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REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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THE WILLIAMS COMPANIES, INC. DELAWARE 75-0569878
WILLIAMS CAPITAL I DELAWARE APPLICATION PENDING
WILLIAMS CAPITAL II DELAWARE APPLICATION PENDING
(Exact name of Registrant as (State or other jurisdiction of (I.R.S. Employer
Identification
Specified in its Charter) incorporation or organization) Numbers)
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ONE WILLIAMS CENTER
TULSA, OKLAHOMA 74172
(918) 588-2000
(Address, including zip code, and telephone number, including
area code, of each registrant's principal executive offices)
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WILLIAM G. VON GLAHN, ESQ.
SENIOR VICE PRESIDENT AND GENERAL COUNSEL
THE WILLIAMS COMPANIES, INC.
ONE WILLIAMS CENTER
TULSA, OKLAHOMA 74172
(918) 588-2000
(Name, address, including zip code, and telephone number, including
area code, of agent for service for each registrant)
COPY TO:
KEITH L. KEARNEY, ESQ.
DAVIS POLK & WARDWELL
450 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
(212) 450-4000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: From time to
time after the effective date of the registration statement, as determined by
market conditions.
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, please check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] ------------------
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ------------------
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. []
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CALCULATION OF REGISTRATION FEE
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TITLE OF EACH CLASS OF SECURITIES PROPOSED MAXIMUM AGGREGATE AMOUNT OF
TO BE REGISTERED OFFERING PRICE(1)(2)(3) REGISTRATION FEE
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Common Stock $1 par value; Preferred Stock
Purchase Rights; Preferred Stock, $1 par
value; Debt Securities; Warrants to Purchase
Common Stock; Warrants to Purchase Debt
Securities; and Junior Subordinated Debt
Securities of The Williams Companies, Inc.
for issuance to Williams Capital I and
Williams Capital II.........................
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Preferred Securities of Williams Capital I and
Williams Capital II severally ("Preferred
Securities")................................ $30,000,000 $9,191
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Guarantees of Preferred Securities of Williams
Capital I and Williams Capital II by The
Williams Companies, Inc.....................
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(Continued on Next Page)
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(Continued From Cover Page)
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o) and exclusive of accrued interest and dividends, if
any. Also excludes an aggregate of $300,000,000 of unsold securities
included in Registration Statement No. 33-49835 for which a registration
fee was paid on July 27, 1993 and an aggregate of $100,000,000 of unsold
securities included in Registration Statement No. 33-47061 for which a
registration fee was paid on April 10, 1992 each of which are covered by
the Prospectuses included in this Registration Statement pursuant to Rule
429. As a result, up to an aggregate of $430,000,000 of any of the
securities referred to above may be sold pursuant to this Registration
Statement.
(2) The Williams Companies, Inc. is also registering under this Registration
Statement all other obligations that it may have with respect to Preferred
Securities issued by Williams Capital I or Williams Capital II. No separate
consideration will be received for any Guarantee or any other such
obligations.
(3) Includes the rights of holders of the Preferred Securities of Williams
Capital under the Trust Preferred Securities Guarantee and back-up
undertakings, consisting of obligations by The Williams Companies, Inc. to
provide Williams Capital I and Williams Capital II in respect of, and pay
and be responsible for certain expenses, costs, liabilities, and debts of,
as applicable, Williams Capital I, Williams Capital II and such other
obligations of The Williams Companies, Inc. set forth in the Amended and
Restated Declaration of Trust and the Junior Subordinated Debt Trust
Securities Indenture, in each case as further described in the Registration
Statement. No separate consideration will be received for any Guarantees or
any back-up undertakings.
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THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
Pursuant to Rule 429 under the Securities Act of 1933, as amended, the
Prospectuses included in this Registration Statement also relate to certain
unsold securities registered under Registration Statements Nos. 33-47061 and
33-49835.
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EXPLANATORY NOTE
This Registration Statement contains two forms of prospectuses to be used
in connection with offerings of the following securities:
(1) Common Stock, Preferred Stock, Debt Securities, Warrants to
Purchase Common Stock and Debt Securities of The Williams Companies, Inc.
(2) Preferred Securities of Williams Capital I and Williams Capital
II, severally, Junior Subordinated Debt Securities of The Williams
Companies, Inc. and Guarantees by The Williams Companies, Inc. of Preferred
Securities issued by Williams Capital I and Williams Capital II.
Each offering of securities made under this Registration Statement will be
made pursuant to one of these Prospectuses, with the specific terms of the
securities offered thereby set forth in an accompanying Prospectus Supplement.
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SUBJECT TO COMPLETION, DATED , 1997
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED , 1997)
TRUST PREFERRED SECURITIES
WILLIAMS CAPITAL I
% TRUST PREFERRED SECURITIES
(LIQUIDATION AMOUNT $25 PER TRUST PREFERRED SECURITY)
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY
THE WILLIAMS COMPANIES, INC.
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The % Trust Preferred Securities (the "Preferred Securities") offered
hereby represent preferred undivided beneficial interests in the assets of
Williams Capital I, a statutory business trust formed under the laws of the
State of Delaware ("Williams Capital" or the "Trust"). The Williams Companies,
Inc., a Delaware corporation (the "Company"), will directly or indirectly own
all the common securities (the "Common Securities" and, together with the
Preferred Securities, the "Trust Securities") representing undivided beneficial
interests in the assets of Williams Capital. Williams Capital exists for the
sole purpose of issuing the Preferred Securities and Common Securities and
investing the proceeds thereof in an equivalent amount of % Junior
Subordinated Deferrable Interest Debentures due , 203 (the "Junior
Subordinated Debt Securities") of the Company.
(continued on next page)
SEE "RISK FACTORS" BEGINNING ON PAGE S-8 FOR A DISCUSSION OF FACTORS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS, INCLUDING THE PERIOD AND
CIRCUMSTANCES DURING AND UNDER WHICH PAYMENTS OF DISTRIBUTIONS ON THE PREFERRED
SECURITIES MAY BE DEFERRED AND THE RELATED UNITED STATES FEDERAL INCOME TAX
CONSEQUENCES OF SUCH DEFERRAL.
The Company intends to apply for listing of the Preferred Securities on the
New York Stock Exchange, Inc. (the "New York Stock Exchange"). Trading of the
Preferred Securities on the New York Stock Exchange is expected to commence
within a 30-day period after the initial delivery of the Preferred Securities.
See "Underwriting."
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH IT
RELATES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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INITIAL PUBLIC UNDERWRITING PROCEEDS TO WILLIAMS
OFFERING PRICE(1) COMMISSIONS(2) CAPITAL(3)(4)
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Per Preferred Security...... $ (3) $
Total....................... $ (3) $
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(1) Plus accrued distributions, if any, from , 1997.
(2) For information regarding indemnification of the Underwriters, see
"Underwriting."
(3) Because the proceeds of the sale of the Preferred Securities will be
invested in the Junior Subordinated Debt Securities, the Company has agreed
to pay to the Underwriters, as compensation for their arranging the
investment therein of such proceeds, $ per Preferred Security
($ in the aggregate). See "Underwriting."
(4) Expenses of the offering, which are payable by the Company, are estimated to
be $ .
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The Preferred Securities offered hereby are being offered by the several
Underwriters named herein, subject to prior sale, when, as and if accepted by
them and subject to certain conditions. It is expected that delivery of the
Preferred Securities will be made only in book-entry form through the facilities
of The Depository Trust Company, on or about , 1997.
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, 1997
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(continued from cover page)
Upon the occurrence of an event of a default under the Declaration (as
defined herein), the holders of Preferred Securities will have a preference over
the holders of the Common Securities with respect to payments in respect of
distributions and payments upon redemption, liquidation and otherwise.
Holders of the Preferred Securities are entitled to receive cumulative cash
distributions at an annual rate of % of the liquidation amount of $25 per
Preferred Security, accruing from, and including, and payable
quarterly in arrears on March 31, June 30, September 30 and December 31 of each
year, commencing ("distributions"). The payment of distributions
out of monies held by Williams Capital and payments on liquidation of Williams
Capital or the redemption of Preferred Securities out of monies held by Williams
Capital, as set forth below, are guaranteed by the Company (the "Guarantee") to
the extent described under "Description of Guarantee." The Guarantee covers
payments of distributions and other payments on the Preferred Securities only if
and to the extent that the Company has made a payment of interest or principal
or other payments on the Junior Subordinated Debt Securities held by Williams
Capital as its sole asset. The Guarantee, when taken together with the Company's
obligations under the Junior Subordinated Debt Securities, the Indenture (as
defined herein) pursuant to which the Junior Subordinated Debt Securities are
issued and its obligations under the Declaration, including its liabilities to
pay costs, expenses, debts and liabilities of Williams Capital (other than with
respect to the Trust Securities), provides a full and unconditional guarantee of
amounts due on the Preferred Securities. The obligations of the Company under
the Guarantee rank subordinate and junior in right of payment to all Senior
Indebtedness (as defined herein) of the Company and pari passu with any
guarantee now or hereafter entered into by the Company in respect of any
preferred or preference stock of any affiliate of the Company. The obligations
of the Company under the Junior Subordinated Debt Securities are subordinate and
junior in right of payment to all present and future Senior Indebtedness of the
Company and rank pari passu with the 9.60% Quarterly Income Capital Securities
of the Company.
The distribution rate and the distribution payment date and other payment
dates for the Preferred Securities will correspond to the interest rate and
interest payment dates and other payment dates on the Junior Subordinated Debt
Securities, which will be the sole assets of Williams Capital. As a result, if
principal or interest is not paid on the Junior Subordinated Debt Securities by
the Company, no amounts will be paid on the Preferred Securities because
Williams Capital will not have sufficient funds to make distributions on the
Preferred Securities. In such event, the Guarantee will not apply to such
distributions until Williams Capital has sufficient funds available therefor.
The Company has the right to defer payments of interest on the Junior
Subordinated Debt Securities by extending the interest payment period on the
Junior Subordinated Debt Securities at any time for up to 20 consecutive
quarters (each, an "Extension Period"), provided, that no Extension Period may
extend beyond the maturity of the Junior Subordinated Debt Securities. If
interest payments are so deferred, distributions on the Preferred Securities
will also be deferred. During any Extension Period, distributions on the
Preferred Securities will continue to accrue with interest thereon (to the
extent permitted by applicable law) at an annual rate of % per annum
compounded quarterly. Additionally, during any Extension Period, holders of
Preferred Securities will be required to include deferred interest income in the
form of original issue discount ("OID") in their gross income for United States
federal income tax purposes in advance of receipt of the cash distributions with
respect to such deferred interest payments. See "Description of the Junior
Subordinated Debt Securities -- Option to Extend Interest Payment Period," "Risk
Factors Relating to the Preferred Securities -- Option to Extend Interest
Payment Period" and "United States Federal Income Taxation -- Interest Income
and Original Issue Discount."
The Junior Subordinated Debt Securities are redeemable by the Company, in
whole or in part, from time to time, on or after , 200 or at any
time, in whole or in part, in certain circumstances upon the occurrence of a Tax
Event (as defined herein). If the Company redeems Junior Subordinated Debt
Securities, Williams Capital must redeem Trust Securities having an aggregate
liquidation amount equal to the aggregate principal amount of the Junior
Subordinated Debt Securities so redeemed at $25 per Trust Security plus accrued
and unpaid distributions thereon (the "Redemption Price") to the date fixed for
redemption. See
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(continued from cover page)
"Description of the Preferred Securities -- Mandatory Redemption of Trust
Securities." The Preferred Securities will be redeemed upon maturity of the
Junior Subordinated Debt Securities. The Junior Subordinated Debt Securities
mature on , 203 . In addition, upon the occurrence of a Special
Event arising from a change in law or a change in legal interpretation regarding
tax or investment company matters, unless the Junior Subordinated Debt
Securities are redeemed in the limited circumstances described herein, Williams
Capital shall be dissolved, with the result that the Junior Subordinated Debt
Securities will be distributed to the holders of the Trust Securities, on a pro
rata basis, in lieu of any cash distribution. See "Description of the Preferred
Securities -- Special Event Redemption or Distribution." In certain
circumstances, the Company will have the right to redeem the Junior Subordinated
Debt Securities prior to , 200 , which would result in the
redemption by Williams Capital of Trust Securities in the same amount on a pro
rata basis. If the Junior Subordinated Debt Securities are distributed to the
holders of the Preferred Securities, the Company will use its best efforts to
have the Junior Subordinated Debt Securities listed on the New York Stock
Exchange or on such other exchange as the Preferred Securities are then listed.
See "Description of the Preferred Securities -- Special Event Redemption or
Distribution" and "Description of the Junior Subordinated Debt Securities."
In the event of the involuntary or voluntary dissolution, winding up or
termination of Williams Capital, the holders of the Preferred Securities will be
entitled to receive for each Preferred Security a liquidation amount of $25 plus
accrued and unpaid distributions thereon (including interest thereon) to the
date of payment, unless, in connection with such dissolution, the Junior
Subordinated Debt Securities are distributed to the holders of the Preferred
Securities. See "Description of the Preferred Securities -- Liquidation
Distribution Upon Dissolution."
