed in the accompanying index. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements and financial statement schedule based on our audits. We
did not audit the financial statements of National Welders Supply Company, Inc.
(National Welders), (a 45% percent-owned investee company). The Company's
investment in National Welders at December 31, 1997 was $49,800,000, and its
equity in earnings of National Welders was $935,000 for the year ended 1997.
The financial statements of National Welders were audited by other auditors
whose report has been furnished to us, and our opinion, insofar as it relates
to the amounts included for National Welders, is based solely on the report of
the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, based on our audits and the report of other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the financial position of Airgas, Inc. and subsidiaries as
of March 31, 1997 and 1996, and the results of their operations and their cash
flows for each of the years in the three-year period ended March 31, 1997, in
conformity with generally accepted accounting principles. Also in our opinion,
the related financial statement schedule, when considered in relation to the
basic consolidated financial statements taken as a whole, presents fairly, in
all material respects, the information set forth thereon.
Philadelphia, Pennsylvania KPMG PEAT MARWICK LLP
May 8, 1997
F-2
<PAGE>
<PAGE> 35
STATEMENT OF MANAGEMENT'S FINANCIAL RESPONSIBILITY
Management has prepared and is responsible for the integrity and
objectivity of the consolidated financial statements and related financial
information in this Annual Report. The statements are prepared in conformity
with generally accepted accounting principles. The financial statements
reflect management's informed judgment and estimation as to the effect of
events and transactions that are accounted for or disclosed.
Management maintains a system of internal control at each business unit.
This system, which undergoes periodic evaluation, is designed to provide
reasonable assurance that assets are safeguarded and records are adequate for
the preparation of reliable financial data. In determining the extent of the
system of internal control, management recognizes that the cost should not
exceed the benefits derived. The evaluation of these factors requires
estimates and judgment by management.
The Company's financial statements have been audited by KPMG Peat Marwick
LLP, independent auditors. Their Independent Auditors' Report, which is based
on an audit made in accordance with generally accepted auditing standards is
presented on the previous page. In performing their audit, KPMG Peat Marwick
LLP considers the Company's internal control structure to the extent they deem
necessary in order to plan their audit, determine the nature, timing and extent
of tests to be performed and issue their report on the consolidated financial
statements.
The Audit Committee of the Board of Directors meets with the independent
auditors and management to satisfy itself that they are properly discharging
their responsibilities. The auditors have direct access to the Audit
Committee.
Airgas, Inc.
/s/ Thomas C. Deas, Jr. /s/ Peter McCausland
________________________ _______________________
Thomas C. Deas, Jr. Peter McCausland
Vice President, Chairman, President and
Chief Financial Officer Chief Executive Officer
May 8, 1997
F-3
<PAGE>
<PAGE> 36
AIRGAS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS March 31,
________________
(In thousands, except per share amounts) 1997 1996
________________________________________ ____ ____
ASSETS
Current Assets
Trade receivables, less allowances for doubtful
accounts of $4,443 in 1997 and $3,396 in 1996 . . . . .$ 151,053 $120,811
Inventories (Note 5) . . . . . . . . . . . . . . . . . . 129,372 86,162
Prepaid expenses and other current assets. . . . . . . . 31,574 11,601
_______ _______
Total current assets. . . . . . . . . . . . . . . . 311,999 218,574
_______ _______
Plant and Equipment, at cost (Note 6). . . . . . . . . . 736,083 586,328
Less accumulated depreciation. . . . . . . . . . . . . . (183,922) (147,451)
_______ _______
Plant and equipment, net . . . . . . . . . . . . . . . 552,161 438,877
_______ _______
Other Non-current Assets (Note 7) . . . . . . . . . . . 132,257 60,948
Goodwill, net of accumulated amortization
of $29,503 in 1997 and $19,552 in 1996. . . . . . . . . 294,614 165,243
_______ _______
$1,291,031 $883,642
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt (Note 9) . . . . . . .$ 25,158 $ 12,179
Accounts payable, trade. . . . . . . . . . . . . . . . . 74,329 52,528
Accrued expenses and other current liabilities (Note 8). 87,663 72,279
_______ _______
Total current liabilities . . . . . . . . . . . . . 187,150 136,986
_______ _______
Long-Term Debt (Note 9). . . . . . . . . . . . . . . . . 629,931 385,832
Deferred Income Taxes (Note 15). . . . . . . . . . . . . 104,266 88,400
Other Non-current Liabilities (Note 9) . . . . . . . . . 29,565 34,490
Minority Interest in Subsidiaries (Note 21). . . . . . . 3,462 1,725
Commitments and Contingencies (Note 19)
Stockholders' Equity (Note 10)
Common Stock, par value $.01 per share, 200,000 shares
authorized, 68,762 and 66,314 shares issued in
1997 and 1996, respectively . . . . . . . . . . . . . . 688 663
Capital in Excess of Par Value . . . . . . . . . . . . . 155,543 91,512
Retained Earnings. . . . . . . . . . . . . . . . . . . . 196,626 173,360
Cumulative Translation Adjustments . . . . . . . . . . . (468) (410)
Treasury Stock, 800 and 2,355 common shares at cost
in 1997 and 1996, respectively. . . . . . . . . . . . . (15,732) (28,916)
_______ _______
Total stockholders' equity. . . . . . . . . . . . . 336,657 236,209
_______ _______
$1,291,031 $883,642
======= =======
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
<PAGE> 37
AIRGAS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
Years Ended March 31,
(In thousands, except per share amounts) ______________________________
_______________________________________ 1997 1996 1995
____ ____ ____
Net Sales
Distribution . . . . . . . . . . . . . . . .$1,018,704 $801,552 $654,381
Direct Industrial. . . . . . . . . . . . . . 99,216 -- --
Manufacturing . . . . . . . . . . . . . . . 40,974 36,592 33,602
________ _______ _______
Total net sales . . . . . . . . . . . . 1,158,894 838,144 687,983
________ _______ _______
Costs and Expenses
Cost of products sold (excluding depreciation,
depletion and amortization)
Distribution . . . . . . . . . . . . . . . 512,309 395,370 320,800
Direct Industrial. . . . . . . . . . . . . 72,543 -- --
Manufacturing. . . . . . . . . . . . . . . 26,531 24,121 22,076
Selling, distribution and administrative
expenses . . . . . . . . . . . . . . . . . 371,310 279,906 235,639
Depreciation, depletion and amortization . . 62,491 45,762 36,868
Special charges (Note 3) . . . . . . . . . . 31,425 -- --
________ _______ _______
Total costs and expenses. . . . . . . . 1,076,609 745,159 615,383
________ _______ _______
Operating Income
Distribution. . . . . . . . . . . . . . . . 102,571 86,130 66,521
Distribution - special charges. . . . . . . (31,425) -- --
Direct Industrial . . . . . . . . . . . . . 3,076 -- --
Manufacturing. . . . . . . . . . . . . . . . 8,063 6,855 6,079
________ _______ _______
Total operating income . . . . . . . . 82,285 92,985 72,600
Interest expense, net (Note 13). . . . . . . (39,752) (24,862) (17,625)
Other income, net (Note 14). . . . . . . . . 1,672 782 1,067
Equity in earnings of unconsolidated
affiliates (Note 12) . . . . . . . . . . . 958 -- --
Minority interest (Note 21). . . . . . . . . (817) (663) (669)
_________ _______ _______
Earnings before income taxes. . . . . 44,346 68,242 55,373
Income taxes (Note 15) . . . . . . . . . . . 21,080 28,522 23,894
_________ _______ _______
Net earnings. . . . . . . . . . . . .$ 23,266 $ 39,720 $ 31,479
========= ======= =======
Earnings Per Share (Notes 4 and 10). . . . .$ .34 $ .60 $ .48
========= ======= =======
Weighted average shares. . . . . . . . . . . 68,640 66,215 65,525
========= ======= =======
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
<PAGE> 38
AIRGAS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
STOCKHOLDERS' EQUITY
Years Ended March 31, 1997, 1996 and 1995
_________________________________________
Shares of Capital in
Common Stock Common Excess of
(In thousands) $.01 Par Value Stock Par Value
______________ ______________ ______ __________
Balance--April 1, 1994. . . . . . . . . 65,794.2 $658 $56,001
Net earnings . . . . . . . . . . . . . .
Foreign currency translation adjustment.
Retirement of treasury stock . . . . . . (3,754.4) (37) (1,445)
Purchase of treasury stock (Note 10) . .
Issuance of stock in connection
with acquisitions . . . . . . . . . . . 123.2 1 1,436
Stock warrants and options exercised . . 538.9 5 1,265
Tax benefit associated with exercise
of stock options and warrants (Note 15) 1,859
Shares issued in connection with
Employee Stock Purchase Plan (Note 11). 300.2 3 2,704
________ ___ ______
Balance--March 31, 1995. . . . . . . . . 63,002.1 $630 $61,820
Net earnings . . . . . . . . . . . . . .
Foreign currency translation adjustment.
Purchase of treasury stock (Note 10) . .
Issuance of stock in connection
with acquisitions . . . . . . . . . . . 843.7 9 11,435
Stock warrants and options exercised . . 1,841.6 17 3,705
Tax benefit associated with exercise
of stock options and warrants (Note 15) 7,613
Shares issued upon acquisition of minority
interests (Note 21) 258.1 3 3,547
Shares issued in connection with
Employee Stock Purchase Plan (Note 11). 368.2 4 3,392
________ ___ ______
Balance--March 31, 1996. . . . . . . . . 66,313.7 $663 $91,512
Net earnings . . . . . . . . . . . . . .
Foreign currency translation adjustment.
Purchase of treasury stock (Note 10) . .
Reissuance of treasury stock . . . . . .
Issuance of stock in connection
with acquisitions . . . . . . . . . . . 1,102.9 11 49,556
Stock warrants and options exercised . . 872.6 9 3,370
Tax benefit associated with exercise
of stock options and warrants (Note 15) 4,229
Shares issued upon acquisition of minority
interests (Note 21). . . . . . . . . . 76.5 1 1,724
Shares issued in connection with
Employee Stock Purchase Plan (Note 11). 395.9 4 5,152
________ ___ ______
Balance--March 31, 1997 . . . . . . . . 68,761.6 $688 $155,543
======== === ======
COLUMNS CONTINUED ON NEXT PAGE
F-6
<PAGE>
<PAGE> 39 AIRGAS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
STOCKHOLDERS' EQUITY - (Continued)
Years Ended March 31, 1997, 1996 and 1995
_________________________________________
Cumulative
Retained Translation Treasury
(In thousands) Earnings Adjustments Stock
______________ _________ ___________ ________
Balance--April 1, 1994. . . . . . . . . .$102,161 $(471) $(1,482)
Net earnings. . . . . . . . . . . . . . . 31,479
Foreign currency translation adjustment . 2
Retirement of treasury stock. . . . . . . 1,482
Purchase of treasury stock (Note 10). . . (5,969)
Issuance of stock in connection
with acquisitions. . . . . . . . . . . .
Stock warrants and options exercised. . .
Tax benefit associated with exercise
of stock options and warrants (Note 15).
Shares issued in connection with
Employee Stock Purchase Plan (Note 11) .
_______ ____ ______
Balance--March 31, 1995 . . . . . . . . .$133,640 $(469) $(5,969)
Net earnings. . . . . . . . . . . . . . . 39,720
Foreign currency translation adjustment . 59
Purchase of treasury stock (Note 10). . . (22,947)
Issuance of stock in connection
with acquisitions. . . . . . . . . . . .
Stock warrants and options exercised. . .
Tax benefit associated with exercise
of stock options and warrants (Note 15).
Shares issued upon acquisition of minority
interests (Note 21). . . . . . . . . . .
Shares issued in connection with
Employee Stock Purchase Plan (Note 11) .
________ ____ ______
Balance--March 31, 1996 . . . . . . . . .$173,360 $(410) $(28,916)
Net earnings. . . . . . . . . . . . . . . 23,266
Foreign currency translation adjustment . (58)
Purchase of treasury stock (Note 10). . . (15,732)
Reissuance of treasury stock. . . . . . . 28,916
Issuance of stock in connection
with acquisitions. . . . . . . . . . . .
Stock warrants and options exercised. . .
Tax benefit associated with exercise
of stock options and warrants (Note 15).
Shares issued upon acquisition of minority
interests (Note 21). . . . . . . . . . .
Shares issued in connection with
Employee Stock Purchase Plan (Note 11) .
________ ____ _______
Balance--March 31, 1997 . . . . . . . . $196,626 $(468) $(15,732)
======== ==== =======
See accompanying notes to consolidated financial statements.
F-6, Continued
<PAGE> 40 AIRGAS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) Years Ended March 31,
1997 1996 1995
____ ____ ____
Cash Flows From Operating Activities
Net earnings . . . . . . . . . . . . . . . . . . $ 23,266 $39,720 $31,479
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization . . . . . . . . . 62,491 45,762 36,868
Depreciation and amortization - special charges 3,930 -- --
Deferred income taxes. . . . . . . . . . . . . (170) 10,868 11,549
Equity in earnings of unconsolidated affiliates. (2,314) (1,428) (840)
Gain on sale of investment in CBI Industries, Inc. -- -- (560)
Gain on divestiture of medical home-care business. (770) -- --
(Gain)/Loss on sale of plant and equipment. . . 1,386 (12) 110
Minority interest in earnings . . . . . . . . . 817 663 669
Stock issued for employee benefit plan expense 5,156 3,396 2,707
Changes in assets and liabilities, excluding
effects of business acquisitions and divestiture:
Trade receivables, net. . . . . . . . . . . (6,661) (5,300) (1,179)
Inventories, net. . . . . . . . . . . . . . (12,090) (2,509) (1,874)
Prepaid expenses and other current assets . 3,687 (960) 198
Accounts payable, trade. . . . . . . . . . 10,534 (1,461) 2,934
Accrued expenses and other current liabilities. 6,247 4,485 1,332
Other assets and liabilities, net . . . . . (14,262) (1,202) (3,441)
_______ ______ ______
Net cash provided by operating activities. 81,247 92,022 79,952
_______ ______ ______
Cash Flows From Investing Activities
Capital expenditures . . . . . . . . . . . . . . (74,358) (41,236) (36,712)
Proceeds from sale of plant and equipment. . . . 3,551 3,968 2,563
Proceeds from divestiture of medical business. . 6,586 -- --
Business acquisitions, net of cash acquired. . . (168,666)(142,776) (79,202)
Business acquisitions, holdback settlements. . . (7,943) (7,381) (3,643)
Investment in unconsolidated affiliates. . . . . (33,995) (3,448) (3,497)
Purchase of investment in CBI Industries, Inc. . -- -- (17,026)
Proceeds from sale of investment in CBI
Industries, Inc. . . . . . . . . . . . . . . . -- -- 17,892
Dividends from joint venture . . . . . . . . . . 1,729 1,037 550
Other, net . . . . . . . . . . . . . . . . . . . (2,949) (121) (439)
________ ______ ______
Net cash used by investing activities. . . . (276,045)(189,957) (119,514)
Cash Flows From Financing Activities ________ _______ ______
Proceeds from borrowings . . . . . . . . . . . . 916,677 692,414 394,193
Repayment of debt. . . . . . . . . . . . . . . . (707,401)(594,931) (359,253)
Financing costs. . . . . . . . . . . . . . . . . (2,261) (136) (230)
Repurchase of treasury stock, net. . . . . . . . (14,419) (22,947) (5,969)
Exercise of options and warrants . . . . . . . . 3,162 3,722 1,270
Net overdraft. . . . . . . . . . . . . . . . . . (960) 4,068 4,591
Other financing activities . . . . . . . . . . . -- 15,745 4,960
________ ______ ______
Net cash provided by financing activities. . 194,798 97,935 39,562
________ ______ ______
Cash Increase (Decrease) . . . . . . . . . . . . -- -- --
Cash--Beginning of year. . . . . . . . . . . . . -- -- --
_______ ______ ______
Cash--End of Year. . . . . . . . . . . . . . . . $ -- $ -- $ --
======= ====== ======
For supplemental cash flow disclosures see Note 20.
See accompanying notes to consolidated financial statements.
F-7
<PAGE> 41
AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of Presentation
The consolidated financial statements include the accounts of Airgas, Inc.
and subsidiaries (the "Company"). Unconsolidated affiliates are accounted for
on the equity method and generally consist of 20-50% owned operations where
control does not exist or is considered temporary. The excess of the cost of
these affiliates over the Company's share of their net assets at the
acquisition date is being amortized over 40 years. Intercompany accounts and
transactions are eliminated in consolidation.
The Company has made estimates and assumptions relating to the reporting
of assets and liabilities and disclosure of contingent assets and liabilities
to prepare these statements in conformity with generally accepted accounting
principles. Actual results could differ from those estimates.
(b) Inventories
Inventories are stated at the lower of cost or market with cost for
approximately 87% and 81% of the inventories at March 31, 1997 and 1996,
respectively, determined by the first-in, first-out (FIFO) method. Cost for
the remainder of inventories was determined using the last-in, first-out (LIFO)
method.
(c) Plant and Equipment
Plant and equipment are stated at cost. Depreciation is provided on the
straight-line basis over the estimated useful lives of the related assets.
Depletion of the cost of carbon dioxide production facilities, well equipment
and leases are computed on the unit-of-production method.
During 1997, the Company adopted SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of."
The statement requires the recognition of an impairment loss for an asset held
for use when the estimate of undiscounted future cash flows expected to be
generated by the asset is less than its carrying amount. Measurement of the
impairment loss is based on fair value of the asset. As discussed in Note 3,
the Company recorded a write-down related to certain machinery and equipment,
goodwill and other intangible assets of two non-core, distribution product-line
businesses.
F-8
<PAGE>
<PAGE> 42 AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued)
(d) Other Assets
Costs related to the acquisition of long-term debt are deferred and
amortized over the term of the related debt. Costs and payments pursuant to
noncompetition arrangements entered into in connection with business
acquisitions are amortized over the terms of the arrangements which are
principally over 5 years. The Company assesses the recoverability of
noncompetition arrangements by determining whether the amortization of the
asset balance can be recovered through projected undiscounted future cash flows
over its remaining life.
(e) Goodwill
Goodwill represents costs in excess of net assets of businesses acquired
and is amortized on a straight-line basis over the expected periods to be
benefited, which currently ranges from 20 to 40 years. The Company assesses
the recoverability of this intangible asset by determining whether the
amortization of the goodwill balance over its remaining life can be recovered
through projected undiscounted future cash flows.
(f) Income Taxes
Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carry forwards. Deferred tax assets
and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected
to be recovered or settled. The effect on deferred tax assets and liabilities
of a change in tax rates is recognized in income in the period that includes
the enactment date.
(g) Foreign-Currency Translation
The functional currency of the Company's foreign operations is the
applicable local currency. The translation of foreign currencies into U.S.
dollars is performed for balance sheet accounts using current exchange rates in
effect at the balance sheet date and for revenue and expense accounts using
average exchange rates during each reporting period. The gains or losses, net
of applicable deferred income taxes, resulting from such translations are
included in stockholders' equity. Gains and losses arising from foreign
currency transactions are reflected in the consolidated statements of earnings
as incurred.
(h) Concentrations of Credit Risk
Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of trade receivables.
Concentrations of credit risk are limited due to the Company's large number of
customers and their dispersion across many industries. Credit terms granted to
customers are generally net 30 days.
(i) Revenue Recognition
Sales are recorded upon shipment to the customer.
F-9
<PAGE> 43 AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(j) Financial Instruments
In hedging interest rate exposure, the Company enters into interest rate
swap agreements. These instruments are not entered into for trading purposes
and the Company has the ability and intent to hold these instruments to
maturity. The Company only uses non-leveraged instruments. When interest
rates change, the difference to be paid or received is accrued and recognized
as interest expense over the life of the agreement. The fair values of the
Company's financial instruments are estimated based on quoted market prices for
the same or similar issues.
The carrying amounts for accounts receivable and accounts payable
approximate fair value because of the short-term maturity of these financial
instruments.
(k) Insurance Coverage
The Company has established insurance programs to cover workers'
compensation, business automobile, general and products liability. These
programs have self-insured retentions of $1,000,000 per occurrence for workers'
compensation, general and products liability, and a self-insured retention
limit of $500,000 per occurrence for business automobile liability, with
certain maximum aggregate policy limits per claim year. The Company does not
deem its self-insured retention exposure to be material.
(l) Reclassifications
Certain reclassifications have been made to previously issued financial
statements to conform to the current presentation.
(2) ACQUISITIONS
During 1997, the Company acquired IPCO Safety Products Company ("IPCO")
and Rutland Tool & Supply Co., Inc. ("Rutland"), to form the base for the
Company's Direct Industrial segment, ADI. Also, in connection with its carbon
dioxide business, the Company acquired Shell Land & Energy Company's ("Shell")
interest in unitized leases producing carbon dioxide, including Shell's 183
mile pipeline ("Northeast Jackson Dome"). The Company also made certain
related acquisitions of carbon dioxide distributors. In June 1997, the Company
acquired Carbonic Industries Corporation ("CIC"), in a merger.
Acquisitions have been recorded using the purchase method of accounting,
and, accordingly, results of their operations have been included in the
Company's consolidated financial statements since the effective dates of the
respective acquisitions. Also, as discussed in Note 21, the Company has
accounted for the acquisition of subsidiary minority interests in 1997, 1996
and 1995 using the purchase method of accounting.
1997 - During 1997, the Company purchased 24 businesses. The largest of
these acquisitions and their effective dates included IPCO (April 1, 1996),
American Welding Supply (June 1, 1996), Rutland (September 1, 1996), Findley
Welding Supply (October 1, 1996), and Northeast Jackson Dome (December 1,
1996). The aggregate purchase price for these acquisitions amounted to
approximately $233 million. The purchase price for the remaining 19 businesses
amounted to approximately $76 million.
F-10
<PAGE> 44
AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(2) ACQUISITIONS - (Continued)
1996 - During 1996, the Company purchased 42 businesses. The largest of
these acquisitions and their effective dates included Tech-Weld, Inc. (April 3,
1995), Trinity Welding Supply, Inc. (May 1, 1995), Red-D-Arc, Limited (June 29,
1995), Capital Welding Supply, Inc. (August 1, 1996), Langdon Oxygen Company
(October 5, 1995), Acetylene Gas Company (January 1, 1996), Iatech Sales Co.
(January 1, 1996), Welders Equipment Company (February 1, 1996) and Braun
Welding Supply, Inc. (March 1, 1996). The aggregate purchase price for
these acquisitions amounted to approximately $164 million. The purchase price
for the remaining 33 businesses amounted to approximately $73 million.
1995--During 1995, the Company purchased 25 businesses. The largest of
these acquisitions and their effective dates included The Jimmie Jones Company
(August 1, 1994) and Post Welding Supply (November 1, 1994). The aggregate
purchase price for these acquisitions amounted to approximately $83 million.
The purchase price for the remaining 23 businesses amounted to approximately
$44 million.
In connection with the above business acquisitions, the total purchase
price, fair value of assets acquired, cash paid and liabilities assumed were as
follows:
Years Ended March 31,
___________________________
(In thousands) 1997 1996 1995
______________ ____ ____ ____
Cash paid . . . . . . . . . . . . . . . . . . $168,666 $142,776 $ 79,202
Issuance of Airgas common stock . . . . . . . 78,671 11,443 775
Notes issued to sellers . . . . . . . . . . . 30,104 24,242 11,340
Notes payable and capital leases assumed. . . 2,103 4,073 9,067
Other liabilities assumed and accrued
acquisition costs. . . . . . . . . . . . . . 29,733 54,223 22,935
______ ______ ______
Total purchase price allocated to assets
acquired. . . . . . . . . . . . . . . . . . $309,277 $236,757 $123,319
======= ======= =======
Included in the 1997 aggregate purchase price is the issuance of
approximately 3.4 million shares of the Company's common stock(which includes
approximately 2.4 million shares which were issued out of treasury stock),
issued in connection with the September 1996 acquisition of Rutland.
In connection with three acquisitions, the Company is required to issue
shares of Airgas common stock if the Airgas common stock price at certain dates
during fiscal 1999 is less than a previously established price. Shares of the
Company become issuable if the Airgas common stock price falls below a range of
$12.96 to $14.13 per share. At March 31, 1997, based on the Airgas common
stock price, no shares were contingently issuable.
The purchase price for business acquisitions and minority interests were
allocated to the assets acquired and liabilities assumed based on their
estimated fair values. Costs in excess of net assets acquired (goodwill) for
1997, 1996 and 1995 amounted to $144.0 million,$81.3 million and $40.8 million
respectively.
F-11
<PAGE> 45
AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(2) ACQUISITIONS - (Continued)
The following presents unaudited estimated pro forma operating results as
if the 1997 and 1996 acquisitions had been consummated on April 1, 1995. These
pro forma results have been prepared for comparative purposes only and do not
purport to be indicative of what would have occurred had the acquisitions been
made as of April 1, 1995 or of results which may occur in the future.
Years Ended March 31,
_____________________
(In thousands except per share amounts) 1997 1996
_______________________________________ ____ ____
Net sales . . . . . . . . . . . . . . . . . . . $1,221,584 $1,158,591
Net earnings. . . . . . . . . . . . . . . . . . 21,463 34,404
Earnings per share: . . . . . . . . . . . . . . .31 .49
Subsequent to March 31, 1997, the Company has acquired six businesses,
including CIC, with aggregate annual sales of approximately $69 million for an
aggregate purchase price of approximately $82 million. In addition, the
Company has signed letters of intent for nine companies with aggregate annual
sales of $107 million for an aggregate purchase price of approximately $56
million.
(3) SPECIAL CHARGES
On December 23, 1996, the Company announced it was the victim of a
fraudulent breach of contract by a third-party supplier of refrigerant gas. In
connection with the fraud, the Company recorded a non-recurring pre-tax charge
during the fourth quarter of $26.4 million (approximately $17 million after
tax) for product losses and costs associated with the Company's investigation
into the fraud. The Company believes there will be recoveries, including cash
in bank accounts frozen under restraining orders, net assets of the refrigerant
supplier which breached the contract and insurance proceeds under Airgas' and
the refrigerant supplier's policies. The Company will continue to pursue
vigorously all possible sources of recovery. (See Note 19 for further
discussion of legal proceedings pending against the supplier).
The Company recorded a pre-tax, non-cash charge of approximately $5
million(approximately $3.2 million after tax) related to the write-down of
certain machinery and equipment, goodwill and other intangible assets of two
non-core, distribution product-line businesses. The write-down was based on an
evaluation of the estimated fair value of the assets associated with these two
non-core businesses which indicated that these assets were impaired. Fair
value was based on the estimated future undiscounted cash flows to be generated
by these assets.
F-12<PAGE>
<PAGE> 46
AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(4) EARNINGS PER SHARE
Primary and fully diluted earnings per share amounts were determined using
the Treasury Stock method.
In February 1997, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 128, "Earnings per Share." SFAS No. 128 establishes new standards for
computing and presenting earnings per share, effective for financial statements
issued for periods ending after December 15, 1997, including interim periods.
All prior periods will be restated to reflect the new Basic and Diluted
earnings per share amounts. The Company's Basic earnings per share is
essentially net income divided by the weighted shares outstanding, and the
Diluted earnings per share is not expected to be materially different than
currently reported earnings per share amounts. The Company will adopt SFAS No.
128 in the first quarter of fiscal 1998.
(5) INVENTORIES
Inventories consist of: March 31,
_______________________
(In thousands) 1997 1996
______________ ____ ____
Finished goods. . . . . . . . . . . . . . . . . . .$129,218 $85,626
Raw materials . . . . . . . . . . . . . . . . . . . 1,526 1,879
______ ______
130,744 87,505
Less reduction to LIFO cost . . . . . . . . . . . . (1,372) (1,343)
______ ______
$129,372 $86,162
====== ======
(6) PLANT AND EQUIPMENT
The major classes of plant and equipment, at cost, are as follows:
March 31,
_______________________
(In thousands) 1997 1996
______________ ____ ____
Land and land improvements . . . . . . . . . . . . $ 21,676 $ 20,066
Buildings and leasehold improvements . . . . . . . 66,659 58,153
Cylinders. . . . . . . . . . . . . . . . . . . . . 365,253 321,770
Machinery and equipment, including bulk tanks. . . 241,275 151,098
Transportation equipment . . . . . . . . . . . . . 39,264 33,724
Construction in progress . . . . . . . . . . . . . 1,956 1,517
_______ _______
$ 736,083 $586,328
======= =======
Depreciation, depletion and amortization of plant and equipment charged to
operations amounted to $39.1 million, $32.0 million and $26.3 million in 1997,
1996 and 1995, respectively.
F-13
<PAGE> 47
AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(7) OTHER NON-CURRENT ASSETS
Other non-current assets include:
March 31,
_______________________
(In thousands) 1997 1996
______________ ____ ____
Investment in unconsolidated affiliates (Note 12). $ 64,992 $ 9,332
Noncompete agreements and other intangible
assets, at cost, net of accumulated
amortization of $59.8 million in 1997
and $46.7 million in 1996 . . . . . . . . . . . . 54,794 47,530
Other assets. . . . . . . . . . . . . . . . . . . . 12,471 4,086
_______ ______
$132,257 $60,948
======= ======
(8) ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
Accrued expenses and other current liabilities include:
March 31,
_______________________
(In thousands) 1997 1996
______________ ____ ____
Cash overdraft. . . . . . . . . . . . . . . . . . . $ 14,746 $15,706
Insurance payable and related reserves. . . . . . . 5,224 5,297
Customer cylinder deposits. . . . . . . . . . . . . 8,185 7,058
Other accrued expenses and current liabilities. . . 59,508 44,218
______ ______
$ 87,663 $72,279
====== ======
The cash overdraft is attributable to the float of the Company's outstanding
checks.
F-14
<PAGE> 48 AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(9) INDEBTEDNESS
(a) Long-term debt consists of the following:
March 31,
_______________________
(In thousands) 1997 1996
______________ ____ ____
Revolving credit borrowings . . . . . . . . . . . . $311,877 $314,804
Medium-term notes . . . . . . . . . . . . . . . . . 225,000 --
Acquisition and investment notes. . . . . . . . . . 87,426 50,392
All other notes, at various rates and maturities. . 30,786 32,815
_______ _______
Total long-term debt. . . . . . . . . . . . . . . . 655,089 398,011
Less current installments . . . . . . . . . . . . . (25,158) (12,179)
_______ _______
Long-term debt, excluding current installments. . . $629,931 $385,832
======= =======
The Company's primary source of borrowing is a $500 million unsecured
revolving credit facility with various commercial banks which matures on
September 30, 2001. At March 31, 1997, under the revolving credit facility,
$175 million of LIBOR-based borrowings were outstanding with effective interest
rates of 5.99%, and $107 million of money market based borrowings were
outstanding with effective interest rates of 5.88%.
On August 8, 1996, the Company commenced a medium-term note program
pursuant to a registration statement filed with the Securities and Exchange
Commission on July 15, 1996, which provides for the issuance of its securities
with an aggregate public offering price of up to $450 million. In September
1996, the Company issued the following long-term debt under the medium-term
note program: $100 million of unsecured notes due September 2006 bearing
interest at a fixed rate of 7.75%; $50 million of unsecured notes due September
2001 bearing interest at a fixed rate of 7.15%. In March 1997, the Company
issued $75 million of unsecured notes due March 2004 at a fixed rate of 7.14%.
The proceeds from the medium-term note issuances were used to repay bank debt.
The Company has a C$50 million Canadian credit facility (US$37 million)
with various commercial banks which matures on November 14, 1998. At March 31,
1997, the Company had approximately C$41 million (US$30 million) in borrowings
outstanding under the facility, resulting in unused availability under the
facility of approximately C$9 million (US$7 million).
The Company also has unsecured line of credit agreements with various
commercial banks. At March 31, 1997, these agreements totaled $50 million,
under which the Company had no borrowings outstanding.
F-15
<PAGE> 49
AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(9) INDEBTEDNESS - (Continued)
Acquisition notes represent notes issued to sellers of businesses acquired
and are repayable in periodic installments including interest at an average
rate of 7.5%. Some acquisition notes require balloon payments which are
included in the aggregate maturity schedule.
Certain of the Company's credit facility agreements contain restrictive
covenants which include the maintenance of a minimum equity level, maintenance
of certain financial ratios and restrictions on additional borrowings and
dividend payments.
The aggregate maturities of long-term debt for the five years ending March
31, 2003 and thereafter are as follows (in thousands):
Years Ending March 31, Aggregate Maturity
______________________ __________________
1998 . . . . . . . . . . . . . . . . . . . $ 25,158
1999 . . . . . . . . . . . . . . . . . . . 45,142
2000 . . . . . . . . . . . . . . . . . . . 17,713
2001 . . . . . . . . . . . . . . . . . . . 6,750
2002 . . . . . . . . . . . . . . . . . . . 349,021
2003 and thereafter. . . . . . . . . . . . 211,305
_________
$ 655,089
=========
The fair value of long-term debt as of March 31, 1997 was approximately $656
million based on current rates offered to the Company by financial institutions
for similar type instruments.
(b) Swap Agreements
In managing interest rate exposure, principally under the Company's
floating rate revolving credit facilities, the Company has entered into 23
interest rate swap agreements during the period from June 1992 through March
31, 1997, including two forward starting swaps. The interest rate swap
agreements are with major financial institutions having a total notional
principal amount of $358 million at March 31, 1997.
F-16
<PAGE>
<PAGE> 50
AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(9) INDEBTEDNESS - (Continued)
Approximately $208 million of the swap agreements require fixed interest
payments based on an average effective rate of 6.49% for remaining periods
ranging between 1 and 8 years. Five swap agreements require floating rates
($149.5 million notional amount at 5.72% at March 31, 1997). The effect of the
swap agreements was to increase interest expense $1.4 million and $1.3 million
in 1997 and 1996, respectively. Under the terms of seven of the swap
agreements, the Company has elected to receive the discounted value of the
counterparty's interest payments upfront. At March 31, 1997, approximately
$18.7 million of such payments were included in other non-current liabilities.
The Company continually monitors its positions and the credit ratings of
its counterparties, and does not anticipate nonperformance by the
counterparties. The fair market value of these swaps was $807 thousand below
their carry value at March 31, 1997.
The aggregate maturities of the Company's interest rate swaps by type of
swap for the five years ending March 31, 2002 and thereafter are as follows (in
thousands):
Notional Principal Amounts
__________________________
Years Ending March 31, Pay-Fixed Receive-Fixed
______________________ _________ _____________
1998 . . . . . . . . . . . . . $ 30,000 $ 0
1999 . . . . . . . . . . . . . 12,500 7,500
2000 . . . . . . . . . . . . . 26,113 12,000
2001 . . . . . . . . . . . . . 66,113 0
2002 . . . . . . . . . . . . . 27,500 50,000
2003 and thereafter. . . . . . 46,113 80,000
_______ ______
$208,339 $149,500
======= ======
(10) STOCKHOLDERS' EQUITY
(a) Common Stock
On March 22, 1996, the Company's Board of Directors declared a two-for-one
stock split to stockholders of record on April 1, 1996, payable on April 15,
1996. All earnings per share data reflects this two-for-one stock split.
(b) Preferred Stock and Redeemable Preferred Stock
The Company is authorized to issue 20 million shares of preferred stock.
Of the 20 million shares authorized, 200,000 shares have been designated as
Series A Junior Participating Preferred Stock and 200,000 shares have been
designated as Series B Junior Participating Preferred Stock (see Note 10(e) for
further discussion). At March 31, 1997 and 1996, no shares of the preferred
stock were outstanding. The preferred stock may be issued from time to time by
the Board of Directors in one or more series, and the Board of Directors is
authorized to fix the dividend rights and terms, conversion rights, voting
rights, rights and terms of redemption, liquidation preferences, and any other
rights, preferences, privileges and restrictions of any series of Preferred
Stock, and the number of shares constituting each such series and designation
thereof.
F-17
<PAGE> 51
AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(10) STOCKHOLDERS' EQUITY - (Continued)
Additionally, the Company is authorized to issue 30,000 shares of
redeemable preferred stock. At March 31, 1997 and 1996, no shares were
outstanding.
(c) Treasury Stock
In December 1996, the Board of Directors authorized the repurchase of up
to 1,600,000 shares of Airgas common stock, and on April 16, 1997, the Board of
Directors authorized the repurchase of up to 1,000,000 additional shares. The
Company purchased 800,000 shares of Airgas common stock through March 31, 1997
Subsequent to March 31, 1997 and through May 30, 1997, the Company repurchased
1,154,000 shares, leaving a total of 646,000 shares available under the
repurchase program. The Company's treasury shares will be used to fund
acquisitions and employee benefit programs and will be acquired in open market
transactions, from time-to-time, depending on market conditions.
(d) Stock Purchase Warrants
The Company and the Chairman of the Company were parties to a Stock and
Warrant Issuance Agreement, as amended (the "Warrant Agreement"), which was
entered into in connection with the Company's acquisition of US Airgas, Inc.,
of which the Chairman was the majority shareholder, in May 1986. Pursuant to
the Warrant Agreement, the Chairman received warrants to purchase a total of
14,127,432 shares of the Company's common stock. Subsequent to the grant
dates, the Chairman transferred warrants to purchase 2,976,800 shares of common
stock to employees of the Company and to certain other individuals. As of May
1, 1996, all warrants had been exercised or had expired.
The following table summarizes the activity of the stock purchase warrants
during the three years ended March 31, 1997.
Number Price Per
of Shares Share
__________ _________
March 31, 1995
Outstanding, beginning of year . . . . . . . . 1,624,280 $ 1.68 -$ 2.19
Exercised. . . . . . . . . . . . . . . . . . . (114,800) 1.76 - 2.19
March 31, 1996
Outstanding, beginning of year . . . . . . . . 1,509,480 1.76 - 2.19
Exercised. . . . . . . . . . . . . . . . . . . (1,252,568) 1.76 - 2.19
Cancelled. . . . . . . . . . . . . . . . . . . (12,712)
March 31, 1997
Outstanding, beginning of year . . . . . . . . 244,200 1.76 - 2.19
Exercised. . . . . . . . . . . . . . . . . . . (244,200) $ 1.76 -$ 2.19
Outstanding, end of year . . . . . . . . . . . 0
(e) Shareholder Rights Plan
Effective April 1, 1997, the Board of Directors adopted a new stockholder
rights plan(the "Plan"). Pursuant to the Plan, the Board declared a dividend
distribution of one right for each share of common stock outstanding on April
29, 1997. Each right entitles the holder to purchase from the company one one-
thousandth of a share Series B Junior Participating Preferred Stock at an
initial exercise price of $100 per share.
F-18
<PAGE> 52
AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(10) STOCKHOLDERS' EQUITY - (Continued)
Rights become exercisable only following the acquisition by a person or
group of 15 percent (or 20 percent in the case of the Chairman and certain of
his affiliates) or more of the Company's common stock or after the announcement
of a tender offer or exchange offer to acquire 15 percent (or 20 percent in the
case of the Chairman and certain of his affiliates) or more of the outstanding
common stock. If such a person or group acquires 15 percent or more (or 20
percent or more, as the case may be) of the common stock, each right (other
than such person's or group's rights, which will become void) will entitle the
holder to purchase, at the exercise price, common stock having a market value
equal to twice the exercise price. In certain circumstances, the rights may be
redeemed by the Company. If not redeemed, they will expire on April 1, 2007.
On August 1, 1988, the Company Board of Directors adopted a preferred
share purchase rights plan (the "1988 Plan") that entitled Company stockholders
to purchase from the Company a unit consisting of one-hundredth of a share of
Series A Junior Participating Preferred Shares, or a combination of securities
and assets of equivalent value, at a purchase price of $65.00 per unit, subject
to adjustment. The 1988 Plan will expire in August 1998. In view of, among
other things, the impending expiration of the 1988 Plan, the Board adopted the
Plan. Pending its expiration in 1998, the Board amended the 1988 Plan to
provide that it will not take effect if the Plan is triggered.
(11) STOCK-BASED COMPENSATION
In October 1995, the FASB issued SFAS No. 123, "Accounting for Stock-Based
Compensation", effective for fiscal years beginning after December 15, 1995.
This statement establishes financial accounting and reporting standards for
stock-based employee compensation plans, which include the Company's stock
option plans and employee stock purchase plan.
The Company has elected to continue to account for its stock-based
compensation plans in accordance with Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued", as permitted by SFAS 123. Accordingly, no
compensation expense has been recognized for its stock option plans and its
stock purchase plan. However, pro forma information regarding net income and
earnings per share is required by SFAS 123. Had compensation expense for the
Company's stock-based compensation plans been determined based on the fair
value at the grant date in accordance with SFAS 123, the Company's pro forma
net income and earnings per share for 1997 and 1996 would be as follows (in
thousands, except per share data):
F-19
<PAGE> 53
AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Years Ended March 31,
_____________________
1997 1996
_______ ________
Net income As reported $23,266 $39,720
Pro forma $20,028 $37,925
Earnings per share As reported $ .34 $ .60
Pro forma $ .29 $ .57
At March 31, 1997, the Company had three stock-based compensation plans, which
are described below.
(a) 1984 Stock Option Plan
The Company has a stock option plan for officers and key employees. Under
the 1984 Stock Option Plan, the Company has reserved 14,080,000 shares.
Options are granted on terms and conditions determined by a committee of the
Board of Directors. At March 31, 1997, 3,161,941 options were available for
issuance with 785,685 options granted in fiscal 1997 with an exercise price
equal to the market price at the date of grant. Options are generally granted
in May each year, vest 25% annually and have a maximum term of ten years.
The fair value of each option grant is estimated on the date of grant
using the Black-Scholes option pricing model with the following weighted-
average assumptions used for 1997 and 1996 option grants, respectively:
expected volatility of 38.5% for both periods, risk-free interest rate of 6.42%
and 6.46%, and expected life of 4.37 years for both periods. The weighted
average fair value of the options granted during 1997 and 1996 was $8.95 and
$5.11, respectively.
The following table summarizes the activity of the plan during the three
years ended March 31, 1997:
Number Price Per
of Shares Share
__________ _________
March 31, 1995
Outstanding, beginning of year . . . . . . . . 5,250,900 $ 1.46 -$ 8.57
Granted. . . . . . . . . . . . . . . . . . . . 1,004,600 11.32 - 14.71
Exercised. . . . . . . . . . . . . . . . . . . (424,060) 1.46 - 7.89
Expired. . . . . . . . . . . . . . . . . . . . (2,500) 3.30 - 6.32
March 31, 1996
Outstanding, beginning of year . . . . . . . . 5,828,940 1.83 - 14.71
Granted. . . . . . . . . . . . . . . . . . . . 974,020 11.44 - 17.31
Exercised. . . . . . . . . . . . . . . . . . . (589,010) 1.83 - 11.32
Expired. . . . . . . . . . . . . . . . . . . . (14,490) 3.30 - 13.32
March 31, 1997
Outstanding, beginning of year . . . . . . . . 6,199,460 1.83 - 17.31
Granted. . . . . . . . . . . . . . . . . . . . 785,685 11.44 - 23.25
Exercised. . . . . . . . . . . . . . . . . . . (530,390) 1.83 - 17.31
Expired. . . . . . . . . . . . . . . . . . . . (173,080) 3.30 - 22.00
Outstanding, end of year . . . . . . . . . . . 6,281,675 $ 1.83 -$23.25
F-20
<PAGE> 54
AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(b) Board of Directors Stock Option Plan
The Company also maintains a stock option plan covering directors who are not
employees, which has 800,000 shares reserved. At March 31, 1997, 368,000
options for issuance, with 32,000 options granted in fiscal 1997.
The fair value of each option grant is estimated on the date of grant using the
Black-Scholes option pricing model with the following weighted-average
assumptions used for fiscal 1997 and 1996 option grants, respectively: expected
volatility of 37.8% for both periods, risk-free interest rate of 6.42% and
6.46%, and expected life of 5.35 years for both periods. The weighted average
fair value of the stock options granted during 1997 and 1996 was $8.68 and
$6.10, respectively.
