<PAGE>
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED MARCH 1, 1996)
$250,000,000
[LOGO]
6.90% NOTES DUE 2006
------------------------
INTEREST PAYABLE MAY 1 AND NOVEMBER 1
------------------------
INTEREST ON THE 6.90% NOTES DUE NOVEMBER 1, 2006 (THE 'NOTES') OF PRAXAIR, INC.
(THE 'COMPANY') OFFERED HEREBY IS PAYABLE SEMI-ANNUALLY ON MAY 1 AND
NOVEMBER 1 OF EACH YEAR, BEGINNING MAY 1, 1997. THE NOTES WILL NOT BE
REDEEMABLE PRIOR TO MATURITY AND WILL NOT BE SUBJECT TO ANY SINKING
FUND. SEE 'DESCRIPTION OF THE NOTES.'
THE NOTES WILL BE REPRESENTED BY ONE OR MORE GLOBAL SECURITIES (THE 'GLOBAL
SECURITIES') REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY ('DTC')
OR ITS NOMINEE. BENEFICIAL INTERESTS IN THE GLOBAL SECURITIES WILL BE
SHOWN ON, AND TRANSFERS THEREOF WILL BE EFFECTED ONLY THROUGH,
RECORDS MAINTAINED BY DTC AND ITS PARTICIPANTS. EXCEPT AS PROVIDED
HEREIN, NOTES IN DEFINITIVE FORM WILL NOT BE ISSUED.
SEE 'DESCRIPTION OF THE NOTES.'
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS
SUPPLEMENT OR THE PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
------------------------
PRICE 100% AND ACCRUED INTEREST
------------------------
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC(1) COMMISSIONS(2) COMPANY(1)(3)
------------ -------------- -------------
<S> <C> <C> <C>
Per Note...................................... 100.00% .65% 99.35%
Total......................................... $250,000,000 $1,625,000 $248,375,000
</TABLE>
- ------------
(1) Plus accrued interest from November 1, 1996.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See 'Underwriting'.
(3) Before deducting expenses payable by the Company estimated at $200,000.
------------------------
The Notes are offered, subject to prior sale, when, as and if delivered to
and accepted by the Underwriters, and subject to approval of certain legal
matters by Davis Polk & Wardwell, counsel for the Underwriters. It is expected
that delivery of the Notes will be made on or about November 4, 1996 through the
facilities of DTC, against payment therefor in same-day funds.
------------------------
MORGAN STANLEY & CO. CHASE SECURITIES INC.
INCORPORATED
October 30, 1996
<PAGE>
IN CONNECTION WITH THIS OFFERING THE UNDERWRITERS MAY EFFECT TRANSACTIONS WHICH
STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES AT A LEVEL ABOVE THAT WHICH
MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY
BE DISCONTINUED AT ANY TIME.
No dealer, salesman or any other person has been authorized to give any
information or to make any representations other than those contained or
incorporated by reference in this Prospectus Supplement and the accompanying
Prospectus, and, if given or made, such information or representations must not
be relied upon as having been authorized by the Company or by the Underwriters.
This Prospectus Supplement and the accompanying Prospectus do not constitute an
offer to sell or the solicitation of an offer to buy the Notes by anyone in any
jurisdiction in which such offer or solicitation is not authorized or in which
the person making such offer or solicitation is not qualified to do so or to any
person to whom it is unlawful to make such offer or solicitation. Neither the
delivery of this Prospectus Supplement or the Prospectus, nor any sale made
hereunder and thereunder shall, under any circumstances, create any implication
that there has been no change in the affairs of the Company since the date
hereof or that the information contained or incorporated by reference herein or
therein is correct as of any time subsequent to the date of such information.
---------------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<S> <C>
Incorporation of Certain Documents by Reference............................................................ S-3
The Company................................................................................................ S-3
Use of Proceeds............................................................................................ S-3
Ratios of Earnings to Fixed Charges........................................................................ S-3
Description of the Notes................................................................................... S-4
Underwriting............................................................................................... S-4
PROSPECTUS
Available Information...................................................................................... 2
Incorporation of Certain Documents by Reference............................................................ 3
The Company................................................................................................ 4
Recent Developments........................................................................................ 4
Use of Proceeds............................................................................................ 4
Ratio of Earnings to Fixed Charges and Earnings to Combined Fixed
Charges and Preferred Stock Dividends.................................................................... 5
Description of Capital Stock............................................................................... 6
Description of Debt Securities............................................................................. 9
Plan of Distribution....................................................................................... 18
Legal Opinions............................................................................................. 19
Experts.................................................................................................... 19
</TABLE>
S-2
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
In addition to the documents incorporated by reference in the accompanying
Prospectus, the Company hereby expressly incorporates by reference its Annual
Report on Form 10-K for the year ended December 31, 1995, its Quarterly Reports
on Form 10-Q for the quarters ended March 31, 1996 and June 30, 1996 and its
Current Reports on Form 8-K dated March 1, 1996, March 8, 1996 and September 9,
1996. See 'Incorporation Of Certain Documents By Reference' in the accompanying
Prospectus.
THE COMPANY
Praxair, Inc. ('Praxair' or the 'Company') is the largest industrial gases
supplier in North and South America, and the third largest worldwide. Praxair's
primary products are atmospheric gases (oxygen, nitrogen, argon, rare gases) and
process gases (carbon dioxide, helium, hydrogen, electronics gases, acetylene).
The Company's coatings services business, operated through Praxair Surface
Technologies, Inc. supplies wear-resistant and high-temperature
corrosion-resistant metallic and ceramic coatings and powders.
Gases produced by the Company find wide use in the aerospace, beverage,
chemicals, electronics, environmental remediation, food processing, glass,
medical, metal fabrication, oil and gas, primary metals, pulp and paper and
various other industries. By using the gases that Praxair produces and, in many
cases, the proprietary processes that it invents, customer value is created
through improved product quality, increased productivity, conservation of
energy, and the attainment of environmental improvement objectives. The Company
has been and continues to be a major technological innovator in the industrial
gases industry and, working with customers, has done much to increase the use of
its industrial gases to support the manufacture of other products and for many
other uses.
Praxair (including its predecessor companies) was founded in 1907 and was
incorporated in Delaware in 1988. Its principal offices are located at 39 Old
Ridgebury Road in Danbury, Connecticut 06810-5113 and its telephone number is
(203) 837-2000.
USE OF PROCEEDS
The net proceeds received by the Company from the sale of the Notes offered
hereby, approximately $248 million, will be used to repay outstanding commercial
paper, other short-term borrowings and for general corporate purposes. Prior to
such application, such proceeds may be invested in short-term investments. The
indebtedness to be repaid with the proceeds of this offering was incurred for
general corporate purposes. At October 30, 1996 the Company's outstanding
commercial paper and short-term borrowing bore interest at a weighted average
interest rate of approximately 5.49% per annum and had maturities of up to 120
days.
RATIOS OF EARNINGS TO FIXED CHARGES
The Company's ratio of earnings to fixed charges for the year ended December 31,
1995 was 4.2 and pro forma for the acquisition of CBI and the repayment of
certain indebtedness of the Company with the proceeds from the Company's equity
offering in March 1996, as if such acquisition and the repayment of such
indebtedness had occurred on January 1, 1995, the Company's ratio of earnings to
fixed charges would have been 2.8. The Company's ratio of earnings to fixed
charges for the six months ended June 30, 1996 was 2.4 (3.2 pro forma without
giving effect to the 1996 CBI integration charge). For the purpose of computing
this ratio: 'earnings' consist of income from continuing operations before
provision for income taxes, before fixed charges, plus dividends from less than
50%-owned companies carried at equity and the Company's share of pre-tax income
of 50%-owned companies carried at equity, less net capitalized interest of
consolidated subsidiaries and 'fixed charges' comprise interest on long-term and
short-term debt, capitalized interest, the portion of rentals representative of
an appropriate interest factor and the Company's share of fixed charges of
50%-owned companies carried at equity.
S-3
<PAGE>
DESCRIPTION OF THE NOTES
The following description of the particular terms of the Notes offered hereby
supplements, and to the extent inconsistent therewith supersedes, the
description of the general terms and provisions of the Senior Debt Securities
set forth in the accompanying Prospectus, to which description reference is
hereby made. Capitalized terms not otherwise defined herein shall have the
meanings given to them in the accompanying Prospectus.
The Notes will be unsecured general obligations of the Company, will be issued
under an indenture dated as of July 15, 1992 between the Company and Fleet
National Bank of Connecticut, as the ultimate successor trustee (the 'Trustee')
to Bank of America, Illinois, will be limited to $250,000,000 principal amount,
will be issued in book-entry form only and will mature on November 1, 2006.