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IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES
OFFERED HEREBY AT LEVELS ABOVE THOSE THAT MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING TRANSACTIONS, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
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SUMMARY
The following information is qualified in its entirety by the more detailed
information appearing elsewhere in this Prospectus Supplement and the
accompanying Prospectus.
THE COMPANY
The Company, through subsidiaries, is engaged in the transportation and
sale of natural gas and related activities, natural gas gathering, processing
and production activities, the transportation of petroleum products, natural gas
trading, natural gas liquids marketing and provides a variety of other products
and services to the energy industry. The Company also is engaged in the
telecommunications business. The Company's subsidiaries own and operate: (i)
five interstate natural gas pipeline systems; (ii) a common carrier crude and
petroleum products pipeline system; and (iii) natural gas gathering and
processing facilities and production properties. The Company also trades natural
gas and markets natural gas liquids. The Company's telecommunications
subsidiaries offer data, voice and video-related products and services and
customer premises equipment nationwide. The Company also has investments in the
equity of certain other companies.
Substantially all operations of the Company are conducted through
subsidiaries. The Company performs management, legal, financial, tax,
consultative, administrative and other services for its subsidiaries. The
Company's principal sources of cash are from dividends and advances from its
subsidiaries, investments, payments by subsidiaries for services rendered by its
staff and interest payments from subsidiaries on cash advances. The amount of
dividends available to the Company from subsidiaries largely depends upon each
subsidiary's earnings and operating capital requirements. The terms of certain
subsidiaries' borrowing arrangements limit the transfer of funds to the Company.
The Company was incorporated under the laws of the State of Nevada in 1949
and was reincorporated under the laws of the State of Delaware in 1987. The
principal executive offices of the Company are located at One Williams Center,
Tulsa, Oklahoma 74172 (telephone (918) 588-2000).
WILLIAMS CAPITAL
Williams Capital is a statutory business trust formed under Delaware law
pursuant to (i) a declaration of trust, dated as of January 31, 1997, executed
by the Company, as sponsor (the "Sponsor"), and the trustees of Williams Capital
(as described below) and (ii) the filing of a certificate of trust with the
Secretary of State of the State of Delaware on January 31, 1997. Such
declaration will be amended and restated in its entirety (as so amended and
restated, the "Declaration") substantially in the form filed as an exhibit to
the Registration Statement of which this Prospectus Supplement and the
accompanying Prospectus form a part. The Declaration will be qualified as an
indenture under the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"). Upon issuance of the Preferred Securities, the purchasers
thereof will own all of the Preferred Securities. See "Description of the
Preferred Securities -- Book-Entry Only Issuance -- The Depository Trust
Company." The Company will directly or indirectly acquire Common Securities in
an aggregate liquidation amount equal to % or more of the total capital of
Williams Capital. Williams Capital exists for the exclusive purposes of (i)
issuing the Trust Securities representing undivided beneficial interests in the
assets of the Trust, (ii) investing the gross proceeds of the Trust Securities
in the Junior Subordinated Debt Securities and (iii) engaging in only those
other activities necessary or incidental thereto.
Williams Capital's business and affairs are conducted by its trustees, each
appointed by the Company as holder of the Common Securities. Pursuant to the
Declaration, the number of trustees of Williams Capital will be four: The Chase
Manhattan Bank, a New York banking association that is unaffiliated with the
Company, as the institutional trustee (the "Institutional Trustee"), Chase
Manhattan Bank Delaware, a banking association with its principal place of
business in the State of Delaware, as the Delaware trustee (the "Delaware
Trustee"), and two individual trustees (the "Regular Trustees" and, together
with the Institutional Trustee and the Delaware Trustee, the "Williams
Trustees") will be persons who are employees or officers of, or who are
affiliated with the Company. Initially, the Regular Trustees will be Jack D.
McCarthy and James
S-4
<PAGE> 8
G. Ivey, each of whom is an officer of the Company. The Institutional Trustee
will act as the sole indenture trustee under the Declaration for purposes of
compliance with the Trust Indenture Act until removed or replaced by the holder
of the Common Securities. The Chase Manhattan Bank will also act as indenture
trustee (the "Guarantee Trustee") under the Guarantee. See "Description of
Guarantee" and "Description of Junior Subordinated Debt Securities."
The Institutional Trustee will hold title to the Junior Subordinated Debt
Securities for the benefit of the holders of the Trust Securities and, in its
capacity as the holder, the Institutional Trustee will have the power to
exercise all rights, powers and privileges under the indenture pursuant to which
the Junior Subordinated Debt Securities are issued. In addition, the
Institutional Trustee will maintain exclusive control of a segregated
non-interest bearing bank account (the "Property Account") to hold all payments
made in respect of the Junior Subordinated Debt Securities for the benefit of
the holders of the Trust Securities. The Institutional Trustee will make
payments of distributions and payments on liquidation, redemption and otherwise
to the holders of the Trust Securities out of funds from the Property Account.
The Guarantee Trustee will hold the Guarantee for the benefit of the holders of
the Preferred Securities. The Company, as the direct or indirect holder of all
the Common Securities, will have the right, subject to certain restrictions
contained in the Declaration, to appoint, remove or replace any Williams Trustee
and to increase or decrease the number of Williams Trustees. The Company will
pay all fees and expenses related to Williams Capital and the offering of the
Trust Securities. See "Description of the Junior Subordinated Debt Securities --
Miscellaneous."
The rights of the holders of the Preferred Securities, including economic
rights, rights to information and voting rights, are set forth in the
Declaration, the Delaware Business Trust Act (the "Trust Act") and the Trust
Indenture Act. See "Description of the Preferred Securities."
PREFERRED SECURITIES OFFERING
General.................... The Preferred Securities represent undivided
beneficial interests in Williams Capital's assets,
which will consist solely of the Junior
Subordinated Debt Securities. The Junior
Subordinated Debt Securities, in which the proceeds
of the Preferred Securities offered hereby will be
invested, mature on , 203 , unless the
Junior Subordinated Debt Securities are redeemed by
the Company prior to such maturity as described
under "Description of the Preferred
Securities -- Mandatory Redemption of Trust
Securities" and "Description of the Preferred
Securities -- Special Event Redemption or
Distribution."
Distributions.............. The distributions payable on each Preferred
Security will be fixed at a rate per annum of
% of the stated liquidation amount of $25 per
Preferred Security, will be cumulative, will accrue
from , 1997, the date of issuance of
the Preferred Securities, and will be payable
quarterly in arrears, on March 31, June 30,
September 30 and December 31 of each year,
commencing , 1997. See "Description of
the Preferred Securities -- Distributions."
Option to Extend Interest
Payment Period........... The Company has the right, at any time, to defer
payments of interest on the Junior Subordinated
Debt Securities for a period not exceeding 20
consecutive quarters; provided, that no Extension
Period may extend beyond the maturity date of the
Junior Subordinated Debt Securities. As a
consequence of the Company's extension of the
interest payment period, quarterly distributions on
the Preferred Securities would be deferred (though
such distributions would continue to accrue with
interest thereon compounded quarterly, since
interest would continue to accrue on the Junior
Subordinated Debt Securities) during any such
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extended interest payment period. In the event that
the Company exercises its right to extend an
interest payment period, then (a) the Company shall
not declare or pay any dividend on, make any
distributions with respect to, or redeem, purchase,
acquire or make a liquidation payment with respect
to, any of its capital stock or make any guarantee
payment with respect thereto, and (b) the Company
shall not make any payment of interest on or
principal of (or premium, if any, on), or repay,
repurchase or redeem, any debt securities issued by
the Company which rank pari passu with or junior to
the Junior Subordinated Debt Securities. The
foregoing, however, will not apply (i) to any stock
dividends paid by the Company where the dividend
stock is the same stock as that on which the
dividend is being paid or (ii) in certain other
limited events. Prior to the termination of any
Extension Period, the Company may further extend
such Extension Period, provided that such Extension
Period together with all such previous and further
extensions thereof may not exceed 20 consecutive
quarters. Upon the termination of any Extension
Period and the payment of all amounts then due, the
Company may commence a new Extension Period,
subject to the foregoing requirements. See
"Description of the Junior Subordinated Debt
Securities--Interest Income and Option to Extend
Interest Payment Period." Should an Extension
Period occur, Preferred Security holders will
continue to accrue income for United States federal
income tax purposes (in the form of original issue
discount) in respect of their pro rata share of the
Junior Subordinated Debt Securities held by
Williams Capital. As a result, such holders will be
required to include such interest in gross income
for United States federal income tax purposes in
advance of the receipt of cash, and such holders
will not receive the cash from Williams Capital
related to such income if such holders dispose of
Preferred Securities prior to the record date for
payment of distributions. See "United States
Federal Income Taxation -- Interest Income and
Original Issue Discount."
Mandatory Redemption....... Upon the repayment of the Junior Subordinated Debt
Securities, whether at maturity or upon earlier
redemption as provided in the Indenture, the
proceeds from such repayment will be applied by the
Institutional Trustee to redeem a like amount of
Trust Securities, upon the terms and conditions
described herein. See "Description of the Preferred
Securities -- Mandatory Redemption of Trust
Securities."
Optional Redemption........ The Company has the right to redeem the Junior
Subordinated Debt Securities (a) on or after
, 200 , in whole at any time or in
part from time to time, subject to the conditions
described in "Description of the Junior
Subordinated Debt Securities -- Optional
Redemption" or (b) at any time, in whole or in
part, in certain circumstances upon the occurrence
of a Tax Event (as defined herein) as described
under "Description of the Preferred
Securities -- Special Event Redemption or
Distribution," in each case at a redemption price
equal to 100% of the principal amount of Junior
Subordinated Debt Securities being redeemed,
together with any accrued but unpaid interest, to
but not including the redemption date. See
"Description of the Junior Subordinated Debt
Securities -- Optional Redemption." If the Company
redeems any Junior Subordinated Debt Securities,
the proceeds from such redemption will be applied
by the Institutional Trustee to redeem a like
amount of Trust Securities.
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<PAGE> 10
Special Event
Distribution............... Subject to certain conditions and except in limited
circumstances, if at any time a Special Event (as
defined herein) shall occur and be continuing,
Williams Capital shall be dissolved with the result
that Junior Subordinated Debt Securities with an
aggregate principal amount equal to the aggregate
stated liquidation amount of, with an interest rate
identical to the distribution rate of, and with
accrued and unpaid interest thereon equal to
accrued and unpaid distributions on, the Trust
Securities outstanding at such time, would be
distributed to the holders of the Trust Securities
in liquidation of such holders' interests in
Williams Capital on a pro rata basis within 90 days
following the occurrence of such Special Event. See
"Description of the Preferred Securities -- Special
Event Redemption or Distribution."
Voting Rights.............. Generally, the holders of the Preferred Securities
will not have any voting rights. See "Description
of the Preferred Securities -- Voting Rights."
Subject to certain conditions, including that the
Institutional Trustee obtain the opinion of counsel
described under "Description of the Preferred
Securities -- Voting Rights" prior to taking
certain actions, the holders of a majority in
aggregate liquidation amount of the Preferred
Securities have the right to direct the time,
method and place of conducting any proceeding for
any remedy available to the Institutional Trustee,
or direct the exercise of any trust or power
conferred upon the Institutional Trustee under the
Declaration including the right to direct the
Institutional Trustee, as holder of the Junior
Subordinated Debt Securities, to (i) exercise the
remedies available under the Indenture with respect
to the Junior Subordinated Debt Securities, (ii)
waive any past Indenture Event of Default that is
waivable under the Indenture (as defined herein),
(iii) exercise any right to rescind or annul a
declaration that the principal of all the Junior
Subordinated Debt Securities shall be due and
payable, or (iv) consent to any amendment,
modification or termination of the Indenture or the
Junior Subordinated Debt Securities where such
consent shall be required; provided, however, that
where a consent or action under the Indenture would
require the consent or act of a Super Majority (as
defined herein) of holders of the Junior
Subordinated Debt Securities affected thereby, only
the holders of at least such Super Majority in
aggregate liquidation amount of the Preferred
Securities may direct the Institutional Trustee to
give such consent or take such action. See
"Description of the Preferred Securities -- Voting
Rights."
Use of Proceeds............ The proceeds from the sale of the Preferred
Securities offered hereby will be used by Williams
Capital to purchase the Junior Subordinated Debt
Securities issued by the Company. The Company
expects to use such proceeds for general corporate
purposes. See "Use of Proceeds."
Listing.................... The Company intends to apply for listing of the
Preferred Securities on the New York Stock
Exchange. Trading of the Preferred Securities on
the New York Stock Exchange is expected to commence
within a 30-day period after the initial delivery
of the Preferred Securities.
RISK FACTORS
Prospective investors should consider carefully, in addition to the other
information contained in this Prospectus Supplement and the accompanying
Prospectus, the matters set forth under the caption "Risk Factors" in this
Prospectus Supplement before purchasing the Preferred Securities offered hereby.
