AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 12, 1997
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
--------------------------------
PRAXAIR, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 06-124-9050
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
39 OLD RIDGEBURY ROAD
DANBURY, CONNECTICUT 06810-5113
(203) 837-2000
(Address, including zip code, and telephone
number, including area code, of
registrant's principal executive
offices)
David H. Chaifetz
Vice President, General Counsel and Secretary
Praxair, Inc.
(Same address and telephone number as above)
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
--------------------------------
Copies to:
Geoffrey E. Liebmann Sarah Jones Beshar
Cahill Gordon & Reindel Davis Polk & Wardwell
80 Pine Street 450 Lexington Avenue
New York, NY 10005 New York, NY 10017
--------------------------------
Approximate date of commencement of proposed sale to the public:
From time to time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.[ ] ______
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
====================================================================================================================================
<S> <C> <C> <C> <C>
TITLE OF EACH CLASS OF AMOUNT TO BE PROPOSED MAXIMUM AGGREGATE PROPOSED MAXIMUM AGGREGATE AMOUNT OF REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED (1)(2) OFFERING PRICE PER UNIT(3) OFFERING PRICE(2)(3)(4) FEE
- ------------------------------------------------------------------------------------------------------------------------------------
Debt Securities of the
Company
- ------------------------------------------------------------------------------------------------------------------------------------
Preferred Stock (par value
$.01 per share)
- ------------------------------------------------------------------------------------------------------------------------------------
Common Stock (par value
$.01 per share)
- ------------------------------------------------------------------------------------------------------------------------------------
Common Stock Purchase
Rights(5)
- ------------------------------------------------------------------------------------------------------------------------------------
Total $500,000,000 100% $500,000,000 $151,515
====================================================================================================================================
</TABLE>
(1) There are being registered hereunder such presently indeterminate number of
shares of Common Stock into which certain series of the Debt Securities (as
defined herein) and Preferred Stock may be converted and for which no
separate consideration will be received.
(2) In U.S. dollars or the equivalent in foreign currency or currency units.
(3) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457 under the Securities Act of 1933, as amended.
(4) Exclusive of accrued interest or dividends, if any.
(5) The Common Stock Purchase Rights currently trade with the Company's Common
Stock.
<PAGE>
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
PURSUANT TO RULE 429 OF THE RULES AND REGULATIONS OF THE SECURITIES
AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, THE
PROSPECTUS INCLUDED IN THIS REGISTRATION STATEMENT ALSO RELATES TO $124,034,750
PRINCIPAL AMOUNT OF UNISSUED SECURITIES PREVIOUSLY REGISTERED UNDER REGISTRANT'S
REGISTRATION STATEMENT ON FORM S-3 (FILE NO. 333-304), FOR WHICH A REGISTRATION
FEE WAS PREVIOUSLY PAID.
<PAGE>
SUBJECT TO COMPLETION, DATED NOVEMBER 12, 1997
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT WITH RESPECT TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
PROSPECTUS
PRAXAIR, INC.
DEBT SECURITIES
PREFERRED STOCK
COMMON STOCK
--------------------
Praxair, Inc. ("Praxair" or the "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 $624,034,750 (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.
--------------------
<PAGE>
-2-
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
--------------------
The date of this Prospectus is , 1997
<PAGE>
-3-
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,
Suite 1300, New York, New York 10048 and at 500 West Madison Street, Chicago,
Illinois 60661. If available, such material may also be accessed through the
Commission's electronic data gathering, analysis and retrieval system ("EDGAR")
via electronic means, including the Commission's web site on the Internet
(http://www.sec.gov). 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.
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, 1996; (2)
Quarterly Reports of the Company on Form 10-Q for the quarters ended March 31,
1997, June 30, 1997 and September 30, 1997; (3) Current Report on Form 8-K dated
January 23, 1997; (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
<PAGE>
-4-
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.