The following table summarizes the activity of the plan during the three years
ended March 31, 1997:
Number Price Per
of Shares Share
__________ ____________
March 31, 1995
Outstanding, beginning of year . . . . . . . . 272,000 $ 2.10 -$ 8.57
Granted. . . . . . . . . . . . . . . . . . . . 40,000 13.82
March 31, 1996
Outstanding, beginning of year . . . . . . . . 312,000 2.10 - 13.82
Granted. . . . . . . . . . . . . . . . . . . . 40,000 13.50
March 31, 1997
Outstanding, beginning of year . . . . . . . . 352,000 2.10 - 13.82
Granted. . . . . . . . . . . . . . . . . . . . 32,000 19.25
Exercised. . . . . . . . . . . . . . . . . . . (98,000) 2.09 - 13.82
Outstanding, end of year . . . . . . . . . . . 286,000 $ 2.09 - $19.25
The following table summarizes information about options outstanding and
exercisable for the 1984 Stock Option Plan and the Board of Directors Stock
Option Plan at March 31, 1997:
Options Outstanding
____________________________________
Range of
Weighted Average Number Exercise
Remaining Life Outstanding Prices
________________ ___________ _________
4.15 692,370 $ 1.83 - $ 1.83
2.50 1,024,800 1.95 - 2.36
4.25 32,000 2.89 - 3.30
5.12 956,450 3.30 - 3.30
5.36 47,700 3.48 - 4.16
6.12 823,840 6.31 - 6.31
6.73 854,015 6.32 - 11.32
8.15 669,245 11.44 - 13.50
6.81 678,750 13.69 - 17.31
9.18 788,505 18.06 - 23.25
____ _________ _________________
5.91 6,567,675 $1.83 - $23.25
==== ========= =================
F-21
<PAGE> 55
AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Number of Options Weighted Average
Exercisable Exercise Price
__________________ __________________
692,370 $ 1.83
1,024,800 2.24
32,000 2.97
956,450 3.30
47,700 4.05
593,700 6.31
505,155 9.59
188,144 13.34
290,500 15.19
32,250 19.24
_________ ______
4,363,069 $5.30
========= ======
(c) 1994 Employee Stock Purchase Plan
Under the 1994 Employee Stock Purchase Plan (the "ESPP Plan"), the Company
has established an employee stock purchase plan to encourage and assist
employees to acquire equity interest in the Company. The ESPP Plan is
authorized to issue up to 2,000,000 shares of Airgas, Inc. common stock.
Generally, employees may elect to have up to 15% of their annual gross earnings
withheld to purchase Airgas, Inc. common stock at 85 to 95 percent of the
market price of the common stock, depending on base salary levels. Market
value under the ESPP Plan is either the employees' enrollment date market value
or the quarterly purchase date market value, whichever is lower. An employee
may lock-in a purchase price for up to 27 months. The ESPP Plan is designed to
comply with the requirement of Section 423 of the Internal Revenue Code. Under
the ESPP Plan, the Company issued 395,889, 368,194, and 300,204 shares at an
average purchase price of $13.02, $9.22 and $9.02 per share during 1997, 1996,
and 1995, respectively.
Compensation cost under SFAS No. 123 is estimated for the fair value of
the employees' option to purchase shares of common stock, which was estimated
using the Black-Scholes model with the following assumptions for fiscal 1997
and 1996, respectively: expected volatility of 38% for both periods, risk-free
interest rate of 6.2% and 5.7%, and expected term of 27 months for both
periods. The weighted average fair value of the purchase options granted in
fiscal 1997 and 1996 was $6.51 and $4.57, respectively.
(12) INVESTMENT IN UNCONSOLIDATED AFFILIATES
On June 28, 1996, based on the terms of a joint venture agreement, the
Company acquired 47% of the voting capital stock of National Welders Supply
Company, Inc.("National Welders"), for a payment in cash and notes of
approximately $47.6 million. National Welders is a premier distributor of
industrial, medical and specialty gases and related equipment based in
Charlotte, North Carolina. The purpose of the joint venture is to carry on the
business of National Welders, enhanced by its association with the Company and
its acquisition opportunities in the area currently served by National Welders.
F-22
<PAGE> 56
AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
At March 31, 1997, the Company's investment in all other unconsolidated
affiliates totaled approximately $15 million and includes Elkem-American
Carbide Company (U.S.), Bhoruka Gases, Ltd. (India) and Superior Air Products,
Ltd. (India). The Company accounted for these investments by the equity method
of accounting. The Company's share of earnings from all unconsolidated
affiliates was $2.3 million, $1.4 million and $840 thousand for the years ended
March 31, 1997, 1996 and 1995, respectively. Equity in earnings from Elkem
American Carbide Company of $1.4 million, $1.2 million and $840 thousand in
1997, 1996, and 1995 are included in Manufacturing net sales. As of March 31,
1997, the investment in unconsolidated affiliates includes goodwill of
approximately $30 million which is being amortized into income over 40 years.
A summary of financial information for its investments in unconsolidated
affiliates for the fiscal year ended March 31, 1997 is as follows:
(In thousands) March 31, 1997
______________
Current Assets $ 45,936
Non-Current Assets 132,240
_________
Total Assets 178,176
=========
Current Liabilities 27,543
Non-Current Liabilities 92,598
Mandatory Redeemable Preferred Stock 57,577
Stockholders' Equity 458
_________
Total Liabilities and Stockholders' Equity $178,176
=========
Year ended
March 31, 1997
_________________
Net Sales $134,972
Cost of Sales 95,334
________
Gross Profit 39,638
========
Operating Income 7,742
========
Income before taxes 8,691
========
Net income 6,243
Preferred stock dividends and equity
adjustments $ (3,929)
________
Company share of net income $ 2,314
========
F-23
<PAGE> 57 AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(13) INTEREST EXPENSE, NET
Interest expense, net, consists of:
Years Ended March 31,
___________________________
(In thousands) 1997 1996 1995
______________ ____ ____ ____
Interest expense. . . . . . . . . . . . . . . $ 41,777 $25,854 $18,476
Interest and finance charge income. . . . . . (2,025) (992) (851)
______ ______ ______
$ 39,752 $24,862 $17,625
====== ====== ======
(14) OTHER INCOME, NET
Other income, net, consists of:
Years Ended March 31,
___________________________
(In thousands) 1997 1996 1995
______________ ______ ____ ____
Gain on sale of investment in CBI
Industries, Inc. . . . . . . . . . . . . . . $ -- $ -- $ 560
Gain on sale of medical home-care business. . 770 -- --
Other income,net . . . . . . . . . . . . . . 902 782 507
______ _____ ___
$ 1,672 $ 782 $1,067
====== ===== ===
(15) INCOME TAXES
Pre-tax earnings were derived from the following sources:
Years Ended March 31,
___________________________
(In thousands) 1997 1996 1995
______________ ____ ____ ____
United States . . . . . . . . . . . . . . . . $ 44,199 $66,810 $54,239
Foreign . . . . . . . . . . . . . . . . . . . 147 1,432 1,134
______ ______ ______
$ 44,346 $68,242 $55,373
====== ====== ======
Income tax expense consisted of:
Years Ended March 31,
___________________________
(In thousands) 1997 1996 1995
______________ ____ ____ ____
Current:
Federal . . . . . . . . . . . . . . . . . $ 17,337 $14,657 $ 9,997
Foreign . . . . . . . . . . . . . . . . . 1,224 699 573
State . . . . . . . . . . . . . . . . . . 2,689 2,298 1,775
______ ______ ______
21,250 17,654 12,345
______ ______ ______
Deferred:
Federal . . . . . . . . . . . . . . . . . . (1,483) 9,660 9,829
Foreign . . . . . . . . . . . . . . . . . . 634 34 47
State . . . . . . . . . . . . . . . . . . . 679 1,174 1,673
______ ______ ______
(170) 10,868 11,549
______ ______ ______
$ 21,080 $28,522 $23,894
====== ====== ======
F-24
<PAGE> 58
(15) INCOME TAXES - (Continued)
Significant differences between taxes computed at the federal statutory
rate and the provision for income taxes were:
Years Ended March 31,
___________________________
1997 1996 1995
____ ____ ____
Taxes at U.S. federal statutory rate . . . . . . 35.0% 35.0% 35.0%
Increase in income taxes resulting from:
State income taxes, net of federal benefit . . . 3.2% 3.3 4.0
Amortization of non-deductible goodwill. . . . . 2.6% 1.8 1.8
Special charges (Note 3) . . . . . . . . . . . . 3.7% -- --
Sale of medical home-care business . . . . . . . 1.7% -- --
Other, net . . . . . . . . . . . . . . . . . . . 1.3% 1.7 2.4
____ ____ ____
47.5% 41.8% 43.2%
==== ==== ====
The tax effects of cumulative temporary differences that gave rise to the
significant portions of the deferred tax liability and deferred tax asset were
as follows:
March 31,
_______________________
(In thousands) 1997 1996
______________ ____ ____
Deferred Tax Assets:
____________________
Inventories . . . . . . . . . . . . . . . . . . $ 2,666 $ 1,396
Accounts receivable . . . . . . . . . . . . . . 1,123 553
Deferred rental income. . . . . . . . . . . . . 581 809
Insurance reserves. . . . . . . . . . . . . . . 1,793 1,339
Special charges . . . . . . . . . . . . . . . . 9,586 --
Other reserves. . . . . . . . . . . . . . . . . 3,028 2,487
AMT credit carryforwards. . . . . . . . . . . . -- 2,184
Intangible assets . . . . . . . . . . . . . . . 1,207 --
Other . . . . . . . . . . . . . . . . . . . . . 1,874 1,151
______ ______
21,858 9,919
______ ______
Deferred Tax Liabilities:
_________________________
Property and equipment. . . . . . . . . . . . . (106,331) (91,371)
Intangible assets . . . . . . . . . . . . . . . -- (605)
Other. . . . . . . . . . . . . . . . . . . . . (5,385) (3,412)
_______ ______
(111,716) (95,388)
______ ______
Net Deferred Tax Liability . . . . . . . . . . . $(89,858) $(85,469)
====== ======
The Company has recorded tax benefits amounting to $4.2 million, $7.6
million, and $1.9 million in 1997, 1996 and 1995, respectively, resulting from
the exercise of stock options and warrants. This benefit has been recorded in
capital in excess of par value.
F-25
<PAGE> 59
AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(15) INCOME TAXES - (Continued)
The Internal Revenue Service is currently conducting an examination of
the Company's federal income tax returns for the years ended March 31, 1993 and
1994. Management believes that the results of this examination will not have a
material effect on the Company's earnings, financial condition, or liquidity.
(16) BENEFIT PLANS
(a) Pension and Profit Sharing Plans
The Company has a defined contribution 401(k) plan covering substantially
all full-time employees. Under the terms of the plan, the Company makes
matching contributions up to two percent of participants' wages plus additional
discretionary profit sharing contributions based upon the profitability of the
Company. Amounts expensed under the plan for 1997, 1996 and 1995 were $5.9
million, $5.1 million and $4.7 million, respectively.
During 1993, the Company authorized termination of two defined benefit
pension plans effective December 31, 1992. At December 31, 1996, the plans'
projected benefit obligations approximate the plans' net assets available for
benefits. The settlement of the vested benefit obligations by the purchase of
nonparticipating annuity contracts or lump-sum payments for covered employees
is not expected to result in a significant gain or loss.
Certain subsidiaries of the Company participate in multi-employer pension
plans which provide defined benefits to union employees. Contributions are
made to the plans in accordance with negotiated labor contracts. The Company
has not taken any action to terminate or withdraw from these plans. Management
believes that the Company's liability, if any, for multi-employer plan
withdrawal liability will not have a material effect on the Company's financial
position, results of operations, or liquidity. Amounts expensed under these
plans for 1997, 1996 and 1995 were $751 thousand, $482 thousand and $418
thousand respectively.
F-26
<PAGE> 60
AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(16) BENEFIT PLANS - (Continued)
(b) Other Employee Benefits
The Company sponsors a multi-employer post retirement medical benefit plan
for certain employees of one subsidiary under a collective bargaining
agreement. The net postretirement benefit expense related to this plan was
$106 thousand, $98 thousand and $88 thousand for the years ended March 31,
1997, 1996 and 1995, respectively. The Company's unfunded accumulated
postretirement benefit obligation("APBO") was $962 thousand and $896 thousand
at March 31, 1997, and 1996, respectively.
In determining the APBO, the discount rate used to estimate the actuarial
present value of other postretirement benefits was 7.75% and 7.50% at March 31,
1997 and 1996, respectively. The assumed rate of increase in the health care
cost trend rate for employees less than age 65 was 6.75% and 8.25% for March
31, 1997 and 1996, declining gradually to 5.25%, respectively, over the next
four years. For employees 65 and older, the assumed rate of increase was 5.71%
and 6.16% for March 31, 1997 and 1996, declining gradually to 5.25%,
respectively, over the next four years. A 1% increase in the healthcare cost
trend rate would have increased net postretirement benefit expense
approximately $21 thousand and the APBO approximately $142 thousand at March
31, 1997.
(17) RELATED PARTIES
A member of the Company's board of directors is the president and CEO of
National Welders (See Note 12). During the years ended March 31, 1997, 1996
and 1995, National Welders paid $1.1 million, $987 thousand and $914 thousand,
respectively, to a joint venture of the Company for the purchase of calcium
carbide. In addition, National Welders paid $574 thousand, $604 thousand and
$546 thousand to the Company for other gas purchases in 1997, 1996 and 1995,
respectively.
F-27
<PAGE> 61
AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(18) LEASES
The Company leases certain distribution facilities and equipment under
long-term operating leases with varying terms. Most leases contain renewal
options and in some instances, purchase options. Rentals under these long-term
leases for the years ended March 31, 1997, 1996 and 1995, amounted to $24.0
million, $17.8 million and $14.5 million, respectively. At March 31, 1997, the
Company had a contingent guarantee of $3.8 million related to equipment under
such leases. Additionally, the Company leases certain operating facilities at
market rates from employees of the Company who were previous owners of
businesses acquired.
The Company has entered into certain operating leases for real estate
with a trust established by a commercial bank. The trust is committed to
purchase real estate properties up to an aggregate amount of $25 million. The
trust holds title to the properties and leases the properties to the Company.
The rental payments are based on LIBOR plus an applicable margin and the cost
of the property acquired by the trust. The Company has entered into interest
rate swap agreements in a notional principal amount of $10 million to hedge the
effects of fluctuations in the Libor based rental rate. At the expiration of
the leases in 1999, the Company has the option to purchase the real properties
at fair value or assist in the sale of the properties to a third party. The
Company intends to repay the commercial bank in the first quarter of fiscal
1998 funds advanced under the existing trust of approximately $10.9 million
related to the construction of air separation plants. Excluding the air
separation plants, the Company has guaranteed a portion of the debt outstanding
against these properties in the event the proceeds of a sale are not sufficient
to cover the trust's investment in the properties. At March 31, 1997, the
Company had a contingent guarantee of approximately $10.7 million related to
these leased facilities.
At March 31, 1997, future minimum lease payments under noncancelable
operating leases are as follows: (in thousands)
____________
1998 . . . . . . . . . . . . . . . . . . $26,016
1999 . . . . . . . . . . . . . . . . . . 20,547
2000 . . . . . . . . . . . . . . . . . . 16,447
2001 . . . . . . . . . . . . . . . . . . 12,551
2002 . . . . . . . . . . . . . . . . . . 8,989
2003 and thereafter. . . . . . . . . . . 15,137
______
$99,687
======
(19) COMMITMENTS AND CONTINGENCIES
The Company is involved in various legal and regulatory proceedings which
have arisen in the ordinary course of its business and have not been finally
adjudicated. These actions, when ultimately concluded and determined, will
not, in the opinion of management, have a material adverse effect upon the
Company's consolidated financial position, results of operations or liquidity.
F-28
<PAGE> 62
AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(19) COMMITMENTS AND CONTINGENCIES - (Continued)
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 with respect to Praxair's
Right of First Refusal contract with the majority shareholders of National
Welders by the Company in connection with the Company's formation of a joint
venture with National Welders. Praxair is seeking compensatory damages in
excess of $100 million and punitive damages. On February 24, 1997, the court
entered an order denying the Company's motion to dismiss for forum non
conveniens. The Company has filed a petition for writ of mandamus with the
Alabama Supreme court requesting that the lower court's order be vacated or set
aside. The Company believes that Praxair's claims are without merit and
intends to defend vigorously against such claims.
On September 9, 1996, the Company filed suit against Praxair in the Court
of Common Pleas of Philadelphia County, Pennsylvania. The complaint alleges
breach of contract, fraud, conversion and misappropriation of trade secrets
with respect to an agreement between Praxair and the Company, pursuant to which
Praxair induced the Company to provide Praxair valuable information and
conclusions developed by the Company concerning CBI Industries, Inc. ("CBI") in
exchange for Praxair's promise not to acquire CBI without the Company's
participation. The Company has alleged that it became entitled, pursuant to
such agreement, to acquire certain of CBI's assets having a value in excess of
$800 million. The Company is seeking compensatory and punitive damages. On
January 2, 1997, the court entered an order overruling Praxair's preliminary
objections to the Company's complaint and ordering Praxair to file an answer to
the complaint. Praxair has since filed an answer and asserted various
defenses.
On December 23, 1996, the Company had reported that it had been a victim
of a fraudulent breach of contract by a supplier. On February 12, 1997, the
Company filed a lawsuit in the United States District Court for the Southern
District of Georgia against Discount Auto Parts, Inc. ("Discount"), an employee
of Discount, and certain other businesses and individual defendants, alleging
that Discount and the other defendants engaged in racketeering activity
involving the fraudulent sale of smuggled and counterfeit R-12 refrigerant gas.
The Company's complaint alleges that the racketeering activity of the
defendants caused damages to the Company in an amount not less than $20
million. The complaint seeks treble damages under the Federal RICO and Georgia
RICO statutes, as well as monetary damages under other counts alleging fraud,
conspiracy and related wrongful conduct. (See Note 3 for discussion of special
charges recorded in connection with the fraud.
(20) CASH FLOWS
Cash paid for interest expense and income taxes was as follows:
Years Ended March 31,
___________________________
(In thousands) 1997 1996 1995
______________ ______ ____ ____
Interest . . . . . . . . . . . . . . . . . . . $ 38,993 $25,107 $19,011
Income taxes (net of refunds). . . . . . . . . 13,254 10,325 11,411
====== ====== ======
F-29
<PAGE> 63
AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(20) CASH FLOWS - (Continued)
The total purchase price, fair value of assets acquired, cash paid and
liabilities assumed for business acquisitions is presented in Note 2.
During 1997 and 1996 the Company entered into capital lease obligations
for approximately $567 thousand and $912 thousand, respectively.
(21) MINORITY INTEREST IN SUBSIDIARIES
Minority interests in subsidiaries represent the minority shareholders'
proportionate share of the equity and the results of operations of certain
subsidiaries. The Company sold minority interests in certain of its
subsidiaries to employees based on the estimated fair market value of the
subsidiary shares. These sales of subsidiary shares were accounted for as
capital transactions and, therefore, no gain or loss was recorded. Under the
terms of exchange rights agreements between the Company and minority
shareholders, the Company, under certain circumstances, may require or permit
exchange of the minority interests of a subsidiary for common stock of the
Company. The agreements provide the minority shareholders with the right to
exchange their subsidiary shares for common stock of the Company at certain
exchange dates designated by the Board of Directors. Each exchange will be
based on the fair value of the subsidiary's shares and the market price of the
Company's common stock as of a valuation date designated by the Board of
Directors.
On December 31, 1996 and August 31, 1995, in connection with optional
exchanges, certain minority shareholders elected to exchange their minority
interests for an aggregate of 76,556 and 258,116 shares of common stock,
respectively. The market price of the Company's common stock on December 31,
1996 and August 31, 1995 was $22.00 and $13.75 per share, respectively. The
acquisition of the minority interests has been recorded using the purchase
method of accounting.
(22) SUMMARY BY BUSINESS SEGMENT
The Company's operations are conducted principally in North America
through three related business segments: 1) the distribution of industrial,
medical and specialty gases, and related equipment (the "Distribution"
segment); 2) the distribution of industrial, safety and environmental supplies
and metal working and industrial tools and supplies (the "ADI" segment); and 3)
the manufacture of products for the industrial gas and metals industries (the
"Manufacturing" segment). The Distribution segment operates through the
Company's subsidiaries which have locations in 41 states, Canada and Mexico.
ADI distributes products to its customers utilizing outbound telemarketing,
direct mail and catalogs. The Manufacturing segment's products include nitrous
oxide, a gas with applications in the medical, food packaging and certain high
technology electronic industries and calcium carbide, carbon products for the
production of acetylene gas and for the non-ferrous metal industry, and carbon
dioxide, which is used in refrigeration, food processing, beverage carbonation,
chemical processing, crude oil recovery, metal fabrication and agricultural
fumigations.
F-30
<PAGE> 64
AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Total export sales amounted to approximately $7.5 million and $4.3 million
in 1997 and 1996, respectively.
(In thousands) Distribution ADI Manufacturing Total
______________ ____________ _____ ___________ _____
1997
Net sales . . . . . . . . . . . .$1,018,704 $ 99,216 $ 40,974 $1,158,894
Intersegment Sales . . . . . . . . -- 967 1,464 2,431
Operating income . . . . . . . . . 71,146 3,076 8,063 82,285
Assets . . . . . . . . . . . . . . 1,084,939 138,059 68,033 1,291,031
Depreciation and amortization. . . 58,059 2,984 1,448 62,491
Additions to plant and equipment
excluding business acquisitions . 69,934 669 3,755 74,358
1996
Net sales . . . . . . . . . . . .$ 801,552 $ -- $ 36,592 $ 838,144
Intersegment Sales . . . . . . . . -- -- 997 997
Operating income . . . . . . . . . 86,130 -- 6,855 92,985
Assets . . . . . . . . . . . . . . 846,129 -- 37,513 883,642
Depreciation and amortization. . . 44,386 -- 1,376 45,762
Additions to plant and equipment
excluding business acquisitions. . 39,755 -- 1,481 41,236
1995
Net sales. . . . . . . . . . . . . $ 654,381 $ -- $ 33,602 $ 687,983
Intersegment sales . . . . . . . . -- -- 862 862
Operating income . . . . . . . . . 66,521 -- 6,079 72,600
Assets . . . . . . . . . . . . . . 613,320 -- 32,317 645,637
Depreciation and amortization. . . 35,548 -- 1,320 36,868
Additions to plant and equipment
excluding business acquisitions. . 35,961 -- 751 36,712
F-31
<PAGE> 65
AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(22) SUMMARY BY BUSINESS SEGMENT - (continued)
Corporate operating expenses are allocated between the Company's
Distribution, ADI and Manufacturing business segments based on relative sales
dollars.
(23) SUPPLEMENTARY INFORMATION (UNAUDITED)
Summary By Quarter
This table summarizes the unaudited results of operations for each quarter
of 1997 and 1996:
(In thousands, except per share data) First Second Third Fourth (c)
_____________________________________ _____ ______ _____ __________
1997
Net sales . . . . . . . . . . . . . . . $274,098 $278,712 $297,203 $308,881
Operating income (loss) . . . . . . . . 27,321 29,008 29,379 (3,423)
Net earnings (loss) . . . . . . . . . . 11,150 11,310 10,960 (10,154)
Net earnings (loss) per share (a) . . . $ .17 .17 .16 (.15)
1996
Net sales . . . . . . . . . . . . . . . $194,272 $199,030 $208,549 $236,293
Operating income. . . . . . . . . . . . 22,037 22,144 22,984 25,820
Net earnings. . . . . . . . . . . . . . 9,454 9,335 9,817 11,114
Net earnings per share (a), (b):. . . . $ .15 $ .14 $ .15 $ .17
__________________
(a) Earnings per share calculations for each of the quarters are based on the
weighted average number of shares outstanding in each period. Therefore,
the sum of the quarters do not necessarily equal the full year earnings per
share.
(b) See Notes 4 and 10 to the Company's consolidated financial statements for
information regarding earnings per share calculations and adjustment for
the stock split effective April 15, 1996.
(c) See Note 3 to the Company's consolidated financial statements for
information regarding a special charge of approximately $31.4 million
recorded in the fourth quarter of fiscal 1997.
F-32
<PAGE> 66
SCHEDULE II
CONSOLIDATED
AIRGAS, INC. AND SUBSIDIARIES
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
For the Years Ended March 31, 1997, 1996 and 1995
(In thousands of dollars)
Column A Column B Column C
________ ________ ________
Additions
_________
Charged
Balance at Charged to (Credited)
Beginning Cost and to Other
Description of Period Expense Accounts
____________ _________ __________ ____________
1997 Accounts Receivable --
Allowance for doubtful accounts . . $ 3,396 $ 3,860 $ 1,081 (1)
Inventory reserves. . . . . . . . . 6,217 298 2,490
Insurance reserves. . . . . . . . . 5,297 27,821 (1,750)
1996 Accounts Receivable --
Allowance for doubtful accounts . . $ 4,161 $ 2,719 $ 1,313 (1)
Inventory reserves. . . . . . . . . 5,490 (241) 968
Insurance reserves. . . . . . . . . 6,304 19,510 262
1995 Accounts Receivable --
Allowance for doubtful accounts . . $ 4,207 $ 3,102 $ 1,033 (1)
Inventory reserves. . . . . . . . . 4,666 (193) 1,017
Insurance reserves. . . . . . . . . 5,341 17,038 132
(COLUMNS CONTINUED ON NEXT PAGE)
F-33
<PAGE> 67
SCHEDULE II
CONSOLIDATED
AIRGAS, INC. AND SUBSIDIARIES
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
For the Years Ended March 31, 1997, 1996 and 1995
(In thousands of dollars)
(Columns Continued)
Column A Column D Column E
________ ________ ________
Balance
at End of
Description Deductions Period
____________ ______________ ________
1997 Accounts Receivable --
Allowance for doubtful accounts . . . $ (3,894) $ 4,443
Inventory reserves. . . . . . . . . . -- (2) 9,005
Insurance reserves. . . . . . . . . . (26,144) 5,224
1996 Accounts Receivable --
Allowance for doubtful accounts . . . $ (4,797) (2) $ 3,396
Inventory reserves. . . . . . . . . . -- 6,217
Insurance reserves. . . . . . . . . . (20,779) 5,297
1995 Accounts Receivable --
Allowance for doubtful accounts . . . $ (4,181) (2) $ 4,161
Inventory reserves. . . . . . . . . . -- 5,490
Insurance reserves. . . . . . . . . . (16,207) 6,304
________
(1) Includes collections on accounts previously written-off and allowances for
doubtful accounts of businesses acquired less the allowance for doubtful
accounts of businesses sold.
(2) Write-off of uncollectible accounts.
F-33, Continued
<PAGE>
<PAGE>
<PAGE> EX-1
[EXECUTION COPY]
EIGHTH AMENDED AND RESTATED
CREDIT AGREEMENT
Dated as of September 27, 1996
among
AIRGAS, INC.,
as Borrower,
THE SEVERAL LENDERS
FROM TIME TO TIME PARTY HERETO
AND
NATIONSBANK, N.A.,
as Agent
<PAGE>
<PAGE> EX-2
TABLE OF CONTENTS
SECTION 1 DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Computation of Time Periods. . . . . . . . . . . . . . . . . . 18
1.3 Accounting Terms.. . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 2 CREDIT FACILITIES. . . . . . . . . . . . . . . . . . . . . . . . 19
2.1 Revolving Loans. . . . . . . . . . . . . . . . . . . . . . . . 19
2.2 Competitive Loan Subfacility.. . . . . . . . . . . . . . . . . 21
2.3 Letter of Credit Subfacility.. . . . . . . . . . . . . . . . . 23
2.4 Swingline Loan Subfacility.. . . . . . . . . . . . . . . . . . 28
SECTION 3 OTHER PROVISIONS RELATING TO CREDIT FACILITIES . . . . . . . . . 30
3.1 Default Rate.. . . . . . . . . . . . . . . . . . . . . . . . . 30
3.2 Extension and Conversion.. . . . . . . . . . . . . . . . . . . 30
3.3 Prepayments. . . . . . . . . . . . . . . . . . . . . . . . . . 31
3.4 Termination and Reduction of Revolving Committed Amount. . . . 32
3.5 Fees.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
3.6 Capital Adequacy.. . . . . . . . . . . . . . . . . . . . . . . 34
3.7 Inability To Determine Interest Rate.. . . . . . . . . . . . . 34
3.8 Illegality.. . . . . . . . . . . . . . . . . . . . . . . . . . 35
3.9 Requirements of Law. . . . . . . . . . . . . . . . . . . . . . 35
3.10 Taxes.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
3.11 Indemnity.. . . . . . . . . . . . . . . . . . . . . . . . . . 38
3.12 Pro Rata Treatment. . . . . . . . . . . . . . . . . . . . . . 39
3.13 Sharing of Payments.. . . . . . . . . . . . . . . . . . . . . 40
3.14 Payments, Computations, Etc.. . . . . . . . . . . . . . . . . 40
SECTION 4 CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.1 Closing Conditions.. . . . . . . . . . . . . . . . . . . . . . 42
4.2 Conditions to all Extensions of Credit.. . . . . . . . . . . . 43
SECTION 5 REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . 44
5.1 Financial Condition. . . . . . . . . . . . . . . . . . . . . . 44
5.2 No Change. . . . . . . . . . . . . . . . . . . . . . . . . . . 45
5.3 Organization; Existence; Compliance with Law.. . . . . . . . . 45
5.4 Power; Authorization; Enforceable Obligations. . . . . . . . . 45
5.5 No Legal Bar.. . . . . . . . . . . . . . . . . . . . . . . . . 46
5.6 No Material Litigation.. . . . . . . . . . . . . . . . . . . . 46
5.7 No Default.. . . . . . . . . . . . . . . . . . . . . . . . . . 46
5.8 Ownership of Property; Liens.. . . . . . . . . . . . . . . . . 46
5.9 Intellectual Property. . . . . . . . . . . . . . . . . . . . . 46
5.10 No Burdensome Restrictions. . . . . . . . . . . . . . . . . . 47
5.11 Taxes.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
5.12 ERISA.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
5.13 Governmental Regulations, Etc.. . . . . . . . . . . . . . . . 48
5.14 Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . 49
5.15 Purpose of Loans and Letters of Credit. . . . . . . . . . . . 49
5.16 Environmental Matters.. . . . . . . . . . . . . . . . . . . . 49
SECTION 6 AFFIRMATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . 51
6.1 Information Covenants. . . . . . . . . . . . . . . . . . . . . 51
6.2 Preservation of Existence and Franchises.. . . . . . . . . . . 53
6.3 Books and Records. . . . . . . . . . . . . . . . . . . . . . . 53
6.4 Compliance with Law. . . . . . . . . . . . . . . . . . . . . . 53
6.5 Payment of Taxes and Other Indebtedness. . . . . . . . . . . . 53
6.6 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . 54
6.7 Maintenance of Property. . . . . . . . . . . . . . . . . . . . 54
6.8 Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . 54
6.9 Audits/Inspections.. . . . . . . . . . . . . . . . . . . . . . 54
6.10 Financial Covenants.. . . . . . . . . . . . . . . . . . . . . 54
6.11 Maintenance of Designation Rights - National Welders Board of
Directors. . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 7 NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . 55
7.12 Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . 55
7.13 Liens.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
<PAGE> EX-3
7.14 Nature of Business. . . . . . . . . . . . . . . . . . . . . . 56
7.15 Consolidation, Merger or Sale.. . . . . . . . . . . . . . . . 56
7.16 Restricted Payments.. . . . . . . . . . . . . . . . . . . . . 56
7.17 Prepayments of Indebtedness, Etc. . . . . . . . . . . . . . . 57
7.18 Fiscal Year.. . . . . . . . . . . . . . . . . . . . . . . . . 57
7.19 Limitation on Restrictions on Subsidiary Dividends and Other
Distributions, Etc.. . . . . . . . . . . . . . . . . . . . . . . . 57
7.20 Issuance and Sale of Subsidiary Stock.. . . . . . . . . . . . 58
7.21 No Further Negative Pledges.. . . . . . . . . . . . . . . . . 58
SECTION 8 EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . 58
8.1 Events of Default. . . . . . . . . . . . . . . . . . . . . . . 58
8.2 Acceleration; Remedies.. . . . . . . . . . . . . . . . . . . . 61
SECTION 9 AGENCY PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . 62
9.1 Appointment. . . . . . . . . . . . . . . . . . . . . . . . . . 62
9.2 Delegation of Duties.. . . . . . . . . . . . . . . . . . . . . 62
9.3 Exculpatory Provisions.. . . . . . . . . . . . . . . . . . . . 62
9.4 Reliance on Communications.. . . . . . . . . . . . . . . . . . 63
9.5 Notice of Default. . . . . . . . . . . . . . . . . . . . . . . 63
9.6 Non-Reliance on Agent and Other Lenders. . . . . . . . . . . . 64
9.7 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . 64
9.8 Agent in its Individual Capacity.. . . . . . . . . . . . . . . 65
9.9 Successor Agent. . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 10 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . 65
10.1 Notices.. . . . . . . . . . . . . . . . . . . . . . . . . . . 65
10.2 Right of Set-Off. . . . . . . . . . . . . . . . . . . . . . . 66
10.3 Benefit of Agreement. . . . . . . . . . . . . . . . . . . . . 67
10.4 No Waiver; Remedies Cumulative. . . . . . . . . . . . . . . . 69
10.5 Payment of Expenses, Etc. . . . . . . . . . . . . . . . . . . 69
10.6 Amendments, Waivers and Consents. . . . . . . . . . . . . . . 70
10.7 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . 71
10.8 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . 71
10.9 Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . 71
10.10 Governing Law; Submission to Jurisdiction; Venue.. . . . . . 71
10.11 Severability.. . . . . . . . . . . . . . . . . . . . . . . . 72
10.12 Entirety.. . . . . . . . . . . . . . . . . . . . . . . . . . 72
10.13 Binding Effect; Termination of Existing Credit Agreement;
Termination of This Credit Agreement. . . . . . . . . . . . 72
10.14 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . 73
10.15 Conflict.. . . . . . . . . . . . . . . . . . . . . . . . . . 73
10.16 Obligations Senior to Subordinated Debt. . . . . . . . . . . 73
10.17 Currency Conversions.. . . . . . . . . . . . . . . . . . . . 74
<PAGE>
<PAGE> EX-4
SCHEDULES
Schedule 1.1A Applicable Percentages
Schedule 1.1B Existing Letters of Credit
Schedule 1.1C National Welders Liens
Schedule 1.1D Liens
Schedule 2.1(a) Lenders
Schedule 2.1(b)(i) Form of Notice of Borrowing
Schedule 2.1(e) Form of Revolving Note
Schedule 2.2(i) Form of Competitive Note
Schedule 2.4(d) Form of Swingline Note
Schedule 3.2 Form of Notice of Extension/Conversion
Schedule 4.1(h) Form of Legal Opinion
Schedule 5.6 Litigation
Schedule 5.14 Subsidiaries
Schedule 6.1(c) Form of Officer's Compliance Certificate
Schedule 10.3 Form of Assignment and Acceptance
<PAGE>
<PAGE> EX-5
EIGHTH AMENDED AND RESTATED
CREDIT AGREEMENT
THIS EIGHTH AMENDED AND RESTATED CREDIT AGREEMENT, dated as of
September 27, 1996 (the "Credit Agreement"), is by and among AIRGAS, INC., a
Delaware corporation (the "Borrower"), the several lenders identified on the
signature pages hereto and such other lenders as may from time to time become a
party hereto (the "Lenders") and NATIONSBANK, N.A., as agent for the Lenders
(in such capacity, the "Agent").
W I T N E S S E T H
WHEREAS, the Borrower has requested that the Lenders provide a
$500,000,000 credit facility for the purposes hereinafter set forth;
WHEREAS, the Lenders have agreed to make the requested credit facility
available to the Borrower on the terms and conditions hereinafter set forth;
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
SECTION 1
DEFINITIONS
1.1 Definitions.
As used in this Credit Agreement, the following terms shall have the
meanings specified below unless the context otherwise requires:
"Affiliate" means, with respect to any Person, any other
Person (i) directly or indirectly controlling or controlled by or under direct
or indirect common control with such Person or (ii) directly or indirectly
owning or holding five percent (5%) or more of the equity interest in such
Person. For purposes of this definition, "control" when used with respect to
any Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agent" shall have the meaning assigned to such term in the
heading hereof, together with any successors or assigns.
"Agent's Fee Letter" means that certain letter agreement,
dated as of the Closing Date between the Agent and the Borrower, as amended,
modified, supplemented or replaced from time to time.
"Agent's Fees" shall have the meaning assigned to such term
in Section 3.5(c).
"Applicable Percentage" means, for purposes of calculating
the applicable interest rate for any day for any Revolving Loan, the applicable
rate of the Unused Fee for any day for purposes of Section 3.5(a), the
applicable rate of the Standby Letter of Credit Fee for any day for purposes of
Section 3.5(b)(i), the appropriate applicable percentage, as shown on Schedule
1.1A, corresponding to the higher of the long term credit ratings of the
Borrower by S&P and Moody's in effect as of such date; provided, however, in
the event that the long term credit ratings of the Borrower by S&P and Moody's
for any day differ by more than one Pricing Level, the Applicable Percentage
<PAGE> EX-6
for such day shall be the appropriate applicable percentage corresponding to
the Pricing Level which is one Pricing Level higher than the Pricing Level
corresponding to the lower of the long term credit ratings of the Borrower by
S&P and Moody's in effect as of such date. The initial Applicable Percentages
shall be based on Pricing Level IV (as shown on Schedule 1.1A).
"Bankruptcy Code" means the Bankruptcy Code in Title 11 of
the United States Code, as amended, modified, succeeded or replaced from time
to time.
"Bankruptcy Event" means, with respect to any Person, the
occurrence of any of the following with respect to such Person: (i) a court or
governmental agency having jurisdiction in the premises shall enter a decree or
order for relief in respect of such Person in an involuntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or ordering the winding up or liquidation of its affairs; or (ii) a
court or governmental agency having jurisdiction in the premises shall enter a
decree or order appointing a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) of such Person or for any
substantial part of its Property and such decree or order shall remain
undismissed for a period of sixty (60) consecutive days; or (iii) there shall
be commenced against such Person an involuntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or any
case, proceeding or other action for the appointment of a receiver, liquidator,
assignee, custodian, trustee, sequestrator (or similar official) of such Person
or for any substantial part of its Property or for the winding up or
liquidation of its affairs, and such involuntary case or other case, proceeding
or other action shall remain undismissed, undischarged or unbonded for a period
of sixty (60) consecutive days; or (iv) such Person shall commence a voluntary
case under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or consent to the entry of an order for relief in an
involuntary case under any such law, or consent to the appointment or taking
possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of such Person or for any substantial part
of its Property or make any general assignment for the benefit of creditors; or
(v) such Person shall be unable to, or shall admit in writing its inability to,
pay its debts generally as they become due.
"Base Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest whole multiple of 1/100 of 1%) equal to
the greater of (a) the Federal Funds Rate in effect on such day plus 2 of 1% or
(b) the Prime Rate in effect on such day. If for any reason the Agent shall
have determined (which determination shall be conclusive absent manifest error)
that it is unable after due inquiry to ascertain the Federal Funds Rate for any
reason, including the inability or failure of the Agent to obtain sufficient
quotations in accordance with the terms hereof, the Base Rate shall be
determined without regard to clause (a) of the first sentence of this
definition until the circumstances giving rise to such inability no longer
exist. Any change in the Base Rate due to a change in the Prime Rate or the
Federal Funds Rate shall be effective on the effective date of such change in
the Prime Rate or the Federal Funds Rate, respectively.
"Base Rate Loan" means any Loan bearing interest at a rate
determined by reference to the Base Rate.
"Borrower" means the Person identified as such in the
heading hereof, together with any permitted successors and assigns.
<PAGE> EX-7
"Borrower's Obligations" means, without duplication, all of
the obligations of the Borrower to the Lenders (including the Issuing Lender
and the Swingline Lender) and the Agent, whenever arising, under this Credit
Agreement, the Notes or any of the other Credit Documents.
"Business Day" means a day other than a Saturday, Sunday or
other day on which commercial banks in Charlotte, North Carolina are authorized
or required by law to close, except that, when used in connection with a
Eurodollar Loan, such day shall also be a day on which dealings between banks
are carried on in U.S. dollar deposits in London, England, Charlotte, North
Carolina and New York, New York.
"Calculation Date" means the last day of each fiscal quarter
of the Borrower.
"Canadian Subsidiary" means a direct or indirect Subsidiary
of the Borrower which is organized and existing under the laws of Canada or any
province or other political subdivision thereof.
"Capital Lease" means, as applied to any Person, any lease
of any Property (whether real, personal or mixed) by that Person as lessee
which, in accordance with GAAP, is or should be accounted for as a capital
lease on the balance sheet of that Person.
"Closing Date" means the date hereof.
"Code" means the Internal Revenue Code of 1986, as amended,
and any successor thereto, as interpreted by the rules and regulations issued
thereunder, in each case as in effect from time to time. References to
sections of the Code shall be construed also to refer to any successor
sections.
"Commitment" means (i) with respect to each Lender, the
Revolving Commitment of such Lender, (ii) with respect to the Swingline Lender,
the Swingline Commitment, and (iii) with respect to the Issuing Lender, the LOC
Commitment.
"Commitment Percentage" means, for any Lender, the
percentage identified as its Commitment Percentage on Schedule 2.1(a), as such
percentage may be modified in connection with any assignment made in accordance
with the provisions of Section 10.3.
"Competitive Bid" means an offer by a Lender to make a
Competitive Loan pursuant to the terms of Section 2.2.
"Competitive Bid Rate" means, as to any Competitive Bid made
by a Lender in accordance with the provisions of Section 2.2, the fixed rate of
interest offered by the Lender making the Competitive Bid.
"Competitive Loan" means a loan made by a Lender in its
discretion pursuant to the provisions of Section 2.2.
"Competitive Note" means a promissory note of the Borrower
in favor of a Lender delivered pursuant to Section 2.2(f) and evidencing the
Competitive Loans, if any, of such Lender, as such promissory note may be
amended, modified, restated or replaced from time to time.
"Consolidated EBITDA" means, for any period, the sum of (i)
Consolidated Operating Income for such period, (ii) depreciation expense of the
Borrower and its Subsidiaries on a consolidated basis for such period and (iii)
<PAGE> EX-8
amortization expense of the Borrower and its Subsidiaries on a consolidated
basis for such period, all as determined in accordance with GAAP.
"Consolidated Fixed Charge Coverage Ratio" means, as of any
Calculation Date, the ratio of (i) Consolidated EBITDA for the four-quarter
period ended as of such Calculation Date to (ii) Consolidated Interest Expense
for the four-quarter period ended as of such Calculation Date.
"Consolidated Funded Indebtedness Coverage Ratio" means, as
of any Calculation Date, the ratio of (i) total Funded Indebtedness of the
Borrower and its Subsidiaries on a consolidated basis as of such Calculation
Date to (ii) Consolidated EBITDA for the four-quarter period ended as of such
Calculation Date.
"Consolidated Interest Expense" means, for any period,
consolidated interest expense of the Borrower and its Subsidiaries for such
period, as determined in accordance with GAAP.
"Consolidated Long Term Debt" means, at any time, all items
which, in accordance with GAAP, would be classified as long term debt on a
consolidated balance sheet of the Borrower and its Subsidiaries.
"Consolidated Net Income" means, for any period, net income
(excluding extraordinary items) after taxes for such period of the Borrower and
its Subsidiaries on a consolidated basis, as determined in accordance with
GAAP.
"Consolidated Net Worth" means, at any time, consolidated
net stockholders' equity of the Borrower and its Subsidiaries determined in
accordance with GAAP but excluding any capital stock or other equity interests
to which an outstanding Redemption Obligation relates.
"Consolidated Operating Income" means, for any period, (i)
the sum, without duplication, of (a) the amount by which total operating
revenues for such period for the Borrower and its Subsidiaries exceed total
operating expenses for such period for the Borrower and its Subsidiaries, plus
(b) consolidated cash income of the Borrower and its Subsidiaries for such
period from investments in partnerships, joint ventures or similar investments,
plus (ii) on and after such time, if ever, as National Welders is required to
be consolidated with the Borrower in accordance with GAAP and to the extent not
included in the amount determined pursuant to clause (i) above, the amount by
which total operating revenues for such period for National Welders exceed
total operating expenses for such period for National Welders, plus (iii) to
the extent not included in the amount determined pursuant to clause (i) above,
the amount by which total operating revenues for such period for any Person
which became a Subsidiary of the Borrower as the result of a Material
Acquisition during such period exceed total operating expenses for such period
for such Person, all as determined in accordance with GAAP.
"Consolidated Total Assets" means, at any time, all items
which would, in accordance with GAAP, be classified as assets (other than
intangible assets) on a consolidated balance sheet of the Borrower and its
Subsidiaries.
"Credit Documents" means a collective reference to this
Credit Agreement, the Notes, the LOC Documents, the Agent's Fee Letter, and all
other related agreements and documents issued or delivered hereunder or
thereunder or pursuant hereto or thereto.
"Default" means any event, act or condition which with
notice or lapse of time, or both, would constitute an Event of Default.
<PAGE> EX-9
"Dollars" and "$" means dollars in lawful currency of the
United States of America.