S-7
<PAGE> 11
RISK FACTORS
Prospective investors should consider carefully, in addition to the other
information contained in this Prospectus Supplement and the accompanying
Prospectus, the following risk factors before purchasing the Preferred
Securities offered hereby.
RANKING OF SUBORDINATE OBLIGATIONS UNDER THE JUNIOR SUBORDINATED DEBT SECURITIES
AND THE GUARANTEE
The obligations of the Company under the Junior Subordinated Debt
Securities are subordinate and junior in right of payment to all present and
future Senior Indebtedness of the Company and rank pari passu with the Company's
9.60% Quarterly Income Capital Securities. No payment of principal (including
redemption payments, if any), premium, if any, or interest on the Junior
Subordinated Debt Securities may be made if (i) any Senior Indebtedness of the
Company is not paid when due and any applicable grace period with respect to
such default has ended with such default not having been cured or waived or
ceasing to exist, or (ii) the maturity of any Senior Indebtedness of the Company
has been accelerated because of a default. The Company's obligations under the
Guarantee rank subordinate and junior in right of payment to all Senior
Indebtedness of the Company and pari passu with any guarantee now or hereafter
entered into by the Company in respect of any preferred or preference stock of
any affiliate of the Company. There are no terms in the Preferred Securities,
the Junior Subordinated Debt Securities or the Guarantee that limit the
Company's ability to incur additional indebtedness, including indebtedness that
ranks senior to the Junior Subordinated Debt Securities and the Guarantee. See
"Description of Guarantee -- Status of the Guarantee" and "Description of the
Junior Subordinated Debt Securities -- Subordination."
RIGHTS UNDER THE GUARANTEE
The Guarantee will be qualified as an indenture under the Trust Indenture
Act. The Chase Manhattan Bank will act as indenture trustee under the Guarantee
for the purposes of compliance with the provisions of the Trust Indenture Act.
The Guarantee Trustee will hold the Guarantee for the benefit of the holders of
the Preferred Securities.
The Guarantee guarantees to the holders of the Preferred Securities the
payment of (i) any accrued and unpaid distributions that are required to be paid
on the Preferred Securities, to the extent Williams Capital has funds available
therefor, (ii) the Redemption Price with respect to Preferred Securities called
for redemption by Williams Capital, to the extent Williams Capital has funds
available therefor, and (iii) upon a voluntary or involuntary dissolution,
winding-up or termination of Williams Capital (other than in connection with the
distribution of Junior Subordinated Debt Securities to the holders of Preferred
Securities or a redemption of all the Preferred Securities), the lesser of (a)
the aggregate of the liquidation amount and all accrued and unpaid distributions
on the Preferred Securities to the date of the payment and (b) the amount of
assets of Williams Capital remaining available for distribution to holders of
the Preferred Securities in liquidation of Williams Capital. The holders of a
majority in liquidation amount of the Preferred Securities have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Guarantee Trustee or to direct the exercise of any trust or
power conferred upon the Guarantee Trustee under the Guarantee. If the Guarantee
Trustee fails to enforce the Guarantee, any holder of Preferred Securities may
directly institute a legal proceeding against the Company to enforce the
Guarantee Trustee's rights under the Guarantee without first instituting a legal
proceeding against Williams Capital, the Guarantee Trustee or any other person
or entity. A holder of Preferred Securities may also directly institute a legal
proceeding against the Company to enforce such holder's right to receive payment
under the Guarantee without first (i) directing the Guarantee Trustee to enforce
the terms of the Guarantee or (ii) instituting a legal proceeding against
Williams Capital or any other person or entity. If the Company were to default
on its obligation to pay amounts payable on the Junior Subordinated Debt
Securities, Williams Capital would lack available funds for the payment of
distributions or amounts payable on redemption of the Preferred Securities or
otherwise, and, in such event, holders of the Preferred Securities would not be
able to rely upon the Guarantee for payment of such amounts. Instead, a holder
of the Preferred Securities would rely on the enforcement (1) by the
Institutional Trustee of its rights as registered holder of the Junior
Subordinated Debt Securities against the Company pursuant to the terms of the
Junior Subordinated Debt Securities or (2) by such holder of Preferred
S-8
<PAGE> 12
Securities of its right against the Company to enforce payments on the Junior
Subordinated Debt Securities. See "Description of Guarantees" and "Description
of Junior Subordinated Debt Securities" in the accompanying Prospectus. The
Declaration provides that each holder of Preferred Securities, by acceptance
thereof, agrees to the provisions of the Guarantee, including the subordination
provisions thereof, and the Indenture (as defined herein).
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF PREFERRED SECURITIES
If a Declaration Event of Default (as defined herein) occurs and is
continuing, then the holders of Preferred Securities would rely on the
enforcement by the Institutional Trustee of its rights as a holder of the Junior
Subordinated Debt Securities against the Company. In addition, the holders of a
majority in liquidation amount of the Preferred Securities will have the right
to direct the time, method, and place of conducting any proceeding for any
remedy available to the Institutional Trustee or to direct the exercise of any
trust or power conferred upon the Institutional Trustee under the Declaration,
including the right to direct the Institutional Trustee to exercise the remedies
available to it as a holder of the Junior Subordinated Debt Securities. If the
Institutional Trustee fails to enforce its rights under the Junior Subordinated
Debt Securities, any holder of Preferred Securities may directly institute a
legal proceeding against the Company to enforce the Institutional Trustee's
rights under the Junior Subordinated Debt Securities without first instituting
any legal proceeding against the Institutional Trustee or any other person or
entity. If a Declaration Event of Default has occurred and is continuing and
such event is attributable to the failure of the Company to pay interest or
principal on the Junior Subordinated Debt Securities on the date such interest
or principal is otherwise payable (or in the case of redemption, on the
redemption date), then a holder of Preferred Securities may also directly
institute a proceeding for enforcement of payment to such holder of the
principal of or interest on the Junior Subordinated Debt Securities having a
principal amount equal to the aggregate liquidation amount of the Preferred
Securities of such holder (a "Direct Action") on or after the respective due
date specified in the Junior Subordinated Debt Securities without first (i)
directing the Institutional Trustee to enforce the terms of the Junior
Subordinated Debt Securities or (ii) instituting a legal proceeding against the
Company to enforce the Institutional Trustee's rights under the Junior
Subordinated Debt Securities. In connection with such Direct Action, the Company
will be subrogated to the rights of such holder of Preferred Securities under
the Declaration to the extent of any payment made by the Company to such holder
of Preferred Securities in such Direct Action. Consequently, the Company will be
entitled to payment of amounts that a holder of Preferred Securities receives in
respect of an unpaid distribution that resulted in the bringing of a Direct
Action to the extent that such holder receives or has already received full
payment with respect to such unpaid distribution from Williams Capital. The
holders of Preferred Securities will not be able to exercise directly any other
remedy available to the holders of the Junior Subordinated Debt Securities.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
The Company has the right under the Indenture to defer payments of interest
on the Junior Subordinated
Debt Securities by extending the interest payment period from time to time on
the Junior Subordinated Debt Securities for an Extension Period not exceeding 20
consecutive quarterly interest periods during which no interest shall be due and
payable, provided, that no Extension Period may extend beyond the maturity of
the Junior Subordinated Debt Securities. As a consequence of such an extension,
quarterly distributions on the Preferred Securities would be deferred (but
despite such deferral would continue to accrue with interest thereon compounded
quarterly) by Williams Capital during any such extended interest payment period.
In the event that the Company exercises this right to defer interest payments,
then (a) the Company shall not declare or pay any dividend on, make any
distributions with respect to, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of its capital stock or make any
guarantee payment with respect thereto (other than (i) repurchases, redemptions
or other acquisitions of shares of capital stock of the Company in connection
with any employment contract, benefit plan or other similar arrangement with or
for the benefit of employees, officers, directors or consultants, (ii) as a
result of an exchange or conversion of any class or series of the Company's
capital stock for any other class or series of the Company's capital stock, or
(iii) the purchase of fractional interests in shares of the Company's capital
stock pursuant to the conversion or exchange provisions of such capital stock or
the security being converted or exchanged), and (b) the
S-9
<PAGE> 13
Company shall not make any payment of interest on or principal of (or premium,
if any, on), or repay, repurchase or redeem, any debt securities issued by the
Company which rank pari passu with or junior to such Junior Subordinated Debt
Securities. The foregoing, however, will not apply to any stock dividends paid
by the Company where the dividend stock is the same stock as that on which the
dividend is being paid. Prior to the termination of any Extension Period, the
Company may further extend such Extension Period; provided, that such Extension
Period, together with all such previous and further extensions thereof, may not
exceed 20 consecutive quarterly interest periods; provided, further, that no
Extension Period may extend beyond the maturity of the Junior Subordinated Debt
Securities. Upon the termination of any Extension Period and the payment of all
amounts then due, the Company may commence a new Extension Period, subject to
the above requirements. See "Description of the Preferred
Securities--Distributions" and "Description of the Junior Subordinated Debt
Securities--Option to Extend Interest Payment Period."
The junior subordinated debt securities issued from time to time in
connection with the issuance of trust preferred securities by a Trust will
contain the same restrictive covenants described in the preceding paragraph. The
effect of such restrictive covenants will be to limit the rights of holders of
Preferred Securities to receive payments with respect thereto if there has been
a deferral of interest under any such junior subordinated debt securities.
Should the Company exercise its right to defer any payment of interest on
the Junior Subordinated Debt Securities by extending the interest payment
period, under recently issued Treasury regulations, each holder of Preferred
Securities will accrue income in the form of OID in respect of the deferred but
unpaid interest allocable to its Preferred Securities. As a result, during any
Extension Period, each such holder of Preferred Securities will recognize income
for United States federal income tax purposes in advance of the receipt of cash
and will not receive the cash from Williams Capital related to such income if
such holder disposes of its Preferred Securities prior to the record date for
the date on which distributions of such amounts are made. See "United States
Federal Income Taxation -- Interest Income and Original Issue Discount." In such
event, to the extent the selling price is less than the holder's adjusted tax
basis, such holder will recognize a capital loss. Subject to certain limited
exceptions, capital losses cannot be applied to offset ordinary income for
United States federal income tax purposes. The Company believes that the
likelihood of it exercising its right to defer payments of interest is remote.
However, should the Company exercise such right in the future, the market price
of the Preferred Securities is likely to be affected. A holder that disposes of
its Preferred Securities during an Extension Period, therefore, might not
receive the same return on its investment as a holder that continues to hold its
Preferred Securities. In addition, as a result of the existence of the Company's
right to defer interest payments, the market price of the Preferred Securities
(which represent an undivided beneficial interest in the Junior Subordinated
Debt Securities) may be more volatile than other similar securities where the
issuer does not have such rights to defer interest payments.
SPECIAL EVENT REDEMPTION OR DISTRIBUTION
Upon the occurrence of a Special Event (as defined herein), Williams
Capital will be dissolved, except in the limited circumstance described below,
with the result that the Junior Subordinated Debt Securities will be distributed
to the holders of the Trust Securities in connection with the liquidation of
Williams Capital. In certain circumstances in connection with a Tax Event, the
Company has the right to redeem the Junior Subordinated Debt Securities, in
whole or in part, in lieu of a distribution of the Junior Subordinated Debt
Securities to holders of Trust Securities by Williams Capital, in which event
Williams Capital will redeem the Trust Securities on a pro rata basis to the
same extent as the Junior Subordinated Debt Securities are redeemed by the
Company. See "Description of the Preferred Securities -- Special Event
Redemption or Distribution."
Under current United States federal income tax law and assuming, as
expected, that Williams Capital is treated as a grantor trust, a distribution of
Junior Subordinated Debt Securities upon the dissolution of Williams Capital
would not be a taxable event to holders of the Preferred Securities. Upon the
occurrence of a Tax Event, however, a dissolution of Williams Capital in which
holders of the Preferred Securities receive cash would be a taxable event to
such holders. See "United States Federal Income Taxation -- Distribution of
S-10
<PAGE> 14
Junior Subordinated Debt Securities to Holders of Preferred Securities
and -- Disposition of Preferred Securities."
There can be no assurance as to the market prices for the Preferred
Securities or the Junior Subordinated Debt Securities that may be distributed in
exchange for Preferred Securities if a dissolution or liquidation of Williams
Capital were to occur. Accordingly, the Preferred Securities that an investor
may purchase, whether pursuant to the offer made hereby or in the secondary
market, or the Junior Subordinated Debt Securities that a holder of Preferred
Securities may receive on dissolution and liquidation of Williams Capital, may
trade at a discount to the price that the investor paid to purchase the
Preferred Securities offered hereby. Because holders of Preferred Securities may
receive Junior Subordinated Debt Securities upon the occurrence of a Special
Event, prospective purchasers of Preferred Securities are also making an
investment decision with regard to the Junior Subordinated Debt Securities and
should carefully review all the information regarding the Junior Subordinated
Debt Securities contained herein and in the accompanying Prospectus. See
"Description of the Preferred Securities -- Special Event Redemption or
Distribution" and "Description of the Junior Subordinated Debt
Securities -- General."