The Notes will bear interest from November 1, 1996 at the rate of 6.90% per
annum, payable semi-annually on May 1 and November 1 commencing on May 1, 1997
to the persons in whose names the Notes are registered at the close of business
on the preceding April 15 and October 15, respectively.
The Notes will not be redeemable prior to maturity or entitled to any sinking
fund.
The Notes are subject to defeasance under the conditions described in the
accompanying Prospectus, including the condition that an opinion of counsel be
delivered with respect to the absence of any tax effect of any such defeasance
to holders of the Notes.
Upon issuance, the Notes will be represented by one or more Global Securities
which will be deposited with, or on behalf of, DTC and will be registered in the
name of DTC or a nominee of DTC. See 'Description of Debt Securities--Global
Debt Securities' in the accompanying Prospectus.
UNDERWRITING
Under the terms and subject to the conditions set forth in a Terms Agreement
dated the date hereof, the Underwriters named below have severally agreed to
purchase, and the Company has agreed to sell to them severally, the respective
principal amounts of the Notes set forth opposite their respective names below:
PRINCIPAL
AMOUNT
NAME OF NOTES
- ----------------------------------------------------------------- ------------
Morgan Stanley & Co. Incorporated................................ $125,000,000
Chase Securities Inc............................................. 125,000,000
------------
Total.................................................. $250,000,000
------------
------------
The Terms Agreement provides that the obligation of the Underwriters to pay for
and accept delivery of the Notes is subject to the approval of certain legal
matters by their counsel and to certain other conditions. The Underwriters are
committed to take and pay for all of the Notes if any are taken.
The Underwriters propose to offer part of the Notes directly to the public at
the public offering price set forth on the cover page hereof and part to certain
dealers at a price that represents a concession not in excess of .40% of the
principal amount of the Notes. The Underwriters may allow, and such dealers may
reallow, a concession not in excess of .25% of the principal amount of the Notes
to certain other dealers. After the initial offering of the Notes the offering
price and other selling terms may from time to time be varied by the
Underwriters.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.
The Company does not intend to apply for listing of the Notes on a national
securities exchange, but has been advised by the Underwriters that they
presently intend to make a market in the Notes, as permitted by applicable laws
and regulations. The Underwriters are not obligated, however, to make a market
in the Notes and any such market making may be discontinued at any time at the
sole discretion of the Underwriters. Accordingly, no assurance can be given as
to the liquidity of, or trading market for, the Notes.
S-4
<PAGE>
PROSPECTUS
Praxair, Inc.
Debt Securities
Preferred Stock
Common Stock
------------------
Praxair, Inc. ('Company') may offer from time to time its (i) unsecured
senior debt securities (the 'Senior Debt Securities'), (ii) unsecured
subordinated debt securities (the 'Subordinated Debt Securities' and, together
with the Senior Debt Securities, the 'Debt Securities'), (iii) shares of its
Preferred Stock, par value $.01 per share (the 'Preferred Stock') and (iv)
shares of its Common Stock, par value $.01 per share (the 'Common Stock'). The
Preferred Stock and the Common Stock are collectively referred to as the 'Equity
Securities.' The Debt Securities and the Equity Securities are collectively
referred to herein as the 'Securities,' and will have a maximum aggregate
offering price of $1,350,000,000 (or the equivalent thereof in foreign currency
or currency units) and will be offered on terms to be determined by market
conditions at the time of sale.
The Securities may be offered separately or together, in separate series,
in amounts and at prices and on terms to be set forth in an accompanying
prospectus supplement (a 'Prospectus Supplement'). In addition, the specific
terms of the Securities in respect of which this Prospectus is being delivered,
and whether such Securities will be listed on a national securities exchange,
will be set forth in an accompanying Prospectus Supplement.
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR AD-
EQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------
The date of this Prospectus is March 1, 1996
<PAGE>
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS, INCLUDING ANY PROSPECTUS SUPPLEMENT IN CONNECTION
WITH THE OFFER CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR ANY UNDERWRITER, DEALER OR AGENT. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS
OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 ('Exchange Act'), and, in accordance therewith, will file
reports and other information with the Securities and Exchange Commission
('Commission'). Reports, proxy statements, and other information filed by the
Company may be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the Commission's Regional Offices at 7 World Trade Center, 15th Floor,
New York, New York 10048 and at the Citicorp Center, 500 West Madison Street,
Chicago, Illinois 60661. Copies of such information may be obtained by mail from
the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. Such reports, proxy statements and
other information concerning the Company can also be inspected at the offices of
the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005, on
which the Company's common stock is listed.
THE COMPANY HAS FILED WITH THE COMMISSION A REGISTRATION STATEMENT (THE
'REGISTRATION STATEMENT') UNDER THE SECURITIES ACT OF 1933 WITH RESPECT TO THE
SECURITIES COVERED BY THIS PROSPECTUS. THIS PROSPECTUS DOES NOT CONTAIN ALL THE
INFORMATION SET FORTH IN THE REGISTRATION STATEMENT, CERTAIN PARTS OF WHICH ARE
OMITTED IN ACCORDANCE WITH THE RULES AND REGULATIONS OF THE COMMISSION.
REFERENCE IS MADE TO THE REGISTRATION STATEMENT AND TO THE EXHIBITS RELATING
THERETO FOR FURTHER INFORMATION WITH RESPECT TO THE COMPANY AND THE SECURITIES
COVERED BY THIS PROSPECTUS.
2
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by the Company
(Commission File No. 1-11037) are incorporated herein by reference: (1) Annual
report of the Company on Form 10-K for the year ended December 31, 1994; (2)
Quarterly Reports of the Company on Form 10-Q for the quarters ended March 31,
1995, June 30, 1995 and September 30, 1995; (3) Current Reports on Form 8-K
dated December 22, 1995 and January 16, 1996; (4) the description of the
Company's capital stock set forth under the caption 'Item 11. Description of
Registrant's Securities to be Registered' in the Company's Registration
Statement on Form 10 dated March 10, 1992 as amended by the Company's Form 8
dated May 22, 1992, Form 8 dated June 9, 1992 and Form 8 dated June 12, 1992;
and (5) all other documents filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus
and prior to the termination of the offering of the Securities. Any statement
contained in a document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon the request of such person, a copy of any or
all of the documents which are incorporated by reference herein, other than
exhibits to such documents (unless such exhibits are specifically incorporated
by reference into such documents). Written or telephone requests should be
directed to Praxair, Inc., 39 Old Ridgebury Road, Danbury, Connecticut
06810-5113, telephone (203) 837-2000.
3
<PAGE>
THE COMPANY
Praxair, Inc. (the 'Company' or 'Praxair') is the largest supplier of
industrial gases in North and South America and one of the three largest in the
world. The Company's worldwide sales were approximately $2.7 billion in 1994.
Industrial gases account for approximately 91 percent of the Company's business.
Using air as its raw material, the Company produces oxygen, nitrogen and argon
through several air separation processes. Other gases, including hydrogen,
helium and acetylene, are produced by different methods. Gases produced by the
Company find wide use in the aerospace, chemicals, electronics, food processing,
glass, metal fabrication, oil and gas, primary metals, pulp and paper and
various other industries. The Company has been and continues to be a major
technological innovator in the industrial gases industry and, working with
customers, has done much to increase the use of its industrial gases to support
the manufacture of other products and for many other uses. The Company (and its
predecessors) has been actively engaged in the industrial gases business since
1907. The Company's coatings service business, operated through Praxair Surface
Technologies, Inc., supplies wear-resistant and high-temperature
corrosion-resistant metallic and ceramic coatings to many industries and has
been operating since the 1950's.
Praxair became an independent public company on June 30, 1992 when Union
Carbide Corporation ('UCC') distributed all of Praxair's common stock to its
shareholders. The Company's executive offices are located at 39 Old Ridgebury
Road, Danbury, Connecticut 06810-5413, telephone (203) 837-2000.
RECENT DEVELOPMENTS
As of January 12, 1996, PX Acquisition Corp. (the 'Purchaser'), a Delaware
corporation and a wholly owned subsidiary of the Company, accepted for payment
41,093,631 shares of the common stock, par value $2.50 per share, of CBI
Industries, Inc. ('CBI'), a Delaware corporation, for a cash price of $33 per
share pursuant to an amended tender offer dated December 28, 1995. These
tendered shares, together with the 79,300 shares of CBI common stock that the
Company already owned, represent approximately 94% of the outstanding shares of
CBI common stock. Upon completion of the tender offer, CBI became a subsidiary
of the Company. In accordance with the December 22, 1995 Merger Agreement among
the Purchaser, the Company and CBI, the Purchaser will be merged into CBI. At
that time each outstanding share of CBI common stock (other than shares owned by
Praxair, Purchaser, or any subsidiary of Praxair or shares held by dissenting
shareholders exercising appraisal rights pursuant to section 262 of the Delaware
General Corporation Law) will be converted into the right to receive, without
interest, $33 per share in cash. The total purchase price for 100% of CBI's
common stock will be approximately $1.43 billion after taking into account
amounts paid or to be paid in respect of executive compensation agreements,
CBI's outstanding stock options and ESOP debt, and transaction expenses. The
funds used to consummate the acquisition initially came from short-term
borrowings of Praxair, primarily commercial paper.