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Prospectus (including the documents incorporated herein or therein by
reference) contains statements that constitute forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995. Prospective
investors are cautioned that any such forward-looking statements are not
guarantees of future performance and involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievements to differ materially from the future results, performance or
achievements expressed or implied in such forward-looking statements. Such
factors include, inter alia, the impact of changes in worldwide and national
economies, achievement of synergies and cost reductions in the integration of
Liquid Carbonic (as defined below) business of CBI Industries, Inc. ("CBI"),
which was acquired in 1996, the timing of divestments and the proceeds realized
therefrom, pricing fluctuations in foreign currencies, changes in interest
rates, the continued timely development and acceptance of new products and
processes, the impact of competitive products and pricing and the impact of tax
and other legislation and regulation in the jurisdictions in which the Company
operates.
THE COMPANY
Praxair is the largest industrial gases company in North and South
America and the third largest worldwide. Praxair is the world's largest supplier
of carbon dioxide. Praxair's primary products are atmospheric gases (oxygen,
nitrogen, argon and rare gases) and process gases (carbon dioxide, helium,
hydrogen, electronics gases and acetylene). The Company's coatings services
business, operated through Praxair Surface Technologies, supplies wear-resistant
and high-temperature corrosion-resistant metallic and ceramic coatings and
powders. Sales for Praxair were $4,449, $3,146, and $2,711 million for 1996,
1995 and 1994, respectively, with industrial gases accounting
<PAGE>
-5-
for 91% of sales in 1996, 90% in 1995 and 91% in 1994, respectively, and
coatings services and other divisions accounting for the balance.
During 1996, Praxair acquired the common stock of CBI. CBI operated in
three major business segments: Industrial Gases ("Liquid Carbonic"), Contracting
Services ("Chicago Bridge & Iron Company") and Investments (primarily, "Statia
Terminals," a marine terminaling business). The 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. Praxair
determined that the Contracting Services and Investments segments of CBI were
not strategic to the combined company and, during 1996 and 1997, has sold or has
taken actions to sell those businesses. Additionally, in 1996, based on an
agreement with the U.S. Federal Trade Commission, Praxair sold four air
separation plants operated by Liquid Carbonic in the United States. During the
nine months ended September 30, 1997, Praxair sold 96% of Chicago Bridge & Iron
Company N.V. in an initial public offering transaction and five other small
businesses. The after-tax proceeds from these sales were used by Praxair to
repay outstanding short-term debt.
Gases produced by the Company find wide use in the aerospace,
beverage, chemicals, electronics, environmental remediation, food processing and
preservation, 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. Historically, consumption of industrial
gases has increased at approximately 1.5-2.0 times local GDP growth in countries
in which the Company does business.
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 06810-5413 and its telephone number
is (203) 837-2000.
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.
<PAGE>
-6-
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>
NINE MONTHS YEARS ENDED DECEMBER 31,
ENDED ------------------------------------
SEPTEMBER 30, 1997 1996 1995 1994 1993 1992
------------------ ---- ---- ---- ---- ----
Ratio of Earnings
<S> <C> <C> <C> <C> <C> <C>
to Fixed Charges(a) 3.4 2.8 4.2 3.8 3.0 2.2
Ratio of Earnings to
Combined Fixed Charges
and Preferred Stock
Dividends(b) 3.3 2.7 4.2 3.8 3.0 2.2
- ---------------
</TABLE>
(a) For the purpose of computing the foregoing 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.
(b) For the purpose of computing the foregoing ratio: "earnings" consist of
income from continuing operations before provision for income taxes, before
combined 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 "combined fixed charges" comprise interest on long-term
and short-term debt, capitalized interest, the portion of rentals
representative of an appropriate interest factor, preferred stock dividends
and the Company's share of fixed charges of 50%-owned companies carried at
equity.
<PAGE>
-7-
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 (the "Preferred Stock"), and
500,000,000 may be shares of common stock, par value $.01 per share (the "Common
Stock"). As of September 30, 1997, 157,657,373 shares of Common Stock were
issued and outstanding and 750,000 shares of Preferred Stock were issued and
outstanding.