"Environmental Laws" means any and all lawful and applicable
Federal, state, local and foreign statutes, laws, regulations, ordinances,
rules, judgments, orders, decrees, permits, concessions, grants, franchises,
licenses, agreements or other governmental restrictions relating to the
environment or to emissions, discharges, releases or threatened releases of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes into the environment including, without limitation,
ambient air, surface water, ground water, or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants, chemicals, or industrial,
toxic or hazardous substances or wastes.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute thereto, as interpreted by the
rules and regulations thereunder, all as the same may be in effect from time to
time. References to sections of ERISA shall be construed also to refer to any
successor sections.
"ERISA Affiliate" means an entity which is under common
control with the Borrower within the meaning of Section 4001(a)(14) of ERISA,
or is a member of a group which includes the Borrower and which is treated as a
single employer under Sections 414(b), (c), (m), or (o) of the Code.
"Eurodollar Loan" means any Loan bearing interest at a rate
determined by reference to the Eurodollar Rate.
"Eurodollar Rate" means, for the Interest Period for each
Eurodollar Loan comprising part of the same borrowing (including conversions,
extensions and renewals), a per annum interest rate determined pursuant to the
following formula:
Eurodollar Rate = Interbank Offered Rate
_________________________________
1 - Eurodollar Reserve Percentage
"Eurodollar Reserve Percentage" means for any day, that
percentage (expressed as a decimal) which is in effect from time to time under
Regulation D of the Board of Governors of the Federal Reserve System (or any
successor), as such regulation may be amended from time to time or any
successor regulation, as the maximum reserve requirement (including, without
limitation, any basic, supplemental, emergency, special, or marginal reserves)
applicable with respect to Eurocurrency liabilities as that term is defined in
Regulation D (or against any other category of liabilities that includes
deposits by reference to which the interest rate of Eurodollar Loans is
determined), whether or not Lender has any Eurocurrency liabilities subject to
such reserve requirement at that time. Eurodollar Loans shall be deemed to
constitute Eurocurrency liabilities and as such shall be deemed subject to
reserve requirements without benefits of credits for proration, exceptions or
offsets that may be available from time to time to a Lender. The Eurodollar
Rate shall be adjusted automatically on and as of the effective date of any
change in the Eurodollar Reserve Percentage.
"Event of Default" means such term as defined in Section
8.1.
"Excess Net Proceeds" means the Net Proceeds of any sale of
Property made pursuant to Section 7.4(b)(iv) to the extent that such Net
Proceeds relate to Property which either (i) together with all other Property
<PAGE> EX-10
sold pursuant to Section 7.4(b)(iv) during the then current fiscal year,
exceeds in aggregate net book value 10% of Consolidated Total Assets as of the
end of the immediately preceding fiscal year or (ii) together with all other
Property sold pursuant to Section 7.4(b)(iv) after the Closing Date, exceeds in
aggregate net book value 25% of Consolidated Total Assets as of the end of the
immediately preceding fiscal year.
"Executive Officer" means the chief executive officer, chief
operating officer or chief financial officer of the Borrower.
"Existing Credit Agreement" means that certain Seventh
Amended and Restated Loan Agreement dated as of August 10, 1995, as amended
from time to time thereafter, among the Borrower, the lenders party thereto
and NationsBank, N.A. (Carolinas) (predecessor in interest to NationsBank,
N.A.), as agent for such lenders.
"Existing Letters of Credit" means the letters of credit
described by date of issuance, letter of credit number, undrawn amount, name of
beneficiary and date of expiry on Schedule 1.1B hereto.
"Fees" means all fees payable pursuant to Section 3.5.
"Federal Funds Rate" means, for any day, the rate of
interest per annum (rounded upwards, if necessary, to the nearest whole
multiple of 1/100 of 1%) equal to the weighted average of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers on such day, as published by the Federal
Reserve Bank of New York on the Business Day next succeeding such day, provided
that (A) if such day is not a Business Day, the Federal Funds Rate for such day
shall be such rate on such transactions on the next preceding Business Day and
(B) if no such rate is so published on such next preceding Business Day, the
Federal Funds Rate for such day shall be the average rate quoted to the Agent
on such day on such transactions as determined by the Agent.
"Funded Indebtedness" means, with respect to any Person,
without duplication, (i) all Indebtedness of such Person for borrowed money,
(ii) all obligations of such Person evidenced by bonds, debentures, notes or
similar instruments, or upon which interest payments are customarily made,
(iii) all obligations of such Person issued or assumed as the deferred purchase
price of Property or services purchased by such Person (other than trade debt
incurred in the ordinary course of business and due within six months of the
incurrence thereof) which would appear as liabilities on a balance sheet of
such Person, (iv) the principal portion of all obligations of such Person under
Capital Leases, (v) all Guaranty Obligations of such Person with respect to
Funded Indebtedness of another Person, (vi) all net obligations of such Person
in respect of interest rate protection agreements, foreign currency exchange
agreements, commodity purchase or option agreements or other interest or
exchange rate or commodity price hedging agreements, (vii) the maximum
available amount of, and all unreimbursed drawings under, all standby letters
of credit or acceptances issued or created for the account of such Person
(provided, however, in connection with any calculation hereunder of Funded
Indebtedness of the Borrower and its Subsidiaries on a consolidated basis,
there shall be excluded any standby letter of credit or acceptance (together
with any unreimbursed drawings under such letter of credit or acceptance) which
supports any Funded Indebtedness of the Borrower or any of its Subsidiaries
that would otherwise be included in such calculation) and (viii) all Funded
Indebtedness of another Person secured by a Lien on any Property of such
Person, whether or not such Funded Indebtedness has been assumed. The Funded
Indebtedness of any Person shall include the Funded Indebtedness of any
<PAGE> EX-11
partnership or joint venture in which such Person is a general partner or joint
venturer to the extent that such Person is legally liable for such Funded
Indebtedness.
"GAAP" means generally accepted accounting principles in the
United States applied on a consistent basis and subject to the terms of Section
1.3 hereof.
"Governmental Authority" means any Federal, state, local or
foreign court or governmental agency, authority, instrumentality or regulatory
body.
"Guaranty Obligations" means, with respect to any Person,
without duplication, any obligations of such Person (other than endorsements in
the ordinary course of business of negotiable instruments for deposit or
collection) guaranteeing or intended to guarantee any Indebtedness of any other
Person in any manner, whether direct or indirect, and including without
limitation any obligation, whether or not contingent, (i) to purchase any such
Indebtedness or any Property constituting security therefor, (ii) to advance or
provide funds or other support for the payment or purchase of any such
Indebtedness or to maintain working capital, solvency or other balance sheet
condition of such other Person (including without limitation keep well
agreements, maintenance agreements, comfort letters or similar agreements or
arrangements to the extent such agreements or arrangements constitute a legally
binding monetary obligation) for the benefit of any holder of Indebtedness of
such other Person, (iii) to lease or purchase Property, securities or services
primarily for the purpose of assuring the holder of such Indebtedness, or (iv)
to otherwise assure or hold harmless the holder of such Indebtedness against
loss in respect thereof. The amount of any Guaranty Obligation hereunder shall
(subject to any limitations set forth therein) be deemed to be an amount equal
to the outstanding principal amount (or maximum principal amount, if larger) of
the Indebtedness in respect of which such Guaranty Obligation is made.
"Indebtedness" of any Person means (i) all obligations of
such Person for borrowed money, (ii) all obligations of such Person evidenced
by bonds, debentures, notes or similar instruments, or upon which interest
payments are customarily made, (iii) all obligations of such Person under
conditional sale or other title retention agreements relating to Property
purchased by such Person (other than customary reservations or retentions of
title under agreements with suppliers entered into in the ordinary course of
business), (iv) all obligations of such Person issued or assumed as the
deferred purchase price of Property or services purchased by such Person (other
than trade debt incurred in the ordinary course of business and due within six
months of the incurrence thereof) which would appear as liabilities on a
balance sheet of such Person, (v) all Indebtedness of others secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien on, or payable out of the proceeds of
production from, Property owned or acquired by such Person, whether or not the
obligations secured thereby have been assumed, (vi) all Guaranty Obligations of
such Person, (vii) the principal portion of all obligations of such Person
under Capital Leases, (viii) all net obligations of such Person in respect of
interest rate protection agreements, foreign currency exchange agreements,
commodity purchase or option agreements or other interest or exchange rate or
commodity price hedging agreements, (ix) the maximum available amount of, and
all unreimbursed drawings under, all standby letters of credit or acceptances
issued or created for the account of such Person (provided, however, in
connection with any calculation hereunder of Indebtedness of the Borrower and
its Subsidiaries on a consolidated basis, there shall be excluded any standby
letter of credit or acceptance (together with any unreimbursed drawings under
such letter of credit or acceptance) which supports any Indebtedness of the
Borrower or any of its Subsidiaries that would otherwise be included in such
<PAGE> EX-12
calculation) and (x) all preferred stock issued by such Person and required by
the terms thereof to be redeemed, or for which mandatory sinking fund payments
are due, by a fixed date (other than the preferred stock issued under the
National Welders Joint Venture Agreement). The Indebtedness of any Person
shall include the Indebtedness of any partnership or joint venture in which
such Person is a general partner or joint venturer to the extent that such
Person is legally liable for such Indebtedness.
"Interbank Offered Rate" means, for the Interest Period for
each Eurodollar Loan comprising part of the same borrowing (including
conversions, extensions and renewals), a per annum interest rate (rounded
upwards, if necessary, to the nearest whole multiple of 1/100 of 1%) equal to
the rate of interest, determined by the Agent on the basis of the offered rates
for deposits in dollars for a period of time corresponding to such Interest
Period (and commencing on the first day of such Interest Period), appearing on
Telerate Page 3750 (or, if, for any reason, Telerate Page 3750 is not
available, the Reuters Screen LIBO Page) as of approximately 11:00 A.M. (London
time) two (2) Business Days before the first day of such Interest Period. As
used herein, "Telerate Page 3750" means the display designated as page 3750 by
Dow Jones Telerate, Inc. (or such other page as may replace such page on that
service for the purpose of displaying the British Bankers Association London
interbank offered rates) and "Reuters Screen LIBO Page" means the display
designated as page "LIBO" on the Reuters Monitor Money Rates Service (or such
other page as may replace the LIBO page on that service for the purpose of
displaying London interbank offered rates of major banks).
"Interest Payment Date" means (i) as to any Base Rate Loan,
the last day of each March, June, September and December, the date of repayment
of principal of such Loan and the Termination Date and (ii) as to any
Eurodollar Loan, any Competitive Loan or any Swingline Loan, the last day of
each Interest Period for such Loan, the date of repayment of principal of such
Loan and on the Termination Date, and in addition where the applicable Interest
Period is more than 3 months, then also on the date 3 months from the beginning
of the Interest Period, and each 3 months thereafter. If an Interest Payment
Date falls on a date which is not a Business Day, such Interest Payment Date
shall be deemed to be the next succeeding Business Day, except that in the case
of Eurodollar Loans where the next succeeding Business Day falls in the next
succeeding calendar month, then on the next preceding Business Day.
"Interest Period" means (i) as to any Eurodollar Loan, a
period of one, two, three, six or twelve month's duration, as the Borrower may
elect, commencing in each case, on the date of the borrowing (including
conversions, extensions and renewals), (ii) as to any Competitive Loan, a
period commencing in each case on the date of the borrowing and ending on the
date specified in the applicable Competitive Bid whereby the offer to make such
Competitive Loan was extended (such ending date in any event to be not more
than 180 days from the date of the borrowing) and (iii) as to any Swingline
Loan, a period commencing in each case on the date of the borrowing and ending
on the date agreed to by the Borrower and the Swingline Lender in accordance
with the provisions of Section 2.4(b)(i) (such ending date in any event to be
not more than thirty (30) days from the date of borrowing); provided, however,
(A) if any Interest Period would end on a day which is not a Business Day, such
Interest Period shall be extended to the next succeeding Business Day (except
that in the case of Eurodollar Loans where the next succeeding Business Day
falls in the next succeeding calendar month, then on the next preceding
Business Day), (B) no Interest Period shall extend beyond the Termination Date,
and (C) in the case of Eurodollar Loans, where an Interest Period begins on a
day for which there is no numerically corresponding day in the calendar month
in which the Interest Period is to end, such Interest Period shall end on the
last day of such calendar month.
<PAGE> EX-13
"Issuing Lender" means NationsBank.
"Issuing Lender Fees" shall have the meaning assigned to
such term in Section 3.5(b)(iii).
"Lenders" means each of the Persons identified as a "Lender"
on the signature pages hereto, and each Person which may become a Lender by way
of assignment in accordance with the terms hereof, together with their
successors and permitted assigns.
"Letter of Credit" means (i) any letter of credit issued by
the Issuing Lender for the account of the Borrower in accordance with the terms
of Section 2.3 and (ii) any Existing Letter of Credit.
"Lien" means any mortgage, pledge, hypothecation,
assignment, deposit arrangement, security interest, encumbrance, lien
(statutory or otherwise), preference, priority or charge of any kind (including
any agreement to give any of the foregoing, any conditional sale or other title
retention agreement, any financing or similar statement or notice filed under
the Uniform Commercial Code as adopted and in effect in the relevant
jurisdiction or other similar recording or notice statute, and any lease in the
nature thereof).
"Loan" or "Loans" means the Revolving Loans (or a portion of
any Revolving Loan bearing interest at the Base Rate or the Eurodollar Rate and
referred to as a Base Rate Loan or a Eurodollar Loan), the Competitive Loans
and/or the Swingline Loans (or any Swingline Loan bearing interest at the Base
Rate or the Quoted Rate and referred to as a Base Rate Loan or a Quoted Rate
Swingline Loan), individually or collectively, as appropriate.
"LOC Commitment" means the commitment of the Issuing Lender
to issue Letters of Credit in an aggregate face amount at any time outstanding
(together with the amounts of any unreimbursed drawings thereon) of up to the
LOC Committed Amount.
"LOC Committed Amount" shall have the meaning assigned to
such term in Section 2.3.
"LOC Documents" means, with respect to any Letter of Credit,
such Letter of Credit, any amendments thereto, any documents delivered in
connection therewith, any application therefor, and any agreements,
instruments, guarantees or other documents (whether general in application or
applicable only to such Letter of Credit) governing or providing for (i) the
rights and obligations of the parties concerned or at risk or (ii) any
collateral security for such obligations.
"LOC Obligations" means, at any time, the sum of (i) the
maximum amount which is, or at any time thereafter may become, available to be
drawn under Letters of Credit then outstanding, assuming compliance with all
requirements for drawings referred to in such Letters of Credit plus (ii) the
aggregate amount of all drawings under Letters of Credit honored by the Issuing
Lender but not theretofore reimbursed.
"Material Acquisition" means any acquisition involving an
aggregate purchase price (including cash and non-cash consideration) paid or
payable by the Borrower and/or any of its Subsidiaries in excess of
$50,000,0000.
"Material Adverse Effect" means a material adverse effect on
(i) the condition (financial or otherwise), operations, business, assets,
liabilities or prospects of the Borrower and its Subsidiaries taken as a whole,
(ii) the ability of Borrower to perform any material obligation under the
<PAGE> EX-14
Credit Documents to which it is a party or (iii) the material rights and
remedies of the Lenders under the Credit Documents.
"Materials of Environmental Concern" means any gasoline or
petroleum (including crude oil or any fraction thereof) or petroleum products
or any hazardous or toxic substances, materials or wastes, defined or regulated
as such in or under any Environmental Laws, including, without limitation,
asbestos, polychlorinated biphenyls and urea-formaldehyde insulation.
"Moody's" means Moody's Investors Service, Inc., or any
successor or assignee of the business of such company in the business of rating
securities.
"Multiemployer Plan" means a Plan which is a multiemployer
plan as defined in Sections 3(37) or 4001(a)(3) of ERISA.
"Multiple Employer Plan" means a Plan which the Borrower,
any Subsidiary of the Borrower or any ERISA Affiliate and at least one employer
other than the Borrower, any Subsidiary of the Borrower or any ERISA Affiliate
are contributing sponsors.
"National Welders" means National Welders Supply Company,
Inc., a North Carolina corporation.
"National Welders Joint Venture Agreement" means that
certain joint venture agreement dated June 28, 1996 by and among the Borrower,
National Welders, J. A. Turner, Jr., Judith Carpenter, J. A. Turner, III and
Linerieux B. Turner.
"National Welders Liens" means the liens and security
interests on the assets of National Welders as described on Schedule 1.1C
hereto.
"NationsBank" means NationsBank, N.A. and its successors.
"Net Proceeds" means cash proceeds received by the Borrower
or any of its Subsidiaries from time to time in connection with any sale of
Property made pursuant to Section 7.4(b)(iv), net of the actual costs and taxes
incurred by such Person in connection with and attributable to such sale.
"Non-Excluded Taxes" means such term as is defined in
Section 3.10.
"Note" or "Notes" means any Revolving Note, any Competitive
Note or the Swingline Note, as the context may require.
"Notice of Borrowing" means a written notice of borrowing in
substantially the form of Schedule 2.1(b)(i), as required by Section 2.1(b)(i).
"Notice of Extension/Conversion" means the written notice of
extension or conversion in substantially the form of Schedule 3.2, as required
by Section 3.2.
"Participation Interest" means, the extension of credit by a
Lender by way of a purchase of a participation in any Letters of Credit or LOC
Obligations as provided in Section 2.3(c), in Swingline Loans as provided in
Section 2.4(b)(iii) or in any Loans as provided in Section 3.13.
"PBGC" means the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA and any successor
thereof.
<PAGE> EX-15
"Permitted Liens" means:
(i) Liens in favor of the Agent on behalf of the
Lenders;
(ii) Liens (other than Liens created or imposed
under ERISA) for taxes, assessments or governmental charges or levies not yet
due or Liens for taxes being contested in good faith by appropriate
proceedings for which adequate reserves determined in accordance with GAAP have
been established (and as to which the Property subject to any such Lien is not
yet subject to foreclosure, sale or loss on account thereof);
(iii) statutory Liens of landlords and Liens of
carriers, warehousemen, mechanics, materialmen and suppliers and other Liens
imposed by law or pursuant to customary reservations or retentions of title
arising in the ordinary course of business, provided that such Liens secure
only amounts not yet due and payable or, if due and payable, are unfiled
and no other action has been taken to enforce the same or are being
contested in good faith by appropriate proceedings for which adequate
reserves determined in accordance with GAAP have been established (and
as to which the Property subject to any such Lien is not yet subject to
foreclosure, sale or loss on account thereof);
(iv) Liens (other than Liens created or imposed
under ERISA) incurred or deposits made by the Borrower and its Subsidiaries in
the ordinary course of business in connection with workers' compensation,
unemployment insurance and other types of social security, or to secure
the performance of tenders, statutory obligations, bids, leases, government
contracts, performance and return-of-money bonds and other similar
obligations (exclusive of obligations for the payment of borrowed money);
(v) Liens in connection with attachments or
judgments (including judgment or appeal bonds) provided that the judgments
secured shall, within 30 days after the entry thereof, have been discharged or
execution thereof stayed pending appeal, or shall have been discharged within
30 days after the expiration of any such stay;
(vi) easements, rights-of-way, restrictions
(including zoning restrictions), minor defects or irregularities in title and
other similar charges or encumbrances not, in any material respect, impairing
the use of the encumbered Property for its intended purposes;
(vii) Liens on Property securing Indebtedness to
the extent permitted under Section 7.1;
(viii) normal and customary rights of setoff upon
deposits of cash in favor of banks or other depository institutions;
(ix) the National Welders Liens; and
(x) Liens existing as of the Closing Date and set
forth on Schedule 1.1D.
"Person" means any individual, partnership, joint venture,
firm, corporation, limited liability company, association, trust or other
enterprise (whether or not incorporated) or any Governmental Authority.
<PAGE> EX-16
"Plan" means any employee benefit plan (as defined in
Section 3(3) of ERISA) which is covered by ERISA and with respect to which the
Borrower, any Subsidiary of the Borrower or any ERISA Affiliate is (or, if such
plan were terminated at such time, would under Section 4069 of ERISA be deemed
to be) an "employer" within the meaning of Section 3(5) of ERISA.
"Prime Rate" means the rate of interest per annum publicly
announced from time to time by NationsBank as its prime rate in effect at its
principal office in Charlotte, North Carolina, with each change in the Prime
Rate being effective on the date such change is publicly announced as effective
(it being understood and agreed that the Prime Rate is a reference rate used by
NationsBank in determining interest rates on certain loans and is not intended
to be the lowest rate of interest charged on any extension of credit by
NationsBank to any debtor).
"Property" means any interest in any kind of property or
asset, whether real, personal or mixed, or tangible or intangible.
"Quoted Rate" means, with respect to any Quoted Rate
Swingline Loan, the fixed percentage rate per annum offered by the Swingline
Lender and accepted by the Borrower with respect to such Swingline Loan as
provided in accordance with the provisions of Section 2.4.
"Quoted Rate Swingline Loan" means a Swingline Loan bearing
interest at a Quoted Rate.
"Redemption Obligation" means the contingent liability of
the Borrower or any of its Subsidiaries with respect to cash redemption
obligations relating to any capital stock or other equity interests issued by
the Borrower or any of its Subsidiaries to any officer, director, shareholder
or other principal of any Subsidiary created or acquired after the Closing
Date.
"Regulation D, G, U, or X" means Regulation D, G, U or X,
respectively, of the Board of Governors of the Federal Reserve System as from
time to time in effect and any successor to all or a portion thereof.
"Release" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping or
disposing into the environment (including the abandonment or discarding of
barrels, containers and other closed receptacles containing any Materials of
Environmental Concern).
"Reportable Event" means any of the events set forth in
Section 4043(c) of ERISA, other than those events as to which the post-event
notice requirement is waived under subsections .13, .14, .18, .19, or .20 of
PBGC Reg. ' 2615.
"Required Lenders" means, at any time, Lenders which are
then in compliance with their obligations hereunder (as determined by the
Agent) and holding in the aggregate at least 51% of (i) the Revolving
Commitments (and Participation Interests therein) or (ii) if the Commitments
have been terminated, the outstanding Loans and Participation Interests
(including the Participation Interests of the Issuing Lender in any Letters of
Credit).
"Requirement of Law" means, as to any Person, the
certificate of incorporation and by-laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental Authority, in
<PAGE> EX-17
each case applicable to or binding upon such Person or any of its material
property is subject.
"Restricted Payment" means (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class of
stock of the Borrower or any of its Subsidiaries, now or hereafter outstanding,
(ii) any redemption (including, without limitation, in connection with any
Redemption Obligation), retirement, sinking fund or similar payment, purchase
or other acquisition for value, direct or indirect, of any shares of any class
of stock of the Borrower or any of its Subsidiaries, now or hereafter
outstanding or (iii) any payment made to retire, or to obtain the surrender of,
any outstanding warrants, options or other rights to acquire shares of any
class of stock of the Borrower or any of its Subsidiaries, now or hereafter
outstanding.
"Revolving Commitment" means, with respect to each Lender,
the commitment of such Lender in an aggregate principal amount at any time
outstanding of up to such Lender's Commitment Percentage of the Revolving
Committed Amount, (i) to make Revolving Loans in accordance with the
provisions of Section 2.1(a), (ii) to purchase participation interests in
Letters of Credit in accordance with the provisions of Section 2.3(c), and
(iii) to purchase participation interests in the Swingline Loans in accordance
with the provisions of Section 2.4(b)(iii).
"Revolving Committed Amount" shall have the meaning assigned
to such term in Section 2.1(a).
"Revolving Loans" shall have the meaning assigned to such
term in Section 2.1(a).
"Revolving Note" means a promissory note of the Borrower in
favor of a Lender delivered pursuant to Section 2.1(e) and evidencing the
Revolving Loans of such Lender, as such promissory note may be amended,
modified, restated or replaced from time to time.
"S&P" means Standard & Poor's Ratings Group, a division of
McGraw Hill, Inc., or any successor or assignee of the business of such
division in the business of rating securities.
"Senior Subordinated Note Purchase Agreements" means a
collective reference to (i) the Senior Subordinated Note Purchase Agreement
dated July 15, 1987, as amended from time to time thereafter, pursuant to which
the Borrower issued $25,000,000 of its 11.375% senior subordinated notes due
June 1, 1997 and (ii) the Senior Subordinated Note Purchase Agreement dated
July 1, 1988, as amended from time to time thereafter, pursuant to which the
Borrower issued $30,000,000 of its 11.375% senior subordinated notes due August
1, 1998.
"Single Employer Plan" means any Plan which is covered by
Title IV of ERISA, but which is not a Multiemployer Plan.
"Standby Letter of Credit Fee" shall have the meaning
assigned to such term in Section 3.5(b)(i).
"Subsidiary" means, as to any Person, (a) any corporation
more than 50% of whose stock of any class or classes having by the terms
thereof ordinary voting power to elect a majority of the directors of such
corporation (irrespective of whether or not at the time, any 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 owned by such Person directly or
indirectly through Subsidiaries, and (b) any partnership, association, joint
<PAGE> EX-18
venture or other entity in which such Person directly or indirectly through
Subsidiaries has more than 50% equity interest at any time. The term
"Subsidiary" or "Subsidiaries" shall include National Welders at such
time, if ever, as National Welders is required to be consolidated with the
Borrower in accordance with GAAP.
"Swingline Commitment" means the commitment of the Swingline
Lender to make Swingline Loans in an aggregate principal amount at any time
outstanding of up to the Swingline Committed Amount.
"Swingline Committed Amount" shall have the meaning assigned
to such term in Section 2.4(a).
"Swingline Lender" means NationsBank.
"Swingline Loan" shall have the meaning assigned to such
term in Section 2.4(a).
"Swingline Note" means the promissory note of the Borrower
in favor of the Swingline Lender in the original principal amount of
$5,000,000, as such promissory note may be amended, modified, restated or
replaced from time to time.
"Termination Date" means September 30, 2001.
"Termination Event" means (i) with respect to any Plan, the
occurrence of a Reportable Event or the substantial cessation of operations
(within the meaning of Section 4062(e) of ERISA); (ii) the withdrawal by the
Borrower, any Subsidiary of the Borrower or any ERISA Affiliate from a Multiple
Employer Plan during a plan year in which it was a substantial employer (as
such term is defined in Section 4001(a)(2) of ERISA), or the termination of a
Multiple Employer Plan; (iii) the distribution of a notice of intent to
terminate or the actual termination of a Plan pursuant to Section 4041(a)(2) or
4041A of ERISA; (iv) the institution of proceedings to terminate or the actual
termination of a Plan by the PBGC under Section 4042 of ERISA; (v) any event or
condition which might constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan; or
(vi) the complete or partial withdrawal of the Borrower, any Subsidiary of the
Borrower or any ERISA Affiliate from a Multiemployer Plan.
"Trade Letter of Credit Fee" shall have the meaning assigned
to such term in Section 3.5(b)(ii).
"Unused Fee" shall have the meaning assigned to such term in
Section 3.5(a).
"Unused Fee Calculation Period" shall have the meaning
assigned to such term in Section 3.5(a).
"Unused Revolving Committed Amount" means, for any period,
the amount by which (a) the then applicable Revolving Committed Amount exceeds
(b) the daily average sum for such period of (i) the outstanding aggregate
principal amount of all Revolving Loans plus (ii) the outstanding aggregate
principal amount of all LOC Obligations plus (iii) 50% of the outstanding
aggregate principal amount of all Competitive Loans.
"Voting Stock" means, with respect to any Person, capital
stock issued by such Person the holders of which are ordinarily, in the absence
of contingencies, entitled to vote for the election of directors (or persons
performing similar functions) of such Person, even though the right so to vote
has been suspended by the happening of such a contingency.
<PAGE> EX-19
1.2 Computation of Time Periods.
For purposes of computation of periods of time hereunder, the word
"from" means "from and including" and the words "to" and "until" each mean "to
but excluding."
1.3 Accounting Terms.
Except as otherwise expressly provided herein, all accounting terms
used herein shall be interpreted, and all financial statements and certificates
and reports as to financial matters required to be delivered to the Lenders
hereunder shall be prepared, in accordance with GAAP applied on a consistent
basis. All calculations made for the purposes of determining compliance with
this Credit Agreement shall (except as otherwise expressly provided herein) be
made by application of GAAP applied on a basis consistent with the most recent
annual or quarterly financial statements delivered pursuant to Section 6.1
hereof (or, prior to the delivery of the first financial statements pursuant to
Section 6.1 hereof, consistent with the financial statements as at March 31,
1996); provided, however, if (a) the Borrower shall object to determining such
compliance on such basis at the time of delivery of such financial statements
due to any change in GAAP or the rules promulgated with respect thereto or (b)
the Agent or the Required Lenders shall so object in writing within 30 days
after delivery of such financial statements, then such calculations shall be
made on a basis consistent with the most recent financial statements delivered
by the Borrower to the Lenders as to which no such objection shall have been
made.
Notwithstanding the above, it is understood and agreed that, for purposes of
all calculations made in determining compliance with the financial covenants
set forth in Section 6.10, the amount determined pursuant to clause (iii) of
the definition of "Consolidated Operating Income" set forth in this Section 1.1
shall be calculated so as to give effect to any Material Acquisition occurring
during any period applicable in such calculations occurring after the date of
such Material Acquisition.
SECTION 2
CREDIT FACILITIES
2.1 Revolving Loans.
(a) Revolving Commitment. Subject to the terms and conditions
hereof and in reliance upon the representations and warranties set forth
herein, each Lender severally agrees to make available to the Borrower such
Lender's Commitment Percentage of revolving credit loans requested by the
Borrower in Dollars ("Revolving Loans") from time to time from the Closing Date
until the Termination Date, or such earlier date as the Revolving Commitments
shall have been terminated as provided herein for the purposes hereinafter set
forth; provided, however, that the sum of the aggregate principal amount of
outstanding Revolving Loans shall not exceed FIVE HUNDRED MILLION DOLLARS
($500,000,000) (as such aggregate maximum amount may be reduced from time to
time as provided in Section 3.4, the "Revolving Committed Amount"); provided,
further, (i) with regard to each Lender individually, such Lender's outstanding
Revolving Loans shall not exceed such Lender's Commitment Percentage of the
Revolving Committed Amount, and (ii) with regard to the Lenders collectively,
the aggregate principal amount of outstanding Revolving Loans plus the
aggregate principal amount of outstanding Competitive Loans plus the aggregate
principal amount of outstanding Swingline Loans plus LOC Obligations
outstanding shall not exceed the Revolving Committed Amount. Revolving Loans
may consist of Base Rate Loans or Eurodollar Loans, or a combination thereof,
<PAGE> EX-20
as the Borrower may request, and may be repaid and reborrowed in accordance
with the provisions hereof; provided, however, that no more than 11 Eurodollar
Loans shall be outstanding hereunder at any time. For purposes hereof,
Eurodollar Loans with different Interest Periods shall be considered as
separate Eurodollar Loans, even if they begin on the same date, although
borrowings, extensions and conversions may, in accordance with the provisions
hereof, be combined at the end of existing Interest Periods to constitute a new
Eurodollar Loan with a single Interest Period. Revolving Loans hereunder may
be repaid and reborrowed in accordance with the provisions hereof.
(b) Revolving Loan Borrowings.
(i) Notice of Borrowing. The Borrower shall request a
Revolving Loan borrowing by written notice (or telephone notice promptly
confirmed in writing) to the Agent not later than 11:00 A.M. (Charlotte, North
Carolina time) on the Business Day prior to the date of the requested borrowing
in the case of Base Rate Loans, and on the third Business Day prior to the date
of the requested borrowing in the case of Eurodollar Loans. Each such request
for borrowing shall be irrevocable and shall specify (A) that a Revolving Loan
is requested, (B) the date of the requested borrowing (which shall be a
Business Day), (C) the aggregate principal amount to be borrowed, and (D)
whether the borrowing shall be comprised of Base Rate Loans, Eurodollar Loans
or a combination thereof, and if Eurodollar Loans are requested, the Interest
Period(s) therefor. If the Borrower shall fail to specify in any such Notice
of Borrowing (I) an applicable Interest Period in the case of a Eurodollar
Loan, then such notice shall be deemed to be a request for an Interest Period
of one month, or (II) the type of Revolving Loan requested, then such notice
shall be deemed to be a request for a Base Rate Loan hereunder. The Agent
shall give notice to each affected Lender promptly upon receipt of each Notice
of Borrowing pursuant to this Section 2.1(b)(i), the contents thereof and each
such Lender's share of any borrowing to be made pursuant thereto.
(ii) Minimum Amounts. Each Eurodollar Loan or Base Rate
Loan that is a Revolving Loan shall be in a minimum aggregate principal amount
of $5,000,000 and integral multiples of $1,000,000 in excess thereof (or the
remaining amount of the Revolving Committed Amount, if less).
(iii) Advances. Each Lender will make its Commitment
Percentage of each Revolving Loan borrowing available to the Agent for the
account of the Borrower as specified in Section 3.14(a), or in such other
manner as the Agent may specify in writing, by 1:00 P.M. (Charlotte, North
Carolina time) on the date specified in the applicable Notice of Borrowing in
Dollars and in funds immediately available to the Agent. Such borrowing will
then be made available to the Borrower by the Agent by crediting the account of
the Borrower on the books of such office with the aggregate of the amounts made
available to the Agent by the Lenders and in like funds as received by the
Agent.
(c) Repayment. The principal amount of all Revolving Loans
shall be due and payable in full on the Termination Date.
(d) Interest. Subject to the provisions of Section 3.1,
(i) Base Rate Loans. During such periods as Revolving
Loans shall be comprised in whole or in part of Base Rate Loans, such Base Rate
Loans shall bear interest at a per annum rate equal to the Base Rate; and
(ii) Eurodollar Loans. During such periods as Revolving
Loans shall be comprised in whole or in part of Eurodollar Loans, such
Eurodollar Loans shall bear interest at a per annum rate equal to the
Eurodollar Rate plus the Applicable Percentage.
<PAGE> EX-21
Interest on Revolving Loans shall be payable in arrears on each applicable
Interest Payment Date (or at such other times as may be specified herein).
(e) Revolving Notes. The Revolving Loans made by each Lender
shall be evidenced by a duly executed promissory note of the Borrower to such
Lender in an original principal amount equal to such Lender's Commitment
Percentage of the Revolving Committed Amount and in substantially the form of
Schedule 2.1(e).
2.2 Competitive Loan Subfacility.
(a) Competitive Loans. Subject to the terms and conditions and
relying upon the representations and warranties herein set forth, the Borrower
may, from time to time from the Closing Date until the Termination Date,
request and each Lender may, in its sole discretion, agree to make, Competitive
Loans in Dollars to the Borrower; provided, however, that (i) the aggregate
principal amount of outstanding Competitive Loans shall not at any time exceed
the Revolving Committed Amount and (ii) the sum of the aggregate principal
amount of outstanding Revolving Loans plus the aggregate principal amount of
outstanding Competitive Loans plus the aggregate principal amount of
outstanding Swingline Loans plus LOC Obligations outstanding shall not at any
time exceed the Revolving Committed Amount. Each Competitive Loan shall be not
less than $2,000,000 in the aggregate and integral multiples of $1,000,000 in
excess thereof (or the remaining portion of the Revolving Committed Amount, if
less).
(b) Competitive Bid Requests. The Borrower may solicit by
making a written, telefax or telephonic request to all of the Lenders for a
Competitive Loan. To be effective, such request must be received by each of
the Lenders by such time as determined by each such Lender in accordance with
such Lender's customary practices (in any event not to be later than 12:00 NOON
(Charlotte, North Carolina time)) on the date of the requested borrowing and
must specify (i) that a Competitive Loan is requested, (ii) the amount of such
Competitive Loan and (iii) the Interest Period for such Competitive Loan.
(c) Competitive Bids. Upon receipt of a request by the Borrower
for a Competitive Loan, each Lender may, in its sole discretion, submit a
Competitive Bid containing an offer to make a Competitive Loan in an amount up
to the amount specified in the related request for Competitive Loans. Such
Competitive Bid shall be submitted to the Borrower by telephone notice by such
time as determined by such Lender in accordance with such Lender's customary
practices (in any event not to be later than 1:00 P.M. (Charlotte, North
Carolina time)) on the date of the requested Competitive Loan. Competitive
Bids so made shall be irrevocable. Each Competitive Bid shall specify (i) the
date of the proposed Competitive Loan, (ii) the maximum and minimum principal
amounts of the Competitive Loan for which such offer is being made (which
may be for all or a part of (but not more than) the amount requested by the
Borrower), (iii) the applicable Competitive Bid Rate, and (iv) the applicable
Interest Period.
(d) Acceptance of Competitive Bids. The Borrower may, before
such time as determined by the applicable Lender in accordance with such
Lender's customary practices (in any event until 2:00 P.M. (Charlotte, North
Carolina time)) on the date of the requested Competitive Loan, accept any
Competitive Bid by giving the applicable Lender and the Agent telephone notice
(immediately confirmed in writing) of (i) the Lender or Lenders whose
Competitive Bid(s) is/are accepted, (ii) the principal amount of the
Competitive Bid(s) so accepted and (iii) the Interest Period of the Competitive
Bid(s) so accepted. The Borrower may accept any Competitive Bid in whole or in
part; provided, however, that (a) the principal amount of each Competitive Loan
<PAGE> EX-22
may not exceed the maximum amount offered in the Competitive Bid and may not be
less than the minimum amount offered in the Competitive Bid, (b) the principal
amount of each Competitive Loan may not exceed the total amount requested
pursuant to subsection (a) above, (c) the Borrower shall not accept a
Competitive Bid made at a particular Competitive Bid Rate if it has decided to
reject a Competitive Bid made at a lower Competitive Bid Rate and (d) if the
Borrower shall accept a Competitive Bid or Bids made at a particular
Competitive Bid Rate but the amount of such Competitive Bid or Bids shall cause
the total amount of Competitive Bids to be accepted by the Borrower to exceed
the total amount requested pursuant to subsection (a) above, then the Borrower
shall accept a portion of such Competitive Bid or Bids in an amount equal to
the total amount requested pursuant to subsection (a) above less the amount of
other Competitive Bids accepted with respect to such request, which acceptance,
in the case of multiple Competitive Bids at the same Competitive Bid Rate,
shall be made pro rata in accordance with each such Competitive Bid at such
Competitive Bid Rate. Competitive Bids so accepted by the Borrower shall be
irrevocable.
(e) Funding of Competitive Loans. Upon acceptance by the
Borrower pursuant to subsection (d) above of all or a portion of any Lender's
Competitive Bid, such Lender shall, before such time as determined by such
Lender in accordance with such Lender's customary practices, on the date of the
requested Competitive Loan, make such Competitive Loan available to the Agent
in Federal or other immediately available funds. Upon receipt of such
funds, the Agent will promptly make such funds available to the Borrower at
Account No. 001-641-844 maintained at the offices of NationsBank; provided,
however, that if on the date of such Competitive Loan the Borrower is to repay
all or any part of an outstanding Revolving Loan, then the Agent shall apply
such Competitive Loan first to such repayment, and only an amount equal to the
excess (if any) of the amount borrowed over the amount being repaid shall be
made available to the Borrower.
(f) Competitive Notes. The Competitive Loans of each Lender
shall be evidenced by a single Competitive Note duly executed on behalf of the
Borrower, dated the date hereof, in substantially the form of Schedule 2.2(f),
payable to the order of such Lender.
(g) Repayment of Competitive Loans. The Borrower shall repay to
each Lender which has made a Competitive Loan on the last day of the Interest
Period for such Competitive Loan the then unpaid principal amount of such
Competitive Loan. The Borrower may not prepay any Competitive Loan unless such
prepayment is accompanied by payment of amounts specified
in Section 3.1.
(h) Interest. The Borrower shall pay interest to each Lender on
the unpaid principal amount of each Competitive Loan from and including the
date of such Competitive Loan to but excluding the stated maturity date
thereof, at the applicable Competitive Bid Rate for such Competitive Loan
(computed on the basis of the actual number of days elapsed over a year of
360 days). Interest on Competitive Loans shall be payable in arrears on each
applicable Interest Payment Day (or at such other times as may be specified
herein).
(i) Limitation on Number of Competitive Loans. The Borrower
shall not request a Competitive Loan if, assuming the maximum amount of
Competitive Loans so requested is borrowed as of the date of such request, the
sum of the aggregate principal amount of outstanding Revolving Loans plus the
aggregate principal amount of outstanding Competitive Loans plus the aggregate
principal amount of outstanding Swingline Loans plus LOC Obligations
outstanding would exceed the aggregate Revolving Committed Amount.
<PAGE> EX-23
(j) Change in Procedures for Requesting Competitive Loans. The
Borrower and the Lenders hereby agree that, notwithstanding any other provision
to the contrary contained in this Credit Agreement, upon mutual agreement of
the Agent and the Borrower and written notice by the Agent to the Lenders, all
further requests by the Borrower for Competitive Loans shall be made by the
Borrower to the Lenders through the Agent in accordance with such procedures
as shall be prescribed by the Agent and acceptable to the Borrower and each
Lender.
2.3 Letter of Credit Subfacility.
(a) Issuance. Subject to the terms and conditions hereof and of
the LOC Documents, if any, and any other terms and conditions which the Issuing
Lender may reasonably require, the Lenders will participate in the issuance by
the Issuing Lender from time to time of such Letters of Credit in Dollars from
the Closing Date until the Termination Date as the Borrower may request, in a
form acceptable to the Issuing Lender; provided, however, that (i) the LOC
Obligations outstanding shall not at any time exceed TWO HUNDRED FIFTY MILLION
DOLLARS ($250,000,000) (the "LOC Committed Amount") and (ii) the sum of the
aggregate principal amount of outstanding Revolving Loans plus the aggregate
principal amount of outstanding Competitive Loans plus the aggregate principal
amount of outstanding Swingline Loans plus LOC Obligations outstanding shall
not at any time exceed the aggregate Revolving Committed Amount. No Letter of
Credit shall (x) have an original expiry date more than one year from the date
of issuance or (y) as originally issued or as extended, have an expiry date
extending beyond the Termination Date. Each Letter of Credit shall comply with
the related LOC Documents. The issuance and expiry date of each Letter of
Credit shall be a Business Day.
(b) Notice and Reports. The request for the issuance of a
Letter of Credit shall be submitted by the Borrower to the Issuing Lender at
least three (3) Business Days prior to the requested date of issuance. The
Issuing Lender will, at least quarterly and more frequently upon request,
disseminate to each of the Lenders a detailed report specifying the Letters of
Credit which are then issued and outstanding and any activity with respect
thereto which may have occurred since the date of the prior report, and
including therein, among other things, the beneficiary, the face amount, expiry
date as well as any payment or expirations which may have occurred.
(c) Participation. Each Lender, upon issuance of a Letter of
Credit (or, in the case of each Existing Letter of Credit, on the Closing
Date), shall be deemed to have purchased without recourse a risk participation
from the applicable Issuing Lender in such Letter of Credit and the obligations
arising thereunder, in each case in an amount equal to its pro rata share
of the obligations under such Letter of Credit (based on the respective
Commitment Percentages of the Lenders) and shall absolutely, unconditionally
and irrevocably assume, as primary obligor and not as surety, and be obligated
to pay to the Issuing Lender therefor and discharge when due, its pro rata
share of the obligations arising under such Letter of Credit. Without limiting
the scope and nature of each Lender's participation in any Letter of Credit, to
the extent that the Issuing Lender has not been reimbursed as required
hereunder or under any such Letter of Credit, each such Lender shall pay to the
Issuing Lender its pro rata share of such unreimbursed drawing in same day
funds on the day of notification by the Issuing Lender of an unreimbursed
drawing pursuant to the provisions of subsection (d) hereof. The obligation
of each Lender to so reimburse the Issuing Lender shall be absolute and
unconditional and shall not be affected by the occurrence of a Default, an
Event of Default or any other occurrence or event. Any such reimbursement
shall not relieve or otherwise impair the obligation of the Borrower to
reimburse the Issuing Lender under any Letter of Credit, together with interest
as hereinafter provided.