PROPOSED TAX LEGISLATION
On March 19, 1996, as a part of President Clinton's Fiscal 1997 Budget
Proposal, the Treasury Department proposed legislation (the "Proposed
Legislation") that, among other things, would (i) treat as equity for United
States federal income tax purposes certain debt instruments with a maximum term
of more than 20 years and (ii) disallow interest deductions on debt instruments
with a maturity of more than 40 years. The Proposed Legislation was proposed to
be effective for debt instruments issued on or after December 7, 1995.
On March 29, 1996, Senate Finance Committee Chairman William V. Roth, Jr.
and House Ways and Means Committee Chairman Bill Archer issued a joint statement
(the "Joint Statement") indicating their intent that the Proposed Legislation,
if adopted by either of the tax-writing committees of Congress, would have an
effective date that is no earlier than the date of "appropriate Congressional
action." The proposals were not adopted in the recently concluded session of
Congress. There can be no assurance, however, that final legislation similar to
the Bill or future legislative proposals, future regulations or official
administrative pronouncements or future judicial decisions will not affect the
ability of the Company to deduct interest on the Junior Subordinated Debt
Securities. Such a change could give rise to a Tax Event, which may permit the
Company to cause a redemption of the Preferred Securities. See "Description of
the Preferred Securities -- Special Event Redemption or Distribution."
LIMITED VOTING RIGHTS
Holders of Preferred Securities will have limited voting rights and will
not be entitled to vote to appoint, remove or replace, or to increase or
decrease the number of, Williams Trustees, which voting rights are vested
exclusively in the holder of the Common Securities. See "Description of the
Preferred Securities -- Voting Rights."
TRADING PRICE
Should the Company exercise its option to defer any payment of interest on
the Junior Subordinated Debt Securities, the Preferred Securities may trade at a
price that does not fully reflect the value of accrued but unpaid interest with
respect to the underlying Junior Subordinated Debt Securities. In the event of
such a deferral, a holder of Preferred Securities who disposes of its Preferred
Securities between record dates for payments of distributions thereon will be
required to include in income as ordinary income accrued but unpaid interest on
the Junior Subordinated Debt Securities to the date of disposition, and to add
such amount to its adjusted tax basis in its pro rata share of the underlying
Junior Subordinated Debt Securities deemed disposed of. To the extent the
selling price is less than such holder's adjusted tax basis (which will include,
in the form of OID, all accrued but unpaid interest), such holder will recognize
a capital loss. Subject to certain limited exceptions, capital losses cannot be
applied to offset ordinary income for United States federal income tax
S-11
<PAGE> 15
purposes. See "United States Federal Income Taxation -- Interest Income and
Original Issue Discount" and "-- Sales of Preferred Securities."
USE OF PROCEEDS
All of the net proceeds from the sale of the Preferred Securities offered
hereby will be invested by Williams Capital in Junior Subordinated Debt
Securities of the Company. The Company will use the proceeds from the sale of
the Junior Subordinated Debt Securities to Williams Capital for general
corporate purposes.
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS
<TABLE>
<CAPTION>
NINE MONTHS ENDED YEAR ENDED DECEMBER 31,
SEPTEMBER 30, --------------------------------
1996 1995 1994 1993 1992 1991
----------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to combined fixed charges and
preferred stock dividend requirements......... 2.22 2.06 2.15 2.30 1.59 1.43
</TABLE>
For the purpose of this ratio (i) earnings consist of income from
continuing operations before fixed charges and incomes taxes for the Company,
its majority-owned subsidiaries and its proportionate share of 50 percent-owned
companies, less undistributed earnings of less than 50 percent-owned companies;
and (ii) fixed charges consist of interest and debt expense on all indebtedness
(without reduction for interest capitalized), that portion of rental payments on
operating leases estimated to represent an interest factor, plus the pretax
effect of preferred stock dividends of the Company and its subsidiaries.
ACCOUNTING TREATMENT
The financial statements of Williams Capital will be included in the
Company's consolidated financial statements with the Preferred Securities shown
as "Williams Capital-Obligated Mandatorily Redeemable Preferred Securities of
Subsidiary Trusts holding solely Junior Subordinated Debt Securities."
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<PAGE> 16
CAPITALIZATION
The following table sets forth the capitalization of the Company at
September 30, 1996, and as adjusted to give effect to the issuance of the
Preferred Securities.
<TABLE>
<CAPTION>
AT SEPTEMBER 30, 1996
-------------------------
OUTSTANDING AS ADJUSTED
----------- -----------
(IN MILLIONS)
<S> <C> <C>
Notes Payable.......................................................... $ 300 $ 300
Long-term debt due within one year..................................... 54 54
------ ------
Long-term debt......................................................... 354 354
------ ------
4,137 4,137
Williams Capital-Obligated Mandatorily Redeemable Preferred Securities
of Subsidiary Trusts holding solely Junior Subordinated Debt
Securities(1)........................................................
Stockholders' equity
Preferred stock...................................................... 161 161
Common stock......................................................... 107 107
Capital in excess of par value....................................... 1,092 1,092
Retained earnings.................................................... 2,057 2,057
Unamortized deferred compensation.................................... (2) (2)
------ ------
3,415 3,415
Less treasury stock.................................................. (71) (71)
------ ------
Total stockholders' equity........................................... 3,344 3,344
------ ------
Total capitalization................................................... $ 7,481 $
====== ======
</TABLE>
- ---------------
(1) The sole asset of each trust will be junior subordinated deferrable interest
debentures of the Company. The sole asset of Williams Capital will be
$ aggregate principal amount of % junior subordinated
deferrable interest debentures of the Company due , 203 .
S-13
<PAGE> 17
DESCRIPTION OF THE PREFERRED SECURITIES
The Preferred Securities will be issued pursuant to the terms of the
Declaration. The Declaration will be qualified as an indenture under the Trust
Indenture Act. The Institutional Trustee, The Chase Manhattan Bank, will act as
indenture trustee under the Declaration for purposes of compliance with the
provisions of the Trust Indenture Act. The terms of the Preferred Securities
will include those stated in the Declaration and those made part of the
Declaration by the Trust Indenture Act. This description supplements the
description of the general terms and provisions of the Preferred Securities set
forth in the accompanying Prospectus under the caption "Description of Preferred
Securities." The following summary of the material terms and provisions of the
Preferred Securities does not purport to be complete and is subject to, and
qualified in its entirety by reference to, the Declaration (a copy of which is
filed as an exhibit to the Registration Statement of which this Prospectus
Supplement is a part), the Trust Act and the Trust Indenture Act.
GENERAL
The Declaration authorizes the Regular Trustees to issue on behalf of
Williams Capital the Trust Securities, which represent undivided beneficial
interests in the assets of Williams Capital. All of the Common Securities will
be owned, directly or indirectly, by the Company. The Common Securities rank
pari passu, and payments will be made thereon on a pro rata basis, with the
Preferred Securities, except that upon the occurrence and during the continuance
of a Declaration Event of Default, the rights of the holders of the Common
Securities to receive payment of periodic distributions and payments upon
liquidation, redemption and otherwise will be subordinated to the rights of the
holders of the Preferred Securities. The Declaration does not permit the
issuance by Williams Capital of any securities other than the Trust Securities
or the incurrence of any indebtedness by Williams Capital. Pursuant to the
Declaration, the Institutional Trustee will hold title to the Junior
Subordinated Debt Securities purchased by Williams Capital for the benefit of
the holders of the Trust Securities. The payment of distributions out of money
held by Williams Capital, and payments upon redemption of the Preferred
Securities or liquidation of Williams Capital out of money held by Williams
Capital, are guaranteed by the Company to the extent described under
"Description of Guarantee." The Guarantee will be held by The Chase Manhattan
Bank, the Guarantee Trustee, for the benefit of the holders of the Preferred
Securities. The Guarantee does not cover payment of distributions when Williams
Capital does not have sufficient available funds to pay such distributions. In
such event, the remedy of a holder of Preferred Securities is to (i) vote to
direct the Institutional Trustee to enforce the Institutional Trustee's rights
under the Junior Subordinated Debt Securities or (ii) if the failure of Williams
Capital to pay distributions is attributable to the failure of the Company to
pay interest or principal on the Junior Subordinated Debt Securities, institute
a proceeding directly against the Company for enforcement of payment to such
holder of the principal or interest on the Junior Subordinated Debt Securities
having a principal amount equal to the aggregate liquidation amount of the
Preferred Securities of such holder on or after the respective due date
specified in the Junior Subordinated Debt Securities. See "-- Voting Rights."
DISTRIBUTIONS
Distributions on the Preferred Securities will be fixed at a rate per annum
of % of the stated liquidation amount of $25 per Preferred Security.
Distributions in arrears beyond the first date such distributions are payable
(or would be payable, if not for any Extension Period or default by the Company
on the Junior Subordinated Debt Securities) will bear interest thereon at the
rate per annum of % thereof compounded quarterly. The term "distribution"
as used herein includes any such interest payable unless otherwise stated. The
amount of distributions payable for any period will be computed on the basis of
a 360-day year of twelve 30-day months.
Distributions on the Preferred Securities will be cumulative, will accrue
from and including , and will be payable quarterly in arrears on March
31, June 30, September 30 and December 31 of each year, commencing .
When, as and if available for payment, distributions will be made by the
Institutional Trustee, except as otherwise described below.
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<PAGE> 18
The distribution rate and the distribution payment dates and other payment
dates for the Preferred Securities will correspond to the interest rate and
interest payment dates and other payment dates on the Junior Subordinated Debt
Securities.
The Company has the right under the Indenture to defer payments of interest
on the Junior Subordinated Debt Securities by extending the interest payment
period from time to time on the Junior Subordinated Debt Securities for an
Extension Period not exceeding 20 consecutive quarterly interest periods during
which no interest shall be due and payable, provided, that no Extension Period
may extend beyond the maturity of the Junior Subordinated Debt Securities. As a
consequence of the Company's extension of the interest payment period, quarterly
distributions on the Preferred Securities would be deferred (though such
distributions would continue to accrue with interest thereon compounded
quarterly, since interest would continue to accrue on the Junior Subordinated
Debt Securities) during any such extended interest payment period. In the event
that the Company exercises its right to extend the interest payment period, then
(a) the Company shall not declare or pay any dividend on, make any distributions
with respect to, or redeem, purchase, acquire or make a liquidation payment with
respect to, any of its capital stock or make any guarantee payment with respect
thereto (other than (i) repurchases, redemptions or other acquisitions of shares
of capital stock of the Company in connection with any employment contract,
benefit plan or other similar arrangement with or for the benefit of employees,
officers, directors or consultants, (ii) as a result of an exchange or
conversion of any class or series of the Company's capital stock for any other
class or series of the Company's capital stock, or (iii) the purchase of
fractional interests in shares of the Company's capital stock pursuant to the
conversion or exchange provisions of such capital stock or the security being
converted or exchanged), and (b) the Company shall not make any payment of
interest on or principal of (or premium, if any, on), or repay, repurchase or
redeem, any debt securities issued by the Company which rank pari passu with or
junior to the Junior Subordinated Debt Securities. The foregoing, however, will
not apply to any stock dividends paid by the Company where the dividend stock is
the same stock as that on which the dividend is being paid. Prior to the
termination of any Extension Period, the Company may further extend such
Extension Period; provided, that such Extension Period, together with all such
previous and further extensions thereof, may not exceed 20 consecutive quarterly
interest periods; provided further, that no Extension Period may extend beyond
the maturity of the Junior Subordinated Debt Securities. Upon the termination of
any Extension Period and the payment of all amounts then due, the Company may
commence a new Extension Period, subject to the above requirements. See
"Description of the Junior Subordinated Debt Securities -- Interest" and
"-- Option to Extend Interest Payment Period." The Regular Trustees shall give
the holders of the Preferred Securities notice of any Extension Period upon
their receipt of notice thereof from the Company. See "Description of the Junior
Subordinated Debt Securities -- Option To Extend Interest Payment Period." If
distributions are deferred, the deferred distributions and accrued interest
thereon shall be paid to holders of record of the Preferred Securities as they
appear on the books and records of Williams Capital on the record date next
following the termination of such deferral period.
Distributions on the Preferred Securities will be made on the dates payable
to the extent that Williams Capital has funds available for the payment of such
distributions in the Property Account. Williams Capital's funds available for
distribution to the holders of the Preferred Securities will be limited to
payments received from the Company on the Junior Subordinated Debt Securities.
See "Description of the Junior Subordinated Debt Securities." The payment of
distributions out of monies held by Williams Capital is guaranteed by the
Company to the extent set forth under "Description of Guarantee."