CBI operates in three major business segments: Industrial Gases (Liquid
Carbonic), Contracting Services (Chicago Bridge and Iron) and Investments
(primarily Statia Terminals). CBI's Industrial Gases segment is the world's
largest supplier of carbon dioxide in its various forms and produces, processes
and markets a wide variety of other industrial, medical and specialty gases, and
assembles and sells industrial gas-related equipment. The Contracting Services
segment is organized as a worldwide construction group that provides, through
separate subsidiaries, a broad range of services, including design, engineering,
fabrication, project management, general contracting and specialty construction
services, including non-destructive inspection and post-weld heat treatment. The
Investments segment provides transshipment, storage, bunkering and blending
services for hydrocarbon products at the island of St. Eustatius in the
Caribbean and in Nova Scotia, Canada, and operates a special products terminal
in Brownsville, Texas.
The Industrial Gases segment of CBI will be integrated with the Company's
operations. However, because the Contracting Services and Investments segments,
and certain other smaller businesses are not considered strategic to the
combined company, the Company will initiate the sale of these businesses.
Additionally, based on an agreement with the U.S. Federal Trade Commission, the
Company will sell four air separation plants operated by CBI's Liquid Carbonic
segment in the United States.
USE OF PROCEEDS
Unless otherwise indicated in an accompanying Prospectus Supplement, the
Company intends to use the net proceeds from the sale of the Securities to
retire short-term debt and for general corporate purposes. Reference is made to
the financial statements of the Company incorporated by reference herein for a
description of the terms of the outstanding indebtedness of the Company.
4
<PAGE>
RATIOS OF EARNINGS TO FIXED CHARGES
AND
EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
The following table sets forth the ratios of earnings to fixed charges and
earnings to combined fixed charges and preferred stock dividends of the Company
for the periods indicated:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
NINE MONTHS ENDED ----------------------------------------
SEPTEMBER 30, 1995 1994 1993 1992 1991 1990
------------------- ------- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges(a).................... 4.4(b) 3.8(b) 3.0 2.2 2.3 2.8
Ratio of Earnings to Combined Fixed Charges and Preferred
Stock Dividends(a)..................................... 4.4(b) 3.8(b) 3.0 2.2 2.3 2.8
</TABLE>
- ------------------
(a) For the purpose of computing the foregoing ratios: 'earnings' consist of
income from continuing operations before provision for income taxes, before
fixed charges, plus dividends from less than 50%-owned companies carried at
equity and the Company's share of pre-tax income of 50%-owned companies
carried at equity, less net capitalized interest of consolidated
subsidiaries and 'fixed charges' comprise interest on long-term and
short-term debt, capitalized interest, the portion of rentals representative
of an appropriate interest factor and the Company's share of fixed charges
of 50%-owned companies carried at equity.
(b) For the year ended December 31, 1994 and for the nine months ended September
30, 1995, pro forma for the acquisition of CBI as if such acquisition had
occurred on January 1, 1994, the Company's ratio of earnings to fixed
charges would have been 2.4 and 2.6, respectively.
5
<PAGE>
DESCRIPTION OF CAPITAL STOCK
AUTHORIZED CAPITAL STOCK
Under the Restated Certificate of Incorporation of the Company (the
'Restated Certificate') the total number of shares of all classes of stock that
the Company has authority to issue is 525,000,000, of which 25,000,000 may be
shares of preferred stock, par value $.01 per share, and 500,000,000 may be
shares of common stock, par value $.01 per share. As of December 31, 1995,
140,535,569 shares of common stock were issued and outstanding. No shares of
Preferred Stock were outstanding on such date.
COMMON STOCK
Holders of the Company's Common Stock are entitled to receive, subject to
the prior rights of holders of outstanding stock having prior rights as to
dividends, such dividends as are declared by the Board of Directors of the
Company, to one vote for each share at all meetings of stockholders, and,
subject to the prior rights of holders of outstanding stock having prior rights
as to asset distributions, to the remaining assets of the Company upon
liquidation, dissolution or winding up of the Company.
The Company is authorized to issue additional shares of common stock
without further stockholder approval (except as may be required by applicable
law or stock exchange regulations). With respect to the issuance of common
shares of any additional series, the Board of Directors of the Company is
authorized to determine, without any further action by the holders of the
Company's Common Stock, the dividend rights, dividend rate, conversion rights,
voting rights and rights and terms of redemption, as well as the number of
shares constituting such series and the designation thereof. Should the Board of
Directors of the Company elect to exercise its authority, the rights and
privileges of holders of the Company's Common Stock could be made subject to
rights and privileges of any such other series of common stock. The Company has
no present plans to issue any common stock of a series other than the Company's
Common Stock.
PREFERRED STOCK
The Company is authorized to issue up to 25,000,000 shares of Preferred
Stock without further stockholder approval (except as may be required by
applicable law or stock exchange regulations). The Board of Directors of the
Company is authorized to determine, without any further action by the holders of
the Company's Common Stock, the dividend rights, dividend rate, conversion
rights, voting rights, rights and terms of redemption, liquidation preferences
and sinking fund terms of any series of Preferred Stock, as well as the number
of shares constituting such series and the designation thereof. Should the Board
of Directors of the Company elect to exercise its authority, the rights and
privileges of holders of the Company's Common Stock could be made subject to the
rights and privileges of any such series of Preferred Stock.
NO PREEMPTIVE RIGHTS
No holder of any stock of any class of the Company has any preemptive right
to subscribe for any securities of any kind or class.
RIGHTS AGREEMENT
The Board of Directors of the Company declared a dividend distribution of
one common stock purchase right (a 'Right') for each share of the Company's
Common Stock outstanding at the close of business on June 30, 1992 (the 'Rights
Record Date') to the holders of record of the Company's Common Stock on the
Rights Record Date. The dividend was paid on the Rights Record Date. The holders
of any additional shares of the Company's Common Stock issued after the Rights
Record Date and before the redemption or expiration of the Rights are also
entitled to one Right for each such additional share. Each Right entitles the
registered holder under certain circumstances to purchase from the Company one
share of the Company's Common Stock. The price at which a share of the Company's
Common Stock may be purchased upon exercise of a Right is $47.33 (the 'Purchase
Price').
6
<PAGE>
The Rights will be evidenced by separate certificates only after the
earlier of (i) the 10th calendar day after the public announcement by the
Company or an Acquiring Person (as such term is described below) that an
Acquiring Person has become an Acquiring Person or (ii) the 10th calendar day
after the commencement of, or announcement of the intent to commence, a tender
or exchange offer if, upon consummation thereof, such person would be an
Acquiring Person (the first to occur of such dates being called the 'Rights
Distribution Date'). With respect to any of the Company's Common Stock
certificates outstanding as of the Rights Record Date, until the Rights
Distribution Date the Rights will be evidenced by such certificate. Until the
Rights Distribution Date (or earlier redemption or expiration of the Rights) new
certificates issued after the Rights Record Date upon transfer or new issuance
of the Company's Common Stock will contain a notation incorporating the Rights
Agreement by reference.
The Rights Agreement between the Company and The Bank of New York (the
'Rights Agreement') provides that, until the Rights Distribution Date (or
earlier redemption or expiration of the Rights), the Rights will be transferred
with and only with the Company's Common Stock. Until the Rights Distribution
Date (or earlier redemption or expiration of the Rights), the surrender for
transfer of any certificate for shares of the Company's Common Stock will also
constitute the transfer of the Rights associated with the Company's Common Stock
represented by that certificate. At no time will the Rights have any voting
power.
As soon as practicable following the Rights Distribution Date, separate
certificates evidencing the Rights ('Rights Certificates') will be mailed to
holders of record of the Company's Common Stock as of the close of business on
the Rights Distribution Date and such separate Rights Certificates alone will
evidence the Rights.
The Rights are not exercisable until the Rights Distribution Date. The
Rights will expire on June 30, 2002 (the 'Final Expiration Date'), unless the
Rights are earlier redeemed or exchanged by the Company, in each case as
described below.