<PAGE> EX-24
(d) Reimbursement. In the event of any drawing under any Letter
of Credit, the Issuing Lender will promptly notify the Borrower. Unless the
Borrower shall immediately notify the Issuing Lender that the Borrower intends
to otherwise reimburse the Issuing Lender for such drawing, the Borrower shall
be deemed to have requested that the Lenders make a Revolving Loan in the
amount of the drawing as provided in subsection (e) hereof on the related
Letter of Credit, the proceeds of which will be used to satisfy the related
reimbursement obligations. The Borrower promises to reimburse the Issuing
Lender on the day of drawing under any Letter of Credit (either with the
proceeds of a Revolving Loan obtained hereunder or otherwise) in same day
funds. If the Borrower shall fail to reimburse the Issuing Lender as provided
hereinabove, the unreimbursed amount of such drawing shall bear interest at a
per annum rate equal to the Base Rate plus the sum of (i) the Applicable
Percentage and (ii) two percent (2%). The Borrower's reimbursement obligations
hereunder shall be absolute and unconditional under all circumstances
irrespective of any rights of setoff, counterclaim or defense to payment the
Borrower may claim or have against the Issuing Lender, the Agent, the Lenders,
the beneficiary of the Letter of Credit drawn upon or any other Person,
including without limitation any defense based on any failure of the Borrower
to receive consideration or the legality, validity, regularity or
unenforceability of the Letter of Credit. The Issuing Lender will promptly
notify the other Lenders of the amount of any unreimbursed drawing and each
Lender shall promptly pay to the Agent for the account of the Issuing Lender in
Dollars and in immediately available funds, the amount of such Lender's pro
rata share of such unreimbursed drawing. Such payment shall be made on the day
such notice is received by such Lender from the Issuing Lender if such
notice is received at or before 2:00 P.M. (Charlotte, North Carolina time)
otherwise such payment shall be made at or before 12:00 NOON (Charlotte, North
Carolina time) on the Business Day next succeeding the day such notice is
received. If such Lender does not pay such amount to the Issuing Lender in
full upon such request, such Lender shall, on demand, pay to the Agent for the
account of the Issuing Lender interest on the unpaid amount during the
period from the date of such drawing until such Lender pays such amount to the
Issuing Lender in full at a rate per annum equal to, if paid within two (2)
Business Days of the date that such Lender is required to make payments of such
amount pursuant to the preceding sentence, the Federal Funds Rate and
thereafter at a rate equal to the Base Rate. Each Lender's obligation to make
such payment to the Issuing Lender, and the right of the Issuing Lender to
receive the same, shall be absolute and unconditional, shall not be affected by
any circumstance whatsoever and without regard to the termination of this
Credit Agreement or the Commitments hereunder, the existence of a Default or
Event of Default or the acceleration of the obligations of the Borrower
hereunder and shall be made without any offset, abatement, withholding or
reduction whatsoever. Simultaneously with the making of each such payment by a
Lender to the Issuing Lender, such Lender shall, automatically and without any
further action on the part of the Issuing Lender or such Lender, acquire a
participation in an amount equal to such payment (excluding the portion of such
payment constituting interest owing to the Issuing Lender) in the related
unreimbursed drawing portion of the LOC Obligation and in the interest thereon
and in the related LOC Documents, and shall have a claim against the Borrower
with respect thereto.
(e) Repayment with Revolving Loans. On any day on which the
Borrower shall have requested, or been deemed to have requested, a Revolving
Loan advance to reimburse a drawing under a Letter of Credit, the Agent shall
give notice to the Lenders that a Revolving Loan has been requested or deemed
requested by the Borrower to be made in connection with a drawing under a
Letter of Credit, in which case a Revolving Loan advance comprised of Base
Rate Loans (or Eurodollar Loans to the extent the Borrower has complied with
the procedures of Section 2.1(b)(i) with respect thereto) shall be immediately
made to the Borrower by all Lenders (notwithstanding any termination of the
<PAGE> EX-25
Commitments pursuant to Section 8.2) pro rata based on the respective
Commitment Percentages of the Lenders (determined before giving effect to any
termination of the Commitments pursuant to Section 8.2) and the proceeds
thereof shall be paid directly to the Issuing Lender for application to the
respective LOC Obligations. Each such Lender hereby irrevocably agrees to make
its pro rata share of each such Revolving Loan immediately upon any such
request or deemed request in the amount, in the manner and on the date
specified in the preceding sentence notwithstanding (i) the amount of such
borrowing may not comply with the minimum amount for advances of Revolving
Loans otherwise required hereunder, (ii) whether any conditions specified in
Section 4.2 are then satisfied, (iii) whether a Default or an Event of Default
then exists, (iv) failure for any such request or deemed request for Revolving
Loan to be made by the time otherwise required hereunder, (v) whether the date
of such borrowing is a date on which Revolving Loans are otherwise permitted to
be made hereunder or (vi) any termination of the Commitments relating thereto
immediately prior to or contemporaneously with such borrowing. In the event
that any Revolving Loan cannot for any reason be made on the date otherwise
required above (including, without limitation, as a result of the commencement
of a proceeding under the Bankruptcy Code with respect to the Borrower), then
each such Lender hereby agrees that it shall forthwith purchase (as of the date
such borrowing would otherwise have occurred, but adjusted for any payments
received from the Borrower on or after such date and prior to such purchase)
from the Issuing Lender such participation in the outstanding LOC Obligations
as shall be necessary to cause each such Lender to share in such LOC
Obligations ratably (based upon the respective Commitment Percentages of the
Lenders (determined before giving effect to any termination of the Commitments
pursuant to Section 8.2)), provided that at the time any purchase of
participation pursuant to this sentence is actually made, the purchasing Lender
shall be required to pay to the Issuing Lender, to the extent not paid to the
Issuer by the Borrower in accordance with the terms of subsection (d) hereof,
interest on the principal amount of participation purchased for each day from
and including the day upon which such borrowing would otherwise have occurred
to but excluding the date of payment for such participation, at the rate equal
to, if paid within two (2) Business Days of the date of the Revolving Loan
advance, the Federal Funds Rate, and thereafter at a rate equal to the Base
Rate.
(f) Designation of Subsidiaries as Account Parties.
Notwithstanding anything to the contrary set forth in this Credit Agreement,
including without limitation Section 2.3(a) hereof, a Letter of Credit issued
hereunder may contain a statement to the effect that such Letter of Credit is
issued for the account of a Subsidiary of the Borrower, provided that
notwithstanding such statement, the Borrower shall be the actual account
party for all purposes of this Credit Agreement for such Letter of Credit and
such statement shall not affect the Borrower's reimbursement obligations
hereunder with respect to such Letter of Credit.
(g) Renewal, Extension. The renewal or extension of any Letter
of Credit shall, for purposes hereof, be treated in all respects the same as
the issuance of a new Letter of Credit hereunder.
(h) Uniform Customs and Practices. The Issuing Lender may have
the Letters of Credit be subject to The Uniform Customs and Practice for
Documentary Credits, as published as of the date of issue by the International
Chamber of Commerce (the "UCP"), in which case the UCP may be incorporated
therein and deemed in all respects to be a part thereof.
(i) Indemnification; Nature of Issuing Lender's Duties. (i)
The Borrower agrees to indemnify and hold harmless the Issuing Lender, each
other Lender, the Agent and each of their respective officers, directors,
affiliates, employees or agents (the "Indemnitees") from and against any and
<PAGE> EX-26
all claims and damages, losses, liabilities, costs and expenses which the
Indemnitees may incur (or which may be claimed against any Indemnitee) by any
Person by reason of or in connection with the issuance or transfer of or
payment or failure to pay under any Letter of Credit; provided that the
Borrower shall not be required to indemnify the Indemnitees for any claims,
damages, losses, liabilities, costs or expenses to the extent, but only to the
extent, (A) caused by the willful misconduct or gross negligence of any
Indemnitee in determining whether a request presented under any Letter of
Credit complied with the terms of such Letter of Credit or (B) caused by the
Issuing Lender's failure to pay under any Letter of Credit after the
presentation to it of a request strictly complying with the terms and
conditions of such Letter of Credit (unless such payment is prohibited by any
law, regulation, court order or decree).
(ii) The Borrower agrees, as between the Borrower and
the Issuing Lender, the Borrower shall assume all risks of the acts, omissions
or misuse of any Letter of Credit by the beneficiary thereof.
(iii) The Issuing Lender shall not, in any way, be liable
for any failure by the Issuing Lender or anyone else to pay any drawing under
any Letter of Credit as a result of any Government Acts or any other cause
beyond the control of the Issuing Lender.
(iv) Nothing in this subsection (h) is intended to limit
the reimbursement obligations of the Borrower contained in subsection (d)
above. The obligations of the Borrower under this subsection (i) shall
survive the termination of this Credit Agreement. No act or omissions of
any current or prior beneficiary of a Letter of Credit shall in any way affect
or impair the rights of the Issuing Lender to enforce any right, power or
benefit under this Credit Agreement.
(v) Notwithstanding anything to the contrary contained
in this subsection (h), the Borrower shall have no obligation to indemnify the
Issuing Lender in respect of any liability incurred by the Issuing Lender (A)
arising out of the gross negligence or willful misconduct of the Issuing
Lender, or (B) caused by the Issuing Lender's failure to pay under any
Letter of Credit after presentation to it of a request strictly complying with
the terms and conditions of such Letter of Credit, as determined by a court
of competent jurisdiction, unless such payment is prohibited by any law,
regulation, court order or decree.
(j) Responsibility of Issuing Lender. It is expressly understood
and agreed that the obligations of the Issuing Lender hereunder to the Lenders
are only those expressly set forth in this Credit Agreement and that the
Issuing Lender shall be entitled to assume that the conditions precedent set
forth in Section 4.2 have been satisfied unless it shall have acquired actual
knowledge that any such condition precedent has not been satisfied; provided,
however, that nothing set forth in this Section 2.3 shall be deemed to
prejudice the right of any Lender to recover from the Issuing Lender any
amounts made available by such Lender to the Issuing Lender pursuant to this
Section 2.3 in the event that it is determined by a court of competent
jurisdiction that the payment with respect to a Letter of Credit constituted
gross negligence or willful misconduct on the part of the Issuing Lender.
(k) Conflict with LOC Documents. In the event of any conflict
between this Credit Agreement and any LOC Document (including any letter of
credit application), this Credit Agreement shall control.
<PAGE> EX-27
2.4 Swingline Loan Subfacility.
(a) Swingline Commitment. Subject to the terms and conditions
hereof and in reliance upon the representations and warranties herein set
forth, the Swingline Lender, in its individual capacity, agrees to make certain
revolving credit loans requested by the Borrower in Dollars to the Borrower
(each a "Swingline Loan" and, collectively, the "Swingline Loans") from time to
time from the Closing Date until the Termination Date for the purposes
hereinafter set forth; provided, however, (i) the aggregate principal amount of
Swingline Loans outstanding at any time shall not exceed FIVE MILLION DOLLARS
($5,000,000) (the "Swingline Committed Amount"), and (ii) the aggregate
principal amount of outstanding Revolving Loans plus the aggregate principal
amount of outstanding Competitive Loans plus the aggregate principal amount of
outstanding Swingline Loans plus LOC Obligations outstanding shall not exceed
the Revolving Committed Amount. Swingline Loans hereunder shall be made as
Base Rate Loans or Quoted Rate Swingline Loans as the Borrower may request in
accordance with the provisions of this Section 2.4, and may be repaid and
reborrowed in accordance with the provisions hereof.
(b) Swingline Loan Advances.
(i) Notices; Disbursement. Whenever the Borrower
desires a Swingline Loan advance hereunder it shall give written notice (or
telephone notice promptly confirmed in writing) to the Swingline Lender not
later than 2:00 P.M. (Charlotte, North Carolina time) on the Business Day of
the requested Swingline Loan advance. Each such notice shall be irrevocable
and shall specify (A) that a Swingline Loan advance is requested, (B) the date
of the requested Swingline Loan advance (which shall be a Business Day) and (C)
the principal amount of the Swingline Loan advance requested. Each Swingline
Loan shall be made as a Base Rate Loan or a Quoted Rate Swingline Loan and
shall have such maturity date as the Swingline Lender and the Borrower shall
agree upon receipt by the Swingline Lender of any such notice from the
Borrower. The Swingline Lender shall initiate the transfer of funds
representing the Swingline Loan advance to the Borrower by 3:00 P.M.
(Charlotte, North Carolina time) on the Business Day of the requested
borrowing.
(ii) Minimum Amounts. Each Swingline Loan advance shall
be in a minimum principal amount of $100,000 and in integral multiples thereof
(or the remaining amount of the Swingline Committed Amount, if less).
(iii) Repayment of Swingline Loans. The principal amount
of all Swingline Loans shall be due and payable on the earlier of (A) the
maturity date agreed to by the Swingline Lender and the Borrower with respect
to such Loan (which maturity date shall not be a date more than thirty (30)
days from the date of advance thereof) or (B) the Termination Date. The
Swingline Lender may, at any time, in its sole discretion, by written notice to
the Borrower and the Lenders, demand repayment of its Swingline Loans by way of
a Revolving Loan advance, in which case the Borrower shall be deemed to have
requested a Revolving Loan advance comprised solely of Base Rate Loans in the
amount of such Swingline Loans; provided, however, that any such demand shall
be deemed to have been given one Business Day prior to the Termination Date and
on the date of the occurrence of any Event of Default described in Section 8.1
(or if such date is not a Business Day, the first Business Day succeeding such
date) and upon acceleration of the indebtedness hereunder and the exercise of
remedies in accordance with the provisions of Section 8.2. Each Lender hereby
irrevocably agrees to make its pro rata share of each such Revolving Loan in
the amount, in the manner and on the date specified in the preceding sentence
notwithstanding (I) the amount of such borrowing may not comply with the
minimum amount for advances of Revolving Loans otherwise required hereunder,
(II) whether any conditions specified in Section 4.2 are then satisfied, (III)
<PAGE> EX-28
whether a Default or an Event of Default then exists, (IV) failure of any such
request or deemed request for Revolving Loan to be made by the time otherwise
required hereunder, (V) whether the date of such borrowing is a date on which
Revolving Loans are otherwise permitted to be made hereunder or (VI) any
termination of the Commitments relating thereto immediately prior to or
contemporaneously with such borrowing. In the event that any Revolving Loan
cannot for any reason be made on the date otherwise required above (including,
without limitation, as a result of the commencement of a proceeding under the
Bankruptcy Code with respect to the Borrower), then each Lender hereby agrees
that it shall forthwith purchase (as of the date such borrowing would otherwise
have occurred, but adjusted for any payments received from the Borrower on or
after such date and prior to such purchase) from the Swingline Lender such
participations in the outstanding Swingline Loans as shall be necessary to
cause each such Lender to share in such Swingline Loans ratably based upon its
Commitment Percentage of the Revolving Committed Amount (determined before
giving effect to any termination of the Commitments pursuant to Section 3.4),
provided that (A) all interest payable on the Swingline Loans shall be for the
account of the Swingline Lender until the date as of which the respective
participation is purchased and (B) at the time any purchase of participations
pursuant to this sentence is actually made, the purchasing Lender shall be
required to pay to the Swingline Lender, to the extent not paid to the
Swingline Lender by the Borrower in accordance with the terms of subsection
(c)(ii) hereof, interest on the principal amount of participation purchased for
each day from and including the day upon which such borrowing would otherwise
have occurred to but excluding the date of payment for such participation, at
the rate equal to the Federal Funds Rate.
(c) Interest on Swingline Loans. (i) Subject to the provisions
of Section 3.1, each Swingline Loan shall bear interest as follows:
(A) Base Rate Loans. If such Swingline Loan is a Base
Rate Loan, at a per annum rate (computed on the basis of the actual number of
days elapsed over a year of 365 days) equal to the Base Rate; and
(B) Quoted Rate Swingline Loans. If such Swingline
Loan is a Quoted Rate Swingline Loan, at a per annum rate (computed on the
basis of the actual number of days elapsed over a year of 360 days) equal to
the Quoted Rate applicable thereto.
Notwithstanding any other provision to the contrary set forth in this
Credit Agreement, in the event that the principal amount of any Quoted Rate
Swingline Loan is not repaid on the last day of the Interest Period for such
Loan, then such Loan shall be automatically converted into a Base Rate Loan at
the end of such Interest Period.
(ii) Payment of Interest. Interest on Swingline Loans
shall be payable in arrears on each applicable Interest Payment Date (or at
such other times as may be specified herein).
(d) Swingline Note. The Swingline Loans shall be evidenced by a
duly executed promissory note of the Borrower to the Swingline Lender in an
original principal amount equal to the Swingline Committed Amount substantially
in the form of Schedule 2.4(d).
<PAGE> EX-29
SECTION 3
OTHER PROVISIONS RELATING TO CREDIT FACILITIES
3.1 Default Rate.
Upon the occurrence, and during the continuance, of an Event of
Default, the principal of and, to the extent permitted by law, interest on the
Loans and any other amounts owing hereunder or under the other Credit Documents
shall bear interest, payable on demand, at a per annum rate 2% greater than the
rate which would otherwise be applicable (or if no rate is applicable, whether
in respect of interest, fees or other amounts, then 2% greater than the Base
Rate).
3.2 Extension and Conversion.
Subject to the terms of Section 4.2, the Borrower shall have the
option, on any Business Day, to extend existing Loans into a subsequent
permissible Interest Period or to convert Loans into Loans of another interest
rate type; provided, however, that (i) except as provided in Section 3.8,
Eurodollar Loans may be converted into Base Rate Loans only on the last day of
the Interest Period applicable thereto, (ii) Eurodollar Loans may be extended,
and Base Rate Loans may be converted into Eurodollar Loans, only if no Default
or Event of Default is in existence on the date of extension or conversion,
(iii) Loans extended as, or converted into, Eurodollar Loans shall be subject
to the terms of the definition of "Interest Period" set forth in Section 1.1
and shall be in such minimum amounts as provided in, with respect to Revolving
Loans, Section 2.1(b)(ii), (iv) no more than 11 Eurodollar Loans shall be
outstanding hereunder at any time (it being understood that, for purposes
hereof, Eurodollar Loans with different Interest Periods shall be considered as
separate Eurodollar Loans, even if they begin on the same date, although
borrowings, extensions and conversions may, in accordance with the provisions
hereof, be combined at the end of existing Interest Periods to constitute a new
Eurodollar Loan with a single Interest Period), (v) any request for extension
or conversion of a Eurodollar Loan which shall fail to specify an Interest
Period shall be deemed to be a request for an Interest Period of one month and
(vi) Competitive Loans and Swingline Loans may not be extended or converted
pursuant to this Section 3.2. Each such extension or conversion shall be
effected by the Borrower by giving a Notice of Extension/Conversion (or
telephone notice promptly confirmed in writing) to the Agent prior to 11:00
A.M. (Charlotte, North Carolina time) on the Business Day of, in the case of
the conversion of a Eurodollar Loan into a Base Rate Loan, and on the third
Business Day prior to, in the case of the extension of a Eurodollar Loan as, or
conversion of a Base Rate Loan into, a Eurodollar Loan, the date of the
proposed extension or conversion, specifying the date of the proposed extension
or conversion, the Loans to be so extended or converted, the types of Loans
into which such Loans are to be converted and, if appropriate, the applicable
Interest Periods with respect thereto. Each request for extension or
conversion shall be irrevocable and shall constitute a representation and
warranty by the Borrower of the matters specified in subsections (ii),
(iii), (iv), (v) and (vi) of Section 4.2. In the event the Borrower fails to
request extension or conversion of any Eurodollar Loan in accordance with this
Section, or any such conversion or extension is not permitted or required by
this Section, then such Eurodollar Loan shall be automatically converted into a
Base Rate Loan at the end of the Interest Period applicable thereto. The Agent
shall give each Lender notice as promptly as practicable of any such proposed
extension or conversion affecting any Loan.
<PAGE> EX-30
3.3 Prepayments.
(a) Voluntary Prepayments. The Borrower shall have the right to
prepay Loans in whole or in part from time to time, subject to Section 3.11,
but otherwise without premium or penalty; provided, however, that (i)
Eurodollar Loans and Competitive Loans may only be prepaid on three Business
Days' prior written notice to the Agent and specifying the applicable Loans to
be prepaid; (ii) any prepayment of Eurodollar Loans, Competitive Loans or
Quoted Rate Swingline Loans will be subject to Section 3.11; and (iii) each
such partial prepayment of Loans shall be (A) in the case of Revolving Loans
and Competitive Loans, in a minimum principal amount of $5,000,000 and integral
multiples of $1,000,000 in excess thereof and (B) in the case of Swingline
Loans, in a minimum principal amount of $100,000 and integral multiples
thereof. Subject to the foregoing terms, amounts prepaid under this Section
3.3(a) shall be applied as the Borrower may elect.
(b) Mandatory Prepayments.
(i) If at any time, the sum of the aggregate principal
amount of outstanding Revolving Loans plus the aggregate principal amount of
outstanding Competitive Loans plus the aggregate principal amount of
outstanding swingline Loans plus LOC Obligations outstanding shall exceed the
Revolving Committed Amount, the Borrower shall prepay immediately the
outstanding principal balance on the Revolving Loans, Competitive Loans and/or
Swingline Loans in an amount sufficient to eliminate such excess.
(ii) Within 10 Business Days of the receipt by the
Borrower or any of its Subsidiaries of any Excess Net Proceeds, the Borrower
shall prepay the Revolving Loans, Competitive Loans and/or Swingline Loans, and
automatically the Revolving Commitments shall be reduced, in an amount equal to
such Excess Net Proceeds.
(c) General. All prepayments made pursuant to this Section 3.3
shall (i) be subject to Section 3.11 and (ii) unless the Borrower shall specify
otherwise, be applied first to Swingline Loans, second to Revolving Loans and
third to Competitive Loans, and with respect to Revolving Loans, first to Base
Rate Loans, if any, and then to Eurodollar Loans in direct order of Interest
Period maturities. Amount prepaid may be reborrowed in accordance with the
provisions hereof.
3.4 Termination and Reduction of Revolving Committed Amount.
(a) Voluntary Reductions. The Borrower may from time to time
permanently reduce or terminate the Revolving Committed Amount in whole or in
part (in minimum aggregate amounts of $5,000,000 or in integral multiples of
$1,000,000 in excess thereof (or, if less, the full remaining amount of the
then applicable Revolving Committed Amount)) upon five Business Days' prior
written notice to the Agent; provided, however, no such termination or
reduction shall be made which would cause the aggregate principal amount of
outstanding Revolving Loans plus the aggregate principal amount of outstanding
Competitive Loans plus the aggregate principal amount of outstanding Swingline
Loans plus LOC Obligations outstanding to exceed the Revolving Committed Amount
unless, concurrently with such termination or reduction, the Revolving Loans,
Competitive Loans and/or Swingline Loans are repaid to the extent necessary to
eliminate such excess. The Commitments of the Lenders and the Issuing Lender
shall automatically terminate on the Termination Date. The Agent shall
promptly notify each affected Lender of receipt by the Agent of any notice from
the Borrower pursuant to this Section 3.4(a).
(b) Mandatory Reductions. On any date that the Loans are
required to be prepaid or the Revolving Commitments are required to be reduced
<PAGE> EX-31
pursuant to the terms of Section 3.3(b)(ii), the Revolving Committed Amount
shall automatically be permanently reduced by the amount of such required
prepayment.
(c) Termination Date. The Revolving Commitments of the Lenders,
the Swingline Commitment of the Swingline Lender and the LOC Commitment of the
Issuing Lender shall automatically terminate on the Termination Date.
(d) General. The Borrower shall pay to the Agent for the
account of the Lenders in accordance with the terms of Section 3.5(a), on the
date of each termination or reduction of the Revolving Committed Amount, the
Unused Fee accrued through the date of such termination or reduction on the
amount of the Revolving Committed Amount so terminated or reduced.
3.5 Fees.
(a) Unused Fee. In consideration of the Revolving Commitments
of the Lenders hereunder, the Borrower agrees to pay to the Agent for the
account of each Lender a fee (the "Unused Fee") on the Unused Revolving
Committed Amount computed at a per annum rate for each day during the
applicable Unused Fee Calculation Period (hereinafter defined) at a rate equal
to the Applicable Percentage in effect from time to time. The Unused Fee shall
commence to accrue on the Closing Date and shall be due and payable in arrears
on the last business day of each March, June, September and December (and any
date that the Revolving Committed Amount is reduced as provided in Section 3.4
and the Termination Date) for the immediately preceding quarter (or portion
thereof) (each such quarter or portion thereof for which the Unused Fee is
payable hereunder being herein referred to as an "Unused Fee Calculation
Period"), beginning with the first of such dates to occur after the Closing
Date.
(b) Letter of Credit Fees.
(i) Standby Letter of Credit Issuance Fee. In
consideration of the issuance of standby Letters of Credit hereunder, the
Borrower promises to pay to the Agent for the account of each Lender a fee (the
"Standby Letter of Credit Fee") on such Lender's Commitment Percentage of the
average daily maximum amount available to be drawn under each such standby
Letter of Credit computed at a per annum rate for each day from the date of
issuance to the date of expiration equal to the Applicable Percentage. The
Standby Letter of Credit Fee will be payable quarterly in arrears on the last
Business Day of each March, June, September and December for the immediately
preceding quarter (or a portion thereof).
(ii) Trade Letter of Credit Drawing Fee. In
consideration of the issuance of trade Letters of Credit hereunder, the
Borrower promises to pay to the Agent for the account of each Lender a fee (the
"Trade Letter of Credit Fee") equal to 25 basis points on the face amount of
each trade Letter of Credit. The Trade Letter of Credit Fee will be payable on
each date of drawing under a trade Letter of Credit.
(iii) Issuing Lender Fees. In addition to the Standby
Letter of Credit Fee payable pursuant to clause (i) above and the Trade Letter
of Credit Fee payable pursuant to clause (ii) above, the Borrower promises to
pay to the Issuing Lender for its own account without sharing by the other
Lenders (A) an issuance fee of 25 basis points on the face amount of each trade
Letter of Credit, payable on each date of issuance or extension of a trade
Letter of Credit, (B) a drawing fee of 15 basis points on the amount of each
drawing on any trade Letter of Credit, payable on each date of drawing under a
trade Letter of Credit, and (C) the letter of credit fronting and negotiation
fees agreed to by the Borrower and the Issuing Lender from time to time and the
<PAGE> EX-32
customary charges from time to time of the Issuing Lender with respect to the
issuance, amendment, transfer, administration, cancellation and conversion of,
and drawings under, such Letters of Credit (collectively, the "Issuing Lender
Fees").
(c) Administrative Fees. The Borrower agrees to pay to the
Agent, for its own account and NationsBanc Capital Markets, Inc., as
applicable, the fees referred to in the Agent's Fee Letter (collectively, the
"Agent's Fees").
3.6 Capital Adequacy.
If any Lender has determined, after the date hereof, that the adoption
of, or any change in, or any change by any Governmental Authority, central bank
or comparable agency charged with the interpretation or administration thereof
in the interpretation or administration of, any applicable law, rule or
regulation regarding capital adequacy, or compliance by such Lender with any
request or directive regarding capital adequacy (whether or not having the
force of law) of any such authority, central bank or comparable agency, has or
would have the effect of reducing the rate of return on such Lender's capital
or assets as a consequence of its commitments or obligations hereunder to a
level below that which such Lender could have achieved but for such adoption,
effectiveness, change or compliance (taking into consideration such Lender's
policies with respect to capital adequacy), then, upon notice from such Lender
to the Borrower, the Borrower shall be obligated to pay to such Lender such
additional amount or amounts as will compensate such Lender for such reduction.
Within a reasonable time after making a request for such additional amount
hereunder, such Lender will furnish to the Borrower a statement certifying the
amount of such reduction and describing the event giving rise to such
reduction. Each determination by any such Lender of amounts owing under this
Section shall, absent manifest error, be conclusive and binding on the
parties hereto.
3.7 Inability To Determine Interest Rate.
If prior to the first day of any Interest Period, the Agent shall have
determined (which determination shall be conclusive and binding upon the
Borrower) that, by reason of circumstances affecting the relevant market,
adequate and reasonable means do not exist for ascertaining the Eurodollar Rate
for such Interest Period, the Agent shall give telecopy or telephonic notice
thereof to the Borrower and the Lenders as soon as practicable thereafter. If
such notice is given (a) any Eurodollar Loans requested to be made on the first
day of such Interest Period shall be made as Base Rate Loans and (b) any Loans
that were to have been converted on the first day of such Interest Period to
or continued as Eurodollar Loans shall be converted to or continued as Base
Rate Loans. Until such notice has been withdrawn by the Agent, no further
Eurodollar Loans shall be made or continued as such, nor shall the Borrower
have the right to convert Base Rate Loans to Eurodollar Loans.
3.8 Illegality.
Notwithstanding any other provision herein, if the adoption of or any
change in any Requirement of Law or in the interpretation or application
thereof occurring after the Closing Date shall make it unlawful for any Lender
to make or maintain Eurodollar Loans as contemplated by this Credit Agreement,
(a) such Lender shall promptly give written notice of such circumstances to the
Borrower and the Agent (which notice shall be withdrawn whenever such
circumstances no longer exist), (b) the commitment of such Lender hereunder to
make Eurodollar Loans, continue Eurodollar Loans as such and convert a Base
Rate Loan to Eurodollar Loans shall forthwith be canceled and, until such
time as it shall no longer be unlawful for such Lender to make or maintain
<PAGE> EX-33
Eurodollar Loans, such Lender shall then have a commitment only to make a Base
Rate Loan when a Eurodollar Loan is requested and (c) such Lender's Loans then
outstanding as Eurodollar Loans, if any, shall be converted automatically to
Base Rate Loans on the respective last days of the then current Interest
Periods with respect to such Loans or within such earlier period as required by
law. If any such conversion of a Eurodollar Loan occurs on a day which is not
the last day of the then current Interest Period with respect thereto, the
Borrower shall pay to such Lender such amounts, if any, as may be required
pursuant to Section 3.11.
3.9 Requirements of Law.
If, after the date hereof, the adoption of or any change in any
Requirement of Law or in the interpretation or application thereof applicable
to any Lender, or compliance by any Lender with any request or directive
(whether or not having the force of law) from any central bank or other
Governmental Authority, in each case made subsequent to the Closing Date (or,
if later, the date on which such Lender becomes a Lender):
(a) shall subject such Lender to any tax of any kind
whatsoever with respect to any Letter of Credit, any Eurodollar Loans or
Competitive Loans made by it or its obligation to make Eurodollar Loans, or
change the basis of taxation of payments to such Lender in respect thereof
(except for (i) Non-Excluded Taxes covered by Section 3.10 (including
Non-Excluded Taxes imposed solely by reason of any failure of such Lender to
comply with its obligations under Section 3.10(b)) and (ii) changes in taxes
measured by or imposed upon the overall net income, or franchise tax (imposed
in lieu of such net income tax), of such Lender or its applicable lending
office, branch, or any affiliate thereof)); or
(b) shall impose, modify or hold applicable any
reserve, special deposit, compulsory loan or similar requirement against assets
held by, deposits or other liabilities in or for the account of, advances,
loans or other extensions of credit by, or any other acquisition of funds by,
any office of such Lender which is not otherwise included in the determination
of the Eurodollar Rate hereunder; and the result of any of the foregoing is to
increase the cost to such Lender, by an amount which such Lender deems to be
material, of making, converting into, continuing or maintaining Eurodollar
Loans or Competitive Loans or issuing or participating in Letters of Credit or
to reduce any amount receivable hereunder in respect thereof, then, in any such
case, upon notice to the Borrower from such Lender, through the Agent, in
accordance herewith, the Borrower shall be obligated to promptly pay such
Lender, upon its demand, any additional amounts necessary to compensate such
Lender for such increased cost or reduced amount receivable, provided that, in
any such case, the Borrower may elect to convert the Eurodollar Loans made by
such Lender hereunder to Base Rate Loans by giving the Agent at least one
Business Day's notice of such election, in which case the Borrower shall
promptly pay to such Lender, upon demand, without duplication, such amounts, if
any, as may be required pursuant to Section 3.11; provided further, however,
that if the result of any the foregoing shall be to decrease the cost to any
Lender of making or maintaining any Eurodollar Loan or Competitive Loan or of
issuing or participating in any Letter of Credit by a material amount, then
such Lender will credit to the Borrower an amount equal to such decreased
costs. If any Lender becomes entitled to claim any additional amounts pursuant
to this subsection, it shall provide prompt notice thereof to the Borrower,
through the Agent, certifying (x) that one of the events described in this
paragraph (a) has occurred and describing in reasonable detail the nature of
such event, (y) as to the increased cost or reduced amount resulting from such
event and (z) as to the additional amount demanded by such Lender and a
reasonably detailed explanation of the calculation thereof. Such a certificate
as to any additional amounts payable pursuant to this subsection submitted
<PAGE> EX-34
by such Lender, through the Agent, to the Borrower shall be conclusive and
binding on the parties hereto in the absence of manifest error. Each Lender
agrees that it will promptly refund any amounts received by it pursuant to this
Section 3.9 that were erroneously billed to the Borrower, together with
interest thereon at the Federal Funds Rate. This covenant shall survive the
termination of this Credit Agreement and the payment of the Loans and all other
amounts payable hereunder.
3.10 Taxes.
(a) Except as provided below in this subsection, all payments
made by the Borrower under this Credit Agreement and any Notes shall be made
free and clear of, and without deduction or withholding for or on account of,
any present or future income, stamp or other taxes, levies, imposts, duties,
charges, fees, deductions or withholdings, now or hereafter imposed, levied,
collected, withheld or assessed by any court, or governmental body, agency or
other official, excluding taxes measured by or imposed upon the overall net
income of any Lender or its applicable lending office, or any branch or
affiliate thereof, and all franchise taxes, branch taxes, taxes on doing
business or taxes on the overall capital or net worth of any Lender or its
applicable lending office, or any branch or affiliate thereof, in each case
imposed in lieu of net income taxes, imposed: (i) by the jurisdiction under the
laws of which such Lender, applicable lending office, branch or affiliate is
organized or is located, or in which its principal executive office is located,
or any nation within which such jurisdiction is located or any political
subdivision thereof; or (ii) by reason of any connection between the
jurisdiction imposing such tax and such Lender, applicable lending office,
branch or affiliate other than a connection arising solely from such Lender
having executed, delivered or performed its obligations, or received payment
under or enforced, this Credit Agreement or any Notes. If any such
non-excluded taxes, levies, imposts, duties, charges, fees, deductions or
withholdings ("Non-Excluded Taxes") are required to be withheld from any
amounts payable to the Agent or any Lender hereunder or under any Notes, (A)
the amounts so payable to the Agent or such Lender shall be increased to the
extent necessary to yield to the Agent or such Lender (after payment of all
Non-Excluded Taxes) interest or any such other amounts payable hereunder at the
rates or in the amounts specified in this Credit Agreement and any Notes,
provided, however, that the Borrower shall be entitled to deduct and withhold
any Non-Excluded Taxes and shall not be required to increase any such amounts
payable to any Lender that is not organized under the laws of the United States
of America or a state thereof if such Lender fails to comply with the
requirements of paragraph (b) of this subsection whenever any Non-Excluded
Taxes are payable by the Borrower, and (B) as promptly as possible thereafter
the Borrower shall send to the Agent for its own account or for the account of
such Lender, as the case may be, a certified copy of an original official
receipt received by the Borrower showing payment thereof. If the Borrower
fails to pay any Non-Excluded Taxes when due to the appropriate taxing
authority or fails to remit to the Agent the required receipts or other
required documentary evidence, the Borrower shall indemnify the Agent and the
Lenders for any incremental taxes, interest or penalties that may become
payable by the Agent or any Lender as a result of any such failure. Each
Lender agrees that it will promptly refund any amounts received by it pursuant
to this Section 3.9 that were erroneously billed to the Borrower, together with
interest thereon at the Federal Funds Rate. The agreements in this subsection
shall survive the termination of this Credit Agreement and the payment of the
Loans and all other amounts payable hereunder.
(b) Each Lender that is not incorporated under the laws of the
United States of America or a state thereof shall:
<PAGE> EX-35
(X)(i) on or before the date of any payment by the
Borrower under this Credit Agreement or Notes to such Lender, deliver to the
Borrower and the Agent (A) two (2) duly completed copies of United States
Internal Revenue Service Form 1001 or 4224, or successor applicable form, as
the case may be, certifying that it is entitled to receive payments under this
Credit Agreement and any Notes without deduction or withholding of any United
States federal income taxes and (B) an Internal Revenue Service Form W-8 or
W-9, or successor applicable form, as the case may be, certifying that it is
entitled to an exemption from United States backup withholding tax;
(ii) deliver to the Borrower and the Agent two
(2) further copies of any such form or certification on or before the date that
any such form or certification expires or becomes obsolete and after the
occurrence of any event requiring a change in the most recent form previously
delivered by it to the Borrower; and
(iii) obtain such extensions of time for filing
and complete such forms or certifications as may reasonably be requested by the
Borrower or the Agent; or
(Y) in the case of any such Lender that is not a "bank"
within the meaning of Section 881(c)(3)(A) of the Internal Revenue Code, (i)
represent to the Borrower (for the benefit of the Borrower and the Agent) that
it is not a bank within the meaning of Section 881(c)(3)(A) of the Internal
Revenue Code, (ii) agree to furnish to the Borrower on or before the date of
any payment by the Borrower, with a copy to the Agent two (2) accurate and
complete original signed copies of Internal Revenue Service Form W-8, or
successor applicable form certifying to such Lender's legal entitlement at the
date of such certificate to an exemption from U.S. withholding tax under the
provisions of Section 881(c) of the Internal Revenue Code with respect to
payments to be made under this Credit Agreement and any Notes (and to deliver
to the Borrower and the Agent two (2) further copies of such form on or before
the date it expires or becomes obsolete and after the occurrence of any event
requiring a change in the most recently provided form and, if necessary, obtain
any extensions of time reasonably requested by the Borrower or the Agent for
filing and completing such forms), and (iii) agree, to the extent legally
entitled to do so, upon reasonable request by the Borrower, to provide to the
Borrower (for the benefit of the Borrower and the Agent) such other forms as
may be reasonably required in order to establish the legal entitlement of such
Lender to an exemption from withholding with respect to payments under this
Credit Agreement and any Notes;
unless in any such case any change in treaty, law or regulation has occurred
after the date such Person becomes a Lender hereunder which renders all such
forms inapplicable or which would prevent such Lender from duly completing and
delivering any such form with respect to it and such Lender so advises the
Borrower and the Agent. Each Person that shall become a Lender or a
participant of a Lender pursuant to subsection 10.3 shall, upon the
effectiveness of the related transfer, be required to provide all of the forms,
certifications and statements required pursuant to this subsection, provided
that in the case of a participant of a Lender the obligations of such
participant of a Lender pursuant to this subsection (b) shall be determined as
if the participant of a Lender were a Lender except that such participant of a
Lender shall furnish all such required forms, certifications and statements to
the Lender from which the related participation shall have been purchased.
3.11 Indemnity.
The Borrower promises to indemnify each Lender and to hold each Lender
harmless from any loss or expense which such Lender may sustain or incur (other
than through such Lender's breach of its obligations hereunder, gross
<PAGE> EX-36
negligence or willful misconduct) as a consequence of (a) default by the
Borrower in making a borrowing of, conversion into or continuation of
Eurodollar Loans or Quoted Rate Swingline Loans after the Borrower has given a
notice requesting the same in accordance with the provisions of this Credit
Agreement, (b) default by the Borrower in making any prepayment of a Eurodollar
Loan or a Quoted Rate Swingline Loan after the Borrower has given a notice
thereof in accordance with the provisions of this Credit Agreement or (c) the
making of a prepayment of Eurodollar Loans or Quoted Rate Swingline Loans on a
day which is not the last day of an Interest Period with respect thereto. With
respect to Eurodollar Loans, such indemnification may include an amount equal
to the excess, if any, of (i) the amount of interest which would have accrued
on the amount so prepaid, or not so borrowed, converted or continued, for the
period from the date of such prepayment or of such failure to borrow, convert
or continue to the last day of the applicable Interest Period (or, in the case
of a failure to borrow, convert or continue, the Interest Period that would
have commenced on the date of such failure) in each case at the applicable rate
of interest for such Eurodollar Loans provided for herein (excluding, however,
the Applicable Percentage included therein, if any) over (ii) the amount of
interest (as reasonably determined by such Lender) which would have accrued to
such Lender on such amount by placing such amount on deposit for a comparable
period with leading banks in the interbank Eurodollar market. The covenants of
the Borrower set forth in this Section 3.11 shall survive the termination of
this Credit Agreement and the payment of the Loans and all other amounts
payable hereunder.
3.12 Pro Rata Treatment.
Except to the extent otherwise provided herein:
(a) Loans. Each Revolving Loan, each payment or
prepayment of principal of any Revolving Loan or reimbursement obligations
arising from drawings under Letters of Credit, each payment of interest on the
Revolving Loans or reimbursement obligations arising from drawings under
Letters of Credit, each payment of Unused Fees, each payment of the Standby
Letter of Credit Fee, each payment of the Trade Letter of Credit Fee, each
reduction of the Revolving Committed Amount and each conversion or extension of
any Revolving Loan, shall be allocated pro rata among the Lenders in accordance
with the respective principal amounts of their outstanding Revolving Loans and
Participation Interests.
(b) Advances. Unless the Agent shall have been
notified in writing by any Lender prior to a Revolving Loan borrowing that such
Lender will not make the amount that would constitute its ratable share of such
Revolving Loan borrowing available to the Agent, the Agent may assume that such
Lender is making such amount available to the Agent, and the Agent may, in
reliance upon such assumption, make available to the Borrower a corresponding
amount. If such amount is not made available to the Agent by such Lender
within the time period specified therefor hereunder, such Lender shall pay to
the Agent, on demand, such amount with interest thereon at a rate equal to the
Federal Funds Rate for the period until such Lender makes such amount
immediately available to the Agent. A certificate of the Agent submitted to
any Lender with respect to any amounts owing under this subsection shall be
conclusive in the absence of manifest error.
3.13 Sharing of Payments.
The Lenders agree among themselves that, in the event that any Lender
shall obtain payment in respect of any Loan, LOC Obligations or any other
obligation owing to such Lender under this Credit Agreement through the
exercise of a right of setoff, banker's lien or counterclaim, or pursuant to a
secured claim under Section 506 of Title 11 of the United States Code or other
<PAGE> EX-37
security or interest arising from, or in lieu of, such secured claim, received
by such Lender under any applicable bankruptcy, insolvency or other similar law
or otherwise, or by any other means, in excess of its pro rata share of such
payment as provided for in this Credit Agreement, such Lender shall promptly
purchase from the other Lenders a participation in such Loans, LOC Obligations
and other obligations in such amounts, and make such other adjustments from
time to time, as shall be equitable to the end that all Lenders share such
payment in accordance with their respective ratable shares as provided for in
this Credit Agreement. The Lenders further agree among themselves that if
payment to a Lender obtained by such Lender through the exercise of a right of
setoff, banker's lien, counterclaim or other event as aforesaid shall be
rescinded or must otherwise be restored, each Lender which shall have shared
the benefit of such payment shall, by repurchase of a participation theretofore
sold, return its share of that benefit (together with its share of any accrued
interest payable with respect thereto) to each Lender whose payment shall have
been rescinded or otherwise restored. The Borrower agrees that any Lender so
purchasing such a participation may, to the fullest extent permitted by law,
exercise all rights of payment, including setoff, banker's lien or
counterclaim, with respect to such participation as fully as if such Lender
were a holder of such Loan, LOC Obligations or other obligation in the amount
of such participation. Except as otherwise expressly provided in this Credit
Agreement, if any Lender or the Agent shall fail to remit to the Agent or any
other Lender an amount payable by such Lender or the Agent to the Agent or such
other Lender pursuant to this Credit Agreement on the date when such amount is
due, such payments shall be made together with interest thereon for each date
from the date such amount is due until the date such amount is paid to the
Agent or such other Lender at a rate per annum equal to the Federal Funds Rate.
If under any applicable bankruptcy, insolvency or other similar law, any Lender
receives a secured claim in lieu of a setoff to which this Section 3.13
applies, such Lender shall, to the extent practicable, exercise its rights in
respect of such secured claim in a manner consistent with the rights of the
Lenders under this Section 3.13 to share in the benefits of any recovery on
such secured claim.
3.14 Payments, Computations, Etc.
(a) Except as otherwise specifically provided herein, all
payments hereunder (other than payments in respect of Competitive Loans) shall
be made to the Agent in dollars in immediately available funds, without offset,
deduction, counterclaim or withholding of any kind, at the Agent's office
specified in Schedule 2.1(a) not later than 2:00 P.M. (Charlotte, North
Carolina time) on the date when due. Payments received after such time shall
be deemed to have been received on the next succeeding Business Day. The Agent
may (but shall not be obligated to) debit the amount of any such payment which
is not made by such time to any ordinary deposit account of the Borrower
maintained with the Agent (with notice to the Borrower). The Borrower shall,
at the time it makes any payment under this Credit Agreement (other than
payments in respect of Competitive Loans), specify to the Agent the Loans, LOC
Obligations, Fees, interest or other amounts payable by the Borrower hereunder
to which such payment is to be applied (and in the event that it fails so to
specify, or if such application would be inconsistent with the terms hereof,
the Agent shall distribute such payment to the Lenders in such manner as the
Agent may determine to be appropriate in respect of obligations owing by the
Borrower hereunder, subject to the terms of Section 3.12(a)). The Agent will
distribute such payments to such Lenders, if any such payment is received prior
to 12:00 NOON (Charlotte, North Carolina time) on a Business Day in like funds
as received prior to the end of such Business Day and otherwise the Agent will
distribute such payment to such Lenders on the next succeeding Business Day.