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
At September 30, 1997, there were 25,000,000 shares of Preferred Stock
authorized, of which 750,000 shares were issued and outstanding. The outstanding
shares of Preferred Stock were issued in December 1996 when PX Merger Corp. was
merged into CBI. At that time, each outstanding share of CBI preferred stock was
exchanged for a share of Praxair Preferred Stock having the same terms. Each
series of preferred stock ranks on parity with the other, and no dividends may
be paid on Praxair Common Stock unless Preferred Stock dividends have been paid.
The Preferred Stock has limited voting rights. Following is a summary of each
series of Preferred Stock outstanding:
<PAGE>
-8-
SERIES A PREFERRED STOCK
There are 550,000 outstanding shares of Praxair 7.48% Cumulative
Preferred Stock, Series A which are entitled to receive cumulative annual
dividends of $7.48 per share, payable quarterly. The Series A Preferred Stock is
mandatorily redeemable on, but not prior to, April 1, 2000 at a price of $100
per share and has a liquidation preference of $100 per share.
SERIES B PREFERRED STOCK
There are 200,000 outstanding shares of Praxair 6.75% Cumulative
Preferred Stock, Series B which are entitled to receive cumulative annual
dividends of $6.75 per share, payable quarterly. The Series B Preferred Stock is
mandatorily redeemable on, but not prior to, September 5, 2002 at a price of
$100 per share and has a liquidation preference of $100 per share.
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").
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.
<PAGE>
-9-
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
<PAGE>
-10-
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.
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).
<PAGE>
-11-
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.
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 State Street Bank and Trust Company 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.
<PAGE>
-12-
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 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
<PAGE>
-13-
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.
<PAGE>
-14-
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, 1997, the Company had outstanding approximately
$2,024 million in long term debt (net of current maturities) consisting of
Senior Indebtedness (as defined below).
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
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.
<PAGE>
-15-
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.
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.
<PAGE>
-16-
"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, 1997, the Company's facility in Tonawanda, NY and
its manufacturing and pipeline facilities in Houston, TX 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
<PAGE>
-17-
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 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
<PAGE>
-18-
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, 1997, Consolidated Net Tangible Assets were approximately
$5,637,000,000. 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.
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:
<PAGE>
-19-
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.
<PAGE>
-20-
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 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:
<PAGE>
-21-
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. 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
<PAGE>
-22-
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 $1,500 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
<PAGE>
-23-
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 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 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.
<PAGE>
-24-
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
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
State Street Bank and Trust Company, 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.
<PAGE>
-25-
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.
In connection with the offering of the Securities, underwriters may
engage in transactions that stabilize, maintain or otherwise effect the price of
the Securities. Specifically, the underwriters may overallot in connection with
<PAGE>
-26-
the offerings of the Securities, creating a syndicate short position. In
addition, underwriters may bid for, and purchase, Securities in the open market
to cover syndicate shorts or to stabilize the price of the Securities. Finally,
the underwriting syndicate may reclaim selling concessions allowed for
distributing the Securities in the offering of the Securities, if the syndicate
repurchases previously distributed Securities in syndicate covering
transactions, syndicate transactions or otherwise. Any of these activities may
stabilize or maintain the market prices of the Securities above independent
market levels. The underwriters are not required to engage in any of these
activities, and may end any of them at any time.
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,
1996 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.
<PAGE>
<TABLE>
<CAPTION>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.*
<S> <C>
SEC filing fee................................................ $ 151,515
Accounting fees and expenses.................................. 40,000
Legal fees and expenses....................................... 90,000
Rating agency fees............................................ 162,500
Trustee's fees and expenses................................... 30,000
Blue sky fees and expenses.................................... 10,000
Printing and engraving expenses............................... 100,000
Miscellaneous................................................. 5,985
----------
Total......................................................... $ 590,000
</TABLE>
- ---------------
* Except for SEC filing fee, all expenses are estimated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
THE COMPANY
Reference is made to Section 145 of the General Corporation Law of the
State of Delaware (the "GCL"), which provides for indemnification of directors,
agents, officers and other employees in certain circumstances, and to Section
102(b)(7) of the GCL, which provides for the elimination or limitation of the
personal liability for monetary damages of directors under certain
circumstances. Article VIII of the Restated Certificate of Incorporation of the
Company eliminates the personal liability for monetary damages of directors
under certain circumstances and provides indemnification to directors and
officers of the Company to the fullest extent permitted by the GCL. Among other
things, these provisions provide indemnification for officers and directors
against liabilities for judgments in and settlements of lawsuits and other
proceedings and for the advance and payment of fees and expenses reasonably
incurred by the director or officer in defense of any such lawsuit or
proceeding.