In the event that (i) the Company is the surviving corporation in a merger
with an Acquiring Person and its Common Stock is not changed or exchanged, (ii)
a person becomes an Acquiring Person (except pursuant to an offer for all
outstanding shares of the Company's Common Stock which the independent directors
determine to be fair to its stockholders and such other constituencies as the
independent directors are entitled to consider under the Restated Certificate
and otherwise in the best interests of the Company), (iii) an Acquiring Person
engages in one or more 'self-dealing' transactions as set forth in the Rights
Agreement, or (iv) during such time as there is an Acquiring Person, an event
occurs (e.g., a reverse stock split) which results in such Acquiring Person's
ownership interest being increased by more than 1%, at any time following the
Rights Distribution Date, each holder of a Right will thereafter have the right
to receive, upon exercise, the Company's Common Stock (or, in certain
circumstances, cash, property or other securities of the Company) having a value
equal to two times the Purchase Price then in effect. Notwithstanding any of the
foregoing, following the occurrence of any of the events set forth in this
paragraph, all Rights that are, or (under certain circumstances specified in the
Rights Agreement) were, beneficially owned by any Acquiring Person will be null
and void. In lieu of the issuance of shares of the Company's Common Stock upon
exercise of Rights, the Company's Board of Directors may under certain
circumstances, and if there is an insufficient number of shares of the Company's
Common Stock authorized but unissued or held as treasury shares to permit the
exercise in full of the Rights, the Company's Board is required to, take such
action as may be necessary to cause the Company to issue or pay, upon the
exercise of Rights, cash (including by way of a reduction of purchase price),
property, other securities or any combination of the foregoing having an
aggregate value equal to that of the shares of the Company's Common Stock which
otherwise would have been issuable upon exercise of Rights.
In the event that, at any time after the public announcement by the Company
or an Acquiring Person that a person or group has become an Acquiring Person,
the Company is acquired in a merger or other business combination transaction
(other than a merger described in the immediately preceding paragraph or a
merger which follows an offer described in the immediately preceding paragraph)
or 50% or more of its assets or earning power is sold or transferred, each
holder of a Right shall thereafter have the right to receive, upon exercise,
common stock of the acquiring company having a value of two times the Purchase
Price then in effect.
The term 'Acquiring Person' means a person or group of affiliated or
associated persons who has acquired, or obtained the right to acquire,
beneficial ownership of 15% or more of the outstanding shares of the Company's
Common Stock.
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The Purchase Price payable, and the number of shares of the Company's
Common Stock (or other securities or property) issuable, upon exercise of the
Rights are subject to adjustment from time to time to prevent dilution (a) in
the event of a stock dividend on, or a subdivision, combination or
reclassification of, the Company's Common Stock, (b) upon the grant to holders
of the Company's Common Stock of certain rights, options or warrants to
subscribe for or purchase the Company's Common Stock at a price, or securities
convertible into the Company's Common Stock with a conversion price, less than
the then-current market price of the Company's Common Stock or (c) upon the
distribution to holders of the Company's Common Stock of evidences of
indebtedness or assets (excluding regular periodic cash dividends at a rate not
in excess of 125% of the rate of the last cash dividend theretofore paid or a
dividend payable in the Company's Common Stock) or of subscription rights or
warrants (other than those referred to above). Prior to the Rights Distribution
Date, the Board of Directors of the Company may make such equitable adjustments
as it deems appropriate in the circumstances in lieu of any adjustment otherwise
required by the foregoing.
With certain exceptions, no adjustment in the Purchase Price will be
required until the earlier of (a) three years from the date of the event giving
rise to such adjustment or (b) the time at which cumulative adjustments require
an adjustment of at least 3% in such Purchase Price. The Company will not be
required to issue fractional shares of the Company's Common Stock and, in lieu
thereof, can make an adjustment in cash for fractional shares based on the
market price of the Company's Common Stock on the last day prior to the date of
exercise.
At any time prior to the 20th day following the public announcement by the
Company or an Acquiring Person that a person or group has become an Acquiring
Person, the Company may redeem the Rights in whole, but not in part, at a price
of $.001 per Right (the 'Redemption Price'). Under certain circumstances, the
decision to redeem shall require the concurrence of a majority of the
independent directors. Immediately upon the action of the Company's Board of
Directors electing to redeem the Rights with, if required, the concurrence of
the independent directors, the Company must make announcement thereof, and upon
such action by the Company's Board of Directors ordering the redemption of the
Rights, the right to exercise the Rights will terminate and the only right of
the holders of Rights will be to receive the Redemption Price.
At any time after the occurrence of any of the events set forth in the
sixth preceding paragraph, the Company's Board of Directors may exchange the
Rights (other than Rights owned by an Acquiring Person, which will have become
void), in whole or in part, at an exchange ratio of one share of the Company's
Common Stock (and/or other securities, cash or other assets deemed to have the
same value as one share of Common Stock) per Right (subject to adjustment).
The terms of the Rights may be amended by the Company's Board of Directors
without the consent of the holders of the Rights, except that from and after the
earlier to occur of (i) the public announcement by the Company or an Acquiring
Person that a person or group of affiliated or associated persons has become an
Acquiring Person or (ii) the Rights Distribution Date, no such amendment may
adversely affect the interests of the holders of the Rights (excluding the
interest of any Acquiring Person) and in no event shall any such amendment
change the Redemption Price, the Final Expiration Date, the Purchase Price or
the number of shares of the Company's Common Stock for which a Right is then
exercisable.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
on terms not approved by the Company's Board of Directors, except pursuant to an
offer conditioned on a substantial number of Rights being acquired. The Rights
should not interfere with any merger or other business combination approved by
the Company's Board of Directors since the Rights may be redeemed by the Company
at the Redemption Price prior to the 20th day following the public announcement
by the Company or an Acquiring Person that a person or group has become an
Acquiring Person. The foregoing description of the Rights does not purport to be
complete and is subject to, and is qualified in its entirety by reference to,
the Rights Agreement, including the definitions therein of certain terms.
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DESCRIPTION OF DEBT SECURITIES
Senior Debt Securities may be issued from time to time in one or more
series, under an Indenture dated July 15, 1992 (the 'Senior Indenture') between
the Company and Fleet National Bank of Connecticut as the ultimate successor
trustee to Bank of America Illinois (formerly Continental Bank, National
Association), as trustee (the 'Senior Trustee'), which is filed as an Exhibit to
the Registration Statement of which this Prospectus is a part.
Subordinated Debt Securities may be issued from time to time in series
under an indenture (the 'Subordinated Indenture') between the Company and a
trustee to be identified in the related Prospectus Supplement (the 'Subordinated
Trustee'). The Subordinated Indenture is filed as an exhibit to the Registration
Statement of which this Prospectus is a part. The Senior Indenture and the
Subordinated Indenture are sometimes referred to collectively as the
'Indentures,' and the Senior Trustee and the Subordinated Trustee are sometimes
referred to collectively as the 'Debt Trustees.' The following statements under
this caption are summaries of certain provisions contained or, in the case of
the Subordinated Indenture, to be contained in the Indentures, do not purport to
be complete and are qualified in their entirety by reference to the Indentures,
including the definitions therein of certain terms. Capitalized terms used
herein and not defined shall have the meanings assigned to them in the related
Indenture. The particular terms of the Debt Securities and any variations from
such general provisions applicable to any series of Debt Securities will be set
forth in the Prospectus Supplement applicable to such series.
GENERAL
Each Indenture provides or, in the case of the Subordinated Indenture, will
provide for the issuance of Debt Securities in one or more series with the same
or various maturities. Neither Indenture limits the amount of Debt Securities
that can be issued thereunder and each provides that the Debt Securities may be
issued in series up to the aggregate principal amount which may be authorized
from time to time by the Company. The Debt Securities will be unsecured.
Reference is made to the Prospectus Supplement for the following terms, if
applicable, of the Debt Securities offered thereby: (1) the designation,
aggregate principal amount, currency or composite currency and denominations;
(2) the price at which such Debt Securities will be issued and, if an index
formula or other method is used, the method for determining amounts of principal
or interest; (3) the maturity date and other dates, if any, on which principal
will be payable; (4) the interest rate (which may be fixed or variable), if any;
(5) the date or dates from which interest will accrue and on which interest will
be payable, and the record dates for the payment of interest; (6) the manner of
paying principal or interest; (7) the place or places where principal and
interest will be payable; (8) the terms of any mandatory or optional redemption
by the Company; (9) the terms of any redemption at the option of Holders; (10)
whether such Debt Securities are to be issuable as registered Debt Securities,
bearer Debt Securities, or both, and whether and upon what terms any registered
Debt Securities may be exchanged for bearer Debt Securities and vice versa; (11)
whether such Debt Securities are to be represented in whole or in part by a Debt
Security in global form and, if so, the identity of the depositary (the
'Depositary') for any global Debt Security; (12) any tax indemnity provisions;
(13) if the Debt Securities provide that payments of principal or interest may
be made in a currency other than that in which Debt Securities are denominated,
the manner for determining such payments; (14) the portion of principal payable
upon acceleration of a Discounted Debt Security (as defined below); (15) whether
and upon what terms Debt Securities may be defeased; (16) any events of default
or restrictive covenants in addition to or in lieu of those set forth in the
Indentures; (17) provisions for electronic issuance of Debt Securities or for
Debt Securities in uncertificated form; and (18) any additional provisions or
other special terms not inconsistent with the provisions of the Indentures,
including any terms that may be required or advisable under United States or
other applicable laws or regulations, or advisable in connection with the
marketing of the Debt Securities.