All payments of principal and interest in respect of Competitive Loans shall be
in accordance with the terms of Section 2.2. Whenever any payment hereunder
shall be stated to be due on a day which is not a Business Day, the due date
<PAGE> EX-38
thereof shall be extended to the next succeeding Business Day (subject to
accrual of interest and Fees for the period of such extension), except that in
the case of Eurodollar Loans, if the extension would cause the payment to be
made in the next following calendar month, then such payment shall instead be
made on the next preceding Business Day. Except as expressly provided
otherwise herein, all computations of interest and fees shall be made on the
basis of actual number of days elapsed over a year of 360 days, except with
respect to computation of interest on Base Rate Loans which (unless the Base
Rate is determined by reference to the Federal Funds Rate) shall be calculated
based on a year of 365 or 366 days, as appropriate. Interest shall accrue from
and include the date of borrowing, but exclude the date of payment.
(b) Allocation of Payments After Event of Default.
Notwithstanding any other provisions of this Credit Agreement to the contrary,
after the occurrence and during the continuance of an Event of Default, all
amounts collected or received by the Agent or any Lender on account of the
Borrower's Obligations or any other amounts outstanding under any of the
Credit Documents shall be paid over or delivered as follows:
FIRST, to the payment of all reasonable out-of-pocket costs
and expenses (including without limitation reasonable attorneys' fees) of the
Agent in connection with enforcing the rights of the Lenders under the Credit
Documents;
SECOND, to payment of any fees owed to the Agent;
THIRD, to the payment of all reasonable out-of-pocket costs
and expenses (including without limitation, reasonable attorneys' fees) of each
of the Lenders in connection with enforcing its rights under the Credit
Documents or otherwise with respect to the Borrower's Obligations owing to such
Lender;
FOURTH, to the payment of all of the Borrower's Obligations
consisting of accrued fees and interest;
FIFTH, to the payment of the outstanding principal amount of
the Borrower's Obligations;
SIXTH, to all other Borrower's Obligations and other
obligations which shall have become due and payable under the Credit Documents
or otherwise and not repaid pursuant to clauses "FIRST" through "FIFTH" above;
and
SEVENTH, to the payment of the surplus, if any, to whoever
may be lawfully entitled to receive such surplus.
In carrying out the foregoing, (i) amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category; (ii) each of the Lenders shall receive an amount equal to
its pro rata share (based on the proportion that the then outstanding Loans and
Participation Interests held by such Lender bears to the aggregate then
outstanding Loans and LOC Participation Interests) of amounts available to be
applied pursuant to clauses "THIRD", "FOURTH", "FIFTH" and "SIXTH" above; and
(iii) to the extent that any amounts available pursuant to clause "FIFTH" above
are attributable to the issued but undrawn amount of outstanding Letters of
Credit, such amounts shall be held by the Agent in a cash collateral account
and applied (A) first, to reimburse the Issuing Lender from time to time for
any drawings under such Letters of Credit and (B) then, following the
expiration of all Letters of Credit, to all other obligations of the types
described in clauses "FIFTH" and "SIXTH" above in the manner provided in this
Section 3.15(c).
<PAGE> EX-39
SECTION 4
CONDITIONS
4.1 Closing Conditions.
The obligation of the Lenders to enter into this Credit Agreement and
to make the initial Loans or the Issuing Lender to issue the initial Letter of
Credit, whichever shall occur first, shall be subject to satisfaction of the
following conditions (in form and substance acceptable to the Lenders):
(a) The Agent shall have received original counterparts
of this Credit Agreement executed by each of the parties hereto;
(b) The Agent shall have received an appropriate
original Revolving Note for each Lender, executed by the Borrower;
(c) The Agent shall have received an appropriate
original Competitive Note for each Lender, executed by the Borrower;
(d) The Agent shall have received an appropriate
original Swingline Note for the Swingline Lender, executed by the Borrower;
(e) The Agent shall have received all documents it may
reasonably request relating to the existence and good standing of the Borrower,
the corporate or other necessary authority for and the validity of the Credit
Documents, and any other matters relevant thereto, all in form and substance
reasonably satisfactory to the Agent;
(f) The Agent shall have received a legal opinion of
McCausland, Keen & Buckman, counsel for the Borrower, dated as of the Closing
Date and substantially in the form of Schedule 4.1(h); and
(g) The Agent shall have received, for its own account
and for the accounts of the Lenders, all fees and expenses required by this
Credit Agreement or any other Credit Document to be paid on or before the
Closing Date.
4.2 Conditions to all Extensions of Credit.
The obligations of each Lender to make, convert or extend any Loan and
of the Issuing Lender to issue or extend Letters of Credit (including the
initial Loans and the initial Letter of Credit) are subject to satisfaction of
the following conditions in addition to satisfaction on the Closing Date of the
conditions set forth in Section 4.1:
(i) The Borrower shall have delivered (A) in the case
of any Revolving Loan, an appropriate Notice of Borrowing or Notice of
Extension/Conversion or (B) in the case of any Letter of Credit, the Issuing
Lender shall have received an appropriate request for issuance or extension in
accordance with the provisions of Section 2.3(b);
(ii) The representations and warranties set forth in
Section 5 shall be, subject to the limitations set forth therein, true and
correct in all material respects as of such date (except for those which
expressly relate to an earlier date);
(iii) There shall not have been commenced against the
Borrower an involuntary case under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect, or any case, proceeding or other
action for the appointment of a receiver, liquidator, assignee, custodian,
<PAGE> EX-40
trustee, sequestrator (or similar official) of such Person or for any
substantial part of its Property or for the winding up or liquidation of its
affairs, and such involuntary case or other case, proceeding or other action
shall remain undismissed, undischarged or unbonded;
(iv) No Default or Event of Default shall exist and be
continuing either prior to or after giving effect thereto;
(v) No material adverse change shall have occurred
since March 31, 1996 in the condition (financial or otherwise), business,
management or prospects of the Borrower and its Subsidiaries taken as a whole;
and
(vi) Immediately after giving effect to the making of
such Loan (and the application of the proceeds thereof) or to the issuance or
extension of such Letter of Credit, as the case may be, (A) the sum of the
aggregate principal amount of outstanding Revolving Loans plus the aggregate
principal amount of outstanding Competitive Loans plus the aggregate principal
amount of outstanding Swingline Loans plus LOC Obligations outstanding shall
not exceed the Revolving Committed Amount, and (B) the LOC Obligations shall
not exceed the LOC Committed Amount.
The delivery of each Notice of Borrowing, each Notice of Extension/Conversion
and each request for the issuance or extension of a Letter of Credit pursuant
to Section 2.3(b) shall constitute a representation and warranty by the
Borrower of the correctness of the matters specified in subsections (ii),
(iii), (iv), (v) and (vi) above.
SECTION 5
REPRESENTATIONS AND WARRANTIES
The Borrower hereby represents to the Agent and each Lender that:
5.1 Financial Condition.
(a) The audited consolidated and consolidating balance sheet of
the Borrower and its consolidated Subsidiaries, and the related consolidated
and consolidating statements of earnings and statements of cash flows, as of
March 31, 1996 have heretofore been furnished to each Lender. Such financial
statements (including the notes thereto) (i) have been audited by KPMG Peat
Marwick, (ii) have been prepared in accordance with GAAP consistently applied
throughout the periods covered thereby and (iii) present fairly (on the basis
disclosed in the footnotes to such financial statements) the consolidated
financial condition, results of operations and cash flows of the Borrower
and its consolidated Subsidiaries as of such date and for such periods. The
unaudited interim balance sheets of the Borrower and its consolidated
Subsidiaries as at the end of, and the related unaudited interim statements of
earnings and of cash flows for, each fiscal month and quarterly period ended
after March 31, 1996 and prior to the Closing Date have heretofore been
furnished to each Lender. Such interim financial statements for each such
quarterly period, (i) have been prepared in accordance with GAAP consistently
applied throughout the periods covered thereby and (ii) present fairly (on the
basis disclosed in the footnotes to such financial statements) the consolidated
financial condition, results of operations and cash flows of the Borrower and
its consolidated Subsidiaries as of such date and for such periods. During the
period from March 31, 1996 to and including the Closing Date, there has been
no sale, transfer or other disposition by the Borrower or any of its
Subsidiaries of any material part of the business or property of the Borrower
and its consolidated Subsidiaries, taken as a whole, and no purchase or other
<PAGE> EX-41
acquisition by any of them of any business or property (including any
capital stock of any other person) material in relation to the consolidated
financial condition of the Borrower and its consolidated Subsidiaries, taken as
a whole, in each case, which, is not reflected in the foregoing financial
statements or in the notes thereto and has not otherwise been disclosed in
writing to the Lenders on or prior to the Closing Date.
(b) The projections of profit and loss statements, balance
sheets and cash flow reports for the Borrower and its consolidated Subsidiaries
on a consolidated basis for fiscal year 1997, copies of which have heretofore
been furnished to each Lender, are based upon reasonable assumptions made known
to the Lenders and upon information not known to be incorrect or misleading in
any material respect.
5.2 No Change.
Since March 31, 1996, there has been no development or event relating
to or affecting the Borrower or any of its Subsidiaries which has had or would
be reasonably expected to have a Material Adverse Effect.
5.3 Organization; Existence; Compliance with Law.
Each of the Borrower and its Subsidiaries (a) is a corporation duly
organized, validly existing and is in good standing under the laws of the
jurisdiction of its incorporation or organization, (b) has the corporate or
other necessary power and authority, and the legal right, to own and operate
its property, to lease the property it operates as lessee and to conduct the
business in which it is currently engaged, (c) is duly qualified as a foreign
entity and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of property or the conduct of its business
requires such qualification, other than in such jurisdictions where the failure
to be so qualified and in good standing would not be reasonably expected to
have a Material Adverse Effect, and (d) is in compliance with all material
Requirements of Law.
5.4 Power; Authorization; Enforceable Obligations.
The Borrower has the corporate or other necessary power and authority,
and the legal right, to make, deliver and perform the Credit Documents and to
borrow hereunder, and has taken all necessary corporate action to authorize the
borrowings on the terms and conditions of this Credit Agreement and to
authorize the execution, delivery and performance of the Credit Documents to
which it is a party. No consent or authorization of, filing with, notice to or
other similar act by or in respect of, any Governmental Authority or any other
Person is required to be obtained or made by or on behalf of the Borrower in
connection with the borrowings hereunder or with the execution, delivery,
performance, validity or enforceability of the Credit Documents to which the
Borrower is a party. This Credit Agreement has been, and each other Credit
Document to which the Borrower is a party will be, duly executed and delivered
on behalf of the Borrower. This Credit Agreement constitutes, and each other
Credit Document when executed and delivered will constitute, a legal, valid and
binding obligation of the Borrower enforceable against the Borrower in
accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles (whether enforcement is sought by proceedings in equity or
at law).
5.5 No Legal Bar.
<PAGE> EX-42
The execution, delivery and performance of the Credit Documents by the
Borrower, the borrowings hereunder and the use of the proceeds thereof (a) will
not violate any Requirement of Law or contractual obligation of the Borrower or
any of its Subsidiaries in any respect that would reasonably be expected to
have a Material Adverse Effect, (b) will not result in, or require, the
creation or imposition of any Lien on any of the properties or revenues of any
of the Borrower or any of its Subsidiaries pursuant to any such Requirement of
Law or contractual obligation, and (c) will not violate or conflict with any
provision of the Borrower's articles of incorporation or by-laws.
5.6 No Material Litigation.
With the possible exception of certain litigation between Praxair,
Inc. and the Borrower (of which the Lenders are aware), except as disclosed and
described in Schedule 5.6 attached hereto, no litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority is pending or,
to the best knowledge of the Borrower, threatened by or against the Borrower or
any of its Subsidiaries or against any of their respective properties or
revenues which (a) relates to any of the Credit Documents or any of the
transactions contemplated hereby or thereby or (b) would be reasonably expected
to have a Material Adverse Effect.
5.7 No Default.
Neither the Borrower nor any of its Subsidiaries is in default under
or with respect to any of their contractual obligations in any respect which
would be reasonably expected to have a Material Adverse Effect. No Default or
Event of Default has occurred and is continuing.
5.8 Ownership of Property; Liens.
Each of the Borrower and its Subsidiaries has good record and
marketable title in fee simple to, or a valid leasehold interest in, all its
material real property, and good title to, or a valid leasehold interest in,
all its other material property, and none of such property is subject to any
Lien, except for Permitted Liens.
5.9 Intellectual Property.
Each of the Borrower and its Subsidiaries owns, or has the legal right
to use, all United States trademarks, tradenames, copyrights, technology,
know-how and processes, if any, necessary for each of them to conduct its
business as currently conducted (the "Intellectual Property") except for those
the failure to own or have such legal right to use would not be reasonably
expected to have a Material Adverse Effect. No claim has been asserted and is
pending by any Person challenging or questioning the use of any such
Intellectual Property or the validity or effectiveness of any such Intellectual
Property, nor does the Borrower know of any such claim, and the use of such
Intellectual Property by the Borrower or any of its Subsidiaries does not
infringe on the rights of any Person, except for such claims and infringements
that in the aggregate, would not be reasonably expected to have a Material
Adverse Effect.
5.10 No Burdensome Restrictions.
Except as previously disclosed in writing to the Lenders on or prior
to the Closing Date, no Requirement of Law or contractual obligation of the
Borrower or any of its Subsidiaries would be reasonably expected to have a
Material Adverse Effect.
<PAGE> EX-43
5.11 Taxes.
Each of the Borrower and its Subsidiaries has filed or caused to be
filed all United States federal income tax returns and all other material tax
returns which, to the best knowledge of the Borrower, are required to be filed
and has paid (a) all taxes shown to be due and payable on said returns or (b)
all taxes shown to be due and payable on any assessments of which it has
received notice made against it or any of its property and all other taxes,
fees or other charges imposed on it or any of its property by any Governmental
Authority (other than any (i) taxes, fees or other charges with respect to
which the failure to pay, in the aggregate, would not have a Material Adverse
Effect or (ii) taxes, fees or other charges the amount or validity of which are
currently being contested and with respect to which reserves in conformity with
GAAP have been provided on the books of such Person), and no tax Lien has been
filed, and, to the best knowledge of the Borrower, no claim is being asserted,
with respect to any such tax, fee or other charge.
5.12 ERISA.
Except as would not result in a Material Adverse Effect:
(a) During the five-year period prior to the date on which this
representation is made or deemed made: (i) no Termination Event has occurred,
and, to the best knowledge of the Borrower, no event or condition has occurred
or exists as a result of which any Termination Event could reasonably be
expected to occur, with respect to any Plan; (ii) no "accumulated funding
deficiency," as such term is defined in Section 302 of ERISA and Section 412 of
the Code, whether or not waived, has occurred with respect to any Plan; (iii)
each Single Employer Plan and, to the best knowledge of the Borrower, each
Multiemployer Plan has been maintained, operated, and funded in compliance with
its own terms and in material compliance with the provisions of ERISA, the
Code, and any other applicable federal or state laws; and (iv) no lien in favor
of the PBGC or a Plan has arisen or is reasonably likely to arise on account of
any Plan.
(b) The actuarial present value of all "benefit liabilities"
under all Single Employer Plans (determined within the meaning of Section
401(a)(2) of the Code, utilizing the actuarial assumptions used to fund such
Plans), whether or not vested, did not, as of the last annual valuation date
prior to the date on which this representation is made or deemed made, exceed
the current value of the assets of all such Plans.
(c) Neither the Borrower, any of the Subsidiaries of the
Borrower nor any ERISA Affiliate has incurred, or, to the best knowledge of the
Borrower, could be reasonably expected to incur, any withdrawal liability under
ERISA to any Multiemployer Plan or Multiple Employer Plan. Neither the
Borrower, any of the Subsidiaries of the Borrower nor any ERISA Affiliate would
become subject to any withdrawal liability under ERISA if the Borrower, any of
the Subsidiaries of the Borrower or any ERISA Affiliate were to withdraw
completely from all Multiemployer Plans and Multiple Employer Plans as of the
valuation date most closely preceding the date on which this representation is
made or deemed made. Neither the Borrower, any of the Subsidiaries of the
Borrower nor any ERISA Affiliate has received any notification that any
Multiemployer Plan is in reorganization (within the meaning of Section 4241 of
ERISA), is insolvent (within the meaning of Section 4245 of ERISA), or has been
terminated (within the meaning of Title IV of ERISA), and no Multiemployer Plan
is, to the best knowledge of the Borrower, reasonably expected to be in
reorganization, insolvent, or terminated.
(d) No prohibited transaction (within the meaning of Section 406
of ERISA or Section 4975 of the Code) or breach of fiduciary responsibility has
<PAGE> EX-44
occurred with respect to a Plan which has subjected or may subject the
Borrower, any of the Subsidiaries of the Borrower or any ERISA Affiliate to any
liability under Sections 406, 409, 502(i), or 502(l) of ERISA or Section 4975
of the Code, or under any agreement or other instrument pursuant to which the
Borrower, any of the Subsidiaries of the Borrower or any ERISA Affiliate has
agreed or is required to indemnify any person against any such liability.
5.13 Governmental Regulations, Etc.
(a) No part of the proceeds of the Loans will be used, directly
or indirectly, for the purpose of purchasing or carrying any "margin stock"
within the meaning of Regulation G or Regulation U, or for the purpose of
purchasing or carrying or trading in any securities. If requested by any
Lender or the Agent, the Borrower will furnish to the Agent and each Lender a
statement to the foregoing effect in conformity with the requirements of FR
Form U-1 referred to in said Regulation U. No indebtedness being reduced or
retired out of the proceeds of the Loans was or will be incurred for the
purpose of purchasing or carrying any margin stock within the meaning of
Regulation U or any "margin security" within the meaning of Regulation T.
"Margin stock" within the meanings of Regulation U does not constitute more
than 25% of the value of the consolidated assets of the Borrower and its
Subsidiaries. None of the transactions contemplated by this Credit Agreement
(including, without limitation, the direct or indirect use of the proceeds of
the Loans) will violate or result in a violation of the Securities Act
of 1933, as amended, or the Securities Exchange Act of 1934, as amended, or
regulations issued pursuant thereto, or Regulation G, T, U or X.
(b) Neither the Borrower nor any of its Subsidiaries is subject
to regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act or the Investment Company Act of 1940, each as amended. In addition,
neither the Borrower nor any of its Subsidiaries is (i) an "investment company"
registered or required to be registered under the Investment Company Act of
1940, as amended, and is not controlled by such a company, or (ii) a "holding
company", or a "subsidiary company" of a "holding company", or an "affiliate"
of a "holding company" or of a "subsidiary" of a "holding company", within the
meaning of the Public Utility Holding Company Act of 1935, as amended.
(c) No director, executive officer or principal shareholder of
the Borrower or any of its Subsidiaries is a director, executive officer or
principal shareholder of any Lender. For the purposes hereof the terms
"director", "executive officer" and "principal shareholder" (when used with
reference to any Lender) have the respective meanings assigned thereto in
Regulation O issued by the Board of Governors of the Federal Reserve System.
(d) Each of the Borrower and its Subsidiaries has obtained all
material licenses, permits, franchises or other governmental authorizations
necessary to the ownership of its respective Property and to the conduct of its
business.
(e) Neither the Borrower nor any of its Subsidiaries is in
violation of any applicable statute, regulation or ordinance of the United
States of America, or of any state, city, town, municipality, county or any
other jurisdiction, or of any agency thereof (including without limitation,
environmental laws and regulations), which violation could reasonably be
expected to have a Material Adverse Effect.
(f) Each of the Borrower and its Subsidiaries is current with
all material reports and documents, if any, required to be filed with any state
or federal securities commission or similar agency and is in full compliance in
all material respects with all applicable rules and regulations of such
commissions.
<PAGE> EX-45
5.14 Subsidiaries.
Schedule 5.14 sets forth all the Subsidiaries of the Borrower at the
Closing Date, the jurisdiction of their incorporation and the direct or
indirect ownership interest of the Borrower therein.
5.15 Purpose of Loans and Letters of Credit.
The proceeds of the Loans hereunder shall be used solely by the
Borrower (i) to refinance existing Indebtedness of the Borrower under the
Existing Credit Agreement, (ii) to finance the acquisition of new Subsidiaries,
(iii) to finance loans, advances and other investments by the Borrower and its
Subsidiaries to the extent permitted under this Credit Agreement and (iv) for
the working capital, capital expenditure and other general corporate purposes
of the Borrower and its Subsidiaries. The Letters of Credit shall be used only
for or in connection with appeal bonds, reimbursement obligations arising in
connection with surety and reclamation bonds, reinsurance, domestic or
international trade transactions and obligations not otherwise aforementioned
relating to transactions entered into by the applicable account party in the
ordinary course of business.
5.16 Environmental Matters.
Except as could not reasonably be expected to have a Material Adverse
Effect:
(a) Each of the facilities and properties owned, leased or
operated by the Borrower or any of its Subsidiaries (the "Properties") and all
operations at the Properties are in compliance with all applicable
Environmental Laws, and there is no violation of any Environmental Law with
respect to the Properties or the businesses operated by the Borrower or any of
its Subsidiaries (the "Businesses"), and there are no conditions relating to
the Businesses or Properties that could give rise to liability under any
applicable Environmental Laws.
(b) None of the Properties contains, or has previously
contained, any Materials of Environmental Concern at, on or under the
Properties in amounts or concentrations that constitute or constituted a
violation of, or could give rise to liability under, Environmental Laws.
(c) Neither the Borrower nor any of its Subsidiaries has
received any written or verbal notice of, or inquiry from any Governmental
Authority regarding, any violation, alleged violation, non-compliance,
liability or potential liability regarding environmental matters or compliance
with Environmental Laws with regard to any of the Properties or the Businesses,
nor does the Borrower or any of its Subsidiaries have knowledge or reason to
believe that any such notice will be received or is being threatened.
(d) Materials of Environmental Concern have not been transported
or disposed of from the Properties, or generated, treated, stored or disposed
of at, on or under any of the Properties or any other location, in each case by
or on behalf of the Borrower or any of its Subsidiaries in violation of, or in
a manner that would be reasonably likely to give rise to liability under, any
applicable Environmental Law.
(e) No judicial proceeding or governmental or administrative
action is pending or, to the best knowledge of the Borrower, threatened, under
any Environmental Law to which the Borrower or any of its Subsidiaries is or
will be named as a party, nor are there any consent decrees or other decrees,
consent orders, administrative orders or other orders, or other administrative
<PAGE> EX-46
or judicial requirements outstanding under any Environmental Law with respect
to the Borrower or any of its Subsidiaries, the Properties or the Businesses.
(f) There has been no release or, threat of release of Materials
of Environmental Concern at or from the Properties, or arising from or related
to the operations (including, without limitation, disposal) of the Borrower or
any of its Subsidiaries in connection with the Properties or otherwise in
connection with the Businesses, in violation of or in amounts or in a manner
that could give rise to liability under Environmental Laws.
SECTION 6
AFFIRMATIVE COVENANTS
The Borrower hereby covenants and agrees that so long as this Credit
Agreement is in effect or any amounts payable hereunder or under any other
Credit Document shall remain outstanding, and until all of the Commitments
hereunder shall have terminated:
6.1 Information Covenants.
The Borrower will furnish, or cause to be furnished, to the Agent and
each of the Lenders:
(a) Annual Financial Statements. As soon as available, and in
any event within 120 days after the close of each fiscal year of the Borrower
and its Subsidiaries, a consolidated and consolidating balance sheet and income
statement of the Borrower and its Subsidiaries, as of the end of such fiscal
year, together with related consolidated and consolidating statements of
operations and retained earnings and of cash flows for such fiscal year,
setting forth in comparative form consolidated and consolidating figures for
the preceding fiscal year, all such financial information described above to be
in reasonable form and detail and audited by independent certified public
accountants of recognized national standing reasonably acceptable to the Agent
and whose opinion shall be to the effect that such financial statements have
been prepared in accordance with GAAP (except for changes with which such
accountants concur) and shall not be limited as to the scope of the audit or
qualified as to the status of the Borrower and its Subsidiaries as a going
concern.
(b) Quarterly Financial Statements. As soon as available, and
in any event within 60 days after the close of each fiscal quarter of the
Borrower and its Subsidiaries (other than the fourth fiscal quarter, in which
case 120 days after the end thereof) a consolidated and consolidating balance
sheet and income statement of the Borrower and its Subsidiaries, as of the end
of such fiscal quarter, together with related consolidated and consolidating
statements of operations and retained earnings and of cash flows for such
fiscal quarter in each case setting forth in comparative form consolidated and
consolidating figures for the corresponding period of the preceding fiscal
year, all such financial information described above to be in reasonable form
and detail and reasonably acceptable to the Agent, and accompanied by a
certificate of the chief financial officer or other Executive Officer of the
Borrower to the effect that such quarterly financial statements fairly present
in all material respects the financial condition of the Borrower and its
Subsidiaries and have been prepared in accordance with GAAP, subject to changes
resulting from audit and normal year-end audit adjustments.
(c) Officer's Certificate. At the time of delivery of the
financial statements provided for in Sections 6.1(a) and 6.1(b) above, a
certificate of the chief financial officer or other Executive Officer of the
<PAGE> EX-47
Borrower substantially in the form of Schedule 6.1(c), (i) demonstrating
compliance with the financial covenants contained in Section 6.10 by
calculation thereof as of the end of each such fiscal period and (ii) stating
that no Default or Event of Default exists, or if any Default or Event of
Default does exist, specifying the nature and extent thereof and what action
the Borrower proposes to take with respect
thereto.
(d) Auditor's Reports. Promptly upon receipt thereof, a copy of
any other report or "management letter" submitted by independent accountants to
the Borrower or any of its Subsidiaries in connection with any annual, interim
or special audit of the books of such Person.
(e) Notice of Consolidation - National Welders. Within 15 days
of the effective date thereof, written notice to each of the Lenders of the
consolidation of National Welders with the Borrower in accordance with GAAP.
(f) Reports. Promptly upon transmission or receipt thereof, (a)
copies of any filings and registrations with, and reports to or from, the
Securities and Exchange Commission, or any successor agency, and copies of all
financial statements, proxy statements, notices and reports as the Borrower or
any of its Subsidiaries shall send to its shareholders or to a holder of any
Indebtedness owed by the Borrower or any of its Subsidiaries in its capacity as
such a holder and (b) upon the request of the Agent, all reports and written
information to and from the United States Environmental Protection Agency, or
any state or local agency responsible for environmental matters, the United
States Occupational Health and Safety Administration, or any state or local
agency responsible for health and safety matters, or any successor agencies or
authorities concerning environmental, health or safety matters.
(g) Notices. Within five (5) Business Days after any Executive
Officer of the Borrower obtains knowledge thereof, the Borrower will give
written notice to the Agent of (a) the occurrence of an event or condition
consisting of a Default or Event of Default, specifying the nature and
existence thereof and what action the Borrower proposes to take with respect
thereto, and (b) the occurrence of any of the following with respect to
the Borrower or any of its Subsidiaries (i) the pendency or commencement of any
litigation, arbitral or governmental proceeding against such Person which if
adversely determined is likely to have a Material Adverse Effect, (ii) the
institution of any proceedings against such Person with respect to, or the
receipt of notice by such Person of potential liability or responsibility for
violation, or alleged violation of any federal, state or local law, rule or
regulation, including but not limited to, Environmental Laws, the violation of
which would likely have a Material Adverse Effect, or (iii) any notice or
determination concerning the imposition of any withdrawal liability by a
Multiemployer Plan against such Person or any ERISA Affiliate, the
determination that a Multiemployer Plan is, or is expected to be, in
reorganization within the meaning of Title IV of ERISA or the termination of
any Plan.
(h) ERISA. Within five (5) Business Days after any Executive
Officer of the Borrower obtains knowledge thereof, the Borrower will give
written notice to the Agent of the occurrence of any of the following events if
such event has had or reasonably could be expected to have a Material Adverse
Effect: (i) of any event or condition, including, but not limited to, any
Reportable Event, that constitutes, or might reasonably lead to, a Termination
Event; (ii) with respect to any Multiemployer Plan, the receipt of notice as
prescribed in ERISA or otherwise of any withdrawal liability assessed against
the Borrower or any of its ERISA Affiliates, or of a determination that any
Multiemployer Plan is in reorganization or insolvent (both within the meaning
of Title IV of ERISA); (iii) the failure to make full payment on or before the
<PAGE> EX-48
due date (including extensions) thereof of all amounts which the Borrower, any
of the Subsidiaries of the Borrower or any ERISA Affiliate is required to
contribute to each Plan pursuant to its terms and as required to meet the
minimum funding standard set forth in ERISA and the Code with respect thereto;
or (iv) any change in the funding status of any Plan, together with a
description of any such event or condition or a copy of any such notice and a
statement by the chief financial officer or other Executive Officer of the
Borrower briefly setting forth the details regarding such event, condition, or
notice, and the action, if any, which has been or is being taken or is proposed
to be taken by the Borrower with respect thereto.
(i) Other Information. With reasonable promptness upon any such
request, such other information regarding the business, properties or financial
condition of the Borrower or any of its Subsidiaries as the Agent or the
Required Lenders may reasonably request.
6.2 Preservation of Existence and Franchises.
Except as a result of or in connection with a dissolution, merger or
disposition of a Subsidiary permitted by Section 7.4, the Borrower will, and
will cause each of its Subsidiaries to, do all things necessary to preserve and
keep in full force and effect its existence, rights, franchises and authority.
6.3 Books and Records.
The Borrower will, and will cause each of its Subsidiaries to, keep
complete and accurate books and records of its transactions in accordance with
good accounting practices on the basis of GAAP (including the establishment and
maintenance of appropriate reserves).
6.4 Compliance with Law.
The Borrower will, and will cause each of its Subsidiaries to, comply
with all laws, rules, regulations and orders, and all applicable restrictions
imposed by all Governmental Authorities, applicable to it and its property if
noncompliance with any such law, rule, regulation, order or restriction would
have a Material Adverse Effect.
6.5 Payment of Taxes and Other Indebtedness.
Except as otherwise provided pursuant to the terms of the definition
of "Permitted Liens" set forth in Section 1.1, the Borrower will, and will
cause each of its Subsidiaries to, pay and discharge (i) all taxes, assessments
and governmental charges or levies imposed upon it, or upon its income or
profits, or upon any of its properties, before they shall become delinquent,
(ii) all lawful claims (including claims for labor, materials and supplies)
which, if unpaid, might give rise to a Lien upon any of its properties, and
(iii) except as prohibited hereunder, all of its other Indebtedness as it shall
become due.
6.6 Insurance.
The Borrower will, and will cause each of its Subsidiaries to, at all
times maintain in full force and effect insurance (including worker's
compensation insurance, liability insurance, casualty insurance and business
interruption insurance) in such amounts, covering such risks and liabilities
and with such deductibles or self-insurance retentions as are in accordance
with normal industry practice.
6.7 Maintenance of Property.
<PAGE> EX-49
The Borrower will, and will cause each of its Subsidiaries to,
maintain and preserve its properties and equipment material to the conduct of
its business in good repair, working order and condition, normal wear and tear
and casualty and condemnation excepted, and will make, or cause to be made, in
such properties and equipment from time to time all repairs, renewals,
replacements, extensions, additions, betterments and improvements thereto as
may be needed or proper, to the extent and in the manner customary for
companies in similar businesses.
6.8 Use of Proceeds.
The Borrower will use the proceeds of the Loans and will use the
Letters of Credit solely for the purposes set forth in Section 5.15.
6.9 Audits/Inspections.
Upon reasonable notice and during normal business hours, the Borrower
will, and will cause each of its Subsidiaries to, permit representatives
appointed by the Agent, including, without limitation, independent accountants,
agents, attorneys, and appraisers to visit and inspect its property, including
its books and records, its accounts receivable and inventory, its facilities
and its other business assets, and to make photocopies or photographs thereof
and to write down and record any information such representative obtains.
6.10 Financial Covenants.
(a) Consolidated Funded Indebtedness Coverage Ratio. The
Borrower shall cause the Consolidated Funded Indebtedness Coverage Ratio as of
each Calculation Date to be no greater than 4.5 to 1.0.
(b) Consolidated Fixed Charge Coverage Ratio. The Borrower
shall cause the Consolidated Fixed Charge Coverage Ratio as of each Calculation
Date to be at least 3.00 to 1.00.
(c) Consolidated Net Worth. The Borrower shall cause
Consolidated Net Worth at all times to be no less than the sum of $275,000,000,
increased on a cumulative basis as of the last day of each fiscal year
(commencing with the first of such dates to occur after the Closing Date) by an
amount equal to 50% of the Consolidated Net Income (without deduction for any
losses) for the fiscal year then ended.
6.11 Maintenance of Designation Rights - National Welders Board
of Directors.
The Borrower shall maintain at all times the right to designate at
least 50% of the members of the Board of Directors of National Welders.
SECTION 7
NEGATIVE COVENANTS
The Borrower hereby covenants and agrees that, so long as this Credit
Agreement is in effect or any amounts payable hereunder or under any other
Credit Document shall remain outstanding, and until all of the Commitments
hereunder shall have terminated:
<PAGE> EX-50
7.1 Indebtedness.
The Borrower will not permit:
(a) the sum (without duplication) of (i) the aggregate
outstanding principal balance of all Indebtedness of Subsidiaries of the
Borrower (other than Indebtedness permitted pursuant to Section 7.1(b) and
other than Indebtedness of National Welders outstanding during the 180-day
period immediately succeeding the first date as of which National Welders is
required, if ever, to be consolidated with the Borrower in accordance with
GAAP) plus (ii) the aggregate outstanding principal balance of all secured
Indebtedness of the Borrower and its Subsidiaries (other than Indebtedness
permitted pursuant to Section 7.1(b) and other than Indebtedness of National
Welders outstanding during the 180-day period immediately succeeding the first
date as of which National Welders is required, if ever, to be consolidated with
the Borrower in accordance with GAAP), to exceed at any time 20% of
Consolidated Net Worth as of the then most recent Calculation Date; or
(b) the aggregate outstanding principal balance of all
Indebtedness of Canadian Subsidiaries of the Borrower to exceed at any time
$50,000,000.
7.2 Liens.
The Borrower will not, nor will it permit any of its Subsidiaries to,
contract, create, incur, assume or permit to exist any Lien with respect to any
of their Property, whether now owned or after acquired, except for Permitted
Liens.
7.3 Nature of Business.
The Borrower will not, nor will it permit any of its Subsidiaries to,
substantively alter the character or conduct of the business conducted by any
such Person as of the Closing Date.
7.4 Consolidation, Merger or Sale.
The Borrower will not, nor will it permit any of its Subsidiaries to:
(a) except in connection with a disposition of assets permitted
by the terms of Section 7.4(b), dissolve, liquidate or wind up their affairs,
or enter into any transaction of merger or consolidation, provided that (i) the
Borrower may merge or consolidate with any of its Subsidiaries so long as the
Borrower is the surviving corporation; (ii) any Subsidiary of the Borrower may
merge or consolidate with any other Subsidiary of the Borrower; (iii) the
Borrower or any Subsidiary of the Borrower may merge or consolidate with any
other Person that is not a Subsidiary of the Borrower so long as (A) the
Borrower or Subsidiary of the Borrower is the surviving corporation and (B) no
Default or Event of Default shall have occurred and be continuing at the time
of such merger or consolidation or shall result upon giving effect thereto; and
(iv) any Subsidiary of the Borrower of which 85% or more of the capital stock
or other equity interests is owned by the Borrower (directly or indirectly
through Subsidiaries) may dissolve, liquidate or wind up its affairs at any
time; or
(b) sell, lease, transfer or otherwise dispose of any Property
(including without limitation pursuant to any sale and leaseback transaction)
other than (i) sales or leases in the ordinary course of business, (ii) the
sale or disposition of machinery and equipment no longer used or useful in the
conduct of such Person's business, (iii) sales, distributions or other
dispositions of stock in Subsidiaries of the Borrower to the extent permitted
<PAGE> EX-51
under Section 7.9 and (iv) other sales of Property (including without
limitation stock in Subsidiaries) provided that (A) unless the Excess Net
Proceeds of such sale are applied to prepay the Loans and to reduce the
Revolving Commitments in accordance with the terms of Section 3.3(b)(ii), the
aggregate net book value of the Property sold by the Borrower or any of its
Subsidiaries pursuant to this clause (iv) shall not exceed (1) for all such
transactions during any fiscal year, 10% of Consolidated Total Assets as of
the end of the fiscal year immediately preceding the then current fiscal year
or (2) for all such transactions after the Closing Date, 25% of Total Assets as
of the end of the fiscal year immediately preceding the then current fiscal
year, (B) the sale price for any Property sold in any such transaction pursuant
to this clause (iv) shall not be less than the fair market value of such
Property, (C) each such transaction pursuant to this clause (iv) involving
Property having a net book value of $5,000,000 or more shall be on an
arms-length basis with a wholly independent third party and (D) no Default of
Event of Default shall have occurred and be continuing at the time of any such
transaction pursuant to this clause (iv) or shall result upon giving effect
thereto.
7.5 Restricted Payments.
The Borrower will not, nor will it permit any of its Subsidiaries to,
directly or indirectly declare, order, make or set apart any sum for or pay any
Restricted Payment, except (i) to make dividends payable solely in the same
class of capital stock of such Person, (ii) to make dividends or other
distributions payable to the Borrower (directly or indirectly through
Subsidiaries of the Borrower), (iii) as permitted by Section 7.6, and (iv)
other Restricted Payments so long as no Default of Event of Default shall have
occurred and be continuing at the time of any such Restricted Payment or shall
result upon giving effect thereto.
7.6 Prepayments of Indebtedness, Etc.
The Borrower will not, nor will it permit any of its Subsidiaries to,
(i) if any Default or Event of Default has occurred and is continuing or would
be directly or indirectly caused as a result thereof, (A) after the issuance
thereof, amend or modify (or permit the amendment or modification of) any of
the terms of any Indebtedness if such amendment or modification would add or
change any terms in a manner adverse to the issuer of such Indebtedness, or
shorten the final maturity or average life to maturity or require any payment
to be made sooner than originally scheduled or increase the interest rate
applicable thereto or change any subordination provision thereof or (B) make
(or give any notice with respect thereto) any voluntary or optional payment or
prepayment or redemption or acquisition for value of (including without
limitation, by way of depositing money or securities with the trustee with
respect thereto before due for the purpose of paying when due), refund,
refinance or exchange of any other Indebtedness or (ii) amend, modify or change
its articles of incorporation (or corporate charter or other similar
organizational document) or bylaws (or other similar document) where such
change would have a Material Adverse Effect.
7.7 Fiscal Year.
The Borrower will not, nor will it permit any of its Subsidiaries to,
change its fiscal year.
7.8 Limitation on Restrictions on Subsidiary Dividends and Other
Distributions, Etc.
<PAGE> EX-52
The Borrower will not, nor will it permit any of its Subsidiaries to,
directly or indirectly, create or otherwise cause, incur, assume, suffer or
permit to exist or become effective any consensual encumbrance or restriction
of any kind on the ability of any such Person to (i) pay dividends or make any
other distribution on any of such Person's capital stock, (ii) pay any
Indebtedness owed to the Borrower or any of its Subsidiaries, (iii) make loans
or advances to the Borrower or any of its Subsidiaries or (iv) transfer any
of its Property to the Borrower or any of its Subsidiaries, except for
encumbrances or restrictions existing under or by reason of (A) customary
non-assignment provisions in any lease governing a leasehold interest, (B) any
agreement or other instrument of a Person existing at the time it becomes a
Subsidiary of the Borrower, provided that such encumbrance or restriction is
not applicable to any other Person, or any Property of any other Person, other
than such Person becoming a Subsidiary of the Borrower and was not entered into
in contemplation of such Person becoming a Subsidiary of the Borrower, (C) the
Senior Subordinated Note Purchase Agreements as in effect on the date hereof,
(D) documents evidencing or relating to Indebtedness of Canadian Subsidiaries
of the Borrower permitted pursuant to Section 7.1 and (E) this Credit Agreement
and the other Credit Documents.
7.9 Issuance and Sale of Subsidiary Stock..
The Borrower will not, nor will it permit any of its Subsidiaries to,
except to qualify directors where required by applicable law or to satisfy
other requirements of applicable law and except as otherwise permitted under
the terms of Section 7.4(b), sell, transfer or otherwise dispose of, any shares
of capital stock of any of its Subsidiaries or permit any of its Subsidiaries
to issue, sell or otherwise dispose of, any shares of capital stock of any of
its Subsidiaries; provided, however, that any Subsidiary of the Borrower may
issue, sell and/or distribute to officers of such Subsidiary additional shares
of stock in such Subsidiary not to exceed 15% in the aggregate of any class of
stock of such Subsidiary for all such officers.
7.10 No Further Negative Pledges.
Except with respect to prohibitions against other encumbrances on
specific Property encumbered to secure payment of particular Indebtedness
(which Indebtedness relates solely to such specific Property, and improvements
and accretions thereto, and is otherwise permitted hereby) and except pursuant
to the Senior Subordinated Note Purchase Agreements as in effect on the date
hereof, the Borrower will not, nor will it permit any of its Subsidiaries to,
enter into, assume or become subject to any agreement prohibiting or otherwise
restricting the creation or assumption of any Lien upon its properties or
assets, whether now owned or hereafter acquired, or requiring the grant of any
security for such obligation if security is given for some other obligation.
SECTION 8
EVENTS OF DEFAULT
8.1 Events of Default.
An Event of Default shall exist upon the occurrence of any of the
following specified events (each an "Event of Default"):
(a) Payment. The Borrower shall
(i) default in the payment when due of any
principal of any of the Loans or of any reimbursement obligations arising from
drawings under Letters of Credit, or
<PAGE> EX-53
(ii) default, and such defaults shall continue
for five (5) or more days, in the payment when due of any interest on the Loans
or on any reimbursement obligations arising from drawings under Letters of
Credit, or of any Fees or other amounts owing hereunder, under any of the other
Credit Documents or in connection herewith or therewith; or
(b) Representations. Any representation, warranty or
statement made or deemed to be made by the Borrower herein, in any of the other
Credit Documents, or in any statement or certificate delivered or required
to be delivered pursuant hereto or thereto shall prove untrue in any material
respect on the date as of which it was deemed to have been made; or
(c) Covenants. The Borrower shall default in the due
performance or observance by it of any term, covenant or agreement (other than
those referred to in subsections (a) or (b) of this Section 8.1) contained in
this Credit Agreement and such default shall continue unremedied for a period
of at least 30 days after the earlier of a Executive Officer of the Borrower
becoming aware of such default or notice thereof by the Agent; or
(d) Other Credit Documents. The Borrower shall default
in the due performance or observance of any term, covenant or agreement in any
of the other Credit Documents (subject to applicable grace or cure periods,
if any); or
(e) Bankruptcy, etc. Any Bankruptcy Event shall occur
with respect to the Borrower or any of its Subsidiaries; or
(f) Defaults under Other Indebtedness. With respect to
any Indebtedness (other than Indebtedness outstanding under this Credit
Agreement) in excess of $1,000,000 in the aggregate for the Borrower and
its Subsidiaries taken as a whole any of the following shall occur (unless,
with respect to any Indebtedness in favor of the seller of a company acquired
by the Borrower or any of its Subsidiaries, such occurrence is in connection
with a bona fide dispute as to the right of the applicable Person to offset
such Indebtedness against indemnification obligations of the holder of such
Indebtedness to such Person and such Person shall have made adequate provision
(as determined by the Required Lenders in their reasonable discretion) for such
Indebtedness on its books of account): (A) the Borrower or any of its
Subsidiaries shall (1) default in any payment (beyond the applicable grace
period with respect thereto, if any) with respect to any such Indebtedness, or
(2) the occurrence and continuance of a default in the observance or
performance relating to such Indebtedness or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event or
condition shall occur or condition exist, the effect of which default or other
event or condition is to cause, or permit, the holder or holders of such
Indebtedness (or trustee or agent on behalf of such holders) to cause
(determined without regard to whether any notice or lapse of time is required),
any such Indebtedness to become due prior to its stated maturity; or (B) any
such Indebtedness shall be declared due and payable, or required to be prepaid
other than by a regularly scheduled required prepayment, prior to the stated
maturity thereof; or
(g) Judgments. One or more judgments or decrees shall
be entered against the Borrower or any of its Subsidiaries involving a
liability of $1,000,000 or more in the aggregate (to the extent not paid or
fully covered by insurance provided by a carrier who has acknowledged coverage)
and any such judgments or decrees shall not have been vacated, discharged or
stayed or bonded pending appeal within 30 days from the entry thereof; or
<PAGE> EX-54
(h) ERISA. Any of the following events or conditions,
if such event or condition reasonably could be expected to involve possible
taxes, penalties, and other liabilities in an aggregate amount in excess of
$1,000,000: (1) any "accumulated funding deficiency," as such term is
defined in Section 302 of ERISA and Section 412 of the Code, whether or
not waived, shall exist with respect to any Plan, or any lien shall arise on
the assets of the Borrower, any Subsidiary of the Borrower or any ERISA
Affiliate in favor of the PBGC or a Plan; (2) a Termination Event shall occur
with respect to a Single Employer Plan, which is, in the reasonable opinion
of the Agent, likely to result in the termination of such Plan for purposes of
Title IV of ERISA; (3) a Termination Event shall occur with respect to a
Multiemployer Plan or Multiple Employer Plan, which is, in the reasonable
opinion of the Agent, likely to result in (i) the termination of such Plan for
purposes of Title IV of ERISA, or (ii) the Borrower, any Subsidiary of the
Borrower or any ERISA Affiliate incurring any liability in connection with a
withdrawal from, reorganization of (within the meaning of Section 4241 of
ERISA), or insolvency or (within the meaning of Section 4245 of ERISA)
such Plan; or (4) any prohibited transaction (within the meaning of Section
406 of ERISA or Section 4975 of the Code) or breach of fiduciary
responsibility shall occur which may subject the Borrower, any Subsidiary
of the Borrower or any ERISA Affiliate to any liability under Sections 406,
409, 502(i), or 502(l) of ERISA or Section 4975 of the Code, or under any
agreement or other instrument pursuant to which the Borrower, any
Subsidiary of the Borrower or any ERISA Affiliate has agreed or is required
to indemnify any person against any such liability; or
(i) Ownership. Any Person or two or more Persons
acting in concert shall have acquired beneficial ownership, directly or
indirectly, of, or shall have acquired by contract or otherwise, or shall have
entered into a contract or arrangement that, upon consummation, will result in
its or their acquisition of, control over, Voting Stock of the Borrower (or
other securities convertible into such Voting Stock) representing 35% or more
of the combined voting power of all Voting Stock of the Borrower; provided,
however, such occurrence shall not constitute an Event of Default hereunder
until a period of 30 days has elapsed from the date of the acquisition by such
Person and/or its Affiliates of Voting Stock of the Borrower which gives such
Person and/or its Affiliates an aggregate ownership of more than 35% of the
Voting Stock of the Borrower; provided further, if such Person and/or its
Affiliates have filed a tender offer statement with the Securities and Exchange
Commission in connection with such acquisition, the 30 day period referenced
above in the foregoing proviso shall commence on the date of the filing with
the Securities and Exchange Commission of such tender offer statement.