The directors and officers of the Company are covered by insurance
policies indemnifying against certain liabilities, including certain liabilities
arising under the Act, which might be incurred by them in such capacities and
against which they may not be indemnified by the Company.
The Standard Underwriting Agreement Provisions (Exhibit 1.1) provide
for indemnification by the underwriters of the Company and its officers,
directors and controlling persons under certain circumstances.
For a statement of the registrants' undertakings with respect to
indemnification of directors and officers, see Item 17 below.
11-1
<PAGE>
ITEM 16. EXHIBITS.
1.1 Form of Standard Underwriting Agreement Provisions (including
Form of Terms Agreement) (incorporated herein by reference to
Exhibit 1.1 to the Company's Form S-3 Registration Statement,
Registration No. 333-304).
4.1 Indenture dated as of July 15, 1992 between the Company and
State Street Bank and Trust Company as the ultimate successor
trustee to Bank of America Illinois (formerly Continental
Bank, National Association) (incorporated herein by reference
to Exhibit 4 to the Company's Form 10-Q for the quarter ended
June 30, 1992, File No. 1-11307).
4.2 Forms of Senior Debt Securities (see Exhibits A and B to
Exhibit 4.1 above).
4.3 Instrument of Resignation, Appointment and Acceptance, dated
as of January 16, 1996 among the Company, First Trust of
Illinois, National Association (as successor to Bank of
America Illinois, formerly Continental Bank, National
Association) as resigning trustee, and State Street Bank and
Trust Company, as successor trustee (incorporated herein by
reference to Exhibit 4.3 to the Company's Form S-3
Registration Statement, Registration No. 333-304).
4.4 Form of Subordinated Indenture (incorporated herein by
reference to Exhibit 4.4 to the Company's Form S-3
Registration Statement, Registration No. 333-304).
4.5 Forms of Subordinated Debt Securities (see Exhibits A and B to
Exhibit 4.4 above).
4.6 Rights Agreement between the Company and The Bank of New York,
as Rights Agent (incorporated herein by reference to Exhibit
4.02 to the Company's Registration Statement on Form 10, File
No. 1-11037).
5.1* Opinion of Cahill Gordon & Reindel.
12.1* Statement re Computation of Ratio of Earnings to Fixed Charges
and Earnings to Combined Fixed Charges and Preferred Stock
Dividends of the Company - Five Years ended December 31, 1996
and Nine Months ended September 30, 1997.
23.1* Consent of Price Waterhouse LLP, independent certified public
accountants.
23.2 Consent of Cahill Gordon & Reindel (included in Exhibit 5.1).
24.1* Powers of attorney (included on the signature pages hereof).
25.1 Form T-1 Statement of Eligibility of State Street Bank and
Trust Company as the ultimate successor trustee to Bank of
America Illinois (formerly Continental Bank, National
Association), as Trustee under the Indenture dated July 15,
1992 between the Company and Bank of America Illinois
(incorporated herein by reference to Exhibit 25.1 to the
Company's Form S-3 Registration Statement, Registration No.
333-304).
II-2
<PAGE>
- ------------------
* Filed herewith.
ITEM 17. UNDERTAKINGS.
The undersigned hereby undertake:
1. To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(a) To include any prospectus required by Section 10(a)(3) of the
Act, unless the information required to be included in such
post-effective amendment is contained in a periodic report
filed by the Company pursuant to Section 13 or Section 15(d)
of the Exchange Act and incorporated herein by reference;
(b) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement, unless
the information required to be included in such post-effective
amendment is contained in a periodic report filed by the
Company pursuant to Section 13 or Section 15(d) of the
Exchange Act and incorporated herein by reference; and
(c) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement.