If the principal of, premium, if any, or interest on Debt Securities of any
series are payable in a foreign or composite currency, any material risks
relating to an investment in such Debt Securities will be described in the
prospectus supplement relating to that series.
Debt Securities of any series may be issued as registered Debt Securities,
bearer Debt Securities or uncertificated Debt securities, as specified in the
terms of the series. Unless otherwise indicated in the applicable
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Prospectus Supplement, registered Debt Securities will be issued in
denominations of $1,000 and whole multiples thereof and bearer Debt Securities
will be issued in denominations of $5,000 and whole multiples thereof. The Debt
Securities of a series may be issued in whole or in part in the form of one or
more global Debt Securities that will be deposited with, or on behalf of, a
Depositary identified in the Prospectus Supplement relating to the series.
Unless otherwise indicated in the Prospectus Supplement relating to a series,
the terms of the depositary arrangement with respect to any Debt Securities of a
series specified in the Prospectus Supplement as being represented by global
Debt Securities will be as set forth below under 'Global Debt Securities'.
In connection with its original issuance, no bearer Debt Security will be
offered, sold, resold, or mailed or otherwise delivered to any location in the
United States and a bearer Debt Security in definitive form may be delivered in
connection with its original issuance only if the person entitled to receive the
bearer Debt Security furnishes certification as described in United States
Treasury regulation section 1.163-5(c)(2)(i)(D)(iii). If there is a change in
the relevant provisions or interpretation of United States laws, the foregoing
restrictions will not apply to a series if the Company determines that such
provisions no longer apply to the series or that failure to so comply would not
have an adverse tax effect on the Company or on holders or cause the series to
be treated as 'registration-required' obligations under United States law.
For purposes of this Prospectus, unless otherwise indicated, 'United
States' means the United States of America (including the States and the
District of Columbia), its territories and possessions and all other areas
subject to its jurisdiction. 'United States person' means a citizen or resident
of the United States, any corporation, partnership or other entity created or
organized in or under the laws of the United States or a political subdivision
thereof or any estate or trust the income of which is subject to United States
federal income taxation regardless of its source. Any special United States
federal income tax considerations applicable to bearer Debt Securities will be
described in the Prospectus Supplement relating thereto.
To the extent set forth in the applicable Prospectus Supplement, except in
special circumstances set forth in the applicable Indenture, principal and
interest on bearer Debt Securities will be payable only upon surrender of bearer
Debt Securities and coupons at a paying agency of the Company located outside of
the United States. During any period thereafter for which it is necessary in
order to conform to United States tax law or regulations, the Company will
maintain a paying agent outside the United States to which the bearer Debt
Securities and coupons may be presented for payment and will provide the
necessary funds therefor to the paying agent upon reasonable notice.
Registration of transfer of registered Debt Securities may be requested
upon surrender thereof at any agency of the Company maintained for that purpose
and upon fulfillment of all other requirements of the agent. Bearer Debt
Securities and the coupons related thereto will be transferable by delivery.
Debt Securities may be issued under the Indentures as Discounted Debt
Securities to be offered and sold at a substantial discount from the principal
amount thereof. Special United States federal income tax and other
considerations applicable thereto will be described in the applicable Prospectus
Supplement relating to such Discounted Debt Securities. 'Discounted Debt
Security' means a Debt Security where the amount of principal due upon
acceleration is less than the stated principal amount.
RANKING OF DEBT SECURITIES
The Senior Debt Securities will be unsecured and will rank on a parity with
other unsecured and unsubordinated debt of the Company.
At September 30, 1995, the Company had outstanding approximately $936
million in long term debt (net of current maturities) consisting of Senior
Indebtedness (as defined below). At September 30, 1995, pro forma for the
acquisition of CBI, the Company would have had outstanding approximately $1.936
billion in long term debt (net of current maturities) consisting of Senior
Indebtedness.
The obligations of the Company pursuant to any Subordinated Debt Securities
will be subordinate in right of payment to all Senior Indebtedness of the
Company. 'Senior Indebtedness' of the Company is defined to mean the principal
of (and premium, if any) and interest on (a) any and all indebtedness and
obligations of the Company (including indebtedness of others guaranteed by the
Company) other than the Subordinated Debt Securities, whether or not contingent
and whether outstanding on the date of the Subordinated Indenture or
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thereafter created, incurred or assumed, which (i) are for money borrowed; (ii)
are evidenced by any bond, note, debenture or similar instrument; (iii)
represent the unpaid balance on the purchase price of any property, business, or
asset of any kind; (iv) are obligations of the Company as lessee under any and
all leases of property, equipment or other assets required to be capitalized on
the balance sheet of the lessee under generally accepted accounting principles;
(v) are reimbursement obligations of the Company with respect to letters of
credit; and (b) any deferrals, amendments, renewals, extensions, modifications
and refundings of any indebtedness or obligations of the types referred to
above; provided that Senior Indebtedness shall not include (i) the Subordinated
Debt Securities; (ii) any indebtedness or obligation of the Company which, by
its express terms or the express terms of the instrument creating or evidencing
it, is not superior in right of payment to the Subordinated Debt Securities; or
(iii) any indebtedness or obligation incurred by the Company in connection with
the purchase of assets, materials or services in the ordinary course of business
and which constitutes a trade payable.
The Subordinated Indenture will not contain any limitation on the amount of
Senior Indebtedness which may be hereafter incurred by the Company.
The Subordinated Indenture will provide that where notice of certain
defaults in respect of Senior Indebtedness has been given to the Company, no
payment with respect to the principal of or interest on the Subordinated Debt
Securities will be made by the Company unless and until such default has been
cured or waived. Upon any payment or distribution of the Company's assets to
creditors of the Company in a liquidation or dissolution of the Company, or in a
reorganization, bankruptcy, insolvency, receivership or similar proceeding
relating to the Company or its property, whether voluntary or involuntary, the
holders of Senior Indebtedness will first be entitled to receive payment in full
of all amounts due thereon before the holders of the Subordinated Debt
Securities will be entitled to receive any payment upon the principal of or
premium, if any, or interest on the Subordinated Debt Securities. By reason of
such subordination, in the event of insolvency of the Company, holders of Senior
Indebtedness of the Company may receive more, ratably, and holders of the
Subordinated Debt Securities may receive less, ratably, than the other creditors
of the Company. Such subordination will not prevent the occurrence of any Event
of Default in respect of the Subordinated Debt Securities.
CERTAIN COVENANTS
The Senior Indenture contains, among others, the covenants summarized
below, which will be applicable (unless waived or amended) so long as any of the
Senior Debt Securities are outstanding, unless otherwise stated in the
applicable Prospectus Supplement.
The Debt Securities will not be secured by any properties or assets and
will represent unsecured debt of the Company. Because secured debt ranks ahead
of unsecured debt with respect to the assets securing such secured debt, the
limitation on liens and the limitation on sale-leaseback transactions place some
restrictions on the Company's ability to incur additional secured debt or its
equivalent when the asset securing the debt is a material manufacturing facility
in the United States. The limitations are subject to a number of qualifications
and exceptions described below. There can be no assurance that a facility
subject to the limitations at any time will continue to be subject to those
limitations at a later time.
Unless otherwise indicated in a Prospectus Supplement, the covenants
contained in the Senior Indenture and the Senior Debt Securities do not afford
holders of the Senior Debt Securities protection in the event of a highly
leveraged or other transaction involving the Company that may adversely affect
holders of the Senior Debt Securities.
DEFINITIONS
'Attributable Debt' for a lease means, as of the date of determination, the
present value of net rent for the remaining term of the lease. Rent shall be
discounted to present value at a discount rate that is compounded semi-annually.
The discount rate shall be 10% per annum or, if the Company elects, the discount
rate shall be equal to the weighted average Yield to Maturity of the Senior Debt
Securities under the Senior Indenture. Such average shall be weighted by the
principal amount of the Senior Debt Securities of each series or, in the case of
Discounted Senior Debt Securities, the amount of principal that would be due as
of the date of determination if payment of the Senior Debt Securities were
accelerated on that date.