8.2 Acceleration; Remedies.
Upon the occurrence of an Event of Default, and at any time thereafter
unless and until such Event of Default has been waived by the Required Lenders
or cured to the satisfaction of the Required Lenders (pursuant to the voting
procedures in Section 10.6), the Agent shall, upon the request and direction of
the Required Lenders, by written notice to the Borrower take any of the
following actions:
(i) Termination of Commitments. Declare the
Commitments terminated whereupon the Commitments shall be immediately
terminated.
(ii) Acceleration. Declare the unpaid principal of and
any accrued interest in respect of all Loans, any reimbursement obligations
arising from drawings under Letters of Credit and any and all other
indebtedness or obligations of any and every kind owing by the Borrower to the
Agent and/or any of the Lenders hereunder to be due whereupon the same shall
<PAGE> EX-55
be immediately due and payable without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by the Borrower.
(iii) Cash Collateral. Direct the Borrower to pay (and
the Borrower agrees that upon receipt of such notice, or upon the occurrence
of an Event of Default under Section 8.1(e), it will immediately pay) to the
Agent additional cash, to be held by the Agent, for the benefit of the
Lenders, in a cash collateral account as additional security for the LOC
Obligations in respect of subsequent drawings under all then outstanding
Letters of Credit in an amount equal to the maximum aggregate amount
which may be drawn under all Letters of Credits then outstanding.
(iv) Enforcement of Rights. Enforce any and all rights
and interests created and existing under the Credit Documents and all rights of
set-off.
Notwithstanding the foregoing, if an Event of Default specified in
Section 8.1(e) shall occur, then the Commitments shall automatically terminate
and all Loans, all reimbursement obligations arising from drawings under
Letters of Credit, all accrued interest in respect thereof, all accrued and
unpaid Fees and other indebtedness or obligations owing to the Agent and/or any
of the Lenders hereunder automatically shall immediately become due and payable
without the giving of any notice or other action by the Agent or the Lenders.
SECTION 9
AGENCY PROVISIONS
9.1 Appointment.
Each Lender hereby designates and appoints NationsBank, N.A. as
administrative agent (in such capacity as Agent hereunder, the "Agent") of such
Lender to act as specified herein and the other Credit Documents, and each such
Lender hereby authorizes the Agent as the agent for such Lender, to take such
action on its behalf under the provisions of this Credit Agreement and the
other Credit Documents and to exercise such powers and perform such duties as
are expressly delegated by the terms hereof and of the other Credit Documents,
together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere herein and in the other
Credit Documents, the Agent shall not have any duties or responsibilities,
except those expressly set forth herein and therein, or any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Credit Agreement or any of the other Credit Documents, or shall otherwise exist
against the Agent. The provisions of this Section are solely for the benefit
of the Agent and the Lenders and the Borrower shall have no rights as a third
party beneficiary of the provisions hereof. In performing its functions and
duties under this Credit Agreement and the other Credit Documents, the Agent
shall act solely as agent of the Lenders and does not assume and shall not
be deemed to have assumed any obligation or relationship of agency or trust
with or for the Borrower or any of its respective Affiliates.
<PAGE> EX-56
9.2 Delegation of Duties.
The Agent may execute any of their respective duties hereunder or
under the other Credit Documents by or through agents or attorneys-in-fact and
shall be entitled to advice of counsel concerning all matters pertaining to
such duties. The Agent shall not be responsible for the negligence or
misconduct of any agents or attorneys-in-fact selected by it with reasonable
care.
9.3 Exculpatory Provisions.
The Agent and its officers, directors, employees, agents,
attorneys-in-fact or affiliates shall not be (i) liable for any action lawfully
taken or omitted to be taken by it or such Person under or in connection
herewith or in connection with any of the other Credit Documents (except for
its or such Person's own gross negligence or willful misconduct), or (ii)
responsible in any manner to any of the Lenders for any recitals, statements,
representations or warranties made by the Borrower contained herein or in any
of the other Credit Documents or in any certificate, report, document,
financial statement or other written or oral statement referred to or provided
for in, or received by the Agent under or in connection herewith or in
connection with the other Credit Documents, or enforceability or sufficiency
therefor of any of the other Credit Documents, or for any failure of the
Borrower to perform its obligations hereunder or thereunder. The Agent shall
not be responsible to any Lender for the effectiveness, genuineness, validity,
enforceability, collectability or sufficiency of this Credit Agreement, or any
of the other Credit Documents or for any representations, warranties, recitals
or statements made herein or therein or made by the Borrower in any written or
oral statement or in any financial or other statements, instruments, reports,
certificates or any other documents in connection herewith or therewith
furnished or made by the Agent to the Lenders or by or on behalf of the
Borrower to the Agent or any Lender or be required to ascertain or inquire as
to the performance or observance of any of the terms, conditions, provisions,
covenants or agreements contained herein or therein or as to the use of the
proceeds of the Loans or the use of the Letters of Credit or of the existence
or possible existence of any Default or Event of Default or to inspect the
properties, books or records of the Borrower or any of its respective
Affiliates.
9.4 Reliance on Communications.
The Agent shall be entitled to rely, and shall be fully protected in
relying, upon any note, writing, resolution, notice, consent, certificate,
affidavit, letter, cablegram, telegram, telecopy, telex or teletype message,
statement, order or other document or conversation believed by it to be genuine
and correct and to have been signed, sent or made by the proper Person or
Persons and upon advice and statements of legal counsel (including, without
limitation, counsel to the Borrower, independent accountants and other experts
selected by the Agent with reasonable care). The Agent may deem and treat the
Lenders as the owner of their respective interests hereunder for all purposes
unless a written notice of assignment, negotiation or transfer thereof shall
have been filed with the Agent in accordance with Section 10.3(b) hereof. The
Agent shall be fully justified in failing or refusing to take any action under
this Credit Agreement or under any of the other Credit Documents unless it
shall first receive such advice or concurrence of the Required Lenders as it
deems appropriate or it shall first be indemnified to its satisfaction
by the Lenders against any and all liability and expense which may be incurred
by it by reason of taking or continuing to take any such action. The Agent
shall in all cases be fully protected in acting, or in refraining from acting,
hereunder or under any of the other Credit Documents in accordance with a
request of the Required Lenders (or to the extent specifically provided in
<PAGE> EX-57
Section 10.6, all the Lenders) and such request and any action taken or failure
to act pursuant thereto shall be binding upon all the Lenders (including
their successors and assigns).
9.5 Notice of Default.
The Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default hereunder unless the Agent has
received notice from a Lender or the Borrower referring to the Credit Document,
describing such Default or Event of Default and stating that such notice is a
"notice of default." In the event that the Agent receives such a notice, the
Agent shall give prompt notice thereof to the Lenders. The Agent shall take
such action with respect to such Default or Event of Default as shall
be reasonably directed by the Required Lenders.
9.6 Non-Reliance on Agent and Other Lenders.
Each Lender expressly acknowledges that each of the Agent and its
officers, directors, employees, agents, attorneys-in-fact or affiliates has not
made any representations or warranties to it and that no act by the Agent or
any affiliate thereof hereinafter taken, including any review of the affairs of
the Borrower or any of its respective Affiliates, shall be deemed to constitute
any representation or warranty by the Agent to any Lender. Each Lender
represents to the Agent that it has, independently and without reliance upon
the Agent or any other Lender, and based on such documents and information as
it has deemed appropriate, made its own appraisal of and investigation into the
business, assets, operations, property, financial and other conditions,
prospects and creditworthiness of the Borrower or its respective Affiliates and
made its own decision to make its Loans hereunder and enter into this Credit
Agreement. Each Lender also represents that it will, independently and without
reliance upon the Agent or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Credit Agreement, and to make such investigation as it deems necessary to
inform itself as to the business, assets, operations, property, financial and
other conditions, prospects and creditworthiness of the Borrower and its
respective Affiliates. Except for notices, reports and other documents
expressly required to be furnished to the Lenders by the Agent hereunder,
the Agent shall not have any duty or responsibility to provide any Lender with
any credit or other information concerning the business, operations, assets,
property, financial or other conditions, prospects or creditworthiness of the
Borrower or any of its respective Affiliates which may come into the possession
of the Agent or any of its officers, directors, employees, agents,
attorneys-in-fact or affiliates.
9.7 Indemnification.
The Lenders agree to indemnify the Agent in its capacity as such (to
the extent not reimbursed by the Borrower and without limiting the obligation
of the Borrower to do so), ratably according to their respective Commitments
(or if the Commitments have expired or been terminated, in accordance with the
respective principal amounts of outstanding Loans and Participation Interests
of the Lenders), from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind whatsoever which may at any time (including without limitation at
any time following the final payment of all of the obligations of the Borrower
hereunder and under the other Credit Documents) be imposed on, incurred by
or asserted against the Agent in its capacity as such in any way relating to or
arising out of this Credit Agreement or the other Credit Documents or any
documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the Agent
<PAGE> EX-58
under or in connection with any of the foregoing; provided that no Lender shall
be liable for the payment of any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the gross negligence or willful misconduct of
the Agent. If any indemnity furnished to the Agent for any purpose shall, in
the opinion of the Agent, be insufficient or become impaired, the Agent may
call for additional indemnity and cease, or not commence, to do the acts
indemnified against until such additional indemnity is furnished. The
agreements in this Section shall survive the repayment of the Loans, LOC
Obligations and other obligations under the Credit Documents and the
termination of the Commitments hereunder.
9.8 Agent in its Individual Capacity.
The Agent and its affiliates may make loans to, accept deposits from
and generally engage in any kind of business with the Borrower, its
Subsidiaries or their respective Affiliates as though the Agent were not the
Agent hereunder. With respect to the Loans made by and all obligations of the
Borrower hereunder and under the other Credit Documents, the Agent shall have
the same rights and powers under this Credit Agreement as any Lender and may
exercise the same as though it were not the Agent, and the terms "Lender" and
"Lenders" shall include the Agent in its individual capacity.
9.9 Successor Agent.
The Agent may, at any time, resign upon 20 days' written notice to the
Lenders, and be removed with or without cause by the Required Lenders upon 30
days' written notice to the Agent. Upon any such resignation or removal, the
Required Lenders shall have the right to appoint a successor Agent. If no
successor Agent shall have been so appointed by the Required Lenders, and shall
have accepted such appointment, within 30 days after the notice of resignation
or notice of removal, as appropriate, then the retiring Agent shall select a
successor Agent provided such successor is a Lender hereunder or a commercial
bank organized under the laws of the United States of America or of any State
thereof and has a combined capital and surplus of at least $400,000,000. Upon
the acceptance of any appointment as Agent hereunder by a successor, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations as Agent, as
appropriate, under this Credit Agreement and the other Credit Documents and the
provisions of this Section 9.9 shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under this Credit
Agreement.
SECTION 10
MISCELLANEOUS
10.1 Notices.
Except as otherwise expressly provided herein, all notices and other
communications shall have been duly given and shall be effective (i) when
delivered, (ii) when transmitted via telecopy (or other facsimile device) to
the number set out below, (iii) the day following the day on which the same has
been delivered prepaid to a reputable national overnight air courier service,
or (iv) the third Business Day following the day on which the same is sent by
certified or registered mail, postage prepaid, in each case to the respective
parties at the address, in the case of the Borrower and the Agent, set forth
below, and, in the case of the Lenders, set forth on Schedule 2.1(a), or
at such other address as such party may specify by written notice to the other
parties hereto:
<PAGE> EX-59
if to the Borrower:
Airgas, Inc.
Five Radnor Corporate Center
100 Matsonford Road
Radnor, PA 19087
Attn: Chief Financial Officer
Telecopy: (610) 687-1052
with a copy to:
McCausland, Keen & Buckman
Five Radnor Corporate Center
100 Matsonford Road
Radnor, PA 19087
Attn: Melvin J. Buckman, Esq.
Telecopy: (610) 341-1099
if to the Agent:
NationsBank, N.A.
NationsBank Corporate Center, 8th Floor
Charlotte, NC 28255
Attn: M. Gregory Seaton
Telecopy: (704) 386-3271
with a copy to:
NationsBank, N.A.
Independence Center, 15th Floor
NC1-001-15-04
101 N. Tryon Street
Charlotte, North Carolina 28255
Attn: Lori McIntosh
Telecopy: (704) 386-9923
10.2 Right of Set-Off.
In addition to any rights now or hereafter granted under applicable
law or otherwise, and not by way of limitation of any such rights, upon the
occurrence of an Event of Default, each Lender is authorized at any time and
from time to time, without presentment, demand, protest or other notice of any
kind (all of which rights being hereby expressly waived), to set-off and to
appropriate and apply any and all deposits (general or special) and any other
indebtedness at any time held or owing by such Lender (including, without
limitation branches, agencies or Affiliates of such Lender wherever located) to
or for the credit or the account of the Borrower against obligations and
liabilities of such Person to such Lender hereunder, under the Notes, the other
Credit Documents or otherwise, irrespective of whether such Lender shall have
made any demand hereunder and although such obligations, liabilities or claims,
or any of them, may be contingent or unmatured, and any such set-off shall be
deemed to have been made immediately upon the occurrence of an Event of Default
even though such charge is made or entered on the books of such Lender
subsequent thereto. Any Person purchasing a participation in the Loans and
Commitments hereunder pursuant to Section 3.13 or Section 10.3(c) may exercise
all rights of set-off with respect to its participation interest as fully as if
such Person were a Lender hereunder.
<PAGE> EX-60
10.3 Benefit of Agreement.
(a) Generally. This Credit Agreement shall be binding upon and
inure to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto; provided that the Borrower may not assign or
transfer any of its interests without prior written consent of all the Lenders;
provided further that the rights of each Lender to transfer, assign or grant
participations in its rights and/or obligations hereunder shall be limited as
set forth in this Section 10.3, provided however that nothing herein shall
prevent or prohibit any Lender from (i) pledging its Loans hereunder to a
Federal Reserve Bank in support of borrowings made by such Lender from such
Federal Reserve Bank, or (ii) granting assignments or selling participations in
such Lender's Loans and/or Commitments hereunder to its parent company and/or
to any Affiliate or Subsidiary of such Lender.
(b) Assignments. Each Lender may assign all or a portion of its
rights and obligations hereunder, pursuant to an assignment agreement
substantially in the form of Schedule 10.3(b), to (i) any Lender or any
Affiliate or Subsidiary of a Lender, or (ii) any other commercial bank,
financial institution or "accredited investor" (as defined in Regulation D of
the Securities and Exchange Commission) reasonably acceptable to the Agent and
the Borrower; provided that (i) any such assignment (other than any assignment
to an existing Lender) shall be in a minimum aggregate amount of $5,000,000 of
the Commitments and in integral multiples of $1,000,000 above such amount (or,
if less, the remaining amount of the Commitment being assigned by such Lender)
and (ii) each such assignment shall be of a constant, not varying, percentage
of all such Lender's rights and obligations under this Credit Agreement. Any
assignment hereunder shall be effective upon delivery to the Agent of written
notice of the assignment together with a transfer fee of $3,500 payable to the
Agent for its own account from and after the effective date specified in the
applicable assignment agreement. The assigning Lender will give prompt notice
to the Agent and the Borrower of any such assignment. Upon the effectiveness
of any such assignment (and after notice to, and (to the extent required
pursuant to the terms hereof), with the consent of, the Borrower as provided
herein), the assignee shall become a "Lender" for all purposes of this Credit
Agreement and the other Credit Documents and, to the extent of such assignment,
the assigning Lender shall be relieved of its obligations hereunder to the
extent of the Loans and Commitment components being assigned. Along such lines
the Borrower agrees that upon notice of any such assignment and surrender of
the appropriate Note or Notes, it will promptly provide to the assigning Lender
and to the assignee separate promissory notes in the amount of their respective
interests substantially in the form of the original Note (but with notation
thereon that it is given in substitution for and replacement of the original
Note or any replacement notes thereof). By executing and delivering an
assignment agreement in accordance with this Section 10.3(b), the assigning
Lender thereunder and the assignee thereunder shall be deemed to confirm to and
agree with each other and the other parties hereto as follows: (i) such
assigning Lender warrants that it is the legal and beneficial owner of the
interest being assigned thereby free and clear of any adverse claim; (ii)
except as set forth in clause (i) above, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Credit Agreement, any of the other Credit Documents or any other instrument or
document furnished pursuant hereto or thereto, or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Credit
Agreement, any of the other Credit Documents or any other instrument or
document furnished pursuant hereto or thereto or the financial condition of the
Borrower or any of its respective Affiliates or the performance or observance
by the Borrower of any of its obligations under this Credit Agreement, any of
the other Credit Documents or any other instrument or document furnished
pursuant hereto or thereto; (iii) such assignee represents and warrants that it
<PAGE> EX-61
is legally authorized to enter into such assignment agreement; (iv) such
assignee confirms that it has received a copy of this Credit Agreement, the
other Credit Documents and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
such assignment agreement; (v) such assignee will independently and without
reliance upon the Agent, such assigning Lender or any other Lender, and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Credit Agreement and the other Credit Documents; (vi) such assignee
appoints and authorizes the Agent to take such action on its behalf and to
exercise such powers under this Credit Agreement or any other Credit Document
as are delegated to the Agent by the terms hereof or thereof, together with
such powers as are reasonably incidental thereto; and (vii) such assignee
agrees that it will perform in accordance with their terms all the obligations
which by the terms of this Credit Agreement and the other Credit Documents are
required to be performed by it as a Lender.
(c) Participations. Each Lender may sell, transfer, grant or
assign participations in all or any part of such Lender's interests and
obligations hereunder; provided that (i) such selling Lender shall remain a
"Lender" for all purposes under this Credit Agreement (such selling Lender's
obligations under the Credit Documents remaining unchanged) and the participant
shall not constitute a Lender hereunder, (ii) no such participant shall have,
or be granted, rights to approve any amendment or waiver relating to this
Credit Agreement or the other Credit Documents except to the extent any such
amendment or waiver would (A) reduce the principal of or rate of interest on or
Fees in respect of any Loans in which the participant is participating or (B)
postpone the date fixed for any payment of principal (including extension
of the Termination Date or the date of any mandatory prepayment), interest or
Fees in which the participant is participating, and (iii) sub-participations by
the participant (except to an affiliate, parent company or affiliate of a
parent company of the participant) shall be prohibited. In the case of any
such participation, the participant shall not have any rights under this Credit
Agreement or the other Credit Documents (the participant's rights against the
selling Lender in respect of such participation to be those set forth in the
participation agreement with such Lender creating such participation) and all
amounts payable by the Borrower hereunder shall be determined as if such Lender
had not sold such participation, provided, however, that such participant shall
be entitled to receive additional amounts under Sections 3.6, 3.9, 3.10 and
3.11 to the same extent as if it were a Lender provided that it shall not be
entitled to receive any more than the selling Lender would have received had it
not sold the participation.
10.4 No Waiver; Remedies Cumulative.
No failure or delay on the part of the Agent or any Lender in
exercising any right, power or privilege hereunder or under any other Credit
Document and no course of dealing between the Agent or any Lender and the
Borrower shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, power or privilege hereunder or under any other Credit
Document preclude any other or further exercise thereof or the exercise of any
other right, power or privilege hereunder or thereunder. The rights and
remedies provided herein are cumulative and not exclusive of any rights or
remedies which the Agent or any Lender would otherwise have. No notice to or
demand on the Borrower in any case shall entitle the Borrower to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of the rights of the Agent or the Lenders to any other or further action
in any circumstances without notice or demand.
<PAGE> EX-62
10.5 Payment of Expenses, Etc.
The Borrower agrees to: (i) pay all reasonable out-of-pocket costs
and expenses (A) of the Agent in connection with the negotiation, preparation,
execution and delivery and administration of this Credit Agreement and the
other Credit Documents and the documents and instruments referred to therein
(including, without limitation, the reasonable fees and expenses of Moore & Van
Allen, PLLC, special counsel to the Agent) and any amendment, waiver or consent
relating hereto and thereto including, but not limited to, any such amendments,
waivers or consents resulting from or related to any work-out, renegotiation or
restructure relating to the performance by the Borrower under this Credit
Agreement and (B) of the Agent and the Lenders in connection with enforcement
of the Credit Documents and the documents and instruments referred to therein
(including, without limitation, in connection with any such enforcement, the
reasonable fees and disbursements of counsel for the Agent and each of the
Lenders); (ii) pay and hold each of the Lenders harmless from and against any
and all present and future stamp and other similar taxes with respect to the
foregoing matters and save each of the Lenders harmless from and against any
and all liabilities with respect to or resulting from any delay or omission
(other than to the extent attributable to such Lender) to pay such taxes; and
(iii) indemnify each Lender, its officers, directors, employees,
representatives and agents from and hold each of them harmless against
any and all losses, liabilities, claims, damages or expenses incurred by any of
them as a result of, or arising out of, or in any way related to, or by reason
of (A) any investigation, litigation or other proceeding (whether or not any
Lender is a party thereto) related to the entering into and/or performance of
any Credit Document or the use of proceeds of any Loans (including other
extensions of credit) hereunder or the consummation of any other transactions
contemplated in any Credit Document, including, without limitation, the
reasonable fees and disbursements of counsel incurred in connection with any
such investigation, litigation or other proceeding or (B) the presence
or Release of any Materials of Environmental Concern at, under or from any
Property owned, operated or leased by the Borrower or any of its Subsidiaries,
or the failure by the Borrower or any of its Subsidiaries to comply with any
Environmental Law (but excluding, in the case of either of clause (A) or (B)
above, any such losses, liabilities, claims, damages or expenses to the extent
incurred by reason of gross negligence or willful misconduct on the part of the
Person to be indemnified).
10.6 Amendments, Waivers and Consents.
Neither this Credit Agreement nor any other Credit Document nor any
of the terms hereof or thereof may be amended, changed, waived, discharged or
terminated unless such amendment, change, waiver, discharge or termination is
in writing entered into by, or approved in writing by, the Required Lenders and
the Borrower, provided that no such amendment, change, waiver, discharge or
termination shall, without the consent of each Lender:
(i) extend the final maturity of any Loan or of any
reimbursement obligations arising from drawings under Letters of Credit, or any
portion thereof;
(ii) reduce the rate or extend the time of payment of
interest (other than as a result of waiving the applicability of any
post-default increase in interest rates) on any Loan or of any reimbursement
obligations arising from drawings under Letters of Credit or fees hereunder;
(iii) reduce the principal amount on any Loan or of any
reimbursement obligations arising from drawings under Letters of Credit or the
amount of any accrued interest or Fees, or increase the Commitments of the
Lenders over the amount thereof in effect (it being understood and agreed that
<PAGE> EX-63
a waiver of any Default or Event of Default or of a mandatory reduction in the
total commitments shall not constitute a change in the terms of any Commitment
of any Lender);
(iv) amend, modify or waive any provision of this
Section 10.6 or Section 3.6, 3.10, 3.11, 3.12, 3.13, 8.1(a), 10.2, 10.3, 10.5
or 10.9;
(v) reduce any percentage specified in, or otherwise
modify, the definition of "Required Lenders;" or
(vi) consent to the assignment or transfer by the
Borrower of any of its rights and obligations under (or in respect of) the
Credit Documents to which it is a party.
No provision of Section 2.3 may be amended without the consent of the Issuing
Lender, no provision of Section 2.4 may be amended without the consent of the
Swingline Lender and no provision of Section 10 may be amended without the
consent of the Agent.
10.7 Counterparts.
This Credit Agreement may be executed in any number of counterparts,
each of which when so executed and delivered shall be an original, but all of
which shall constitute one and the same instrument. It shall not be necessary
in making proof of this Credit Agreement to produce or account for more than
one such counterpart.
10.8 Headings.
The headings of the sections and subsections hereof are provided for
convenience only and shall not in any way affect the meaning or construction of
any provision of this Credit Agreement.
10.9 Survival.
All indemnities set forth herein, including, without limitation, in
Section 2.3(i), 3.9, 3.11, 9.7 or 10.5 shall survive the execution and delivery
of this Credit Agreement, the making of the Loans, the issuance of the Letters
of Credit, the repayment of the Loans, LOC Obligations and other obligations
under the Credit Documents and the termination of the Commitments hereunder,
and all representations and warranties made by the Borrower herein shall
survive delivery of the Notes and the making of the Loans hereunder.
10.10 Governing Law; Submission to Jurisdiction; Venue.
(a) THIS CREDIT AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE
GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NORTH CAROLINA. Any legal action or proceeding with respect to this
Credit Agreement or any other Credit Document may be brought in the courts of
the State of North Carolina in Mecklenburg County, or of the United States for
the Western District of North Carolina, and, by execution and delivery of this
Credit Agreement, the Borrower hereby irrevocably accepts for itself and in
respect of its property, generally and unconditionally, the nonexclusive
jurisdiction of such courts. The Borrower further irrevocably consents to the
service of process out of any of the aforementioned courts in any such action
or proceeding by the mailing of copies thereof by registered or certified mail,
postage prepaid, to it at the address set out for notices pursuant to Section
10.1, such service to become effective three (3) days after such mailing.
<PAGE> EX-64
Nothing herein shall affect the right of the Agent to serve process in any
other manner permitted by law or to commence legal proceedings or to otherwise
proceed against the Borrower in any other jurisdiction.
(b) The Borrower hereby irrevocably waives any objection which
it may now or hereafter have to the laying of venue of any of the aforesaid
actions or proceedings arising out of or in connection with this Credit
Agreement or any other Credit Document brought in the courts referred to in
subsection (a) hereof and hereby further irrevocably waives and agrees not
to plead or claim in any such court that any such action or proceeding brought
in any such court has been brought in an inconvenient forum.
(c) TO THE EXTENT PERMITTED BY LAW, EACH OF THE AGENT, THE
LENDERS AND THE BORROWER HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY
IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS
CREDIT AGREEMENT, ANY OF THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
10.11 Severability.
If any provision of any of the Credit Documents is determined to be
illegal, invalid or unenforceable, such provision shall be fully severable and
the remaining provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions.
10.12 Entirety.
This Credit Agreement together with the other Credit Documents
represent the
entire agreement of the parties hereto and thereto, and supersede all prior
agreements
and understandings, oral or written, if any, including any commitment letters
or
correspondence relating to the Credit Documents or the transactions
contemplated
herein and therein.
10.13 Binding Effect; Termination of Existing Credit Agreement;
Termination of This Credit Agreement.
(a) This Credit Agreement shall become effective at such time on
or after the Closing Date and satisfaction of the conditions precedent set
forth in Section 5.1 when it shall have been executed by the Borrower and the
Agent, and the Agent shall have received copies hereof (telefaxed or otherwise)
which, when taken together, bear the signatures of each Lender, and thereafter
this Credit Agreement shall be binding upon and inure to the benefit of the
Borrower, the Agent and each Lender and their respective successors and
assigns. The Borrower and the Lenders party to the Existing Credit Agreement
each hereby agrees that, at such time as this Credit Agreement shall have
become effective pursuant to the terms of the immediately preceding sentence,
(i) the Existing Credit Agreement and the Revolving Commitments thereunder and
as defined therein automatically shall be terminated and (ii) all of the
promissory notes executed by the Borrower in connection with the Existing
Credit Agreement automatically shall be cancelled.
(b) The term of this Credit Agreement shall be until no Loans,
LOC Obligations or any other amounts payable hereunder or under any of the
other Credit Documents shall remain outstanding and until all of the
Commitments hereunder shall have expired or been terminated.
<PAGE> EX-65
10.14 Confidentiality.
The Agent and the Lenders agree to keep confidential (and to cause
their respective affiliates, officers, directors, employees, agents and
representatives to keep confidential) all information, materials and documents
furnished to the Agent or any such Lender by or on behalf the Borrower (whether
before or after the Closing Date) which relates to the Borrower or any of its
Subsidiaries (the "Information"). Notwithstanding the foregoing, the Agent and
each Lender shall be permitted to disclose Information (i) to its affiliates,
officers, directors, employees, agents and representatives in connection with
its participation in any of the transactions evidenced by this Credit Agreement
or any other Credit Documents or the administration of this Credit Agreement or
any other Credit Documents; (ii) to the extent required by applicable laws and
regulations or by any subpoena or similar legal process, or requested by any
Governmental Authority; (iii) to the extent such Information (A) becomes
publicly available other than as a result of a breach of this Credit Agreement
or any agreement entered into pursuant to clause (iv) below, (B) becomes
available to the Agent or such Lender on a non-confidential basis from a source
other than the Borrower or (C) was available to the Agent or such Lender on a
non-confidential basis prior to its disclosure to the Agent or such Lender by
the Borrower; (iv) to any assignee or participant (or prospective assignee or
participant) so long as such assignee or participant (or prospective assignee
or participant) first specifically agrees in a writing furnished to and for the
benefit of the Borrower to be bound by the terms of this Section 10.14; or (v)
to the extent that the Borrower shall have consented in writing to such
disclosure. Nothing set forth in this Section 10.14 shall obligate the Agent
or any Lender to return any materials furnished by the Borrower.
10.15 Conflict.
To the extent that there is a conflict or inconsistency between any
provision hereof, on the one hand, and any provision of any Credit Document, on
the other hand, this Credit Agreement shall control.
10.16 Obligations Senior to Subordinated Debt.
The payment of the Borrower's Obligations hereunder and under the
other Credit Documents is senior to the payment of the indebtedness of the
Borrower under the Senior Subordinated Note Purchase Agreements and each Note
Guaranty (as defined in the Senior Subordinated Note Purchase Agreements) in
accordance with the terms thereof.
10.17 Currency Conversions.
Wherever in this Credit Agreement the conversion of an amount in any
foreign currency into its U.S. currency equivalent is required, such U.S.
currency equivalent amount shall be realized by using the exchange rate for
such foreign currency as set forth in the Wall Street Journal published on the
date on which a computation thereof is required to be made hereunder, or if the
Wall Street Journal is not published on such date of computation, then as set
forth in the most recently published issue of the Wall Street Journal as of
such date.
[The remainder of this page has been left blank intentionally.]
<PAGE>
<PAGE> EX-66
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Credit Agreement to be duly executed and delivered as of
the date first above written.
BORROWER: AIRGAS, INC.,
a Delaware corporation
By /s/ Jeffrey P. Cornwell
___________________________
Title Vice President
______________________
[Signatures continued]
<PAGE>
<PAGE> EX-67
LENDERS: NATIONSBANK, N.A.,
individually in its capacity as a
Lender and in its capacity as Agent
By /s/ Rajesh Sood
_____________________________
Title Vice President
__________________________
THE BANK OF NEW YORK
By /s/ Peter H. Abdill
_____________________________
Title Vice President
__________________________
FIRST UNION NATIONAL BANK (f/k/a
FIRST FIDELITY BANK, N.A.)
By /s/ Patrick C. McGovern
_____________________________
Title Senior Vice President
__________________________
CORESTATES BANK, N.A.
By /s/ David W. Mills
_____________________________
Title Vice President
__________________________
BANK OF AMERICA ILLINOIS
By /s/ Wendy L. Loring
_____________________________
Title Vice President
__________________________
THE FIRST NATIONAL BANK OF CHICAGO
By /s/ Juan J. Duarte
_____________________________
Title Assistant Vice President
__________________________
[signatures continued]
<PAGE> EX-68
CIBC INC.
By /s/ Cheryl L. Root
_____________________________
Title Director, CIBC Wood Gundy
Securities Corp, AS AGENT
__________________________
PNC BANK NATIONAL ASSOCIATION
By /s/ Vicky Zift
_____________________________
Title Vice President
__________________________
FLEET BANK NATIONAL ASSOCIATION
(f/k/a NATWEST BANK N.A.)
By /s/ Gary P. Kearns
_____________________________
Title Senior Vice President
__________________________
THE SANWA BANK, LTD.
NEW YORK BRANCH
By Joseph E. Leo
_____________________________
Title Vice President and Area Manager
________________________________
SOCIETE GENERALE
By Robert Petersen
_____________________________
Title Vice President
__________________________
THE BANK OF NOVA SCOTIA
By J. Alan Edwards
_____________________________
Title Authorized Signatory
__________________________
<PAGE> EX-69
Schedule 1.1A
APPLICABLE PERCENTAGES
Pricing Pricing Pricing Pricing Pricing Pricing
Level I Level II Level III Level IV Level V Level VI
________ ________ _________ ________ _______ ________
If the If the If the If the If the
Borrower's Borrower's Borrower's Borrower's Borrower's
If the long term long term long term long term long term
Borrower's credit credit credit credit credit
long term rating is rating is rating is rating is ratings in
credit rating at least at least at least at least Levels I-V
is at least BBB+ by S&P BBB by S&P BBB- by S&P BB+ by S&P do not
A- by S&P or or Baa1 by or Baa2 by or Baa3 by or BA1 by apply
A3 by Moody's Moody's Moody's Moody's Moody's
_____________ __________ __________ __________ __________ __________
Applicable
Percentage
for
Eurodollar
Loans 0.250% 0.300% 0.375% 0.450% 0.625% 0.875%
Applicable
Percentage
for
Unused Fee 0.085% 0.100% 0.125% 0.150% 0.200% 0.250%
Applicable
Percentage
for
Standby
Letter of
Credit Fee 0.250% 0.300% 0.375% 0.450% 0.625% 0.875%
<PAGE>
<PAGE> EX-70
Schedule 1.1B
EXISTING LETTERS OF CREDIT
<PAGE>
<PAGE> EX-71
Schedule 1.1C
NATIONAL WELDERS LIENS
<PAGE>
<PAGE> EX-72
Schedule 1.1D
LIENS
<PAGE>
<PAGE> EX-73
Schedule 2.1(a)
SCHEDULE OF LENDERS AND COMMITMENTS
LENDER REVOLVING COMMITMENT COMMITMENT PERCENTAGE
NationsBank, N.A.
NationsBank Corporate Center
8th Floor
Charlotte, NC 28255
Attn: Greg Seaton
Telecopy: (704) 388-0960 $70,000,000 14.00%
Bank of America, N.A.
335 Madison Avenue, 5th Floor
New York, NY 10017
Attn: Wendy Loring
Telecopy: (212) 503-7878 $50,000,000 10.00%
Bank of New York
The Bank of New York
One Wall Street, 22nd Floor
New York, NY 10286
Attn: Peter Abdill
Telecopy: (212) 635-6999 $50,000,000 10.00%
CoreStates Bank, N.A.
1339 Chestnut Street, FC1-8-3-16
Philadelphia, PA 19101-7618
Attn: David W. Mills
Telecopy: (215) 973-6745 $50,000,000 10.00%
The First National Bank of Chicago
153 West 51st Street
Mail Suite 4000
New York, NY 10019
Attn: Juan Darte
Telecopy: (212) 373-1388 $50,000,000 10.00%
First Union National Bank
123 S. Broad Street
Mail Code PMB006
Philadelphia, PA 19109
Attn: Carl E. Goelz
Telecopy: (215) 985-8793 $50,000,000 10.00%
CIBC
425 Lexington Ave., 6th Floor
New York, NY 10017
Attn: Cheryl Root
Telecopy: (212) 856-3991 $40,000,000 8.00%
<PAGE> EX-74
SCHEDULE OF LENDERS AND COMMITMENTS (CONTINUED)
LENDER REVOLVING COMMITMENT COMMITMENT PERCENTAGE
Fleet National Bank
One Landmark Square, MSN 751
Stamford, CT 06904-1454
Attn: Barbara Agostini
Telecopy: (203) 358-6111 $40,000,000 8.00%
PNC Bank, N.A.
1600 Market Street, 21st Floor
Philadelphia, PA 19103
Attn: Vicky Ziff
Telecopy: (212) 585-5972 $40,000,000 8.00%
Sanwa Bank Ltd.
55 East 52nd Street
New York, NY 10055
Attn: Joseph Leo
Telecopy: (212) 754-1304 $20,000,000 4.00%
The Bank of Nova Scotia
One Liberty Plaza
New York, NY 10006
Attn: Philip Adsetts
Telecopy: (212) 225-5090 $20,000,000 4.00%
Societe Generale
1221 Avenue of the Americas
New York, NY 10020
Attn: Robert L. Petersen
Telecopy: (212) 278-7430 $20,000,000 4.00%
TOTAL $500,000,000 100.00%
<PAGE>
<PAGE> EX-75
Schedule 2.1(b)(i)
FORM OF NOTICE OF BORROWING
<PAGE>
<PAGE> EX-76
Schedule 2.1(e)
FORM OF REVOLVING NOTE
$_________________ September 27, 1996
FOR VALUE RECEIVED, AIRGAS, INC., a Delaware corporation
(the "Borrower"), hereby promises to pay to the order of ____________________,
its successors and assigns (the "Lender"), at the office of NationsBank, N.A.,
as Agent (the "Agent"), at 101 N. Tryon Street, Independence Center,
NC1-001-15-04, Charlotte, North Carolina 28255 (or at such other place or
places as the holder hereof may designate), at the times set forth in the
Eighth Amended and Restated Credit Agreement dated as of the date hereof among
the Borrower, the Lenders and the Agent (as it may be amended, modified,
extended or restated from time to time, the "Credit Agreement"; all capitalized
terms not otherwise defined herein shall have the meanings set forth in the
Credit Agreement), but in no event later than the Termination Date, in Dollars
and in immediately available funds, the principal amount of
________________________DOLLARS ($____________) or, if less than such principal
amount, the aggregate unpaid principal amount of all Revolving Loans made by
the Lender to the Borrower pursuant to the Credit Agreement, and to pay
interest from the date hereof on the unpaid principal amount hereof, in like
money, at said office, on the dates and at the rates selected in accordance
with Section 2.1(d) of the Credit Agreement.
Upon the occurrence and during the continuance of an Event of Default,
the balance outstanding hereunder shall bear interest as provided in Section
3.1 of the Credit Agreement. Further, in the event the payment of all sums due
hereunder is accelerated under the terms of the Credit Agreement, this Note,
and all other indebtedness of the Borrower to the Lender shall become
immediately due and payable, without presentment, demand, protest or notice of
any kind, all of which are hereby waived by the Borrower.
In the event this Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to the principal
and interest, all costs of collection, including reasonable attorneys' fees.
All borrowings evidenced by this Note and all payments and prepayments
of the principal hereof and interest hereon and the respective dates thereof
shall be endorsed by the holder hereof on Schedule A attached hereto and
incorporated herein by reference, or on a continuation thereof which shall be
attached hereto and made a part hereof; provided, however, that any failure to
endorse such information on such schedule or continuation thereof shall not in
any manner affect the obligation of the Borrower to make payments of principal
and interest in accordance with the terms of this Note.
<PAGE>
<PAGE> EX-77
IN WITNESS WHEREOF, the Borrower has caused this Note to be duly
executed by its duly authorized officer as of the day and year first above
written.
AIRGAS, INC.
By____________________________
Title_________________________
<PAGE>
<PAGE> EX-78
SCHEDULE A TO THE
REVOLVING NOTE
OF AIRGAS, INC.
DATED SEPTEMBER 27, 1996
Unpaid Name of
Type Principal Person
of Interest Payments Balance Making
Date Loan Period Principal Interest of Note Notation
____ ____ ________ _________ ________ _________ _________
<PAGE>
<PAGE> EX-79
Schedule 2.2(i)
FORM OF COMPETITIVE NOTE
$500,000,000 September 27, 1996
FOR VALUE RECEIVED, AIRGAS, INC., a Delaware corporation
(the "Borrower"), hereby promises to pay to the order of _____________________,
its successors and permitted assigns (the "Lender") at such place or places as
the holder hereof may designate from time to time, at the times set forth in
the Eighth Amended and Restated Credit Agreement dated as of the date hereof
among the Borrower, the Lenders and the Agent (as it may be amended, modified,
extended or restated from time to time, the "Credit Agreement"; all capitalized
terms not otherwise defined herein shall have the meanings set forth in the
Credit Agreement), but in no event later than the Termination Date, in Dollars
and in immediately available funds, the principal amount of FIVE HUNDRED
MILLION DOLLARS ($500,000,000) or, if less than such principal amount, the
aggregate unpaid principal amount of all Competitive Loans made by the
Lender to the Borrower pursuant to the Credit Agreement, and to pay interest
from the date hereof on the unpaid principal amount hereof, in like money, at
said office, on the dates and at the rates selected in accordance with Section
2.2 of the Credit Agreement and in the respective Competitive Bid applicable to
each Competitive Loan borrowing evidenced hereby.
Upon the occurrence and during the continuance of an Event of Default,
the balance outstanding hereunder shall bear interest as provided in Section
3.1 of the Credit Agreement. Further, in the event the payment of all sums due
hereunder is accelerated under the terms of the Credit Agreement, this Note,
and all other indebtedness of the Borrower to the Lender shall become
immediately due and payable, without presentment, demand, protest or notice of
any kind, all of which are hereby waived by the Borrower.
In the event this Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to the principal
and interest, all costs of collection, including reasonable attorneys' fees.
All borrowings evidenced by this Note and all payments and prepayments
of the principal hereof and interest hereon and the respective dates thereof
shall be endorsed by the holder hereof on Schedule A attached hereto and
incorporated herein by reference, or on a continuation thereof which shall be
attached hereto and made a part hereof; provided, however, that any failure to
endorse such information on such schedule or continuation thereof shall not in
any manner affect the obligation of the Borrower to make payments of principal
and interest in accordance with the terms of this Note.
<PAGE>
<PAGE> EX-80
IN WITNESS WHEREOF, the Borrower has caused this Note to be duly
executed by its duly authorized officer as of the day and year first above
written.
AIRGAS, INC.
By____________________________
Title_________________________
<PAGE>
<PAGE> EX-81
SCHEDULE A TO THE
COMPETITIVE NOTE
OF AIRGAS, INC.