2. That, for the purpose of determining any liability under the Act, each
such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
3. To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
4. That, for purposes of determining any liability under the Act, each
filing of an annual report pursuant to Section 13(a) or 15(d) of the
Exchange Act that is incorporated by reference in the Registration
Statement shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
5. Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the
undersigned pursuant to the provisions described under Item 15 above,
or otherwise, the undersigned have been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the undersigned of expenses incurred or paid
II-3
<PAGE>
by a director, officer or controlling person of the undersigned in the
successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the undersigned will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
of whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of
such issue.
The undersigned hereby undertakes to file an application for the
purpose of determining the eligibility of the applicable trustee to act under
subsection a of Section 310 of the Trust Indenture Act, as amended, in
accordance with the Rules and Regulations prescribed by the Commission under
Section 305(b)(2) of that act.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Praxair,
Inc. certifies that it has reasonable grounds to believe that it meets all of
the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Danbury, Connecticut, on November 12, 1997.
PRAXAIR, INC.
By: /s/ JAMES S. SAWYER
------------------------------
Name: James S. Sawyer
Title: Treasurer
Each person whose signature appears below appoints each of John A.
Clerico and James S. Sawyer, his attorney-in-fact and agent, with full power of
substitution and resubstitution, to sign and file with the Securities and
Exchange Commission any amendments to the Registration Statement (including
post-effective amendments), any registration statement permitted under Rule
462(b) under the Securities Act of 1933 and any amendments thereto and to file
with the Securities and Exchange Commission one or more supplements to any
prospectus included in any of the foregoing, and generally to do anything else
necessary or proper in connection therewith.
II-5
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/ ALEJANDRO ACHAVAL Director October 21, 1997
- ------------------------------------------
Alejandro Achaval
/s/ JOHN A. CLERICO Vice President, and Chief October 21, 1997
- ------------------------------------------ Financial Officer and Director
John A. Clerico
/s/ RAYMOND W. LEBOEUF Director October 21, 1997
- ------------------------------------------
Raymond W. LeBoeuf
Director October 21, 1997
C. Fred Fetterolf
/s/ DALE F. FREY Director October 21, 1997
- ------------------------------------------
Dale F. Frey
/s/ J. ROBERT VIPOND Vice President and Controller October 21, 1997
- ------------------------------------------ (principal accounting officer)
J. Robert Vipond
/s/ CLAIRE W. GARGALLI Director October 21, 1997
- ------------------------------------------
Claire W. Gargalli
/s/ EDGAR G. HOTARD President and Director October 21, 1997
- ------------------------------------------
Edgar G. Hotard
Director October 21, 1997
- ------------------------------------------
Ronald L. Kuehn, Jr.
/s/ H. WILLIAM LICHTENBERGER Chairman of the Board and Chief October 21, 1997
- ------------------------------------------ Executive Officer
H. William Lichtenberger
/s/ BENJAMIN F. PAYTON Director October 21, 1997
- ------------------------------------------
Benjamin F. Payton
/s/ G. JACKSON RATCLIFFE, JR. Director October 21, 1997
- ------------------------------------------
G. Jackson Ratcliffe, Jr.
/s/ H. MITCHELL WATSON, JR. Director October 21, 1997
- ------------------------------------------
H. Mitchell Watson, Jr.
</TABLE>
II-6
EXHIBIT 5.1
CAHILL GORDON & REINDEL
80 PINE STREET
NEW YORK, NEW YORK 10005
NOVEMBER 12, 1997
(212) 701-3000
Praxair, Inc.
39 Old Ridgebury Road
Danbury, Connecticut 06810-5113
Ladies and Gentlemen:
We have acted as special counsel to Praxair, Inc., a Delaware
corporation (the "Company"), in connection with the filing of a Registration
Statement on Form S-3 (the "Registration Statement") with the Securities and
Exchange Commission (the "Commission"), relating to the registration pursuant to
the Securities Act of 1933, as amended (the "Act"), of securities of the Company
(the "Securities") consisting of (i) senior debt securities (the "Senior Debt
Securities"), (ii) subordinated debt securities (the "Subordinated Debt
Securities" and together with the Senior Debt Securities, the "Debt
Securities"), (iii) common stock, par value $.01 per share, including common
stock purchase rights (the "Common Stock") and (iv) preferred stock, par value
$.01 per share (the "Preferred Stock" and together with the Common Stock, the
"Equity Securities") to be issued from time to time pursuant to Rule 415 under
the Act, for an aggregate initial offering price of up to $624,034,750.