Distributions on the Preferred Securities will be payable to the holders
thereof as they appear on the books and records of Williams Capital at the close
of business on the relevant record dates, which, as long as the Preferred
Securities remain in book-entry only form, will be one Business Day prior to the
relevant payment dates. Such distributions will be paid through the
Institutional Trustee who will hold amounts received in respect of the Junior
Subordinated Debt Securities in the Property Account for the benefit of the
holders of the Trust Securities. Subject to any applicable laws and regulations
and the provisions of the Declaration, each such payment will be made as
described under "--Book-Entry Only Issuance--The Depository Trust Company"
below. In the event that the Preferred Securities do not continue to remain in
book-entry only form, the relevant record dates shall conform to the rules of
any securities exchange on which
S-15
<PAGE> 19
the Preferred Securities are listed and, if none, the Regular Trustees shall
have the right to select relevant record dates, which shall be more than 14 days
but less than 60 days prior to the relevant payment dates. In the event that any
date on which distributions are to be made on the Preferred Securities is not a
Business Day, then payment of the distributions payable on such date will be
made on the next succeeding day which is a Business Day (and without any
interest or other payment in respect of any such delay), except that, if such
Business Day is in the next succeeding calendar year, such payment shall be made
on the immediately preceding Business Day, in each case with the same force and
effect as if made on such date. A "Business Day" shall mean any day other than
Saturday, Sunday or any other day on which banking institutions in New York City
(in the State of New York) are permitted or required by any applicable law to
close.
MANDATORY REDEMPTION OF TRUST SECURITIES
The Preferred Securities have no stated maturity date but will be redeemed
upon the maturity of the Junior Subordinated Debt Securities or to the extent
the Junior Subordinated Debt Securities are redeemed. The Junior Subordinated
Debt Securities will mature on , 203 , and may be redeemed, in
whole or in part, at any time on or after , 200 , or at any
time, in whole or in part, in certain circumstances upon the occurrence of a Tax
Event (as described under "Special Event Redemption or Distribution" below). See
"Description of the Junior Subordinated Debt Securities--Optional Redemption."
Upon the maturity of the Junior Subordinated Debt Securities, the proceeds of
the repayment thereof shall simultaneously be applied to redeem all outstanding
Trust Securities at the Redemption Price. Upon the redemption of the Junior
Subordinated Debt Securities, whether in whole or in part (either at the option
of the Company or pursuant to a Tax Event), the proceeds from such redemption
shall simultaneously be applied to redeem Trust Securities having an aggregate
liquidation amount equal to the aggregate principal amount of the Junior
Subordinated Debt Securities so redeemed at the Redemption Price; provided, that
holders of Trust Securities shall be given not less than 30 nor more than 60
days' notice of such redemption. In the event that fewer than all of the
outstanding Preferred Securities are to be redeemed, the Preferred Securities to
be redeemed shall be selected by the Company pro rata, by lot, or by any other
method determined by the Williams Trustees to be equitable. See "-- Book-Entry
Only Issuance -- The Depository Trust Company" below.
SPECIAL EVENT REDEMPTION OR DISTRIBUTION
"Tax Event" means that the Regular Trustees shall have received an opinion
of a nationally recognized independent tax counsel experienced in such matters
(a "Dissolution Tax Opinion") to the effect that, as a result of (a) any
amendment to, or change (including any announced prospective change) in, the
laws (or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein or (b) any amendment to or
change in an interpretation or application of such laws or regulations by any
legislative body, court, governmental agency or regulatory authority (including
the enactment of any legislation and the publication of any judicial decision or
regulatory determination on or after the date of this Prospectus Supplement), in
either case after the date of this Prospectus Supplement, there is more than an
insubstantial risk that (i) Williams Capital would be subject to United States
federal income tax with respect to income accrued or received on the Junior
Subordinated Debt Securities, (ii) interest payable to Williams Capital on the
Junior Subordinated Debt Securities would not be deductible, in whole or in
part, by the Company for United States federal income tax purposes or (iii)
Williams Capital would be subject to more than a de minimis amount of other
taxes, duties or other governmental charges.
"Investment Company Event" means that the Regular Trustees shall have
received an opinion of a nationally recognized independent counsel experienced
in practicing under the 1940 Act (as defined herein) to the effect that, as a
result of the occurrence of a change in law or regulation or a written change in
interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority (a "Change in 1940 Act Law"),
there is more than an insubstantial risk that Williams Capital is or will be
considered an "investment company" which is required to be registered under the
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Investment Company Act of 1940, as amended (the "1940 Act"), which Change in
1940 Act Law becomes effective on or after the date of this Prospectus
Supplement.
If, at any time, a Tax Event or an Investment Company Event (each, as
defined above, a "Special Event") shall occur and be continuing, Williams
Capital shall, except in the limited circumstances described below, be dissolved
with the result that Junior Subordinated Debt Securities with an aggregate
principal amount equal to the aggregate stated liquidation amount of, with an
interest rate identical to the distribution rate of, and with accrued and unpaid
interest equal to accrued and unpaid distributions on, the Trust Securities
outstanding at such time would be distributed to the holders of the Trust
Securities in liquidation of such holders' interests in Williams Capital on a
pro rata basis within 90 days following the occurrence of such Special Event;
provided, however, that in the case of the occurrence of a Tax Event, such
dissolution and distribution shall be conditioned on the Regular Trustees'
receipt of an opinion of nationally recognized independent tax counsel
experienced in such matters (a "No Recognition Opinion"), which opinion may rely
on, among other things, published revenue rulings of the Internal Revenue
Service, to the effect that the holders of the Trust Securities will not
recognize any gain or loss for United States federal income tax purposes as a
result of such dissolution and distribution of Junior Subordinated Debt
Securities and, provided further, that, if at the time there is available to the
Company or Williams Capital the opportunity to eliminate, within such 90 day
period, the Special Event by taking some ministerial action, such as filing a
form or making an election, or pursuing some other similar reasonable measure,
that will have no adverse effect on Williams Capital, the Company or the holders
of the Trust Securities, the Company or Williams Capital will pursue such
measure in lieu of dissolution. Furthermore, if in the case of the occurrence of
a Tax Event, (i) the Company has received an opinion (a "Redemption Tax
Opinion") of nationally recognized independent tax counsel experienced in such
matters that, as a result of such Tax Event, there is more than an insubstantial
risk that the Company would be precluded from deducting the interest on the
Junior Subordinated Debt Securities for United States federal income tax
purposes, even after the Junior Subordinated Debt Securities were distributed to
the holders of Trust Securities in liquidation of such holders' interests in
Williams Capital as described above, or (ii) the Regular Trustees shall have
been informed by such tax counsel that it cannot deliver a No Recognition
Opinion to the Regular Trustees, the Company shall have the right, upon not less
than 30 nor more than 60 days' notice, to redeem the Junior Subordinated Debt
Securities, in whole or in part, for cash within 90 days following the
occurrence of such Tax Event, and, following such redemption, Trust Securities
with an aggregate liquidation amount equal to the aggregate principal amount of
the Junior Subordinated Debt Securities so redeemed shall be redeemed by
Williams Capital at the Redemption Price on a pro rata basis; provided, however,
that if at the time there is available to the Company or Williams Capital the
opportunity to eliminate, within such 90-day period, the Tax Event by taking
some ministerial action, such as filing a form or making an election or pursuing
some other similar reasonable measure that will have no adverse effect on
Williams Capital, the Company or the holders of the Trust Securities, the
Company or Williams Capital will pursue such measure in lieu of redemption.
If the Junior Subordinated Debt Securities are distributed to the holders
of the Preferred Securities, the Company will use its best efforts to cause the
Junior Subordinated Debt Securities to be listed on the New York Stock Exchange
or on such other exchange as the Preferred Securities are then listed.
After the date for any distribution of Junior Subordinated Debt Securities
upon dissolution of Williams Capital, (i) the Preferred Securities will no
longer be deemed to be outstanding, (ii) the securities depositary or its
nominee, as the record holder of the Preferred Securities, will receive a
registered global certificate or certificates representing the Junior
Subordinated Debt Securities to be delivered upon such distribution, and (iii)
any certificates representing Preferred Securities not held by the Depositary or
its nominee will be deemed to represent Junior Subordinated Debt Securities
having an aggregate principal amount equal to the aggregate stated liquidation
amount of, with an interest rate identical to the distribution rate of, and with
accrued and unpaid interest equal to accrued and unpaid distributions on, such
Preferred Securities until such certificates are presented to the Company or its
agent for transfer or reissuance.
There can be no assurance as to the market prices for either the Preferred
Securities or the Junior Subordinated Debt Securities that may be distributed in
exchange for the Preferred Securities if a dissolution and liquidation of
Williams Capital were to occur. Accordingly, the Preferred Securities that an
investor may
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purchase, whether pursuant to the offer made hereby or in the secondary market,
or the Junior Subordinated Debt Securities that an investor may receive if a
dissolution and liquidation of Williams Capital were to occur, may trade at a
discount to the price that the investor paid to purchase the Preferred
Securities offered hereby.
REDEMPTION PROCEDURES
Williams Capital may not redeem fewer than all of the outstanding Preferred
Securities unless all accrued and unpaid distributions have been paid on all
Preferred Securities for all quarterly distribution periods terminating on or
prior to the date of redemption.
If Williams Capital gives a notice of redemption in respect of the
Preferred Securities (which notice will be irrevocable), then, by 12:00 noon,
New York City time, on the redemption date, and if the Company has paid to the
Institutional Trustee a sufficient amount of cash in connection with the related
redemption or maturity of the Junior Subordinated Debt Securities, the
Institutional Trustee will irrevocably deposit with the Depositary (as defined
in the accompanying Prospectus) funds sufficient to pay the applicable
Redemption Price and will give the Depositary irrevocable instructions and
authority to pay the Redemption Price to the holders of the Preferred
Securities. See "-- Book-Entry Only Issuance -- The Depository Trust Company."
If notice of redemption shall have been given and funds deposited as required,
then, immediately prior to the close of business on the date of such deposit,
distributions will cease to accrue and all rights of holders of Preferred
Securities so called for redemption will cease, except the right of the holders
of such Preferred Securities to receive the Redemption Price but without
interest on such Redemption Price. In the event that any date fixed for
redemption of Preferred Securities is not a Business Day, then payment of the
Redemption Price payable on such date will be made on the next succeeding day
that is a Business Day (without any interest or other payment in respect of any
such delay), except that, if such Business Day falls in the next calendar year,
such payment will be made on the immediately preceding Business Day. In the
event that payment of the Redemption Price in respect of Preferred Securities is
improperly withheld or refused and not paid either by Williams Capital, or by
the Company pursuant to the Guarantee, distributions on such Preferred
Securities will continue to accrue at the then applicable rate from the original
redemption date to the date of payment, in which case the actual payment date
will be considered the date fixed for redemption for purposes of calculating the
Redemption Price.
In the event that fewer than all of the outstanding Preferred Securities
are to be redeemed, the Preferred Securities will be redeemed in accordance with
the Depositary's standard procedures. See "-- Book-Entry Only Issuance -- The
Depository Trust Company."
Subject to the foregoing and applicable law (including, without limitation,
United States federal securities laws), the Company or its subsidiaries may at
any time, and from time to time, purchase outstanding Preferred Securities by
tender, in the open market or by private agreement.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
In the event of any voluntary or involuntary liquidation, dissolution,
winding-up or termination of Williams Capital (each a "Liquidation"), the
holders of the Preferred Securities will be entitled to receive out of the
assets of Williams Capital, after satisfaction of liabilities to creditors,
distributions in an amount equal to the aggregate of the stated liquidation
amount of $25 per Preferred Security plus accrued and unpaid distributions
thereon to the date of payment (the "Liquidation Distribution"), unless, in
connection with such Liquidation, Junior Subordinated Debt Securities in an
aggregate stated principal amount equal to the aggregate stated liquidation
amount of, with an interest rate identical to the distribution rate of, and with
accrued and unpaid interest equal to accrued and unpaid distributions on, the
Preferred Securities outstanding at such time have been distributed on a pro
rata basis to the holders of such Preferred Securities.
If, upon any such Liquidation, the Liquidation Distribution can be paid
only in part because Williams Capital has insufficient assets available to pay
in full the aggregate Liquidation Distribution, then the amounts payable
directly by Williams Capital on the Preferred Securities shall be paid on a pro
rata basis. The holders of the Common Securities will be entitled to receive
distributions upon any such Liquidation pro rata with the holders of the
Preferred Securities, except that if a Declaration Event of Default has occurred
and is
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continuing the Preferred Securities shall have a preference over the Common
Securities with regard to such distributions.
Pursuant to the Declaration, Williams Capital shall terminate (i) on
, 205 , the expiration of the term of the Trust, (ii) upon the
bankruptcy of the Company or the holder of the Common Securities, (iii) upon the
filing of a certificate of dissolution or its equivalent with respect to the
holder of the Common Securities or the Company, the filing of a certificate of
cancellation with respect to Williams Capital, or the revocation of the charter
of the holder of the Common Securities or the Company and the expiration of 90
days after the date of revocation without a reinstatement thereof, (iv) upon the
distribution of Junior Subordinated Debt Securities upon the occurrence of a
Special Event, (v) upon the entry of a decree of a judicial dissolution of the
holder of the Common Securities, the Company or Williams Capital, or (vi) upon
the redemption of all the Trust Securities.
Under the terms of the Indenture, the Company has covenanted that, for so
long as the Preferred Securities remain outstanding, it will not voluntarily
dissolve, wind-up or terminate Williams Capital, except in connection with a
distribution of Junior Subordinated Debt Securities upon a Special Event or in
connection with certain mergers, consolidations or amalgamations permitted by
the Declaration.