DATED SEPTEMBER 27, 1996
Unpaid Name of
Type Principal Person
of Interest Payments Balance Making
Date Loan Period Principal Interest of Note Notation
____ ____ ________ _________ ________ _________ _________
<PAGE>
<PAGE> EX-82
Schedule 2.4(d)
FORM OF SWINGLINE NOTE
$5,000,000 September 27, 1996
FOR VALUE RECEIVED, AIRGAS, INC., a Delaware corporation
(the "Borrower"), hereby promises to pay to the order of NATIONSBANK, N.A., its
successors and assigns (the "Swingline Lender"), at the office of NationsBank,
N.A., as Agent (the "Agent"), at 101 N. Tryon Street, Independence Center,
NC1-001-15-04, Charlotte, North Carolina 28255 (or at such other place or
places as the holder hereof may designate), at the times set forth in the
Eighth Amended and Restated Credit Agreement dated as of the date hereof among
the Borrower, the Swingline Lender and other Lenders and the Agent (as it may
be amended, modified, extended or restated from time to time, the "Credit
Agreement"; all capitalized terms not otherwise defined herein shall have the
meanings set forth in the Credit Agreement), but in no event later than the
Termination Date, in Dollars and in immediately available funds, the principal
amount of FIVE MILLION DOLLARS ($5,000,000) or, if less than such principal
amount, the aggregate unpaid principal amount of all Swingline Loans made by
the Swingline Lender to the Borrower pursuant to the Credit Agreement, and to
pay interest from the date hereof on the unpaid principal amount hereof, in
like money, at said office, on the dates and at the rates selected in
accordance with Section 2.4(c) of the Credit Agreement.
Upon the occurrence and during the continuance of an Event of Default,
the balance outstanding hereunder shall bear interest as provided in Section
3.1 of the Credit Agreement. Further, in the event the payment of all sums due
hereunder is accelerated under the terms of the Credit Agreement, this Note,
and all other indebtedness of the Borrower to the Swingline Lender shall become
immediately due and payable, without presentment, demand, protest or notice of
any kind, all of which are hereby waived by the Borrower.
In the event this Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to the principal
and interest, all costs of collection, including reasonable attorneys' fees.
All borrowings evidenced by this Note and all payments and prepayments
of the principal hereof and interest hereon and the respective dates thereof
shall be endorsed by the holder hereof on Schedule A attached hereto and
incorporated herein by reference, or on a continuation thereof which shall be
attached hereto and made a part hereof; provided, however, that any failure to
endorse such information on such schedule or continuation thereof shall not in
any manner affect the obligation of the Borrower to make payments of principal
and interest in accordance with the terms of this Note.
IN WITNESS WHEREOF, the Borrower has caused this Note to be duly
executed by its duly authorized officer as of the day and year first above
written.
AIRGAS, INC.
By____________________________
Title_________________________
<PAGE>
<PAGE> EX-83
SCHEDULE A TO THE
SWINGLINE NOTE
OF AIRGAS, INC.
DATED SEPTEMBER 27, 1996
Unpaid Name of
Type Principal Person
of Interest Payments Balance Making
Date Loan Period Principal Interest of Note Notation
____ ____ ________ _________ ________ _________ _________
<PAGE>
<PAGE> EX-84
Schedule 3.2
FORM OF NOTICE OF EXTENSION/CONVERSION
NationsBank, N.A.,
as Agent for the Lenders
101 N. Tryon Street
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Agency Services
Ladies and Gentlemen:
The undersigned, Airgas, Inc. (the "Borrower"), refers to the Eighth Amended
and Restated Credit Agreement dated as of September 27, 1996 (as amended,
modified, extended or restated from time to time, the "Credit Agreement"),
among the Borrower, the Lenders and NationsBank, N.A., as Agent. Capitalized
terms used herein and not otherwise defined herein shall have the meanings
assigned to such terms in the Credit Agreement. The Borrower hereby gives
notice pursuant to Section 3.2 of the Credit Agreement that it requests an
extension or conversion of a Revolving Loan outstanding under the Credit
Agreement, and in connection therewith sets forth below the terms on which such
extension or conversion is requested to be made:
(A)Date of Extension or Conversion
(which is the last day of the
the applicable Interest Period) _______________________
(B)Principal Amount of
Extension or Conversion _______________________
(C)Interest rate basis _______________________
(D)Interest Period and the
last day thereof _______________________
In accordance with the requirements of Section 4.2, the Borrower hereby
reaffirms the representations and warranties set forth in the Credit Agreement
as provided in subsection (a)(ii) of such Section, and confirms that the
matters referenced in subsections (a)(iii) and (a)(iv) of such Section, are
true and correct.
Very truly yours,
AIRGAS, INC.
By:____________________________
Title:_________________________
<PAGE>
<PAGE> EX-85
Schedule 4.1(h)
FORM OF LEGAL OPINION
<PAGE>
<PAGE> EX-86
Schedule 5.6
LITIGATION
NONE
<PAGE>
<PAGE> EX-87
Schedule 5.14
SUBSIDIARIES<PAGE>
<PAGE> EX-88
Schedule 6.1(c)
FORM OF OFFICER'S COMPLIANCE
CERTIFICATE
For the fiscal quarter ended _________________, 19___.
I, ______________________, [Title] of Airgas, Inc. (the "Borrower") hereby
certify that, to the best of my knowledge and belief, with respect to that
certain Eighth Amended and Restated Credit Agreement dated as of September 27,
1996 (as amended, modified, extended or restated from time to time, the "Credit
Agreement"; all of the defined terms in the Credit Agreement are incorporated
herein by reference) among the Borrower, the Lenders party thereto and
NationsBank, N.A., as Agent:
a. The company-prepared financial statements which accompany this
certificate are true and correct in all material respects and
have been prepared in accordance with GAAP applied on a
consistent basis, subject to changes resulting from normal
year-end audit adjustments.
b. Since ___________ (the date of the last similar certification,
or, if none, the Closing Date) no Default or Event of Default
has occurred under the Credit Agreement; and
Delivered herewith are detailed calculations demonstrating compliance by the
Borrower with the financial covenants contained in Section 6.10 of the Credit
Agreement as of the end of the fiscal period referred to above.
This ______ day of ___________, 19__.
AIRGAS, INC.
Name:___________________________
Title:__________________________
<PAGE>
<PAGE> EX-89
Attachment to Officer's Certificate
Computation of Financial Covenants
<PAGE>
<PAGE> EX-90
Schedule 10.3(b)
FORM OF ASSIGNMENT AND ACCEPTANCE
THIS ASSIGNMENT AND ACCEPTANCE dated as of _______________, 199_ is entered
into between ________________ ("Assignor") and ____________________
("Assignee").
Reference is made to the Eighth Amended and Restated Credit Agreement dated as
of September 27, 1996, as amended and modified from time to time thereafter
(the "Credit Agreement") among Airgas, Inc., the Lenders party thereto and
NationsBank, N.A., as Agent. Terms defined in the Credit Agreement are used
herein with the same meanings.
1. The Assignor hereby sells and assigns, without recourse, to the Assignee,
and the Assignee hereby purchases and assumes from the Assignor, effective as
of the Effective Date set forth below, the interests set forth below (the
"Assigned Interest") in the Assignor's rights and obligations under the Credit
Agreement, including, without limitation, the interests set forth below in the
Commitments and outstanding Loans of the Assignor on the effective date of the
assignment designated below (the "Effective Date"), together with unpaid Fees
accrued on the assigned Commitments to the Effective Date and unpaid interest
accrued on the assigned Loans to the Effective Date. Each of the Assignor and
the Assignee hereby makes and agrees to be bound by all the representations,
warranties and agreements set forth in Section 10.3(b) of the Credit Agreement,
a copy of which has been received by the Assignee. From and after the
Effective Date (i) the Assignee, if it is not already a Lender under the
Credit Agreement, shall be a party to and be bound by the provisions of the
Credit Agreement and, to the extent of the interests purchased and assumed by
the Assignee under this Assignment and Acceptance, have the rights and
obligations of a Lender thereunder and (ii) the Assignor shall, to the extent
of the interests sold and assigned by the Assignor under this Assignment and
Acceptance, relinquish its rights and be released from its obligations under
the Credit Agreement.
2. This Assignment and Acceptance shall be governed by and construed in
accordance with the laws of the State of North Carolina.
3. Terms of Assignment
(a) Date of Assignment:
(b) Legal Name of Assignor:
(c) Legal Name of Assignee:
(d) Effective Date of Assignment:
(e) Revolving Commitment Percentage
Assigned (expressed as a percentage
set forth to at least 8 decimals) %
(f) Revolving Commitment Percentage
of Assignee after giving effect
to this Assignment and Acceptance
as of the Effective Date
(set forth to at least 8 decimals) %
<PAGE> EX-91
(g) Revolving Commitment Percentage
of Assignor after giving effect
to this Assignment and Acceptance
as of the Effective Date
(set forth to at least 8 decimals) %
(h) Revolving Committed Amount
as of Effective Date $_____________
(i) Dollar Amount of Assignor's
Revolving Commitment Percentage
as of the Effective Date (the amount
set forth in (h) multiplied by
the percentage set forth in (g)) $_____________
(j) Dollar Amount of Assignee's
Revolving Commitment Percentage
as of the Effective Date (the amount
set forth in (h) multiplied by
the percentage set forth in (f)) $_____________
4. This Assignment and Acceptance shall be effective only upon consent of the
Borrower and the Agent, if applicable, delivery to the Agent of this Assignment
and Acceptance together with the transfer fee payable pursuant to Section
10.3(b) in connection herewith.
5. This Assignment and Acceptance may be executed in any number of
counterparts, each of which where so executed and delivered shall be an
original, but all of which shall constitute one and the same instrument. It
shall not be necessary in making proof of this Assignment and Acceptance to
produce or account for more than one such counterpart.<PAGE>
<PAGE> EX-92
The terms set forth above
are hereby agreed to:
____________________, as Assignor
By:_____________________________________
Title:__________________________________
_____________________, as Assignee
By:_____________________________________
Title:__________________________________
CONSENTED TO:
NATIONSBANK, N.A.,
as Agent
By:____________________________________
Title:_________________________________
AIRGAS, INC.
By:____________________________________
Title:_________________________________
<PAGE>
<PAGE> EX-93
REVOLVING NOTE
$70,000,000.00 September 27, 1996
FOR VALUE RECEIVED, AIRGAS, INC., a Delaware corporation
(the "Borrower"), hereby promises to pay to the order of NATIONSBANK, N.A., its
successors and assigns (the "Lender"), at the office of NationsBank, N.A., as
Agent (the "Agent"), at 101 N. Tryon Street, Independence Center,
NC1-001-15-04, Charlotte, North Carolina 28255 (or at such other place or
places as the holder hereof may designate), at the times set forth in the
Eighth Amended and Restated Credit Agreement dated as of the date hereof among
the Borrower, the Lenders and the Agent (as it may be amended, modified,
extended or restated from time to time, the "Credit Agreement"; all capitalized
terms not otherwise defined herein shall have the meanings set forth in the
Credit Agreement), but in no event later than the Termination Date, in Dollars
and in immediately available funds, the principal amount of SEVENTY MILLION
DOLLARS ($70,000,000.00) or, if less than such principal amount, the aggregate
unpaid principal amount of all Revolving Loans made by the Lender to the
Borrower pursuant to the Credit Agreement, and to pay interest from the date
hereof on the unpaid principal amount hereof, in like money, at said office, on
the dates and at the rates selected in accordance with Section 2.1(d) of the
Credit Agreement.
Upon the occurrence and during the continuance of an Event of Default,
the balance outstanding hereunder shall bear interest as provided in Section
3.1 of the Credit Agreement. Further, in the event the payment of all sums due
hereunder is accelerated under the terms of the Credit Agreement, this Note,
and all other indebtedness of the Borrower to the Lender shall become
immediately due and payable, without presentment, demand, protest or notice of
any kind, all of which are hereby waived by the Borrower.
In the event this Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to the principal
and interest, all costs of collection, including reasonable attorneys' fees.
All borrowings evidenced by this Note and all payments and prepayments
of the principal hereof and interest hereon and the respective dates thereof
shall be endorsed by the holder hereof on Schedule A attached hereto and
incorporated herein by reference, or on a continuation thereof which shall be
attached hereto and made a part hereof; provided, however, that any failure to
endorse such information on such schedule or continuation thereof shall not in
any manner affect the obligation of the Borrower to make payments of principal
and interest in accordance with the terms of this Note.<PAGE>
<PAGE> EX-94
IN WITNESS WHEREOF, the Borrower has caused this Note to be duly
executed by its duly authorized officer as of the day and year first above
written.
AIRGAS, INC.
By /s/ Jeffrey P. Cornwell
____________________________
Title Vice President
_________________________
<PAGE>
<PAGE> EX-95
SCHEDULE A TO THE
REVOLVING NOTE
OF AIRGAS, INC.
DATED SEPTEMBER 27, 1996
Unpaid Name of
Type Principal Person
of Interest Payments Balance Making
Date Loan Period Principal Interest of Note Notation
____ ____ ________ _________ ________ _________ _________
<PAGE>
<PAGE> EX-96
REVOLVING NOTE
$50,000,000.00 September 27, 1996
FOR VALUE RECEIVED, AIRGAS, INC., a Delaware corporation
(the "Borrower"), hereby promises to pay to the order of THE BANK OF NEW YORK,
its successors and assigns (the "Lender"), at the office of NationsBank, N.A.,
as Agent (the "Agent"), at 101 N. Tryon Street, Independence Center,
NC1-001-15-04, Charlotte, North Carolina 28255 (or at such other place or
places as the holder hereof may designate), at the times set forth in the
Eighth Amended and Restated Credit Agreement dated as of the date hereof among
the Borrower, the Lenders and the Agent (as it may be amended, modified,
extended or restated from time to time, the "Credit Agreement"; all capitalized
terms not otherwise defined herein shall have the meanings set forth in the
Credit Agreement), but in no event later than the Termination Date, in Dollars
and in immediately available funds, the principal amount of FIFTY MILLION
DOLLARS ($50,000,000.00) or, if less than such principal amount, the aggregate
unpaid principal amount of all Revolving Loans made by the Lender to the
Borrower pursuant to the Credit Agreement, and to pay interest from the date
hereof on the unpaid principal amount hereof, in like money, at said office, on
the dates and at the rates selected in accordance with Section 2.1(d) of the
Credit Agreement.
Upon the occurrence and during the continuance of an Event of Default,
the balance outstanding hereunder shall bear interest as provided in Section
3.1 of the Credit Agreement. Further, in the event the payment of all sums
due hereunder is accelerated under the terms of the Credit Agreement, this
Note, and all other indebtedness of the Borrower to the Lender shall become
immediately due and payable, without presentment, demand, protest or notice of
any kind, all of which are hereby waived by the Borrower.
In the event this Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to the principal
and interest, all costs of collection, including reasonable attorneys' fees.
All borrowings evidenced by this Note and all payments and prepayments
of the principal hereof and interest hereon and the respective dates thereof
shall be endorsed by the holder hereof on Schedule A attached hereto and
incorporated herein by reference, or on a continuation thereof which shall be
attached hereto and made a part hereof; provided, however, that any failure to
endorse such information on such schedule or continuation thereof shall not in
any manner affect the obligation of the Borrower to make payments of principal
and interest in accordance with the terms of this Note.<PAGE>
<PAGE> EX-97
IN WITNESS WHEREOF, the Borrower has caused this Note to be duly
executed by its duly authorized officer as of the day and year first above
written.
AIRGAS, INC.
By /s/ Jeffrey P. Cornwell
____________________________
Title Vice President
_________________________
<PAGE>
<PAGE> EX-98
SCHEDULE A TO THE
REVOLVING NOTE
OF AIRGAS, INC.
DATED SEPTEMBER 27, 1996
Unpaid Name of
Type Principal Person
of Interest Payments Balance Making
Date Loan Period Principal Interest of Note Notation
____ ____ ________ _________ ________ _________ _________
<PAGE>
<PAGE> EX-99
REVOLVING NOTE
$50,000,000.00 September 27, 1996
FOR VALUE RECEIVED, AIRGAS, INC., a Delaware corporation
(the "Borrower"), hereby promises to pay to the order of FIRST UNION NATIONAL
BANK (f/k/a FIRST FIDELITY BANK, N.A.), its successors and assigns (the
"Lender"), at the office of NationsBank, N.A., as Agent (the "Agent"), at 101
N. Tryon Street, Independence Center, NC1-001-15-04, Charlotte, North Carolina
28255 (or at such other place or places as the holder hereof may designate), at
the times set forth in the Eighth Amended and Restated Credit Agreement dated
as of the date hereof among the Borrower, the Lenders and the Agent (as it may
be amended, modified, extended or restated from time to time, the "Credit
Agreement"; all capitalized terms not otherwise defined herein shall have the
meanings set forth in the Credit Agreement), but in no event later than the
Termination Date, in Dollars and in immediately available funds, the principal
amount of FIFTY MILLION DOLLARS ($50,000,000.00) or, if less than such
principal amount, the aggregate unpaid principal amount of all Revolving Loans
made by the Lender to the Borrower pursuant to the Credit Agreement, and to pay
interest from the date hereof on the unpaid principal amount hereof, in
like money, at said office, on the dates and at the rates selected in
accordance with Section 2.1(d) of the Credit Agreement.
Upon the occurrence and during the continuance of an Event of Default,
the balance outstanding hereunder shall bear interest as provided in Section
3.1 of the Credit Agreement. Further, in the event the payment of all sums due
hereunder is accelerated under the terms of the Credit Agreement, this Note,
and all other indebtedness of the Borrower to the Lender shall become
immediately due and payable, without presentment, demand, protest or notice of
any kind, all of which are hereby waived by the Borrower.
In the event this Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to the principal
and interest, all costs of collection, including reasonable attorneys' fees.
All borrowings evidenced by this Note and all payments and prepayments
of the principal hereof and interest hereon and the respective dates thereof
shall be endorsed by the holder hereof on Schedule A attached hereto and
incorporated herein by reference, or on a continuation thereof which shall be
attached hereto and made a part hereof; provided, however, that any failure to
endorse such information on such schedule or continuation thereof shall not in
any manner affect the obligation of the Borrower to make payments of principal
and interest in accordance with the terms of this Note.
<PAGE>
<PAGE> EX-100
IN WITNESS WHEREOF, the Borrower has caused this Note to be duly
executed by its duly authorized officer as of the day and year first above
written.
AIRGAS, INC.
By /s/ Jeffrey P. Cornwell
____________________________
Title Vice President
_________________________
<PAGE>
<PAGE> EX-101
SCHEDULE A TO THE
REVOLVING NOTE
OF AIRGAS, INC.
DATED SEPTEMBER 27, 1996
Unpaid Name of
Type Principal Person
of Interest Payments Balance Making
Date Loan Period Principal Interest of Note Notation
____ ____ ________ _________ ________ _________ _________
<PAGE>
<PAGE> EX-102
REVOLVING NOTE
$50,000,000.00 September 27, 1996
FOR VALUE RECEIVED, AIRGAS, INC., a Delaware corporation
(the "Borrower"), hereby promises to pay to the order of CORESTATES BANK, N.A.,
its successors and assigns (the "Lender"), at the office of NationsBank, N.A.,
as Agent (the "Agent"), at 101 N. Tryon Street, Independence Center,
NC1-001-15-04, Charlotte, North Carolina 28255 (or at such other place or
places as the holder hereof may designate), at the times set forth in the
Eighth Amended and Restated Credit Agreement dated as of the date hereof among
the Borrower, the Lenders and the Agent (as it may be amended, modified,
extended or restated from time to time, the "Credit Agreement"; all capitalized
terms not otherwise defined herein shall have the meanings set forth in the
Credit Agreement), but in no event later than the Termination Date, in Dollars
and in immediately available funds, the principal amount of FIFTY MILLION
DOLLARS ($50,000,000.00) or, if less than such principal amount, the aggregate
unpaid principal amount of all Revolving Loans made by the Lender to the
Borrower pursuant to the Credit Agreement, and to pay interest from the date
hereof on the unpaid principal amount hereof, in like money, at said office, on
the dates and at the rates selected in accordance with Section 2.1(d) of the
Credit Agreement.
Upon the occurrence and during the continuance of an Event of Default,
the balance outstanding hereunder shall bear interest as provided in Section
3.1 of the Credit Agreement. Further, in the event the payment of all sums
due hereunder is accelerated under the terms of the Credit Agreement, this
Note, and all other indebtedness of the Borrower to the Lender shall become
immediately due and payable, without presentment, demand, protest or notice of
any kind, all of which are hereby waived by the Borrower.
In the event this Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to the principal
and interest, all costs of collection, including reasonable attorneys' fees.
All borrowings evidenced by this Note and all payments and prepayments
of the principal hereof and interest hereon and the respective dates thereof
shall be endorsed by the holder hereof on Schedule A attached hereto and
incorporated herein by reference, or on a continuation thereof which shall be
attached hereto and made a part hereof; provided, however, that any failure to
endorse such information on such schedule or continuation thereof shall not in
any manner affect the obligation of the Borrower to make payments of principal
and interest in accordance with the terms of this Note.<PAGE>
<PAGE> EX-103
IN WITNESS WHEREOF, the Borrower has caused this Note to be duly
executed by its duly authorized officer as of the day and year first above
written.
AIRGAS, INC.
By /s/ Jeffrey P. Cornwell
____________________________
Title Vice President
_________________________
<PAGE>
<PAGE> EX-104
SCHEDULE A TO THE
REVOLVING NOTE
OF AIRGAS, INC.
DATED SEPTEMBER 27, 1996
Unpaid Name of
Type Principal Person
of Interest Payments Balance Making
Date Loan Period Principal Interest of Note Notation
____ ____ ________ _________ ________ _________ _________
<PAGE>
<PAGE> EX-105
REVOLVING NOTE
$50,000,000.00 September 27, 1996
FOR VALUE RECEIVED, AIRGAS, INC., a Delaware corporation
(the "Borrower"), hereby promises to pay to the order of BANK OF AMERICA
ILLINOIS, its successors and assigns (the "Lender"), at the office of
NationsBank, N.A., as Agent (the "Agent"), at 101 N. Tryon Street, Independence
Center, NC1-001-15-04, Charlotte, North Carolina 28255 (or at such other place
or places as the holder hereof may designate), at the times set forth in the
Eighth Amended and Restated Credit Agreement dated as of the date hereof among
the Borrower, the Lenders and the Agent (as it may be amended, modified,
extended or restated from time to time, the "Credit Agreement"; all capitalized
terms not otherwise defined herein shall have the meanings set forth in the
Credit Agreement), but in no event later than the Termination Date, in Dollars
and in immediately available funds, the principal amount of FIFTY MILLION
DOLLARS ($50,000,000.00) or, if less than such principal amount, the aggregate
unpaid principal amount of all Revolving Loans made by the Lender to the
Borrower pursuant to the Credit Agreement, and to pay interest from the date
hereof on the unpaid principal amount hereof, in like money, at said office, on
the dates and at the rates selected in accordance with Section 2.1(d) of the
Credit Agreement.
Upon the occurrence and during the continuance of an Event of Default,
the balance outstanding hereunder shall bear interest as provided in Section
3.1 of the Credit Agreement. Further, in the event the payment of all sums
due hereunder is accelerated under the terms of the Credit Agreement, this
Note, and all other indebtedness of the Borrower to the Lender shall become
immediately due and payable, without presentment, demand, protest or notice of
any kind, all of which are hereby waived by the Borrower.
In the event this Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to the principal
and interest, all costs of collection, including reasonable attorneys' fees.
All borrowings evidenced by this Note and all payments and prepayments
of the principal hereof and interest hereon and the respective dates thereof
shall be endorsed by the holder hereof on Schedule A attached hereto and
incorporated herein by reference, or on a continuation thereof which shall be
attached hereto and made a part hereof; provided, however, that any failure to
endorse such information on such schedule or continuation thereof shall not in
any manner affect the obligation of the Borrower to make payments of principal
and interest in accordance with the terms of this Note.<PAGE>
<PAGE> EX-106
IN WITNESS WHEREOF, the Borrower has caused this Note to be duly
executed by its duly authorized officer as of the day and year first above
written.
AIRGAS, INC.
By /s/ Jeffrey P. Cornwell
____________________________
Title Vice President
_________________________
<PAGE>
<PAGE> EX-107
SCHEDULE A TO THE
REVOLVING NOTE
OF AIRGAS, INC.
DATED SEPTEMBER 27, 1996
Unpaid Name of
Type Principal Person
of Interest Payments Balance Making
Date Loan Period Principal Interest of Note Notation
____ ____ ________ _________ ________ _________ _________
<PAGE>
<PAGE> EX-108
REVOLVING NOTE
$50,000,000.00 September 27, 1996
FOR VALUE RECEIVED, AIRGAS, INC., a Delaware corporation
(the "Borrower"), hereby promises to pay to the order of THE FIRST NATIONAL
BANK OF CHICAGO, its successors and assigns (the "Lender"), at the office of
NationsBank, N.A., as Agent (the "Agent"), at 101 N. Tryon Street, Independence
Center, NC1-001-15-04, Charlotte, North Carolina 28255 (or at such other place
or places as the holder hereof may designate), at the times set forth in the
Eighth Amended and Restated Credit Agreement dated as of the date hereof among
the Borrower, the Lenders and the Agent (as it may be amended, modified,
extended or restated from time to time, the "Credit Agreement"; all capitalized
terms not otherwise defined herein shall have the meanings set forth in the
Credit Agreement), but in no event later than the Termination Date, in Dollars
and in immediately available funds, the principal amount of FIFTY MILLION
DOLLARS ($50,000,000.00) or, if less than such principal amount, the aggregate
unpaid principal amount of all Revolving Loans made by the Lender to the
Borrower pursuant to the Credit Agreement, and to pay interest from the date
hereof on the unpaid principal amount hereof, in like money, at said office, on
the dates and at the rates selected in accordance with Section 2.1(d) of the
Credit Agreement.
Upon the occurrence and during the continuance of an Event of Default,
the balance outstanding hereunder shall bear interest as provided in Section
3.1 of the Credit Agreement. Further, in the event the payment of all sums
due hereunder is accelerated under the terms of the Credit Agreement, this
Note, and all other indebtedness of the Borrower to the Lender shall become
immediately due and payable, without presentment, demand, protest or notice of
any kind, all of which are hereby waived by the Borrower.
In the event this Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to the principal
and interest, all costs of collection, including reasonable attorneys' fees.
All borrowings evidenced by this Note and all payments and prepayments
of the principal hereof and interest hereon and the respective dates thereof
shall be endorsed by the holder hereof on Schedule A attached hereto and
incorporated herein by reference, or on a continuation thereof which shall be
attached hereto and made a part hereof; provided, however, that any failure to
endorse such information on such schedule or continuation thereof shall not in
any manner affect the obligation of the Borrower to make payments of principal
and interest in accordance with the terms of this Note.
<PAGE>
<PAGE> EX-109
IN WITNESS WHEREOF, the Borrower has caused this Note to be duly
executed by its duly authorized officer as of the day and year first above
written.
AIRGAS, INC.
By /s/ Jeffrey P. Cornwell
____________________________
Title Vice President
_________________________
<PAGE>
<PAGE> EX-110
SCHEDULE A TO THE
REVOLVING NOTE
OF AIRGAS, INC.
DATED SEPTEMBER 27, 1996
Unpaid Name of
Type Principal Person
of Interest Payments Balance Making
Date Loan Period Principal Interest of Note Notation
____ ____ ________ _________ ________ _________ _________
<PAGE>
<PAGE> EX-111
REVOLVING NOTE
$40,000,000.00 September 27, 1996
FOR VALUE RECEIVED, AIRGAS, INC., a Delaware corporation
(the "Borrower"), hereby promises to pay to the order of CIBC INC., its
successors and assigns (the "Lender"), at the office of NationsBank, N.A., as
Agent (the "Agent"), at 101 N. Tryon Street, Independence Center,
NC1-001-15-04, Charlotte, North Carolina 28255 (or at such other place or
places as the holder hereof may designate), at the times set forth in the
Eighth Amended and Restated Credit Agreement dated as of the date hereof among
the Borrower, the Lenders and the Agent (as it may be amended, modified,
extended or restated from time to time, the "Credit Agreement"; all capitalized
terms not otherwise defined herein shall have the meanings set forth in the
Credit Agreement), but in no event later than the Termination Date, in Dollars
and in immediately available funds, the principal amount of FORTY MILLION
DOLLARS ($40,000,000.00) or, if less than such principal amount, the aggregate
unpaid principal amount of all Revolving Loans made by the Lender to the
Borrower pursuant to the Credit Agreement, and to pay interest from the date
hereof on the unpaid principal amount hereof, in like money, at said office, on
the dates and at the rates selected in accordance with Section 2.1(d) of the
Credit Agreement.
Upon the occurrence and during the continuance of an Event of Default,
the balance outstanding hereunder shall bear interest as provided in Section
3.1 of the Credit Agreement. Further, in the event the payment of all sums due
hereunder is accelerated under the terms of the Credit Agreement, this Note,
and all other indebtedness of the Borrower to the Lender shall become
immediately due and payable, without presentment, demand, protest or notice of
any kind, all of which are hereby waived by the Borrower.
In the event this Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to the principal
and interest, all costs of collection, including reasonable attorneys' fees.
All borrowings evidenced by this Note and all payments and prepayments
of the principal hereof and interest hereon and the respective dates thereof
shall be endorsed by the holder hereof on Schedule A attached hereto and
incorporated herein by reference, or on a continuation thereof which shall be
attached hereto and made a part hereof; provided, however, that any failure to
endorse such information on such schedule or continuation thereof shall not in
any manner affect the obligation of the Borrower to make payments of principal
and interest in accordance with the terms of this Note.
<PAGE>
<PAGE> EX-112
IN WITNESS WHEREOF, the Borrower has caused this Note to be duly
executed by its duly authorized officer as of the day and year first above
written.
AIRGAS, INC.
By /s/ Jeffrey P. Cornwell
____________________________
Title Vice President
_________________________
<PAGE>
<PAGE> EX-113
SCHEDULE A TO THE
REVOLVING NOTE
OF AIRGAS, INC.
DATED SEPTEMBER 27, 1996
Unpaid Name of
Type Principal Person
of Interest Payments Balance Making
Date Loan Period Principal Interest of Note Notation
____ ____ ________ _________ ________ _________ _________
<PAGE>
<PAGE> EX-114
REVOLVING NOTE
$40,000,000.00 September 27, 1996
FOR VALUE RECEIVED, AIRGAS, INC., a Delaware corporation
(the "Borrower"), hereby promises to pay to the order of PNC BANK NATIONAL
ASSOCIATION, its successors and assigns (the "Lender"), at the office of
NationsBank, N.A., as Agent (the "Agent"), at 101 N. Tryon Street, Independence
Center, NC1-001-15-04, Charlotte, North Carolina 28255 (or at such other place
or places as the holder hereof may designate), at the times set forth in the
Eighth Amended and Restated Credit Agreement dated as of the date hereof among
the Borrower, the Lenders and the Agent (as it may be amended, modified,
extended or restated from time to time, the "Credit Agreement"; all capitalized
terms not otherwise defined herein shall have the meanings set forth in the
Credit Agreement), but in no event later than the Termination Date, in Dollars
and in immediately available funds, the principal amount of FORTY MILLION
DOLLARS ($40,000,000.00) or, if less than such principal amount, the aggregate
unpaid principal amount of all Revolving Loans made by the Lender to the
Borrower pursuant to the Credit Agreement, and to pay interest from the date
hereof on the unpaid principal amount hereof, in like money, at said office, on
the dates and at the rates selected in accordance with Section 2.1(d) of the
Credit Agreement.
Upon the occurrence and during the continuance of an Event of Default,
the balance outstanding hereunder shall bear interest as provided in Section
3.1 of the Credit Agreement. Further, in the event the payment of all sums
due hereunder is accelerated under the terms of the Credit Agreement, this
Note, and all other indebtedness of the Borrower to the Lender shall become
immediately due and payable, without presentment, demand, protest or notice of
any kind, all of which are hereby waived by the Borrower.
In the event this Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to the principal
and interest, all costs of collection, including reasonable attorneys' fees.
All borrowings evidenced by this Note and all payments and prepayments
of the principal hereof and interest hereon and the respective dates thereof
shall be endorsed by the holder hereof on Schedule A attached hereto and
incorporated herein by reference, or on a continuation thereof which shall be
attached hereto and made a part hereof; provided, however, that any failure to
endorse such information on such schedule or continuation thereof shall not in
any manner affect the obligation of the Borrower to make payments of principal
and interest in accordance with the terms of this Note.
<PAGE>
<PAGE> EX-115
IN WITNESS WHEREOF, the Borrower has caused this Note to be duly
executed by its duly authorized officer as of the day and year first above
written.
AIRGAS, INC.
By /s/ Jeffrey P. Cornwell
____________________________
Title Vice President
_________________________
<PAGE>
<PAGE> EX-116
SCHEDULE A TO THE
REVOLVING NOTE
OF AIRGAS, INC.
DATED SEPTEMBER 27, 1996
Unpaid Name of
Type Principal Person
of Interest Payments Balance Making
Date Loan Period Principal Interest of Note Notation
____ ____ ________ _________ ________ _________ _________
<PAGE>
<PAGE> EX-117
REVOLVING NOTE
$40,000,000.00 September 27, 1996
FOR VALUE RECEIVED, AIRGAS, INC., a Delaware corporation
(the "Borrower"), hereby promises to pay to the order of FLEET BANK, N.A.
(f/k/a NATWEST BANK N.A.), its successors and assigns (the "Lender"), at the
office of NationsBank, N.A., as Agent (the "Agent"), at 101 N. Tryon Street,
Independence Center, NC1-001-15-04, Charlotte, North Carolina 28255 (or at
such other place or places as the holder hereof may designate), at the times
set forth in the Eighth Amended and Restated Credit Agreement dated as of the
date hereof among the Borrower, the Lenders and the Agent (as it may be
amended, modified, extended or restated from time to time, the "Credit
Agreement"; all capitalized terms not otherwise defined herein shall have the
meanings set forth in the Credit Agreement), but in no event later than the
Termination Date, in Dollars and in immediately available funds, the
principal amount of FORTY MILLION DOLLARS ($40,000,000.00) or, if less than
such principal amount, the aggregate unpaid principal amount of all Revolving
Loans made by the Lender to the Borrower pursuant to the Credit Agreement, and
to pay interest from the date hereof on the unpaid principal amount hereof, in
like money, at said office, on the dates and at the rates selected in
accordance with Section 2.1(d) of the Credit Agreement.
Upon the occurrence and during the continuance of an Event of Default,
the balance outstanding hereunder shall bear interest as provided in Section
3.1 of the Credit Agreement. Further, in the event the payment of all sums
due hereunder is accelerated under the terms of the Credit Agreement, this
Note, and all other indebtedness of the Borrower to the Lender shall become
immediately due and payable, without presentment, demand, protest or notice of
any kind, all of which are hereby waived by the Borrower.
In the event this Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to the principal
and interest, all costs of collection, including reasonable attorneys' fees.
All borrowings evidenced by this Note and all payments and prepayments
of the principal hereof and interest hereon and the respective dates thereof
shall be endorsed by the holder hereof on Schedule A attached hereto and
incorporated herein by reference, or on a continuation thereof which shall be
attached hereto and made a part hereof; provided, however, that any failure to
endorse such information on such schedule or continuation thereof shall not in
any manner affect the obligation of the Borrower to make payments of principal
and interest in accordance with the terms of this Note.
<PAGE>
<PAGE> EX-118
IN WITNESS WHEREOF, the Borrower has caused this Note to be duly
executed by its duly authorized officer as of the day and year first above
written.
AIRGAS, INC.
By /s/ Jeffrey P. Cornwell
____________________________
Title Vice President
_________________________
<PAGE>
<PAGE> EX-119
SCHEDULE A TO THE
REVOLVING NOTE
OF AIRGAS, INC.
DATED SEPTEMBER 27, 1996
Unpaid Name of
Type Principal Person
of Interest Payments Balance Making
Date Loan Period Principal Interest of Note Notation
____ ____ ________ _________ ________ _________ _________
<PAGE>
<PAGE> EX-120
REVOLVING NOTE
$20,000,000.00 September 27, 1996
FOR VALUE RECEIVED, AIRGAS, INC., a Delaware corporation
(the "Borrower"), hereby promises to pay to the order of THE SANWA BANK, LTD.
NEW YORK BRANCH, its successors and assigns (the "Lender"), at the office of
NationsBank, N.A., as Agent (the "Agent"), at 101 N. Tryon Street, Independence
Center, NC1-001-15-04, Charlotte, North Carolina 28255 (or at such other place
or places as the holder hereof may designate), at the times set forth in the
Eighth Amended and Restated Credit Agreement dated as of the date hereof among
the Borrower, the Lenders and the Agent (as it may be amended, modified,
extended or restated from time to time, the "Credit Agreement"; all capitalized
terms not otherwise defined herein shall have the meanings set forth in the
Credit Agreement), but in no event later than the Termination Date, in Dollars
and in immediately available funds, the principal amount of TWENTY MILLION
DOLLARS ($20,000,000.00) or, if less than such principal amount, the aggregate
unpaid principal amount of all Revolving Loans made by the Lender to the
Borrower pursuant to the Credit Agreement, and to pay interest from the date
hereof on the unpaid principal amount hereof, in like money, at said office, on
the dates and at the rates selected in accordance with Section 2.1(d) of the
Credit Agreement.
Upon the occurrence and during the continuance of an Event of Default,
the balance outstanding hereunder shall bear interest as provided in Section
3.1 of the Credit Agreement. Further, in the event the payment of all sums
due hereunder is accelerated under the terms of the Credit Agreement, this
Note, and all other indebtedness of the Borrower to the Lender shall become
immediately due and payable, without presentment, demand, protest or notice of
any kind, all of which are hereby waived by the Borrower.
In the event this Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to the principal
and interest, all costs of collection, including reasonable attorneys' fees.
All borrowings evidenced by this Note and all payments and prepayments
of the principal hereof and interest hereon and the respective dates thereof
shall be endorsed by the holder hereof on Schedule A attached hereto and
incorporated herein by reference, or on a continuation thereof which shall be
attached hereto and made a part hereof; provided, however, that any failure to
endorse such information on such schedule or continuation thereof shall not in
any manner affect the obligation of the Borrower to make payments of principal
and interest in accordance with the terms of this Note.
<PAGE>
<PAGE> EX-121
IN WITNESS WHEREOF, the Borrower has caused this Note to be duly
executed by its duly authorized officer as of the day and year first above
written.
AIRGAS, INC.
By /s/ Jeffrey P. Cornwell
____________________________
Title Vice President
_________________________
<PAGE>
<PAGE> EX-122
SCHEDULE A TO THE
REVOLVING NOTE
OF AIRGAS, INC.
DATED SEPTEMBER 27, 1996
Unpaid Name of
Type Principal Person
of Interest Payments Balance Making
Date Loan Period Principal Interest of Note Notation
____ ____ ________ _________ ________ _________ _________
<PAGE>
<PAGE> EX-123
REVOLVING NOTE
$20,000,000.00 September 27, 1996
FOR VALUE RECEIVED, AIRGAS, INC., a Delaware corporation
(the "Borrower"), hereby promises to pay to the order of SOCIITI GINIRALE, its
successors and assigns (the "Lender"), at the office of NationsBank, N.A., as
Agent (the "Agent"), at 101 N. Tryon Street, Independence Center,
NC1-001-15-04, Charlotte, North Carolina 28255 (or at such other place or
places as the holder hereof may designate), at the times set forth in the
Eighth Amended and Restated Credit Agreement dated as of the date hereof among
the Borrower, the Lenders and the Agent (as it may be amended, modified,
extended or restated from time to time, the "Credit Agreement"; all capitalized
terms not otherwise defined herein shall have the meanings set forth in the
Credit Agreement), but in no event later than the Termination Date, in Dollars
and in immediately available funds, the principal amount of TWENTY MILLION
DOLLARS ($20,000,000.00) or, if less than such principal amount, the aggregate
unpaid principal amount of all Revolving Loans made by the Lender to the
Borrower pursuant to the Credit Agreement, and to pay interest from the date
hereof on the unpaid principal amount hereof, in like money, at said office, on
the dates and at the rates selected in accordance with Section 2.1(d) of the
Credit Agreement.
Upon the occurrence and during the continuance of an Event of Default,
the balance outstanding hereunder shall bear interest as provided in Section
3.1 of the Credit Agreement. Further, in the event the payment of all sums
due hereunder is accelerated under the terms of the Credit Agreement, this
Note, and all other indebtedness of the Borrower to the Lender shall become
immediately due and payable, without presentment, demand, protest or notice of
any kind, all of which are hereby waived by the Borrower.
In the event this Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to the principal
and interest, all costs of collection, including reasonable attorneys' fees.
All borrowings evidenced by this Note and all payments and prepayments
of the principal hereof and interest hereon and the respective dates thereof
shall be endorsed by the holder hereof on Schedule A attached hereto and
incorporated herein by reference, or on a continuation thereof which shall be
attached hereto and made a part hereof; provided, however, that any failure to
endorse such information on such schedule or continuation thereof shall not in
any manner affect the obligation of the Borrower to make payments of principal
and interest in accordance with the terms of this Note.
<PAGE>
<PAGE> EX-124
IN WITNESS WHEREOF, the Borrower has caused this Note to be duly
executed by its duly authorized officer as of the day and year first above
written.
AIRGAS, INC.
By /s/ Jeffrey P. Cornwell
____________________________
Title Vice President
_________________________
<PAGE>
<PAGE> EX-125
SCHEDULE A TO THE
REVOLVING NOTE
OF AIRGAS, INC.
DATED SEPTEMBER 27, 1996
Unpaid Name of
Type Principal Person
of Interest Payments Balance Making
Date Loan Period Principal Interest of Note Notation
____ ____ ________ _________ ________ _________ _________
<PAGE>
<PAGE> EX-126
REVOLVING NOTE
$20,000,000.00 September 27, 1996
FOR VALUE RECEIVED, AIRGAS, INC., a Delaware corporation
(the "Borrower"), hereby promises to pay to the order of THE BANK OF NOVA
SCOTIA, its successors and assigns (the "Lender"), at the office of
NationsBank, N.A., as Agent (the "Agent"), at 101 N. Tryon Street, Independence
Center, NC1-001-15-04, Charlotte, North Carolina 28255 (or at such other place
or places as the holder hereof may designate), at the times set forth in the
Eighth Amended and Restated Credit Agreement dated as of the date hereof among
the Borrower, the Lenders and the Agent (as it may be amended, modified,
extended or restated from time to time, the "Credit Agreement"; all capitalized
terms not otherwise defined herein shall have the meanings set forth in the
Credit Agreement), but in no event later than the Termination Date, in Dollars
and in immediately available funds, the principal amount of TWENTY MILLION
DOLLARS ($20,000,000.00) or, if less than such principal amount, the aggregate
unpaid principal amount of all Revolving Loans made by the Lender to the
Borrower pursuant to the Credit Agreement, and to pay interest from the date
hereof on the unpaid principal amount hereof, in like money, at said office, on
the dates and at the rates selected in accordance with Section 2.1(d) of the
Credit Agreement.
Upon the occurrence and during the continuance of an Event of Default,
the balance outstanding hereunder shall bear interest as provided in Section
3.1 of the Credit Agreement. Further, in the event the payment of all sums due
hereunder is accelerated under the terms of the Credit Agreement, this Note,
and all other indebtedness of the Borrower to the Lender shall become
immediately due and payable, without presentment, demand, protest or notice of
any kind, all of which are hereby waived by the Borrower.
In the event this Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to the principal
and interest, all costs of collection, including reasonable attorneys' fees.
All borrowings evidenced by this Note and all payments and prepayments
of the principal hereof and interest hereon and the respective dates thereof
shall be endorsed by the holder hereof on Schedule A attached hereto and
incorporated herein by reference, or on a continuation thereof which shall be
attached hereto and made a part hereof; provided, however, that any failure to
endorse such information on such schedule or continuation thereof shall not in
any manner affect the obligation of the Borrower to make payments of principal
and interest in accordance with the terms of this Note.
<PAGE>
<PAGE> EX-127
IN WITNESS WHEREOF, the Borrower has caused this Note to be duly
executed by its duly authorized officer as of the day and year first above
written.
AIRGAS, INC.
By /s/ Jeffrey P. Cornwell
____________________________
Title Vice President
_________________________
<PAGE>
<PAGE> EX-128
SCHEDULE A TO THE
REVOLVING NOTE
OF AIRGAS, INC.