The Subordinated Debt Securities are proposed to be issued under an
indenture (the "Subordinated Indenture") to be executed between the Company and
a trustee to be selected by the Company at such time as the Company elects to
issue Subordinated Debt Securities.
The Senior Debt Securities are proposed to be issued under an
indenture dated as of July 15, 1992 (the "Senior Indenture") between the Company
and State Street Bank and Trust Company (as the ultimate successor to Bank of
America Illinois, formerly Continental Bank, National Association), as trustee.
In connection with this opinion, we have assumed that (i) the
Registration Statement, and any amendments thereto (including post effective
amendments), will have become effective; (ii) a prospectus supplement will have
been prepared and filed with the Commission describing the Securities offered
thereby; (iii) all Securities will be issued and sold in compliance with
applicable federal and state securities laws and in the manner stated in the
Registration Statement and the appropriate prospectus supplement; and (iv) a
definitive purchase, underwriting or similar agreement with respect to any
Securities offered will have been duly authorized and validly executed and
delivered by the Company and the other parties thereto.
We are of the opinion that:
II-7
<PAGE>
1. With respect to shares of Common Stock, when certificates
representing the shares of Common Stock have been duly executed, countersigned,
registered and delivered either (a) in accordance with the applicable definitive
purchase, underwriting or similar agreement approved by the Board of Directors
of the Company (the "Board") upon payment of the consideration therefor (not
less than the par value of the Common Stock) provided for therein, or (b) upon
conversion, exchange or exercise of any other Security in accordance with the
terms of such Security or the instrument governing such Security providing for
such conversion, exchange or exercise as approved by the Board, for the
consideration approved by the Board (not less than the par value of the Common
Stock), the shares of Common Stock will be duly authorized, validly issued,
fully paid and nonassessable.
2. With respect to shares of Preferred Stock, when certificates
representing the shares of Preferred Stock have been duly executed,
countersigned, registered and delivered either (a) in accordance with the
applicable definitive purchase, underwriting or similar agreement approved by
the Board upon payment of the consideration therefor (not less than the par
value of the Preferred Stock) provided for therein, or (b) upon conversion,
exchange or exercise of any other Security in accordance with the terms of such
Security or the instrument governing such Security providing for such
conversion, exchange or exercise as approved by the Board, for the consideration
approved by the Board (not less than the par value of the Preferred Stock), the
shares of Preferred Stock will be duly authorized, validly issued, fully paid
and nonassessable.
3. With respect to the Senior Debt Securities to be issued under the
Senior Indenture, when (i) the Board has taken all necessary corporate action to
approve the issuance and terms of such Senior Debt Securities, the terms of the
offering thereof and related matters; and (ii) such Senior Debt Securities have
been duly executed, authenticated, issued and delivered in accordance with the
provisions of the Senior Indenture and in accordance with the applicable
definitive purchase, underwriting or similar agreement approved by the Board
upon payment of the consideration therefor provided for therein, such Debt
Securities will be legally issued and will constitute valid and binding
obligations of the Company, enforceable against the Company in accordance with
their terms, except as such enforcement is subject to any applicable bankruptcy,
insolvency, reorganization, fraudulent transfer or other law relating to or
affecting creditors' rights generally and general principles of equity and will
be entitled to the benefits of the Senior Indenture.