DECLARATION EVENTS OF DEFAULT
An event of default under the Indenture (an "Indenture Event of Default")
constitutes an event of default under the Declaration with respect to the Trust
Securities (a "Declaration Event of Default"); provided, that pursuant to the
Declaration the holder of the Common Securities will be deemed to have waived
any Declaration Event of Default with respect to the Common Securities until all
Declaration Events of Default with respect to the Preferred Securities have been
cured, waived or otherwise eliminated. Until such Declaration Events of Default
with respect to the Preferred Securities have been so cured, waived, or
otherwise eliminated, the Institutional Trustee will be deemed to be acting
solely on behalf of the holders of the Preferred Securities and only the holders
of the Preferred Securities will have the right to direct the Institutional
Trustee with respect to certain matters under the Declaration, and therefore the
Indenture. In the event that any Declaration Event of Default with respect to
the Preferred Securities is waived by the holders of the Preferred Securities as
provided in the Declaration, the holders of Common Securities pursuant to the
Declaration have agreed that such waiver also constitutes a waiver of such
Declaration Event of Default with respect to the Common Securities for all
purposes under the Declaration without any further act, vote or consent of the
holders of Common Securities. See "-- Voting Rights."
If the Institutional Trustee fails to enforce its rights under the Junior
Subordinated Debt Securities, any holder of Preferred Securities may directly
institute a legal proceeding against the Company to enforce the Institutional
Trustee's rights under the Junior Subordinated Debt Securities without first
instituting any legal proceeding against the Institutional Trustee or any other
person or entity. If a Declaration Event of Default has occurred and is
continuing and such event is attributable to the failure of the Company to pay
interest or principal on the Junior Subordinated Debt Securities on the date
such interest or principal is otherwise payable (or in the case of redemption,
the redemption date), then a holder of Preferred Securities may also directly
institute a proceeding for enforcement of payment to such holder of the
principal of or interest on the Junior Subordinated Debt Securities having a
principal amount equal to the aggregate liquidation amount of the Preferred
Securities of such holder on or after the respective due date specified in the
Junior Subordinated Debt Securities without first (i) directing the
Institutional Trustee to enforce the terms of the Junior Subordinated Debt
Securities or (ii) instituting a legal proceeding against the Company to enforce
the Institutional Trustee's rights under the Junior Subordinated Debt
Securities. In connection with such Direct Action, the Company will be
subrogated to the rights of such holder of Preferred Securities under the
Declaration to the extent of any payment made by the Company to such holder of
Preferred Securities in such Direct Action. Consequently, the Company will be
entitled to payment of amounts that a holder of Preferred Securities receives in
respect of an unpaid distribution that resulted in the bringing of a Direct
Action to the extent that such holder receives or has already received full
payment with respect to such unpaid distribution from Williams Capital. The
holders of Preferred Securities will not be able to exercise directly any other
remedy available to the holders of the Junior Subordinated Debt Securities.
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Upon the occurrence of an Indenture Event of Default, the Institutional
Trustee as the sole holder of the Junior Subordinated Debt Securities will have
the right under the Indenture to declare the principal of and interest on the
Junior Subordinated Debt Securities to be immediately due and payable. The
Company and Williams Capital are each required to file annually with the
Institutional Trustee an officers' certificate as to its compliance with all
conditions and covenants under the Declaration.
VOTING RIGHTS
Except as described in this Prospectus Supplement and in the accompanying
Prospectus under "Description of Guarantees -- Modification of Guarantees;
Assignment," and except as provided under the Trust Act, the Trust Indenture Act
and as otherwise required by law and the Declaration, the holders of the
Preferred Securities will have no voting rights.
Subject to the requirement of the Institutional Trustee obtaining a tax
opinion in certain circumstances set forth in the last sentence of this
paragraph, the holders of a majority in aggregate liquidation amount of the
Preferred Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Institutional Trustee,
or direct the exercise of any trust or power conferred upon the Institutional
Trustee under the Declaration including the right to direct the Institutional
Trustee, as holder of the Junior Subordinated Debt Securities, to (i) direct the
time, method and place of conducting any proceeding for any remedy available to
the Indenture Trustee, or exercising any trust or power conferred on the
Indenture Trustee with respect to the Junior Subordinated Debt Securities, (ii)
waive any past Indenture Event of Default that is waivable under Section 5.13 of
the Indenture, (iii) exercise any right to rescind or annul a declaration that
the principal of all the Junior Subordinated Debt Securities shall be due and
payable, or (iv) consent to any amendment, modification or termination of the
Indenture or the Junior Subordinated Debt Securities where such consent shall be
required; provided, however, that, where a consent or action under the Indenture
would require the consent or act of holders of more than a majority in principal
amount of the Junior Subordinated Debt Securities (a "Super Majority") affected
hereby, only the holders of at least such Super Majority in aggregate
liquidation amount of the Preferred Securities may direct the Institutional
Trustee to give such consent or take such action. If the Institutional Trustee
fails to enforce its rights under the Junior Subordinated Debt Securities, any
record holder of Preferred Securities may directly institute a legal proceeding
against the Company to enforce the Institutional Trustee's rights under the
Junior Subordinated Debt Securities without first instituting any legal
proceeding against the Institutional Trustee or any other person or entity. The
Institutional Trustee shall notify all holders of the Preferred Securities of
any notice of default received from the Indenture Trustee with respect to the
Junior Subordinated Debt Securities. Such notice shall state that such Indenture
Event of Default also constitutes a Declaration Event of Default. Except with
respect to directing the time, method and place of conducting a proceeding for a
remedy available to the Institutional Trustee, the Institutional Trustee, as
holder of the Junior Subordinated Debentures, shall not take any of the actions
described in clauses (i), (ii), (iii) or (iv) above unless the Institutional
Trustee has obtained an opinion of a nationally recognized independent tax
counsel experienced in such matters to the effect that, as a result of such
action, Williams Capital will not fail to be classified as a grantor trust for
United States federal income tax purposes.
In the event the consent of the Institutional Trustee, as the holder of the
Junior Subordinated Debt Securities, is required under the Indenture with
respect to any amendment, modification or termination of the Indenture, the
Institutional Trustee shall request the written direction of the holders of the
Trust Securities with respect to such amendment, modification or termination and
shall vote with respect to such amendment, modification or termination as
directed by a majority in liquidation amount of the Trust Securities voting
together as a single class; provided, however, that where any amendment,
modification or termination under the Indenture would require the consent of a
Super Majority, the Institutional Trustee may only give such consent at the
direction of the holders of at least the proportion in aggregate liquidation
amount of the Trust Securities which the relevant Super Majority represents of
the aggregate principal amount of the Junior Subordinated Debt Securities
outstanding. The Institutional Trustee shall be under no obligation to take any
such action in accordance with the directions of the holders of the Trust
Securities unless the Institutional Trustee has obtained an opinion of a
nationally recognized independent tax counsel experienced in such
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matters to the effect that for United States federal income tax purposes
Williams Capital will not be classified as other than a grantor trust.
A waiver of an Indenture Event of Default by the Institutional Trustee at
the direction of the holders of the Preferred Securities will constitute a
waiver of the corresponding Declaration Event of Default.
Any required approval or direction of holders of Preferred Securities may
be given at a separate meeting of holders of Preferred Securities convened for
such purpose, at a meeting of all of the holders of Trust Securities or pursuant
to written consent. The Regular Trustees will cause a notice of any meeting at
which holders of Preferred Securities are entitled to vote, or of any matter
upon which action by written consent of such holders is to be taken, to be
mailed to each holder of record of Preferred Securities. Each such notice will
include a statement setting forth the following information: (i) the date of
such meeting or the date by which such action is to be taken; (ii) a description
of any resolution proposed for adoption at such meeting on which such holders
are entitled to vote or of such matter upon which written consent is sought; and
(iii) instructions for the delivery of proxies or consents. No vote or consent
of the holders of Preferred Securities will be required for Williams Capital to
redeem and cancel Preferred Securities or distribute Junior Subordinated Debt
Securities in accordance with the Declaration.
Notwithstanding that holders of Preferred Securities are entitled to vote
or consent under any of the circumstances described above, any of the Preferred
Securities that are owned at such time by the Company or any entity directly or
indirectly controlling or controlled by, or under direct or indirect common
control with, the Company, shall not be entitled to vote or consent and shall,
for purposes of such vote or consent, be treated as if such Preferred Securities
were not outstanding.
The procedures by which holders of Preferred Securities may exercise their
voting rights are described below. See " -- Book-Entry Only Issuance -- The
Depository Trust Company."
Holders of the Preferred Securities will have no rights to appoint or
remove the Williams Trustees, who may be appointed, removed or replaced solely
by the Company as the indirect or direct holder of all of the Common Securities.
MODIFICATION OF THE DECLARATION
The Declaration may be modified and amended if approved by the Regular
Trustees (and in certain circumstances the Institutional Trustee and the
Delaware Trustee), provided, that, if any proposed amendment provides for, or
the Regular Trustees otherwise propose to effect, (i) any action that would
adversely affect the powers, preferences or special rights of the Trust
Securities, whether by way of amendment to the Declaration or otherwise or (ii)
the dissolution, winding-up or termination of Williams Capital other than
pursuant to the terms of the Declaration, then the holders of the Trust
Securities voting together as a single class will be entitled to vote on such
amendment or proposal and such amendment or proposal shall not be effective
except with the approval of holders of at least a majority in liquidation amount
of the Trust Securities affected thereby; provided, that, if any amendment or
proposal referred to in clause (i) above would adversely affect only the
Preferred Securities or the Common Securities, then only holders of the affected
class will be entitled to vote on such amendment or proposal and such amendment
or proposal shall not be effective except with the approval of holders of a
majority in liquidation amount of such class of Trust Securities.
Notwithstanding the foregoing, no amendment or modification may be made to
the Declaration if such amendment or modification would (i) cause Williams
Capital to be classified for United States federal income tax purposes as other
than a grantor trust, (ii) reduce or otherwise adversely affect the powers of
the Institutional Trustee or (iii) cause Williams Capital to be deemed an
"investment company" which is required to be registered under the 1940 Act.
MERGERS, CONSOLIDATIONS OR AMALGAMATIONS
Williams Capital may not consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety, to any corporation or other body except as
described below. Williams Capital may, with the consent of the Regular Trustees
and without the consent of
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the holders of the Trust Securities, consolidate, amalgamate, merge with or
into, or be replaced by a trust organized as such under the laws of any State;
provided, that (i) such successor entity either (x) expressly assumes all of the
obligations of Williams Capital under the Trust Securities or (y) substitutes
for the Preferred Securities other securities having substantially the same
terms as the Trust Securities (the "Successor Securities"), so long as the
Successor Securities rank the same as the Trust Securities rank with respect to
distributions and payments upon liquidation, redemption and otherwise, (ii) the
Company expressly acknowledges a trustee of such successor entity possessing the
same powers and duties as the Institutional Trustee, in its capacity as the
holder of the Junior Subordinated Debt Securities, (iii) the Preferred
Securities or any Successor Securities are listed, or any Successor Securities
will be listed upon notification of issuance, on any national securities
exchange or with another organization on which the Preferred Securities are then
listed or quoted, (iv) such merger, consolidation, amalgamation or replacement
does not cause the Preferred Securities (including any Successor Securities) to
be downgraded by any nationally recognized statistical rating organization, (v)
such merger, consolidation, amalgamation or replacement does not adversely
affect the rights, preferences and privileges of the holders of the Trust
Securities (including any Successor Securities) in any material respect (other
than with respect to any dilution of the holders' interest in the new entity),
(vi) such successor entity has a purpose identical to that of Williams Capital,
(vii) prior to such merger, consolidation, amalgamation or replacement, Williams
Capital has received an opinion of a nationally recognized independent counsel
to Williams Capital experienced in such matters to the effect that, (A) such
merger, consolidation, amalgamation or replacement does not adversely affect the
rights, preferences and privileges of the holders of the Trust Securities
(including any Successor Securities) in any material respect (other than with
respect to any dilution of the holders' interest in the new entity), and (B)
following such merger, consolidation, amalgamation or replacement, neither
Williams Capital nor such successor entity will be required to register as an
"investment company" under the 1940 Act; and (viii) the Company guarantees the
obligations of such successor entity under the Successor Securities at least to
the extent provided by the Guarantee. Notwithstanding the foregoing, Williams
Capital shall not, except with the consent of holders of 100% in liquidation
amount of the Trust Securities, consolidate, amalgamate, merge with or into, or
be replaced by any other entity or permit any other entity to consolidate,
amalgamate, merge with or into, or replace it, if in the opinion of a nationally
recognized independent tax counsel experienced in such matters, such
consolidation, amalgamation, merger or replacement would cause Williams Capital
or the Successor Entity to be classified as other than a grantor trust for
United States federal income tax purposes. In addition, so long as any Preferred
Securities are outstanding and are not held entirely by the Company, Williams
Capital may not voluntarily liquidate, dissolve, wind-up or terminate except as
described above under "-- Special Event Redemption Distribution."