DATED SEPTEMBER 27, 1996
Unpaid Name of
Type Principal Person
of Interest Payments Balance Making
Date Loan Period Principal Interest of Note Notation
____ ____ ________ _________ ________ _________ _________
<PAGE>
<PAGE> EX-129
COMPETITIVE NOTE
$500,000,000 September 27, 1996
FOR VALUE RECEIVED, AIRGAS, INC., a Delaware corporation
(the "Borrower"), hereby promises to pay to the order of NATIONSBANK, N.A.,
successors and permitted assigns (the "Lender"), at such place or places as the
holder hereof may designate from time to time, at the times set forth in the
Eighth Amended and Restated Credit Agreement dated as of the date hereof among
the Borrower, the Lenders and the Agent (as it may be amended, modified,
extended or restated from time to time, the "Credit Agreement"; all capitalized
terms not otherwise defined herein shall have the meanings set forth in the
Credit Agreement), but in no event later than the Termination Date, in Dollars
and in immediately available funds, the principal amount of FIVE HUNDRED
MILLION DOLLARS ($500,000,000) or, if less than such principal amount, the
aggregate unpaid principal amount of all Competitive Loans made by the Lender
to the Borrower pursuant to the Credit Agreement, and to pay interest from the
date hereof on the unpaid principal amount hereof, in like money, at said
office, on the dates and at the rates selected in accordance with Section 2.2
of the Credit Agreement and in the respective Competitive Bid applicable to
each Competitive Loan borrowing evidenced hereby.
Upon the occurrence and during the continuance of an Event of Default,
the balance outstanding hereunder shall bear interest as provided in Section
3.1 of the Credit Agreement. Further, in the event the payment of all sums due
hereunder is accelerated under the terms of the Credit Agreement, this Note,
and all other indebtedness of the Borrower to the Lender shall become
immediately due and payable, without presentment, demand, protest or notice of
any kind, all of which are hereby waived by the Borrower.
In the event this Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to the principal
and interest, all costs of collection, including reasonable attorneys' fees.
All borrowings evidenced by this Note and all payments and prepayments
of the principal hereof and interest hereon and the respective dates thereof
shall be endorsed by the holder hereof on Schedule A attached hereto and
incorporated herein by reference, or on a continuation thereof which shall be
attached hereto and made a part hereof; provided, however, that any failure to
endorse such information on such schedule or continuation thereof shall not in
any manner affect the obligation of the Borrower to make payments of principal
and interest in accordance with the terms of this Note.
<PAGE>
<PAGE> EX-130
IN WITNESS WHEREOF, the Borrower has caused this Note to be duly
executed by its duly authorized officer as of the day and year first above
written.
AIRGAS, INC.
By /s/ Jeffrey P. Cornwell
____________________________
Title Vice President
_________________________
<PAGE>
<PAGE> EX-131
SCHEDULE A TO THE
COMPETITIVE NOTE
OF AIRGAS, INC.
DATED SEPTEMBER 27, 1996
Unpaid Name of
Type Principal Person
of Interest Payments Balance Making
Date Loan Period Principal Interest of Note Notation
____ ____ ________ _________ ________ _________ _________
<PAGE>
<PAGE> EX-132
COMPETITIVE NOTE
$500,000,000 September 27, 1996
FOR VALUE RECEIVED, AIRGAS, INC., a Delaware corporation
(the "Borrower"), hereby promises to pay to the order of THE BANK OF NEW YORK,
successors and permitted assigns (the "Lender"), at such place or places as the
holder hereof may designate from time to time, at the times set forth in the
Eighth Amended and Restated Credit Agreement dated as of the date hereof among
the Borrower, the Lenders and the Agent (as it may be amended, modified,
extended or restated from time to time, the "Credit Agreement"; all capitalized
terms not otherwise defined herein shall have the meanings set forth in the
Credit Agreement), but in no event later than the Termination Date, in Dollars
and in immediately available funds, the principal amount of FIVE HUNDRED
MILLION DOLLARS ($500,000,000) or, if less than such principal amount, the
aggregate unpaid principal amount of all Competitive Loans made by the Lender
to the Borrower pursuant to the Credit Agreement, and to pay interest from the
date hereof on the unpaid principal amount hereof, in like money, at said
office, on the dates and at the rates selected in accordance with Section 2.2
of the Credit Agreement and in the respective Competitive Bid applicable to
each Competitive Loan borrowing evidenced hereby.
Upon the occurrence and during the continuance of an Event of Default,
the balance outstanding hereunder shall bear interest as provided in Section
3.1 of the Credit Agreement. Further, in the event the payment of all sums due
hereunder is accelerated under the terms of the Credit Agreement, this Note,
and all other indebtedness of the Borrower to the Lender shall become
immediately due and payable, without presentment, demand, protest or notice of
any kind, all of which are hereby waived by the Borrower.
In the event this Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to the principal
and interest, all costs of collection, including reasonable attorneys' fees.
All borrowings evidenced by this Note and all payments and prepayments
of the principal hereof and interest hereon and the respective dates thereof
shall be endorsed by the holder hereof on Schedule A attached hereto and
incorporated herein by reference, or on a continuation thereof which shall be
attached hereto and made a part hereof; provided, however, that any failure to
endorse such information on such schedule or continuation thereof shall not in
any manner affect the obligation of the Borrower to make payments of principal
and interest in accordance with the terms of this Note.
<PAGE>
<PAGE> EX-133
IN WITNESS WHEREOF, the Borrower has caused this Note to be duly
executed by its duly authorized officer as of the day and year first above
written.
AIRGAS, INC.
By /s/ Jeffrey P. Cornwell
____________________________
Title Vice President
_________________________
<PAGE>
<PAGE> EX-134
SCHEDULE A TO THE
COMPETITIVE NOTE
OF AIRGAS, INC.
DATED SEPTEMBER 27, 1996
Unpaid Name of
Type Principal Person
of Interest Payments Balance Making
Date Loan Period Principal Interest of Note Notation
____ ____ ________ _________ ________ _________ _________
<PAGE>
<PAGE> EX-135
COMPETITIVE NOTE
$500,000,000 September 27, 1996
FOR VALUE RECEIVED, AIRGAS, INC., a Delaware corporation
(the "Borrower"), hereby promises to pay to the order of FIRST UNION NATIONAL
BANK (f/k/a FIRST FIDELITY BANK, N.A.), successors and permitted assigns (the
"Lender"), at such place or places as the holder hereof may designate from time
to time, at the times set forth in the Eighth Amended and Restated Credit
Agreement dated as of the date hereof among the Borrower, the Lenders and the
Agent (as it may be amended, modified, extended or restated from time to time,
the "Credit Agreement"; all capitalized terms not otherwise defined herein
shall have the meanings set forth in the Credit Agreement), but in no event
later than the Termination Date, in Dollars and in immediately available funds,
the principal amount of FIVE HUNDRED MILLION DOLLARS ($500,000,000) or, if less
than such principal amount, the aggregate unpaid principal amount of all
Competitive Loans made by the Lender to the Borrower pursuant to the Credit
Agreement, and to pay interest from the date hereof on the unpaid principal
amount hereof, in like money, at said office, on the dates and at the rates
selected in accordance with Section 2.2 of the Credit Agreement and in the
respective Competitive Bid applicable to each Competitive Loan borrowing
evidenced hereby.
Upon the occurrence and during the continuance of an Event of Default,
the balance outstanding hereunder shall bear interest as provided in Section
3.1 of the Credit Agreement. Further, in the event the payment of all sums due
hereunder is accelerated under the terms of the Credit Agreement, this Note,
and all other indebtedness of the Borrower to the Lender shall become
immediately due and payable, without presentment, demand, protest or notice of
any kind, all of which are hereby waived by the Borrower.
In the event this Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to the principal
and interest, all costs of collection, including reasonable attorneys' fees.
All borrowings evidenced by this Note and all payments and prepayments
of the principal hereof and interest hereon and the respective dates thereof
shall be endorsed by the holder hereof on Schedule A attached hereto and
incorporated herein by reference, or on a continuation thereof which shall be
attached hereto and made a part hereof; provided, however, that any failure to
endorse such information on such schedule or continuation thereof shall not in
any manner affect the obligation of the Borrower to make payments of principal
and interest in accordance with the terms of this Note.
<PAGE>
<PAGE> EX-136
IN WITNESS WHEREOF, the Borrower has caused this Note to be duly
executed by its duly authorized officer as of the day and year first above
written.
AIRGAS, INC.
By /s/ Jeffrey P. Cornwell
____________________________
Title Vice President
_________________________
<PAGE>
<PAGE> EX-137
SCHEDULE A TO THE
COMPETITIVE NOTE
OF AIRGAS, INC.
DATED SEPTEMBER 27, 1996
Unpaid Name of
Type Principal Person
of Interest Payments Balance Making
Date Loan Period Principal Interest of Note Notation
____ ____ ________ _________ ________ _________ _________
<PAGE>
<PAGE> EX-138
COMPETITIVE NOTE
$500,000,000 September 27, 1996
FOR VALUE RECEIVED, AIRGAS, INC., a Delaware corporation
(the "Borrower"), hereby promises to pay to the order of CORESTATES BANK, N.A.,
successors and permitted assigns (the "Lender"), at such place or places as the
holder hereof may designate from time to time, at the times set forth in the
Eighth Amended and Restated Credit Agreement dated as of the date hereof among
the Borrower, the Lenders and the Agent (as it may be amended, modified,
extended or restated from time to time, the "Credit Agreement"; all capitalized
terms not otherwise defined herein shall have the meanings set forth in the
Credit Agreement), but in no event later than the Termination Date, in Dollars
and in immediately available funds, the principal amount of FIVE HUNDRED
MILLION DOLLARS ($500,000,000) or, if less than such principal amount, the
aggregate unpaid principal amount of all Competitive Loans made by the Lender
to the Borrower pursuant to the Credit Agreement, and to pay interest from the
date hereof on the unpaid principal amount hereof, in like money, at said
office, on the dates and at the rates selected in accordance with Section 2.2
of the Credit Agreement and in the respective Competitive Bid applicable to
each Competitive Loan borrowing evidenced hereby.
Upon the occurrence and during the continuance of an Event of Default,
the balance outstanding hereunder shall bear interest as provided in Section
3.1 of the Credit Agreement. Further, in the event the payment of all sums due
hereunder is accelerated under the terms of the Credit Agreement, this Note,
and all other indebtedness of the Borrower to the Lender shall become
immediately due and payable, without presentment, demand, protest or notice of
any kind, all of which are hereby waived by the Borrower.
In the event this Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to the principal
and interest, all costs of collection, including reasonable attorneys' fees.
All borrowings evidenced by this Note and all payments and prepayments
of the principal hereof and interest hereon and the respective dates thereof
shall be endorsed by the holder hereof on Schedule A attached hereto and
incorporated herein by reference, or on a continuation thereof which shall be
attached hereto and made a part hereof; provided, however, that any failure to
endorse such information on such schedule or continuation thereof shall not in
any manner affect the obligation of the Borrower to make payments of principal
and interest in accordance with the terms of this Note.
<PAGE>
<PAGE> EX-139
IN WITNESS WHEREOF, the Borrower has caused this Note to be duly
executed by its duly authorized officer as of the day and year first above
written.
AIRGAS, INC.
By /s/ Jeffrey P. Cornwell
____________________________
Title Vice President
_________________________
<PAGE>
<PAGE> EX-140
SCHEDULE A TO THE
COMPETITIVE NOTE
OF AIRGAS, INC.
DATED SEPTEMBER 27, 1996
Unpaid Name of
Type Principal Person
of Interest Payments Balance Making
Date Loan Period Principal Interest of Note Notation
____ ____ ________ _________ ________ _________ _________
<PAGE>
<PAGE> EX-141
COMPETITIVE NOTE
$500,000,000 September 27, 1996
FOR VALUE RECEIVED, AIRGAS, INC., a Delaware corporation
(the "Borrower"), hereby promises to pay to the order of BANK OF AMERICA
ILLINOIS, successors and permitted assigns (the "Lender"), at such place or
places as the holder hereof may designate from time to time, at the times set
forth in the Eighth Amended and Restated Credit Agreement dated as of the date
hereof among the Borrower, the Lenders and the Agent (as it may be amended,
modified, extended or restated from time to time, the "Credit Agreement"; all
capitalized terms not otherwise defined herein shall have the meanings set
forth in the Credit Agreement), but in no event later than the Termination
Date, in Dollars and in immediately available funds, the principal amount of
FIVE HUNDRED MILLION DOLLARS ($500,000,000) or, if less than such principal
amount, the aggregate unpaid principal amount of all Competitive Loans made by
the Lender to the Borrower pursuant to the Credit Agreement, and to pay
interest from the date hereof on the unpaid principal amount hereof, in like
money, at said office, on the dates and at the rates selected in accordance
with Section 2.2 of the Credit Agreement and in the respective Competitive Bid
applicable to each Competitive Loan borrowing evidenced hereby.
Upon the occurrence and during the continuance of an Event of Default,
the balance outstanding hereunder shall bear interest as provided in Section
3.1 of the Credit Agreement. Further, in the event the payment of all sums due
hereunder is accelerated under the terms of the Credit Agreement, this Note,
and all other indebtedness of the Borrower to the Lender shall become
immediately due and payable, without presentment, demand, protest or notice of
any kind, all of which are hereby waived by the Borrower.
In the event this Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to the principal
and interest, all costs of collection, including reasonable attorneys' fees.
All borrowings evidenced by this Note and all payments and prepayments
of the principal hereof and interest hereon and the respective dates thereof
shall be endorsed by the holder hereof on Schedule A attached hereto and
incorporated herein by reference, or on a continuation thereof which shall be
attached hereto and made a part hereof; provided, however, that any failure to
endorse such information on such schedule or continuation thereof shall not in
any manner affect the obligation of the Borrower to make payments of principal
and interest in accordance with the terms of this Note.
<PAGE>
<PAGE> EX-142
IN WITNESS WHEREOF, the Borrower has caused this Note to be duly
executed by its duly authorized officer as of the day and year first above
written.
AIRGAS, INC.
By /s/ Jeffrey P. Cornwell
____________________________
Title Vice President
_________________________
<PAGE>
<PAGE> EX-143
SCHEDULE A TO THE
COMPETITIVE NOTE
OF AIRGAS, INC.
DATED SEPTEMBER 27, 1996
Unpaid Name of
Type Principal Person
of Interest Payments Balance Making
Date Loan Period Principal Interest of Note Notation
____ ____ ________ _________ ________ _________ _________
<PAGE>
<PAGE> EX-144
COMPETITIVE NOTE
$500,000,000 September 27, 1996
FOR VALUE RECEIVED, AIRGAS, INC., a Delaware corporation
(the "Borrower"), hereby promises to pay to the order of THE FIRST NATIONAL
BANK OF CHICAGO, successors and permitted assigns (the "Lender"), at such place
or places as the holder hereof may designate from time to time, at the times
set forth in the Eighth Amended and Restated Credit Agreement dated as of the
date hereof among the Borrower, the Lenders and the Agent (as it may be
amended, modified, extended or restated from time to time, the "Credit
Agreement"; all capitalized terms not otherwise defined herein shall have the
meanings set forth in the Credit Agreement), but in no event later than the
Termination Date, in Dollars and in immediately available funds, the principal
amount of FIVE HUNDRED MILLION DOLLARS ($500,000,000) or, if less than such
principal amount, the aggregate unpaid principal amount of all Competitive
Loans made by the Lender to the Borrower pursuant to the Credit Agreement, and
to pay interest from the date hereof on the unpaid principal amount hereof, in
like money, at said office, on the dates and at the rates selected in
accordance with Section 2.2 of the Credit Agreement and in the respective
Competitive Bid applicable to each Competitive Loan borrowing evidenced hereby.
Upon the occurrence and during the continuance of an Event of Default,
the balance outstanding hereunder shall bear interest as provided in Section
3.1 of the Credit Agreement. Further, in the event the payment of all sums due
hereunder is accelerated under the terms of the Credit Agreement, this Note,
and all other indebtedness of the Borrower to the Lender shall become
immediately due and payable, without presentment, demand, protest or notice of
any kind, all of which are hereby waived by the Borrower.
In the event this Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to the principal
and interest, all costs of collection, including reasonable attorneys' fees.
All borrowings evidenced by this Note and all payments and prepayments
of the principal hereof and interest hereon and the respective dates thereof
shall be endorsed by the holder hereof on Schedule A attached hereto and
incorporated herein by reference, or on a continuation thereof which shall be
attached hereto and made a part hereof; provided, however, that any failure to
endorse such information on such schedule or continuation thereof shall not in
any manner affect the obligation of the Borrower to make payments of principal
and interest in accordance with the terms of this Note.
<PAGE>
<PAGE> EX-145
IN WITNESS WHEREOF, the Borrower has caused this Note to be duly
executed by its duly authorized officer as of the day and year first above
written.
AIRGAS, INC.
By /s/ Jeffrey P. Cornwell
____________________________
Title Vice President
_________________________
<PAGE>
<PAGE> EX-146
SCHEDULE A TO THE
COMPETITIVE NOTE
OF AIRGAS, INC.
DATED SEPTEMBER 27, 1996
Unpaid Name of
Type Principal Person
of Interest Payments Balance Making
Date Loan Period Principal Interest of Note Notation
____ ____ ________ _________ ________ _________ _________
<PAGE>
<PAGE> EX-147
COMPETITIVE NOTE
$500,000,000 September 27, 1996
FOR VALUE RECEIVED, AIRGAS, INC., a Delaware corporation
(the "Borrower"), hereby promises to pay to the order of CIBC INC., successors
and permitted assigns (the "Lender"), at such place or places as the holder
hereof may designate from time to time, at the times set forth in the Eighth
Amended and Restated Credit Agreement dated as of the date hereof among the
Borrower, the Lenders and the Agent (as it may be amended, modified, extended
or restated from time to time, the "Credit Agreement"; all capitalized
terms not otherwise defined herein shall have the meanings set forth in the
Credit Agreement), but in no event later than the Termination Date, in Dollars
and in immediately available funds, the principal amount of FIVE HUNDRED
MILLION DOLLARS ($500,000,000) or, if less than such principal amount, the
aggregate unpaid principal amount of all Competitive Loans made by the Lender
to the Borrower pursuant to the Credit Agreement, and to pay interest from the
date hereof on the unpaid principal amount hereof, in like money, at said
office, on the dates and at the rates selected in accordance with Section 2.2
of the Credit Agreement and in the respective Competitive Bid applicable to
each Competitive Loan borrowing evidenced hereby.
Upon the occurrence and during the continuance of an Event of Default,
the balance outstanding hereunder shall bear interest as provided in Section
3.1 of the Credit Agreement. Further, in the event the payment of all sums due
hereunder is accelerated under the terms of the Credit Agreement, this Note,
and all other indebtedness of the Borrower to the Lender shall become
immediately due and payable, without presentment, demand, protest or notice of
any kind, all of which are hereby waived by the Borrower.
In the event this Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to the principal
and interest, all costs of collection, including reasonable attorneys' fees.
All borrowings evidenced by this Note and all payments and prepayments
of the principal hereof and interest hereon and the respective dates thereof
shall be endorsed by the holder hereof on Schedule A attached hereto and
incorporated herein by reference, or on a continuation thereof which shall be
attached hereto and made a part hereof; provided, however, that any failure to
endorse such information on such schedule or continuation thereof shall not in
any manner affect the obligation of the Borrower to make payments of principal
and interest in accordance with the terms of this Note.
<PAGE>
<PAGE> EX-148
IN WITNESS WHEREOF, the Borrower has caused this Note to be duly
executed by its duly authorized officer as of the day and year first above
written.
AIRGAS, INC.
By /s/ Jeffrey P. Cornwell
____________________________
Title Vice President
_________________________
<PAGE>
<PAGE> EX-149
SCHEDULE A TO THE
COMPETITIVE NOTE
OF AIRGAS, INC.
DATED SEPTEMBER 27, 1996
Unpaid Name of
Type Principal Person
of Interest Payments Balance Making
Date Loan Period Principal Interest of Note Notation
____ ____ ________ _________ ________ _________ _________
<PAGE>
<PAGE> EX-150
COMPETITIVE NOTE
$500,000,000 September 27, 1996
FOR VALUE RECEIVED, AIRGAS, INC., a Delaware corporation
(the "Borrower"), hereby promises to pay to the order of PNC BANK NATIONAL
ASSOCIATION, successors and permitted assigns (the "Lender"), at such place or
places as the holder hereof may designate from time to time, at the times set
forth in the Eighth Amended and Restated Credit Agreement dated as of the date
hereof among the Borrower, the Lenders and the Agent (as it may be amended,
modified, extended or restated from time to time, the "Credit Agreement"; all
capitalized terms not otherwise defined herein shall have the meanings set
forth in the Credit Agreement), but in no event later than the Termination
Date, in Dollars and in immediately available funds, the principal amount of
FIVE HUNDRED MILLION DOLLARS ($500,000,000) or, if less than such principal
amount, the aggregate unpaid principal amount of all Competitive Loans made by
the Lender to the Borrower pursuant to the Credit Agreement, and to pay
interest from the date hereof on the unpaid principal amount hereof, in like
money, at said office, on the dates and at the rates selected in accordance
with Section 2.2 of the Credit Agreement and in the respective Competitive Bid
applicable to each Competitive Loan borrowing evidenced hereby.
Upon the occurrence and during the continuance of an Event of Default,
the balance outstanding hereunder shall bear interest as provided in Section
3.1 of the Credit Agreement. Further, in the event the payment of all sums due
hereunder is accelerated under the terms of the Credit Agreement, this Note,
and all other indebtedness of the Borrower to the Lender shall become
immediately due and payable, without presentment, demand, protest or notice of
any kind, all of which are hereby waived by the Borrower.
In the event this Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to the principal
and interest, all costs of collection, including reasonable attorneys' fees.
All borrowings evidenced by this Note and all payments and prepayments
of the principal hereof and interest hereon and the respective dates thereof
shall be endorsed by the holder hereof on Schedule A attached hereto and
incorporated herein by reference, or on a continuation thereof which shall be
attached hereto and made a part hereof; provided, however, that any failure to
endorse such information on such schedule or continuation thereof shall not in
any manner affect the obligation of the Borrower to make payments of principal
and interest in accordance with the terms of this Note.
<PAGE>
<PAGE> EX-151
IN WITNESS WHEREOF, the Borrower has caused this Note to be duly
executed by its duly authorized officer as of the day and year first above
written.
AIRGAS, INC.
By /s/ Jeffrey P. Cornwell
____________________________
Title Vice President
_________________________
<PAGE>
<PAGE> EX-152
SCHEDULE A TO THE
COMPETITIVE NOTE
OF AIRGAS, INC.
DATED SEPTEMBER 27, 1996
Unpaid Name of
Type Principal Person
of Interest Payments Balance Making
Date Loan Period Principal Interest of Note Notation
____ ____ ________ _________ ________ _________ _________
<PAGE>
<PAGE> EX-153
COMPETITIVE NOTE
$500,000,000 September 27, 1996
FOR VALUE RECEIVED, AIRGAS, INC., a Delaware corporation
(the "Borrower"), hereby promises to pay to the order of FLEET BANK, N.A.
(f/k/a NATWEST BANK N.A.), successors and permitted assigns (the "Lender"), at
such place or places as the holder hereof may designate from time to time, at
the times set forth in the Eighth Amended and Restated Credit Agreement dated
as of the date hereof among the Borrower, the Lenders and the Agent (as it may
be amended, modified, extended or restated from time to time, the "Credit
Agreement"; all capitalized terms not otherwise defined herein shall have the
meanings set forth in the Credit Agreement), but in no event later than the
Termination Date, in Dollars and in immediately available funds, the principal
amount of FIVE HUNDRED MILLION DOLLARS ($500,000,000) or, if less than such
principal amount, the aggregate unpaid principal amount of all Competitive
Loans made by the Lender to the Borrower pursuant to the Credit Agreement, and
to pay interest from the date hereof on the unpaid principal amount hereof, in
like money, at said office, on the dates and at the rates selected in
accordance with Section 2.2 of the Credit Agreement and in the respective
Competitive Bid applicable to each Competitive Loan borrowing evidenced hereby.
Upon the occurrence and during the continuance of an Event of Default,
the balance outstanding hereunder shall bear interest as provided in Section
3.1 of the Credit Agreement. Further, in the event the payment of all sums due
hereunder is accelerated under the terms of the Credit Agreement, this Note,
and all other indebtedness of the Borrower to the Lender shall become
immediately due and payable, without presentment, demand, protest or notice of
any kind, all of which are hereby waived by the Borrower.
In the event this Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to the principal
and interest, all costs of collection, including reasonable attorneys' fees.
All borrowings evidenced by this Note and all payments and prepayments
of the principal hereof and interest hereon and the respective dates thereof
shall be endorsed by the holder hereof on Schedule A attached hereto and
incorporated herein by reference, or on a continuation thereof which shall be
attached hereto and made a part hereof; provided, however, that any failure to
endorse such information on such schedule or continuation thereof shall not in
any manner affect the obligation of the Borrower to make payments of principal
and interest in accordance with the terms of this Note.
<PAGE>
<PAGE> EX-154
IN WITNESS WHEREOF, the Borrower has caused this Note to be duly
executed by its duly authorized officer as of the day and year first above
written.
AIRGAS, INC.
By /s/ Jeffrey P. Cornwell
____________________________
Title Vice President
_________________________
<PAGE>
<PAGE> EX-155
SCHEDULE A TO THE
COMPETITIVE NOTE
OF AIRGAS, INC.
DATED SEPTEMBER 27, 1996
Unpaid Name of
Type Principal Person
of Interest Payments Balance Making
Date Loan Period Principal Interest of Note Notation
____ ____ ________ _________ ________ _________ _________
<PAGE>
<PAGE> EX-156
COMPETITIVE NOTE
$500,000,000 September 27, 1996
FOR VALUE RECEIVED, AIRGAS, INC., a Delaware corporation
(the "Borrower"), hereby promises to pay to the order of THE SANWA BANK, LTD.
NEW YORK BRANCH, successors and permitted assigns (the "Lender"), at such place
or places as the holder hereof may designate from time to time, at the times
set forth in the Eighth Amended and Restated Credit Agreement dated as of the
date hereof among the Borrower, the Lenders and the Agent (as it may be
amended, modified, extended or restated from time to time, the "Credit
Agreement"; all capitalized terms not otherwise defined herein shall have the
meanings set forth in the Credit Agreement), but in no event later than the
Termination Date, in Dollars and in immediately available funds, the principal
amount of FIVE HUNDRED MILLION DOLLARS ($500,000,000) or, if less than such
principal amount, the aggregate unpaid principal amount of all Competitive
Loans made by the Lender to the Borrower pursuant to the Credit Agreement, and
to pay interest from the date hereof on the unpaid principal amount hereof, in
like money, at said office, on the dates and at the rates selected in
accordance with Section 2.2 of the Credit Agreement and in the respective
Competitive Bid applicable to each Competitive Loan borrowing evidenced hereby.
Upon the occurrence and during the continuance of an Event of Default,
the balance outstanding hereunder shall bear interest as provided in Section
3.1 of the Credit Agreement. Further, in the event the payment of all sums
due hereunder is accelerated under the terms of the Credit Agreement, this
Note, and all other indebtedness of the Borrower to the Lender shall become
immediately due and payable, without presentment, demand, protest or notice of
any kind, all of which are hereby waived by the Borrower.
In the event this Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to the principal
and interest, all costs of collection, including reasonable attorneys' fees.
All borrowings evidenced by this Note and all payments and prepayments
of the principal hereof and interest hereon and the respective dates thereof
shall be endorsed by the holder hereof on Schedule A attached hereto and
incorporated herein by reference, or on a continuation thereof which shall be
attached hereto and made a part hereof; provided, however, that any failure to
endorse such information on such schedule or continuation thereof shall not in
any manner affect the obligation of the Borrower to make payments of principal
and interest in accordance with the terms of this Note.
<PAGE>
<PAGE> EX-157
IN WITNESS WHEREOF, the Borrower has caused this Note to be duly
executed by its duly authorized officer as of the day and year first above
written.
AIRGAS, INC.
By /s/ Jeffrey P. Cornwell
____________________________
Title Vice President
_________________________
<PAGE>
<PAGE> EX-158
SCHEDULE A TO THE
COMPETITIVE NOTE
OF AIRGAS, INC.
DATED SEPTEMBER 27, 1996
Unpaid Name of
Type Principal Person
of Interest Payments Balance Making
Date Loan Period Principal Interest of Note Notation
____ ____ ________ _________ ________ _________ _________
<PAGE>
<PAGE> EX-159
COMPETITIVE NOTE
$500,000,000 September 27, 1996
FOR VALUE RECEIVED, AIRGAS, INC., a Delaware corporation
(the "Borrower"), hereby promises to pay to the order of SOCIETE GENERALE,
successors and permitted assigns (the "Lender"), at such place or places as the
holder hereof may designate from time to time, at the times set forth in the
Eighth Amended and Restated Credit Agreement dated as of the date hereof among
the Borrower, the Lenders and the Agent (as it may be amended, modified,
extended or restated from time to time, the "Credit Agreement"; all capitalized
terms not otherwise defined herein shall have the meanings set forth in the
Credit Agreement), but in no event later than the Termination Date, in Dollars
and in immediately available funds, the principal amount of FIVE HUNDRED
MILLION DOLLARS ($500,000,000) or, if less than such principal amount, the
aggregate unpaid principal amount of all Competitive Loans made by the Lender
to the Borrower pursuant to the Credit Agreement, and to pay interest from the
date hereof on the unpaid principal amount hereof, in like money, at said
office, on the dates and at the rates selected in accordance with Section 2.2
of the Credit Agreement and in the respective Competitive Bid applicable to
each Competitive Loan borrowing evidenced hereby.
Upon the occurrence and during the continuance of an Event of Default,
the balance outstanding hereunder shall bear interest as provided in Section
3.1 of the Credit Agreement. Further, in the event the payment of all sums due
hereunder is accelerated under the terms of the Credit Agreement, this Note,
and all other indebtedness of the Borrower to the Lender shall become
immediately due and payable, without presentment, demand, protest or notice of
any kind, all of which are hereby waived by the Borrower.
In the event this Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to the principal
and interest, all costs of collection, including reasonable attorneys' fees.
All borrowings evidenced by this Note and all payments and prepayments
of the principal hereof and interest hereon and the respective dates thereof
shall be endorsed by the holder hereof on Schedule A attached hereto and
incorporated herein by reference, or on a continuation thereof which shall be
attached hereto and made a part hereof; provided, however, that any failure to
endorse such information on such schedule or continuation thereof shall not in
any manner affect the obligation of the Borrower to make payments of principal
and interest in accordance with the terms of this Note.
<PAGE>
<PAGE> EX-160
IN WITNESS WHEREOF, the Borrower has caused this Note to be duly
executed by its duly authorized officer as of the day and year first above
written.
AIRGAS, INC.
By /s/ Jeffrey P. Cornwell
____________________________
Title Vice President
_________________________
<PAGE>
<PAGE> EX-161
SCHEDULE A TO THE
COMPETITIVE NOTE
OF AIRGAS, INC.
DATED SEPTEMBER 27, 1996
Unpaid Name of
Type Principal Person
of Interest Payments Balance Making
Date Loan Period Principal Interest of Note Notation
____ ____ ________ _________ ________ _________ _________
<PAGE>
<PAGE> EX-162
COMPETITIVE NOTE
$500,000,000 September 27, 1996
FOR VALUE RECEIVED, AIRGAS, INC., a Delaware corporation
(the "Borrower"), hereby promises to pay to the order of THE BANK OF NOVA
SCOTIA, successors and permitted assigns (the "Lender"), at such place or
places as the holder hereof may designate from time to time, at the times set
forth in the Eighth Amended and Restated Credit Agreement dated as of the date
hereof among the Borrower, the Lenders and the Agent (as it may be amended,
modified, extended or restated from time to time, the "Credit Agreement"; all
capitalized terms not otherwise defined herein shall have the meanings set
forth in the Credit Agreement), but in no event later than the Termination
Date, in Dollars and in immediately available funds, the principal amount of
FIVE HUNDRED MILLION DOLLARS ($500,000,000) or, if less than such principal
amount, the aggregate unpaid principal amount of all Competitive Loans made by
the Lender to the Borrower pursuant to the Credit Agreement, and to pay
interest from the date hereof on the unpaid principal amount hereof, in like
money, at said office, on the dates and at the rates selected in accordance
with Section 2.2 of the Credit Agreement and in the respective Competitive Bid
applicable to each Competitive Loan borrowing evidenced hereby.
Upon the occurrence and during the continuance of an Event of Default,
the balance outstanding hereunder shall bear interest as provided in Section
3.1 of the Credit Agreement. Further, in the event the payment of all sums due
hereunder is accelerated under the terms of the Credit Agreement, this Note,
and all other indebtedness of the Borrower to the Lender shall become
immediately due and payable, without presentment, demand, protest or notice of
any kind, all of which are hereby waived by the Borrower.
In the event this Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to the principal
and interest, all costs of collection, including reasonable attorneys' fees.
All borrowings evidenced by this Note and all payments and prepayments
of the principal hereof and interest hereon and the respective dates thereof
shall be endorsed by the holder hereof on Schedule A attached hereto and
incorporated herein by reference, or on a continuation thereof which shall be
attached hereto and made a part hereof; provided, however, that any failure to
endorse such information on such schedule or continuation thereof shall not in
any manner affect the obligation of the Borrower to make payments of principal
and interest in accordance with the terms of this Note.
<PAGE>
<PAGE> EX-163
IN WITNESS WHEREOF, the Borrower has caused this Note to be duly
executed by its duly authorized officer as of the day and year first above
written.
AIRGAS, INC.
By /s/ Jeffrey P. Cornwell
____________________________
Title Vice President
_________________________
<PAGE>
<PAGE> EX-164
SCHEDULE A TO THE
COMPETITIVE NOTE
OF AIRGAS, INC.
DATED SEPTEMBER 27, 1996
Unpaid Name of
Type Principal Person
of Interest Payments Balance Making
Date Loan Period Principal Interest of Note Notation
____ ____ ________ _________ ________ _________ _________
<PAGE>
<PAGE> EX-165
SWINGLINE NOTE
$5,000,000 September 27, 1996
FOR VALUE RECEIVED, AIRGAS, INC., a Delaware corporation
(the "Borrower"), hereby promises to pay to the order of NATIONSBANK, N.A., its
successors and assigns (the "Swingline Lender"), at the office of NationsBank,
N.A., as Agent (the "Agent"), at 101 N. Tryon Street, Independence Center,
NC1-001-15-04, Charlotte, North Carolina 28255 (or at such other place or
places as the holder hereof may designate), at the times set forth in the
Eighth Amended and Restated Credit Agreement dated as of the date hereof among
the Borrower, the Swingline Lender and other Lenders and the Agent (as it
may be amended, modified, extended or restated from time to time, the "Credit
Agreement"; all capitalized terms not otherwise defined herein shall have the
meanings set forth in the Credit Agreement), but in no event later than the
Termination Date, in Dollars and in immediately available funds, the principal
amount of FIVE MILLION DOLLARS ($5,000,000) or, if less than such principal
amount, the aggregate unpaid principal amount of all Swingline Loans made by
the Swingline Lender to the Borrower pursuant to the Credit Agreement, and to
pay interest from the date hereof on the unpaid principal amount hereof, in
like money, at said office, on the dates and at the rates selected in
accordance with Section 2.4(c) of the Credit Agreement.
Upon the occurrence and during the continuance of an Event of Default,
the balance outstanding hereunder shall bear interest as provided in Section
3.1 of the Credit Agreement. Further, in the event the payment of all sums due
hereunder is accelerated under the terms of the Credit Agreement, this Note,
and all other indebtedness of the Borrower to the Swingline Lender shall become
immediately due and payable, without presentment, demand, protest or
notice of any kind, all of which are hereby waived by the Borrower.
In the event this Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to the principal
and interest, all costs of collection, including reasonable attorneys' fees.
All borrowings evidenced by this Note and all payments and prepayments
of the principal hereof and interest hereon and the respective dates thereof
shall be endorsed by the holder hereof on Schedule A attached hereto and
incorporated herein by reference, or on a continuation thereof which shall be
attached hereto and made a part hereof; provided, however, that any failure to
endorse such information on such schedule or continuation thereof shall not in
any manner affect the obligation of the Borrower to make payments of principal
and interest in accordance with the terms of this Note.
<PAGE>
<PAGE> EX-166
IN WITNESS WHEREOF, the Borrower has caused this Note to be duly
executed by its duly authorized officer as of the day and year first above
written.
AIRGAS, INC.
By /s/ Jeffrey P. Cornwell
____________________________
Title Vice President
_________________________
<PAGE>
<PAGE> EX-167
SCHEDULE A TO THE
SWINGLINE NOTE
OF AIRGAS, INC.
DATED SEPTEMBER 27, 1996
Unpaid Name of
Type Principal Person
of Interest Payments Balance Making
Date Loan Period Principal Interest of Note Notation
____ ____ ________ _________ ________ _________ _________
<PAGE>
<PAGE>
[AIRGAS LETTERHEAD]
July 24, 1992
Peter McCausland
Chairman and Chief Executive Officer
Airgas, Inc.
Five Radnor Corporate Center
Radnor, PA 19087
RE: Severance Payments
Dear Peter:
On behalf of the Nominating and Compensation Committee of Airgas, Inc., I
am writing to inform you of the Committee's final decision regarding severance
payments following the end of your employment agreement on April 1, 1992. The
Committee has agreed on the following:
1. Severance. Upon termination of employment with Airgas, Inc., you
shall receive (a) a lump sum payment of two times your annual salary (b)
continuation of health insurance and other employee benefits for a period of
three years and (c) automatic full vesting of all previously granted stock
options.
2. Termination. The severance provisions described immediately above
would be applicable in the event Airgas terminates your employment for any
reason other than material dishonesty (i.e., criminal misconduct).
"Termination" is meant to include constructive termination resulting from a
change in control. "Change in control", for the purposes of these severance
provisions, includes (a) replacement by a new chief executive officer, (b)
acquisition of 20 percent of the common stock by any third party or (c)
election of an individual to the Board who is not recommended by unanimous
vote.
The Committee has determined that these severance provisions shall remain
in effect from year to year during such time as you remain the Chief Executive
Officer of Airgas. The provisions described in this letter supersede those in
your prior employment agreement but, nevertheless, shall have no effect on the
Board's previous commitments regarding your incentive bonus formula or stock
option grants.
Sincerely,
/s/ John A.H. Shober
______________________________
John A.H. Shober
Chairman of the Nominating and
Compensation Committee<PAGE>
<PAGE>
<PAGE> EX-168
Exhibit 11
AIRGAS, INC. AND SUBSIDIARIES
EARNINGS PER SHARE CALCULATIONS
For the Years Ended March 31, 1996, 1995 and 1994
<TABLE>
<CAPTION>
Years Ended March 31,
____________________________________________
1997 1996 1995
Primary/ Primary/ Primary/
Fully Fully Fully
Diluted Diluted Diluted
_______ _______ _______
<S> <C> <C> <C>
Adjustments of Shares Outstanding
_________________________________
Shares of common stock
outstanding-weighted 65,875,000 62,820,000 62,148,000
Net common stock equivalents 2,765,000 3,395,000 3,377,000
__________ __________ __________
Adjusted shares outstanding 68,640,000 66,215,000 65,525,000
========== ========== ==========
Actual Net Earnings
___________________
Actual net earnings $23,266,000 $39,720,000 $31,479,000
=========== ========== ==========
Net Earnings Per Share $ .34 $ .60 $ .48
========== ========== ==========
</TABLE>
Earnings per share amounts for 1997, 1996 and 1995 were determined using the
treasury stock method.
<PAGE>
<PAGE>
<PAGE> EX-169 Exhibit 21
AIRGAS, INC. AND SUBSIDIARIES
Airgas Beverage Service, Inc.
Airgas Beverage Systems Inc.
Airgas Breathing Air Systems, Inc.
Airgas Canada, Inc.
Airgas Carbonic Enterprises, Inc.
Airgas Carbonic Industries, Inc.
Airgas Carbonic West, Inc.
Airgas Direct Industrial, Inc.
Airgas Houston, Inc.
Airgas International, Inc.
Airgas Management, Inc.
Airgas Management (India) Pvt. Ltd.
Airgas New England Real Estate, Inc.
Airgas Northeast, Inc.
Airgas Ontario, Inc.
Airgas Realty, Inc.
Airgas Safety, Inc.
Airgas (Singapore) Pte Ltd.
Airgas Specialty Gases, Inc.
Airgas Texas, Inc.
American Carbide and Carbon Corporation
ATNL, Inc.
Bay Airgas, Inc.
Bhoruka Gases Ltd
Cascade Airgas, Inc.
Central States Airgas, Inc.
Cylinder Leasing Corp.
Delta Airgas, Inc.
Elkem American Carbide Company (Joint Venture)
Empire Airgas, Inc.
Forair, Inc.
Gateway Airgas, Inc.
G.S. Parsons, Co.
Great Lakes Airgas, Inc.
Great Western Airgas, Inc.
Gulf States Airgas, Inc.
Industrial Gases of Wichita, Inc.
Kaamool Airgas, Ltd
Keystone Airgas, Inc.
Mauritius Industrial Gases, Inc.
Michigan Airgas, Inc.
Mid America Airgas, Inc.
Mountain Airgas, Inc.
Mountain States Airgas, Inc.
National Welders Supply Co., Inc. (Joint Venture)
NEJD Pipeline Co., Inc.
Nitrous Oxide Corp.
Northern Gases, Inc.
Pacific Airgas, Inc.
Polaska Airgas SP. Zo.o..
Poligaz, S.A.
Post Airgas, Inc.
Potomac Airgas, Inc.
Red-D-Arc, Inc.
Red-D-Arc Limited
Rutland Tool & Supply Co, Inc.
Sierra Airgas, Inc.
Soda Leasing, Inc.
Sooner Airgas, Inc.
Southeast Airgas, Inc.
<PAGE> EX-170
Southern California Airgas, Inc.
Southwest Airgas, Inc.
Trinity Airgas, Inc.
TriState Airgas, Inc.
U.S. Airgas, Inc.
Westwind Company
<PAGE>
<PAGE>
<PAGE> EX-171
Exhibit 23.1
Consent of Independent Auditors'
The Board of Directors
Airgas, Inc.:
We consent to incorporation by reference in the Registration Statements (Nos.
33-39433, 33-39325, 33-48388, 33-57893, 33-61301, 33-63201, 33-64633, 33-61899
and 333-08113) on Form S-3, and (Nos. 33-25419, 33-21780, 33-33954, 33-64056,
33-64058, 33-64112, 33-64114 and 333-28261) on Form S-8 of Airgas, Inc. of our
report dated May 8, 1997, relating to the consolidated balance sheets of
Airgas, Inc. and subsidiaries as of March 31, 1997 and 1996, and the related
consolidated statements of earnings, stockholders' equity, and cash flows and
related schedule for each of the years in the three-year period ended March 31,
1997, which report is included in the March 31, 1997 Annual Report on Form 10-K
of Airgas, Inc.
KPMG Peat Marwick LLP
Philadelphia, Pennsylvania
June 10, 1997
<PAGE>
<PAGE>
<PAGE> EX-172
Exhibit 23.4
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to incorporation by
reference of our report dated April 30, 1997, with respect to the financial
statements of National Welders Supply Company, Inc. for the nine months ended
March 29, 1997 (not separately presented), included in this Form 10-K of
Airgas, Inc. into Airgas, Inc.'s previously filed Registration Statements
(33-39433, 33-39325, 33-48388, 33-57893, 33-61301, 33-63201, 33-64633,
33-61899, 333-08113) on Form S-3, and (Nos. 33-25419, 33-21780, 33-33954,
33-64056, 33-64058, 33-64112, 33-64114, 333-28261) on Form S-8.
ARTHUR ANDERSEN LLP
Charlotte, North Carolina,
June 11, 1997.
<PAGE>
<PAGE>
<PAGE> EX-173
Exhibit 23.5
Report of Independent Public Accountants
To the Board of Directors of
National Welders Supply Company, Inc.:
We have audited the accompanying balance sheet of National Welders Supply
Company, Inc. (a North Carolina corporation) as of March 29, 1997, and the
related statements of income, changes in shareholders' equity and cash flows
for the period from June 29, 1996, to March 29, 1997. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of National Welders Supply
Company, Inc. as of March 29, 1997, and the results of its operations and its
cash flows for the period from June 29, 1996, to March 29, 1997, in conformity
with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Charlotte, North Carolina,
April 30, 1997.
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 151,053
<ALLOWANCES> 4,443
<INVENTORY> 129,372
<CURRENT-ASSETS> 311,999
<PP&E> 736,083
<DEPRECIATION> 183,922
<TOTAL-ASSETS> 1,291,031
<CURRENT-LIABILITIES> 25,158
<BONDS> 629,931
<COMMON> 688
0
0
<OTHER-SE> 335,969
<TOTAL-LIABILITY-AND-EQUITY> 1,291,031
<SALES> 1,158,894
<TOTAL-REVENUES> 1,158,894
<CGS> 611,383
<TOTAL-COSTS> 611,383
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 39,752
<INCOME-PRETAX> 44,345
<INCOME-TAX> 21,080
<INCOME-CONTINUING> 23,266
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 23,266
<EPS-PRIMARY> .34
<EPS-DILUTED> .34
</TABLE>