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Rent is the lesser of (a) rent for the remaining term of the lease assuming
it is not terminated or (b) rent from the date of determination until the first
possible termination date plus the termination payment then due, if any. The
remaining term of a lease includes any period for which the lease has been
extended. Rent does not include (1) amounts due for maintenance, repairs,
utilities, insurance, taxes, assessments and similar charges or (2) contingent
rent, such as that based on sales. Rent may be reduced by the discounted present
value of the rent that any sublessee must pay from the date of determination for
all or part of the same property. If the net rent on a lease is not definitely
determinable, the Company may estimate it in any reasonable manner.
'Consolidated Net Tangible Assets' means total assets less (a) total
current liabilities (excluding short-term Debt, payments due within one year on
long-term Debt and Debt due to Union Carbide Corporation and its subsidiaries)
and (b) goodwill, as reflected in the Company's most recent consolidated balance
sheet preceding the date of a determination under clause (9) of the 'Limitation
on Liens' covenant of the Senior Indenture.
'Debt' means any debt for borrowed money or any guarantee of such a debt.
'Lien' means any mortgage, pledge, security interest or lien.
'Long-Term Debt' means Debt that by its terms matures on a date more than
12 months after the date it was created or Debt that the obligor may extend or
renew without the obligee's consent to a date more than 12 months after the date
the Debt was created.
'Principal Property' means (i) any manufacturing facility, whether now or
hereafter owned, located in the United States (excluding territories and
possessions), except any such facility that in the opinion of the board of
directors of the Company or any authorized committee of the board is not of
material importance to the total business conducted by the Company and its
consolidated Subsidiaries, and (ii) any shares of stock of a Restricted
Subsidiary. At [September 30, 1995], the Company's facility in Tonawanda, NY and
its manufacturing and pipeline facilities in Houston, TX and Chicago, IL
constituted Principal Properties.
'Restricted Subsidiary' means a Wholly-Owned Subsidiary that has
substantially all of its assets located in the United States (excluding
territories or possessions) or Puerto Rico and owns a Principal Property.
'Sale-Leaseback Transaction' means an arrangement pursuant to which the
Company or a Restricted Subsidiary now owns or hereafter acquires a Principal
Property, transfers it to a person, and leases it back from the person.
'Subsidiary' means a corporation a majority of whose Voting Stock is owned
by the Company or a Subsidiary.
'Voting Stock' means capital stock having voting power under ordinary
circumstances to elect directors.
'Wholly-Owned Subsidiary' means a corporation all of whose Voting Stock is
owned by the Company or a Wholly-Owned Subsidiary, the accounts of which are
consolidated with those of the Company in its consolidated financial statements.
'Yield to Maturity' means the yield to maturity on a Security at the time
of its issuance or at the most recent determination of interest on the Security.
LIMITATION ON LIENS
The Company will not, and will not permit any Restricted Subsidiary to,
incur a Lien on Principal Property to secure a Debt unless:
1. the Lien equally and ratably secures the Senior Debt Securities and
the Debt. The Lien may equally and ratably secure the Senior Debt
Securities and any other obligation of the Company or a Subsidiary. The
Lien may not secure an obligation of the Company that is subordinated to
the Senior Debt Securities;
2. the Lien secures Debt incurred to finance all or some of the
purchase price or the cost of construction or improvement of property of
the Company or a Restricted Subsidiary. The Lien may not extend to any
other Principal Property owned by the Company or a Restricted Subsidiary at
the time the Lien is incurred. However, in the case of any construction or
improvement, the Lien may extend to unimproved real property used for the
construction or improvement. The Debt secured by the Lien may not be
incurred more than one
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year after the later of the (a) acquisition, (b) completion of construction
or improvement or (c) commencement of full operation, of the property
subject to the Lien;
3. the Lien is on property of a corporation at the time the
corporation merges into or consolidates with the Company or a Restricted
Subsidiary;
4. the Lien is on property at the time the Company or a Restricted
Subsidiary acquires the property;
5. the Lien is on property of a corporation at the time the
corporation becomes a Restricted Subsidiary;
6. the Lien secures Debt of a Restricted Subsidiary owing to the
Company or another Restricted Subsidiary;
7. the Lien is in favor of a government or governmental entity and
secures (a) payments pursuant to a contract or statute or (b) Debt incurred
to finance all or some of the purchase price or cost of construction or
improvement of the property subject to the Lien;
8. the Lien extends, renews or replaces in whole or in part a Lien
('existing Lien') permitted by any of clauses (1) through (7). The Lien may
not extend beyond (a) the property subject to the existing Lien and (b)
improvements and construction on such property. However, the Lien may
extend to property that at the time is not a Principal Property. The Debt
secured by the Lien may not exceed the Debt secured at the time by the
existing Lien unless the existing Lien or a predecessor Lien was incurred
under clause (1) or (6); or
9. the Debt plus all other Debt secured by Liens on Principal Property
at the time does not exceed 10% of Consolidated Net Tangible Assets.
However, the following Debt shall be excluded from all other Debt in the
determination: (a) Debt secured by a Lien permitted by any of clauses (1)
through (8) and (b) Debt secured by a Lien incurred prior to the date of
the Senior Indenture that would have been permitted by any of those clauses
if the Senior Indenture had been in effect at the time the Lien was
incurred. Attributable Debt for any lease permitted by clause (4) of the
'Limitation on Sale and Leaseback' covenant of the Senior Indenture must be
included in the determination and treated as Debt secured by a Lien on
Principal Property not otherwise permitted by any of clauses (1) through
(8).
In general, clause (9) above, sometimes called a 'basket' clause, permits
Liens to be incurred that are not permitted by any of the exceptions enumerated
in clauses (1) through (8) above if the Debt secured by all such additional
Liens does not exceed 10% of Consolidated Net Tangible Assets at the time. At
September 30, 1995, Consolidated Net Tangible Assets were approximately
$3,390,000,000. At that date, additional Liens securing Debt equal to 10% of
that amount could have been incurred under clause (9).
LIMITATION ON SALE AND LEASEBACK
The Company will not, and will not permit any Restricted Subsidiary to,
enter into a Sale-Leaseback Transaction unless:
1. the lease has a term of three years or less;
2. the lease is between the Company and a Restricted Subsidiary or
between Restricted Subsidiaries;
3. the Company or a Restricted Subsidiary under clauses (2) through
(8) of the 'Limitation on Liens' covenant could create a Lien on the
property to secure Debt at least equal in amount to the Attributable Debt
for the lease;
4. the Company or a Restricted Subsidiary under clause (9) of the
'Limitation on Liens' covenant could create a Lien on the property to
secure Debt at least equal in amount to the Attributable Debt for the
lease; or
5. the Company or a Restricted Subsidiary within 180 days of the
effective date of the lease retires Long-Term Debt of the Company or a
Restricted Subsidiary at least equal in amount to the Attributable Debt for
the lease. A Debt is retired when it is paid or cancelled. However, the
Company or a Restricted Subsidiary may not receive credit for retirement
of: Debt of the Company that is subordinated to the Senior Debt Securities;
or Debt, if paid in cash, that is owned by the Company or a Restricted
Subsidiary.
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In clauses (3) and (4) above, Sale-Leaseback Transactions and Liens are
treated as equivalents. Thus, if the Company or a Restricted Subsidiary could
create a Lien on a property, it may enter into a Sale-Leaseback Transaction to
the same extent.
LIMITATION ON DEBT OF RESTRICTED SUBSIDIARIES
The Company will not permit any Restricted Subsidiary to incur any Debt
unless:
1. such Restricted Subsidiary could create Debt secured by Liens in
accordance with the 'Limitation on Liens' covenant in an amount equal to
such Debt, without equally and ratably securing the Senior Debt Securities;
2. the Debt is owed to the Company or another Restricted Subsidiary;
3. the Debt is Debt of a corporation at the time the corporation
becomes a Restricted Subsidiary;
4. the Debt is Debt of a corporation at the time the corporation
merges into or consolidates with a Restricted Subsidiary or at the time of
a sale, lease or other disposition of its properties as an entirety or
substantially as an entirety to a Restricted Subsidiary;
5. the Debt is incurred to finance all or some of the purchase price
or the cost of construction or improvement of property of the Restricted
Subsidiary. The Debt may not be incurred more than one year after the later
of the (a) acquisition, (b) completion of construction or improvement or
(c) commencement of full operation, of the property;
6. the Debt is incurred for the purpose of extending, renewing or
replacing in whole or in part Debt permitted by any of clauses (1) through
(5); or
7. the Debt plus all other Debt of Restricted Subsidiaries at the time
does not exceed 10% of Consolidated Net Tangible Assets. However, the
following Debt shall be excluded from all other Debt in the determination:
(a) Debt permitted by any of clauses (1) through (6) and (b) Debt incurred
prior to the date of the Senior Indenture that would have been permitted by
any of those clauses if the Senior Indenture had been in effect at the time
the Debt was incurred.