BOOK-ENTRY ONLY ISSUANCE -- THE DEPOSITORY TRUST COMPANY
The Depository Trust Company ("DTC") will act as securities depositary for
the Preferred Securities. The Preferred Securities will be issued only as
fully-registered securities registered in the name of Cede & Co. (DTC's
nominee). One or more fully-registered global Preferred Securities certificates,
representing the total aggregate number of Preferred Securities, will be issued
and will be deposited with DTC.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of securities in definitive form. Such laws
may impair the ability to transfer beneficial interests in the global Preferred
Securities as represented by a global certificate.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"). DTC holds securities that its
participants ("Participants") deposit with DTC. DTC also facilitates the
settlement among Participants of securities transactions, such as transfers and
pledges, in deposited securities through electronic computerized book-entry
changes in Participants' accounts, thereby eliminating the need for physical
movement of securities certificates. Direct Participants include securities
brokers and dealers, banks, trust companies, clearing corporations and certain
other organizations
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("Direct Participants"). DTC is owned by a number of its Direct Participants and
by the New York Stock Exchange, the American Stock Exchange, Inc., and the
National Association of Securities Dealers, Inc. (the "NASD"). Access to the DTC
system is also available to others, such as securities brokers and dealers,
banks and trust companies that clear transactions through or maintain a direct
or indirect custodial relationship with a Direct Participant either directly or
indirectly ("Indirect Participants"). The rules applicable to DTC and its
Participants are on file with the Securities and Exchange Commission.
Purchases of Preferred Securities within the DTC system must be made by or
through Direct Participants, which will receive a credit for the Preferred
Securities on DTC's records. The ownership interest of each actual purchaser of
each Preferred Security ("Beneficial Owner") is in turn to be recorded on the
Direct and Indirect Participants' records. Beneficial Owners will not receive
written confirmation from DTC of their purchases, but Beneficial Owners are
expected to receive written confirmations providing details of the transactions,
as well as periodic statements of their holdings, from the Direct or Indirect
Participants through which the Beneficial Owners purchased Preferred Securities.
Transfers of ownership interests in the Preferred Securities are to be
accomplished by entries made on the books of Participants acting on behalf of
Beneficial Owners. Beneficial Owners will not receive certificates representing
their ownership interests in the Preferred Securities, except in the event that
use of the book-entry system for the Preferred Securities is discontinued.
To facilitate subsequent transfers, all the Preferred Securities deposited
by Participants with DTC are registered in the name of DTC's nominee, Cede & Co.
The deposit of Preferred Securities with DTC and their registration in the name
of Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of
the actual Beneficial Owners of the Preferred Securities. DTC's records reflect
only the identity of the Direct Participants to whose accounts such Preferred
Securities are credited, which may or may not be the Beneficial Owners. The
Participants will remain responsible for keeping account of their holdings on
behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements
that may be in effect from time to time.
Redemption notices shall be sent to Cede & Co. If less than all of the
Preferred Securities are being redeemed, DTC will reduce the amount of the
interest of affected Direct Participants in such Preferred Securities in
accordance with its procedures.
Although voting with respect to the Preferred Securities is limited, in
those cases where a vote is required, neither DTC nor Cede & Co. will itself
consent or vote with respect to Preferred Securities. Under its usual
procedures, DTC would mail an Omnibus Proxy to Williams Capital as soon as
possible after the record date. The Omnibus Proxy assigns Cede & Co. consenting
or voting rights to those Direct Participants to whose accounts the Preferred
Securities are credited on the record date (identified in a listing attached to
the Omnibus Proxy). The Company and Williams Capital believe that the
arrangements among DTC, Direct and Indirect Participants, and Beneficial Owners
will enable the Beneficial Owners to exercise rights equivalent in substance to
the rights that can be directly exercised by a holder of a beneficial interest
in Williams Capital.
Distribution payments on the Preferred Securities will be made to DTC.
DTC's practice is to credit Direct Participants' accounts on the relevant
payment date in accordance with their respective holdings shown on DTC's records
unless DTC has reason to believe that it will not receive payments on such
payment date. Payments by Participants to Beneficial Owners will be governed by
standing instructions and customary practices, as is the case with securities
held for the account of customers in bearer form or registered in "street name,"
and such payments will be the responsibility of such Participant and not of DTC,
Williams Capital or the Company, subject to any statutory or regulatory
requirements to the contrary that may be in effect from time to time. Payment of
distributions to DTC is the responsibility of Williams Capital, disbursement of
such payments to Direct Participants is the responsibility of DTC, and
disbursement of such payments to the Beneficial Owners is the responsibility of
Direct and Indirect Participants.
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Except as provided herein, a Beneficial Owner in a global Preferred
Security certificate will not be entitled to receive physical delivery of
Preferred Securities. Accordingly, each Beneficial Owner must rely on the
procedures of DTC to exercise any rights under the Preferred Securities.
DTC may discontinue providing its services as securities depositary with
respect to the Preferred Securities at any time by giving reasonable notice to
Williams Capital. Under such circumstances, in the event that a successor
securities depositary is not obtained, Preferred Securities certificates are
required to be printed and delivered. Additionally, the Regular Trustees (with
the consent of the Company) may decide to discontinue use of the system of
book-entry transfers through DTC (or any successor depositary) with respect to
the Preferred Securities. In that event, certificates for the Preferred
Securities will be printed and delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Company and Williams Capital believe to
be reliable, but neither the Company nor Williams Capital takes responsibility
for the accuracy thereof.
INFORMATION CONCERNING THE INSTITUTIONAL TRUSTEE
The Institutional Trustee, prior to the occurrence of a default with
respect to the Trust Securities, undertakes to perform only such duties as are
specifically set forth in the Declaration and, after such a default, shall
exercise the same degree of care as a prudent individual would exercise in the
conduct of his or her own affairs. Subject to such provisions, the Institutional
Trustee is under no obligation to exercise any of the powers vested in it by the
Declaration at the request of any holder of Preferred Securities, unless offered
reasonable indemnity by such holder against the costs, expenses and liabilities
which might be incurred thereby. Notwithstanding the foregoing, the holders of
Preferred Securities will not be required to offer such indemnity in the event
such holders, by exercising their voting rights, direct the Institutional
Trustee to take any action following a Declaration Event of Default.
PAYING AGENT
In the event that the Preferred Securities do not remain in book-entry only
form, the following provisions will apply:
The Institutional Trustee will act as paying agent and may designate
an additional or substitute paying agent at any time.
Registration of transfers of Preferred Securities will be effected
without charge by or on behalf of Williams Capital, but upon payment (with
the giving of such indemnity as Williams Capital or the Company may
require) in respect of any tax or other government charges that may be
imposed in relation to it.
Williams Capital will not be required to register or cause to be
registered the transfer of Preferred Securities after such Preferred
Securities have been called for redemption.
GOVERNING LAW
The Declaration and the Preferred Securities will be governed by, and
construed in accordance with, the internal laws of the State of Delaware.
MISCELLANEOUS
The Regular Trustees are authorized and directed to operate Williams
Capital in such a way so that Williams Capital will not be required to register
as an "investment company" under the 1940 Act or be characterized as other than
a grantor trust for United States federal income tax purposes. The Company is
authorized and directed to conduct its affairs so that the Junior Subordinated
Debt Securities will be treated as indebtedness of the Company for United States
federal income tax purposes. In this connection, the Company and the Regular
Trustees are authorized to take any action, not inconsistent with applicable
law, the certificate of trust of Williams Capital or the certificate of
incorporation of the Company, that each of the
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Company and the Regular Trustees determine in their discretion to be necessary
or desirable to achieve such end, as long as such action does not adversely
affect the interests of the holders of the Preferred Securities or vary the
terms thereof.
Holders of the Preferred Securities have no preemptive rights.
DESCRIPTION OF THE JUNIOR SUBORDINATED DEBT SECURITIES
Set forth below is a description of the specific terms of the Junior
Subordinated Debt Securities in which Williams Capital will invest the proceeds
from the issuance and sale of the Trust Securities. This description supplements
the description of the general terms and provisions of the Junior Subordinated
Debt Securities set forth in the accompanying Prospectus under the caption
"Description of Junior Subordinated Debt Securities." The following description
does not purport to be complete and is subject to, and is qualified in its
entirety by reference to, the description of the Junior Subordinated Debt
Securities in the accompanying Prospectus; the Indenture, dated as of
, 1997 (the "Indenture"), between the Company and The Chase Manhattan Bank, as
Trustee (the "Indenture Trustee"), the form of which is filed as an exhibit to
the Registration Statement of which this Prospectus Supplement and the
accompanying Prospectus form a part; and the Trust Indenture Act. Certain
capitalized terms used herein are defined in the Indenture.
Under certain circumstances involving the dissolution of Williams Capital
following the occurrence of a Special Event, Junior Subordinated Debt Securities
may be distributed to the holders of the Trust Securities in liquidation of
Williams Capital. See "Description of the Preferred Securities -- Special Event
Redemption or Distribution."
If the Junior Subordinated Debt Securities are distributed to the holders
of the Preferred Securities, the Company will use its best efforts to have the
Junior Subordinated Debt Securities listed on the New York Stock Exchange or on
such other national securities exchange or similar organization on which the
Preferred Securities are then listed or quoted.
GENERAL
The Junior Subordinated Debt Securities will be issued as unsecured debt
under the Indenture. The Junior Subordinated Debt Securities will be limited in
aggregate principal amount to approximately $ , such amount being the
sum of the aggregate stated liquidation amount of the Preferred Securities and
the capital contributed by the Company to Williams Capital in exchange for the
Common Securities (the "Williams Payment").
The Junior Subordinated Debt Securities are not subject to a sinking fund
provision. The entire principal amount of the Junior Subordinated Debt
Securities will mature and become due and payable, together with any accrued and
unpaid interest thereon including Compound Interest (as defined herein) and
Additional Interest (as defined herein), if any, on , 203 .
If Junior Subordinated Debt Securities are distributed to holders of
Preferred Securities in liquidation of such holders' interests in Williams
Capital, such Junior Subordinated Debt Securities will initially be issued in
the form of one or more Global Securities (as defined under "Book-Entry and
Settlement" below). As described herein, under certain limited circumstances,
Junior Subordinated Debt Securities may be issued in certificated form in
exchange for a Global Security. See "Book-Entry and Settlement" below. In the
event that Junior Subordinated Debt Securities are issued in certificated form,
such Junior Subordinated Debt Securities will be in denominations of $25 and
integral multiples thereof and may be transferred or exchanged at the offices
described below. Payments on Junior Subordinated Debt Securities issued as a
Global Security will be made to DTC, to a successor depositary or, in the event
that no depositary is used, to a Paying Agent for the Junior Subordinated Debt
Securities. In the event Junior Subordinated Debt Securities are issued in
certificated form, principal and interest will be payable, the transfer of the
Junior Subordinated Debt Securities will be registrable and Junior Subordinated
Debt Securities will be exchangeable for Junior Subordinated Debt Securities of
other denominations of a like aggregate principal amount at the corporate
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trust office of the Indenture Trustee in New York, New York; provided, that
payment of interest may be made at the option of the Company by check mailed to
the address of the persons entitled thereto.
The Company does not intend to issue and sell the Junior Subordinated Debt
Securities to any purchasers other than Williams Capital.
There are no covenants or provisions in the Indenture that would afford the
holders of the Junior Subordinated Debt Securities protection in the event of a
highly leveraged transaction, reorganization, restructuring, merger or similar
transaction involving the Company that may adversely affect such holders.
SUBORDINATION
The Junior Subordinated Debt Securities will rank pari passu with the 9.60%
Quarterly Income Capital Securities of the Company and will be expressly
subordinate and junior in right of payment, to the extent and in the manner set
forth in the Indenture, to all "Senior Indebtedness" of the Company. The
Indenture defines "Senior Indebtedness" as obligations (other than nonrecourse
obligations, the debt securities issued under the Indenture (including the
Junior Subordinated Debt Securities) or any other obligations specifically
designated as being subordinate in right of payment to Senior Indebtedness) of,
or guaranteed or assumed by, the Company for borrowed money or evidenced by
bonds, debentures, notes or other similar instruments, and amendments, renewals,
extensions, modifications and refundings of any such indebtedness or obligation.
In the event (a) of any insolvency or bankruptcy proceedings, or any
receivership, liquidation, reorganization or other similar proceedings in
respect of the Company or a substantial part of its property or (b) that (i) a
default shall have occurred with respect to the payment of principal, premium,
if any, or interest on or other monetary amounts due and payable on any Senior
Indebtedness or (ii) there shall have occurred an Event of Default (other than a
default in the payment of principal, premium, if any, or interest, or other
monetary amounts due and payable) with respect to any Senior Indebtedness, as
defined therein or in the instrument under which the same is outstanding,
permitting the holder or holders thereof to accelerate the maturity thereof
(with notice or lapse of time, or both), and such Event of Default shall have
continued beyond the period of grace, if any, in respect thereof, and such
default or Event of Default shall not have been cured or waived or shall not
have ceased to exist, or (c) that the principal of and accrued interest on the
subordinated debt securities (including the Junior Subordinated Debt Securities)
shall have been declared due and payable upon an Event of Default pursuant to
Section 5.1 of the Indenture and such declaration shall not have been rescinded
and annulled as provided therein, then the holders of all Senior Indebtedness
shall first be entitled to receive payment of the full amount unpaid thereon, or
provision shall be made for such payment in money or money's worth, before the
holders of any of the subordinated debt securities (including the Junior
Subordinated Debt Securities) are entitled to receive a payment on account of
the principal, premium, if any, or interest on the indebtedness evidenced by
such subordinated debt securities.