4. With respect to the Subordinated Debt Securities to be issued under
the Subordinated Indenture, when (i) the Subordinated Indenture has been duly
qualified under the Trust Indenture Act of 1939, as amended; (ii) the Board has
taken all necessary corporate action to approve the issuance and terms of such
Subordinated Debt Securities, the terms of the offering thereof and related
matters; and (iii) such Subordinated Debt Securities have been duly executed,
authenticated, issued and delivered in accordance with the provisions of the
Subordinated Indenture and in accordance with the applicable definitive
purchase, underwriting or similar agreement approved by the Board upon payment
of the consideration therefor provided for therein, such Subordinated Debt
Securities will be legally issued and will constitute valid and binding
obligations of the Company, enforceable against the Company in accordance with
their terms, except as such enforcement is subject to any applicable bankruptcy,
insolvency, reorganization, fraudulent transfer or other law relating to or
affecting creditors' rights generally and general principles of equity and will
be entitled to the benefits of the Subordinated Indenture.
II-8
<PAGE>
We hereby consent to the use of our firm's name under the caption
"Legal Matters" and to the filing of this opinion with the Commission as an
exhibit to the aforesaid Registration Statement. In giving such consent we do
not hereby admit that we are within the category of persons whose consent is
required under Section 7 of the Act or the rules and regulations of the
Commission thereunder.
Very truly yours,
/s/ Cahill Gordon & Reindel
--------------------------------
Cahill Gordon & Reindel
II-9
EXHIBIT 12.1
PRAXAIR, INC. AND SUBSIDIARIES
RATIOS OF EARNINGS TO FIXED CHARGES AND EARNINGS TO
COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
(MILLIONS OF DOLLARS, EXCEPT RATIOS)
<TABLE>
<CAPTION>
NINE MONTHS YEARS ENDED DECEMBER 31,
ENDED ------------------------------------
SEPTEMBER 30, 1997 1996 1995 1994 1993 1992
------------------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
EARNINGS
Income of consolidated
companies before
provision for income
taxes 474 452 432 $339 $236 159
Capitalized interest (22) (25) (9) (4) (3) (9)
Depreciation of
capitalized interest 8 9 8 8 9 9
Dividends from less than
50%-owned companies
carried at equity 1 1 1 - 2 -
Praxair share of income
(loss) before provision
for income taxes of 50%-
owned companies carried
at equity 4 16 15 8 10 8
--- --- --- ---- ---- ----
Total earnings, net of fixed
charges 465 453 447 $351 $254 $167
--------------------------------------------------------------------
</TABLE>
II-10
<PAGE>
<TABLE>
<CAPTION>
NINE MONTHS YEARS ENDED DECEMBER 31,
ENDED ------------------------------------
SEPTEMBER 30, 1997 1996 1995 1994 1993 1992
------------------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
FIXED CHARGES
Interest on long-term and
short-term debt 157 195 116 $108 $105 $117
Capitalized interest 22 25 9 4 3 9
Rental expenses representative
of an interest factor 18 23 10 11 12 11
Praxair share of fixed charges
of 50%-owned companies
carried at equity -- 3 4 2 7 7
--- --- --- ---- ---- ----
Total fixed charges 203 246 139 $125 $127 $144
Total adjusted earnings
available for payment of
fixed charges 662 699 586 $476 $381 $311
------------------------------------------------------------------
PREFERRED STOCK
DIVIDENDS
---------
Preferred Stock Dividends 6 8 -- -- -- --
------------------------------------------------------------------
RATIO OF EARNINGS TO
FIXED CHARGES, EXCLUDING
PREFERRED STOCK DIVIDENDS 3.4 2.8 4.2 3.8 3.0 2.2
RATIO OF EARNINGS TO
COMBINED FIXED CHARGES
AND PREFERRED STOCK
DIVIDENDS 3.3 2.7 4.2 3.8 3.0 2.2
- ---------------
II-11
</TABLE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report dated
February 7, 1997, which appears on page 43 of the 1996 Annual Report to
Shareholders of Praxair, Inc., which is incorporated by reference in Praxair,
Inc.'s Annual Report on Form 10-K for the year ended December 31, 1996. We also
consent to the reference to us under the heading "Experts" in such Prospectus.
/s/ Price Waterhouse LLP
- ------------------------------
Price Waterhouse LLP
Stamford, CT
November 5, 1997
II-12