SUCCESSOR OBLIGOR
The Indentures provide or, in the case of the Subordinated Indenture, will
provide that the Company will not consolidate with or merge into, or transfer
all or substantially all of its assets to, any person, unless (1) the person is
organized under the laws of the United States or a State thereof; (2) the person
assumes by supplemental indenture all the obligations of the Company under the
applicable Indenture, the Debt Securities issued under such Indenture and any
coupons pertaining thereto; (3) immediately after the transaction no Default (as
defined) exists; and (4) if, as a result of the transaction, a Principal
Property would become subject to a Lien not permitted by the 'Limitation on
Liens' covenant of the Senior Indenture, the Company or such person secures the
Senior Debt Securities equally and ratably with or prior to all obligations
secured by the Lien.
The successor will be substituted for the Company, and thereafter all
obligations of the Company under the applicable Indenture, the Debt Securities
issued under such Indenture and any coupons shall terminate.
EXCHANGE OF SECURITIES
Registered Debt Securities may be exchanged for an equal aggregate
principal amount of registered Debt Securities of the same series and date of
maturity in such authorized denominations as may be requested upon surrender of
the registered Debt Securities at an agency of the Company maintained for such
purpose and upon fulfillment of all other requirements of the agent.
To the extent permitted by the terms of a series of Debt Securities
authorized to be issued in registered form and bearer form, bearer Debt
Securities may be exchanged for an equal aggregate principal amount of
registered or bearer Debt Securities of the same series and date of maturity in
such authorized denominations as may be requested upon surrender of the bearer
Debt Securities with all unpaid coupons relating thereto (except as may
otherwise be provided in the Debt Securities) at an agency of the Company
maintained for such purpose and
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upon fulfillment of all other requirements of the agent. As of the date of this
Prospectus, it is expected that the terms of a series of Debt Securities will
not permit registered Debt Securities to be exchanged for bearer Debt
Securities.
DEFAULTS AND REMEDIES
An 'Event of Default' with respect to any series of Debt Securities will
occur if:
1. the Company defaults in any payment of interest on any Debt
Securities of the series when the same becomes due and payable and the
Default continues for a period of 10 days;
2. the Company defaults in the payment of the principal of any Debt
Securities of the series when the same becomes due and payable at maturity
or upon redemption, acceleration or otherwise;
3. the Company defaults in the performance of any of its other
agreements applicable to the series and the Default continues for 90 days
after the notice specified below;
4. the Company pursuant to or within the meaning of any Bankruptcy
Law:
1. commences a voluntary case,
2. consents to the entry of an order for relief against it in an
involuntary case,
3. consents to the appointment of a Custodian for it or for all or
substantially all of its property, or
4. makes a general assignment for the benefit of its creditors;
5. a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
1. is for relief against the Company in an involuntary case,
2. appoints a Custodian for the Company or for all or substantially
all of its property, or
3. orders the liquidation of the Company;
and the order or decree remains unstayed and in effect for 60 days; or
6. any other Event of Default provided for in the series.
The term 'Bankruptcy Law' means Title 11, U.S. Code or any similar Federal
or State law for the relief of debtors. The term 'Custodian' means any receiver,
trustee, assignee, liquidator or a similar official under any Bankruptcy Law.
A Default under clause (3) is not an Event of Default until the applicable
Debt Trustee or the Holders of at least 25% in principal amount of the series
notify the Company of the Default and the Company does not cure the Default
within the time specified after receipt of the notice. The applicable Debt
Trustee may require indemnity satisfactory to it before it enforces the
applicable Indenture or the Debt Securities of the series. Subject to certain
limitations, holders of a majority in principal amount of the Debt Securities of
the series may direct the applicable Debt Trustee in its exercise of any trust
or power. A Debt Trustee may withhold from Securityholders of the series notice
of any continuing default (except a default in payment of principal or interest)
if it determines that withholding notice is in their interest.
The Indentures do not have or, in the case of the Subordinated Indenture,
will not have cross-default provisions. Thus, a default by the Company or a
Subsidiary on any other debt would not constitute an Event of Default.
AMENDMENTS AND WAIVERS
Unless the resolution establishing the terms of a series otherwise
provides, the applicable Indenture and the Debt Securities or any coupons of the
series may be amended, and any default may be waived as follows: The Debt
Securities and the applicable Indenture may be amended with the consent of the
holders of a majority in principal amount of the Debt Securities of all series
affected voting as one class. A default on a series may be waived with the
consent of the holders of a majority in principal amount of the Debt Securities
of the series.
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However, without the consent of each Securityholder affected, no amendment or
waiver may (1) reduce the amount of Debt Securities whose holders must consent
to an amendment or waiver, (2) reduce the interest on or change the time for
payment of interest on any Debt Security, (3) change the fixed maturity of any
Debt Security, (4) reduce the principal of any non-Discounted Debt Security or
reduce the amount of principal of any Discounted Debt Security that would be due
on acceleration thereof, (5) change the currency in which principal or interest
on a Debt Security is payable, (6) waive any default in payment of interest on
or principal of a Debt Security or (7) change certain provisions of the
applicable Indenture regarding waiver of past defaults and amendments with the
consent of holders other than to increase the principal amount of Debt
Securities required to consent. Without the consent of any Securityholder, the
applicable Indenture, the Debt Securities or any coupons may be amended to cure
any ambiguity, omission, defect or inconsistency; to provide for assumption of
Company obligations to Securityholders in the event of a merger or consolidation
requiring such assumption; to provide that specific provisions of the applicable
Indenture not apply to a series of Debt Securities not previously issued; to
create a series and establish its terms; to provide for a separate Debt Trustee
for one or more series; or to make any change that does not materially adversely
affect the rights of any Securityholder.
At the date of this Prospectus, approximately $750 million principal amount
of Senior Debt Securities were outstanding under the Senior Indenture and there
were no Subordinated Debt Securities outstanding under the Subordinated
Indenture. The Senior Indenture does not and the Subordinated Indenture will not
limit the amount of Debt Securities that may be issued in the future.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Debt Securities of a series may be defeased in accordance with their terms
and, unless the resolution establishing the terms of the series otherwise
provides, as set forth below. The Company at any time may terminate as to a
series all of its obligations (except for certain obligations with respect to
the defeasance trust and obligations to register the transfer or exchange of a
Debt Security, to replace destroyed, lost or stolen Debt Securities and coupons
and to maintain agencies in respect of the Debt Securities) with respect to the
Debt Securities of the series and any related coupons and the applicable
Indenture ('legal defeasance'). The Company at any time may terminate as to a
series its obligations with respect to the Debt Securities and coupons of the
series under the covenants described under 'Certain Covenants' ('covenant
defeasance').
The Company may exercise its legal defeasance option notwithstanding its
prior exercise of its covenant defeasance option. If the Company exercises its
legal defeasance option, a series may not be accelerated because of an Event of
Default. If the Company exercises its covenant defeasance option, a series may
not be accelerated by reference to the covenants described under 'Certain
Covenants'.
To exercise either option as to a series, the Company must deposit in trust
(the 'defeasance trust') with the applicable Trustee money or U.S. Government
Obligations for the payment of principal, premium, if any, and interest on the
Debt Securities of the series to redemption or maturity and must comply with
certain other conditions. In particular, the Company must obtain an opinion of
tax counsel that the defeasance will not result in recognition for Federal
income tax purposes of any gain or loss to holders of the series. 'U.S.
Government Obligations' are direct obligations of the United States of America
which have the full faith and credit of the United States of America pledged for
payment and which are not callable at the issuer's option, or certificates
representing an ownership interest in such obligations.
GLOBAL DEBT SECURITIES
Global Debt Securities may be issued in registered, bearer or
uncertificated form and in either temporary or permanent form. If Debt
Securities of a series are to be issued as global Debt Securities, one or more
global Debt Securities will be issued in a denomination or aggregate
denominations equal to the aggregate principal amount of outstanding Debt
Securities of the series to be represented by such global Debt Security or
Securities.
Ownership of beneficial interests in global Debt Securities will be limited
to participants and to persons that have accounts with the Depositary
('participants') or persons that may hold interests through participants.
Ownership interests in global Debt Securities will be shown on, and the transfer
of that ownership interest will be effected only through, records maintained by
the Depositary or its nominee for such global Debt Securities (with
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respect to a participant's interest) and records maintained by participants
(with respect to interests of persons other than participants).
Unless otherwise indicated in a Prospectus Supplement, payment of principal
of and any premium and interest on the book-entry Debt Securities represented by
a global Debt Security will be made to the Depositary or its nominee, as the
case may be, as the sole registered owner and the sole holder of the book-entry
Debt Securities represented thereby for all purposes under the applicable
Indenture. Neither the Company or the applicable Trustee, nor any agent of the
Company or the applicable Trustee, will have any responsibility or liability for
any acts or omissions of the Depositary for any records of the Depositary
relating to beneficial ownership interests in any global Debt Security or any
transactions between a Depositary and beneficial owners.
Upon receipt of any payment of principal of or any premium or interest on a
global Debt Security, the Depositary will immediately credit, on its book-entry
registration and transfer system, the accounts of participants with payments in
amounts proportionate to their respective beneficial interests in the principal
amount of such global Debt Security as shown on the records of the Depositary.
Payments by participants to owners of beneficial interests in global Debt
Securities held through such participants will be governed by standing
instructions and customary practices, as is now the case with securities held
for customer accounts registered in 'street name,' and will be the sole
responsibility of such participants.
Unless otherwise stated in a Prospectus Supplement, global Debt Securities
will not be transferred except as a whole by the Depositary to a nominee of the
Depositary. Global Debt Securities will be exchangeable only if (i) the
Depositary notifies the Company that it is unwilling or unable to continue as
Depositary for such global Debt Securities or if at any time the Depositary
ceases to be a clearing agency registered under the Exchange Act, (ii) the
Company in its sole discretion determines that such global Debt Securities shall
be exchangeable for definitive Debt Securities in registered form, or (iii) an
Event of Default with respect to the series of Debt Securities represented by
such global Debt Securities has occurred and is continuing. Any global Debt
Security that is exchangeable pursuant to the preceding sentence shall be
exchangeable for Registered Debt Securities issuable in denominations of $1,000
and integral multiples thereof and registered in such names as the Depositary
holding such global Debt Security shall direct. Subject to the foregoing, the
global Debt Security is not exchangeable, except for a global Debt Security of
like denomination to be registered in the name of the Depositary or its nominee.
So long as the Depositary for global Debt Securities of a series, or its
nominee, is the registered owner of such global Debt Securities, such Depositary
or such nominee, as the case may be, will be considered the sole Holder of Debt
Securities represented by such global Debt Securities for the purposes of
receiving payment on such global Debt Securities, receiving notices and for all
other purposes under the applicable Indenture and such global Debt Securities.
Except as provided above, owners of beneficial interests in global Debt
Securities of a series will not be entitled to receive physical delivery of Debt
Securities of such series in definitive form and will not be considered the
Holders thereof for any purpose under the applicable Indenture. Accordingly,
each person owning a beneficial interest in a global Debt Security must rely on
the procedures of the Depositary and, if such person is not a participant, on
the procedures of the participant through which such person owns its interest,
to exercise any rights of a Holder under the applicable Indenture. The
Depositary may grant proxies and otherwise authorize participants to give or
take any request, demand, authorization, direction, notice, consent, waiver or
other action which a Holder is entitled to give or take under the applicable
Indenture. The Company understands that under existing industry practices, in
the event that the Company requests any action of Holders or that an owner of a
beneficial interest in such a global Debt Security desires to give or take any
action which a Holder is entitled to give or take under the applicable
Indenture, the Depositary would authorize the participants holding the relevant
beneficial interests to give or take such action, and such participants would
authorize beneficial owners owning through such participants to give or take
such action or would otherwise act upon the instructions of beneficial owners
owning through them.
Unless otherwise specified in a Prospectus Supplement relating to Debt
Securities of a series to be issued as global Debt Securities, the Depositary
will be The Depository Trust Company ('DTC'). DTC has advised the Company that
it is a limited-purpose trust company organized under the law of the State of
New York, a member of the Federal Reserve System, a 'clearing corporation'
within the meaning of the New York Uniform Commercial Code, and a 'clearing
agency' registered under the Exchange Act. DTC was created to hold the
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securities of its participants and to facilitate the clearance and settlement of
securities transactions among its participants in such securities through
electronic book-entry changes in accounts of the participants, thereby
eliminating the need for physical movement of securities certificates. DTC's
participants include securities brokers and dealers (which may include the
underwriters, dealers or agents with respect to the Debt Securities), banks,
trust companies, clearing corporations, and certain other organizations some of
whom (and/or their representatives) own DTC. Access to DTC's book-entry system
is also available to others, such as banks, brokers, dealers and trust companies
that clear through or maintain a custodial relationship with a participant
either directly or indirectly.
TRUSTEE
Fleet National Bank of Connecticut, as the ultimate successor trustee to
Bank of America Illinois (formerly Continental Bank, National Association) will
act as Senior Trustee for Debt Securities issued under the Senior Indenture. The
Subordinated Trustee for Debt Securities issued under the Subordinated Indenture
will be identified in the related Prospectus Supplement. The Senior Trustee is
one of several banks which provide credit and banking services to the Company.
PLAN OF DISTRIBUTION
The Company may sell Securities in any of the following ways: (1) through
underwriters or dealers; (2) directly to one or more purchasers; or (3) through
agents. The Prospectus Supplement with respect to the Securities being offered
thereby will set forth the terms of the offering of such Securities, including
the name or names of any underwriters or agents, the purchase price of such
Securities and the proceeds to the Company from such sale, any underwriting
discounts, commissions and other items constituting underwriters' compensation,
any initial public offering price and any discounts or concessions allowed or
reallowed or paid to dealers and any securities exchanges on which such
Securities may be listed. Any underwriter or agent may be deemed to be an
underwriter as that term is defined in the Securities Act of 1933 (the 'Act').
If underwriters are used in the sale of Securities, such Securities will be
acquired by the underwriters for their own account and may be resold from time
to time in one or more transactions, including negotiated transactions, at a
fixed public offering price or at varying prices determined at the time of sale.
The Securities may be offered to the public either through underwriting
syndicates (which may be represented by managing underwriters designated by the
Company), or directly by one or more underwriters acting alone. Unless otherwise
set forth in the Prospectus Supplement, the obligations of the underwriters to
purchase the Securities offered thereby will be subject to certain conditions
precedent, and the underwriters will be obligated to purchase all such
Securities if any are purchased. Any initial public offering price and any
discounts or concessions allowed or reallowed or paid to dealers may be changed
from time to time.
The Securities may be sold directly by the Company or through agents
designated by the Company from time to time. The Prospectus Supplement with
respect to any Securities sold in this manner will set forth the name of any
agent involved in the offer or sale of the Securities as well as any commissions
payable by the Company to such agent. Unless otherwise indicated in the
Prospectus Supplement, any such agent is acting on a best efforts basis for the
period of its appointment.
If dealers are utilized in the sale of any Securities, the Company will
sell the Securities to the dealers, as principals. Any dealer may then resell
the Securities to the public at varying prices to be determined by the dealer at
the time of resale. The name of any dealer and the terms of the transaction will
be set forth in the Prospectus Supplement with respect to the Securities being
offered thereby.
If so indicated in the Prospectus Supplement, the Company will authorize
agents, underwriters or dealers to solicit offers by certain specified
institutions to purchase Securities from the Company at the public offering
price set forth in the Prospectus Supplement pursuant to delayed delivery
contracts providing for payment and delivery on a specified date in the future.
Such contracts will be subject only to those conditions set forth in the
Prospectus Supplement and the Prospectus Supplement will set forth the
commission payable for the solicitation of such contracts.
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It has not been determined whether any Securities will be listed on a
securities exchange. Underwriters will not be obligated to make a market in any
Securities. The Company cannot predict the activity of trading in, or liquidity
of, any Securities.
Agents, underwriters and dealers may be entitled, under agreements entered
into with the Company, to indemnification by the Company against certain civil
liabilities, including liabilities under the Act or to contribution with respect
to payments which the agents, underwriters or dealers may be required to make in
respect thereof. Agents, underwriters and dealers may be customers of, engage in
transactions with, or perform services for the Company in the ordinary course of
business.
LEGAL OPINIONS
Certain legal matters in connection with the Securities will be passed upon
for the Company by Cahill Gordon & Reindel (a partnership including a
professional corporation), New York, New York, and for the agents, underwriters
and dealers by Davis Polk & Wardwell of New York, New York.
EXPERTS
The financial statements incorporated in this Prospectus by reference to
the Annual Report on Form 10-K of the Company for the year ended December 31,
1994 have been so incorporated in reliance on the report of Price Waterhouse
LLP, independent accountants, given on the authority of said firm as experts in
accounting and auditing.
The consolidated financial statements of CBI incorporated by reference in
this Prospectus and elsewhere in the Registration Statement have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in accounting and auditing in giving said
report.
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