OPTIONAL REDEMPTION
The Company shall have the right to redeem the Junior Subordinated Debt
Securities, in whole or in part, from time to time, on or after ,
200 , or at any time in certain circumstances upon the occurrence of a Tax Event
as described under "Description of the Preferred Securities -- Special Event
Redemption or Distribution," upon not less than 30 nor more than 60 days'
notice, at a redemption price equal to 100% of the principal amount to be
redeemed plus any accrued and unpaid interest, including Additional Interest (as
defined herein), if any, to the redemption date. If a partial redemption of the
Preferred Securities resulting from a partial redemption of the Junior
Subordinated Debt Securities would result in the delisting of the Preferred
Securities, the Company may only redeem the Junior Subordinated Debt Securities
in whole.
PROPOSED TAX LEGISLATION
On March 19, 1996, as a part of President Clinton's Fiscal 1997 Budget
Proposal, the Treasury Department proposed legislation (the "Proposed
Legislation") that, among other things, would (i) treat as equity for United
States federal income tax purposes certain debt instruments with a maximum term
of more than 20 years and (ii) disallow interest deductions on debt instruments
with a maturity of more than 40 years.
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The Proposed Legislation was proposed to be effective for debt instruments
issued on or after December 7, 1995.
On March 29, 1996, Senate Finance Committee Chairman William V. Roth, Jr.
and House Ways and Means Committee Chairman Bill Archer issued a joint statement
(the "Joint Statement") indicating their intent that the Proposed Legislation,
if adopted by either of the tax-writing committees of Congress, would have an
effective date that is no earlier than the date of "appropriate Congressional
action." The proposals were not adopted in the recently concluded session of
Congress. There can be no assurance, however, that final legislation similar to
the Bill or future legislative proposals, future regulations or official
administrative pronouncements or future judicial decisions will not affect the
ability of the Company to deduct interest on the Junior Subordinated Debt
Securities. Such a change could give rise to a Tax Event, which may permit the
Company to cause a redemption of the Preferred Securities. See "Description of
the Preferred Securities -- Special Event Redemption or Distribution."
INTEREST
Each Junior Subordinated Debt Security shall bear interest at the rate of
% per annum, from and including the original date of issuance, payable
quarterly in arrears on March 31, June 30, September 30 and December 31 of each
year (each an "Interest Payment Date"), commencing , 1997 person in
whose name such Junior Subordinated Debt Security is registered, subject to
certain exceptions, at the close of business on the Business Day next preceding
such Interest Payment Date. In the event the Junior Subordinated Debt Securities
shall not continue to remain in book-entry only form, the Company shall have the
right to select record dates, which shall be more than 14 days but less than 60
days prior to the Interest Payment Date.
The amount of interest payable for any period will be computed on the basis
of a 360-day year of twelve 30-day months. The amount of interest payable for
any period shorter than a full quarterly period for which interest is computed
will be computed on the basis of the actual number of days elapsed per 30-day
month. In the event that any date on which interest is payable on the Junior
Subordinated Debt Securities is not a Business Day, then payment of the interest
payable on such date will be made on the next succeeding day that is a Business
Day (and without any interest or other payment in respect of any such delay),
except that, if such Business Day is in the next succeeding calendar year, then
such payment shall be made on the immediately preceding Business Day, in each
case with the same force and effect as if made on such date.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
The Company shall have the right at any time, and from time to time, during
the term of the Junior Subordinated Debt Securities, to defer payments of
interest by extending the interest payment period for a period not exceeding 20
consecutive quarters, provided, that no Extension Period may extend beyond the
maturity of the Junior Subordinated Debt Securities, at the end of which
Extension Period, the Company shall pay all interest then accrued and unpaid
(including any Additional Interest) together with interest thereon compounded
quarterly at the rate specified for the Junior Subordinated Debt Securities to
the extent permitted by applicable law ("Compound Interest"); provided further,
that during any such Extension Period, (a) the Company shall not declare or pay
any dividend on, make any distributions with respect to, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of its capital stock
or make any guarantee payment with respect thereto (other than (i) repurchases,
redemptions or other acquisitions of shares of capital stock of the Company in
connection with any employment contract, benefit plan or other similar
arrangement with or for the benefit of employees, officers, directors or
consultants, (ii) as a result of an exchange or conversion of any class or
series of the Company's capital stock for any other class or series of the
Company's capital stock, or (iii) the purchase of fractional interests in shares
of the Company's capital stock pursuant to the conversion or exchange provisions
of such capital stock or the security being converted or exchanged), and (b) the
Company shall not make any payment of interest on or principal of (or premium,
if any, on), or repay, repurchase or redeem, any debt securities issued by the
Company which rank pari passu with or junior to the Junior Subordinated Debt
Securities. The foregoing, however, will not apply to any stock dividends paid
by the Company where the dividend stock is the same stock as that on which the
dividend is
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being paid. Prior to the termination of any Extension Period, the Company may
further defer payments of interest by extending such Extension Period; provided,
however, that such Extension Period, including all such previous and further
extensions, may not exceed 20 consecutive quarterly interest periods (including
the quarterly interest period in which notice of such Extension Period (as
described below) is given); provided further, that no Extension Period may
extend beyond the maturity of the Junior Subordinated Debt Securities. Upon the
termination of any Extension Period and the payment of all amounts then due, the
Company may commence a new Extension Period, subject to the terms set forth in
this section. No interest during an Extension Period, except at the end thereof,
shall be due and payable. The Company has no present intention of exercising its
right to defer payments of interest by extending the interest payment period on
the Junior Subordinated Debt Securities. If the Institutional Trustee shall be
the sole holder of the Junior Subordinated Debt Securities, the Company shall
give the Regular Trustees and the Institutional Trustee notice of its selection
of such Extension Period one Business Day prior to the earlier of (i) the date
distributions on the Preferred Securities would be payable, if not for such
Extension Period, or (ii) the date the Regular Trustees are required to give
notice to the New York Stock Exchange (or other applicable self-regulatory
organization) or to holders of the Preferred Securities of the record date or
the date such distribution would be payable, if not for such Extension Period,
but in any event one Business Day prior to such record date. The Regular
Trustees shall give notice of the Company's selection of such Extension Period
to the holders of the Preferred Securities. If the Institutional Trustee shall
not be the sole holder of the Junior Subordinated Debt Securities, the Company
shall give the holders of the Junior Subordinated Debt Securities notice of its
selection of such Extension Period ten Business Days prior to the earlier of (i)
the next succeeding Interest Payment Date or (ii) the date upon which the
Company is required to give notice to the New York Stock Exchange (or other
applicable self-regulatory organization) or to holders of the Junior
Subordinated Debt Securities of the record or payment date of such related
interest payment.
ADDITIONAL INTEREST
If at any time Williams Capital shall be required to pay any taxes, duties,
assessments or governmental charges of whatever nature (other than withholding
taxes) imposed by the United States, or any other taxing authority, then, in any
such case, the Company will pay as additional interest ("Additional Interest")
on the Junior Subordinated Debt Securities such additional amounts as shall be
required so that the net amounts received and retained by Williams Capital after
paying any such taxes, duties, assessments or other governmental charges will be
not less than the amounts Williams Capital would have received had no such
taxes, duties, assessments or other governmental charges been imposed.
INDENTURE EVENTS OF DEFAULT
If any Indenture Event of Default shall occur and be continuing, the
Institutional Trustee, as the holder of the Junior Subordinated Debt Securities,
will have the right to declare the principal of and the interest on the Junior
Subordinated Debt Securities (including any Compound Interest and Additional
Interest, if any) and any other amounts payable under the Indenture to be
forthwith due and payable and to enforce its other rights as a creditor with
respect to the Junior Subordinated Debt Securities. See "Description of Junior
Subordinated Debt Securities -- Events of Default" in the accompanying
Prospectus for a description of the Indenture Events of Default. An Indenture
Event of Default also constitutes a Declaration Event of Default. The holders of
Preferred Securities in certain circumstances have the right to direct the
Institutional Trustee to exercise its rights as the holder of the Junior
Subordinated Debt Securities. See "Description of the Preferred
Securities -- Declaration Events of Default" and "-- Voting Rights."
Notwithstanding the foregoing, if a Declaration Event of Default has
occurred and is continuing and such event is attributable to the failure of the
Company to pay interest or principal on the Junior Subordinated Debt Securities
on the date such interest or principal is otherwise payable, the Company
acknowledges that, in such event, a holder of Preferred Securities may institute
a Direct Action for payment on or after the respective due date specified in the
Junior Subordinated Debt Securities. The Company may not amend the Indenture to
remove the foregoing right to bring a Direct Action without the prior written
consent of all of the holders of Preferred Securities of Williams Capital.
Notwithstanding any payment made to such holder of Preferred
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Securities by the Company in connection with a Direct Action, the Company shall
remain obligated to pay the principal of or interest on the Junior Subordinated
Debt Securities held by Williams Capital or the Institutional Trustee of
Williams Capital, and the Company shall be subrogated to the rights of the
holder of such Preferred Securities with respect to payments on the Preferred
Securities to the extent of any payments made by the Company to such holder in
any Direct Action. The holders of Preferred Securities will not be able to
exercise directly any other remedy available to the holders of the Junior
Subordinated Debt Securities.
BOOK-ENTRY AND SETTLEMENT
If distributed to holders of Preferred Securities in connection with the
involuntary or voluntary dissolution, winding-up or liquidation of Williams
Capital as a result of the occurrence of a Special Event, the Junior
Subordinated Debt Securities will be issued in the form of one or more global
certificates (each a "Global Security") registered in the name of the depositary
or its nominee. Except under the limited circumstances described below, Junior
Subordinated Debt Securities represented by a Global Security will not be
exchangeable for, and will not otherwise be issuable as, Junior Subordinated
Debt Securities in definitive form. The Global Securities described above may
not be transferred except by the depositary to a nominee of the depositary or by
a nominee of the depositary to the depositary or another nominee of the
depositary or to a successor depositary or its nominee.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
laws may impair the ability to transfer beneficial interests in such a Global
Security.
Except as provided below, owners of beneficial interests in such a Global
Security will not be entitled to receive physical delivery of Junior
Subordinated Debt Securities in definitive form and will not be considered the
Holders (as defined in the Indenture) thereof for any purpose under the
Indenture, and no Global Security representing Junior Subordinated Debt
Securities shall be exchangeable, except for another Global Security of like
denomination and tenor to be registered in the name of the depositary or its
nominee or to a successor depositary or its nominee. Accordingly, each
Beneficial Owner must rely on the procedures of the depositary or 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 Indenture.
THE DEPOSITARY
If Junior Subordinated Debt Securities are distributed to holders of
Preferred Securities in liquidation of such holders' interests in Williams
Capital, DTC will act as securities depositary for the Junior Subordinated Debt
Securities. For a description of DTC and the specific terms of the depositary
arrangements, see "Description of the Preferred Securities -- Book-Entry Only
Issuance -- The Depository Trust Company." As of the date of this Prospectus
Supplement, the description therein of DTC's book-entry system and DTC's
practices as they relate to purchases, transfers, notices and payments with
respect to the Preferred Securities apply in all material respects to any debt
obligations represented by one or more Global Securities held by DTC. The
Company may appoint a successor to DTC or any successor depositary in the event
DTC or such successor depositary is unable or unwilling to continue as a
depositary for the Global Securities.
None of the Company, Williams Capital, the Indenture Trustee, any paying
agent and any other agent of the Company or the Indenture Trustee will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in a Global Security
for such Junior Subordinated Debt Securities or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
DISCONTINUANCE OF THE DEPOSITARY'S SERVICES
A Global Security shall be exchangeable for Junior Subordinated Debt
Securities registered in the names of persons other than the depositary or its
nominee only if (i) the depositary notifies the Company that it is unwilling or
unable to continue as a depositary for such Global Security and no successor
depositary shall have been appointed, (ii) the depositary, at any time, ceases
to be a clearing agency registered under the Exchange
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Act at which time the depositary is required to be so registered to act as such
depositary and no successor depositary shall have been appointed, (iii) the
Company, in its sole discretion, determines that such Global Security shall be
so exchangeable or (iv) there shall have occurred an Indenture Event of Default
with respect to such Junior Subordinated Debt Securities. Any Global Security
that is exchangeable pursuant to the preceding sentence shall be exchangeable
for Junior Subordinated Debt Securities registered in such names as the
depositary shall direct. It is expected that such instructions will be based
upon directions received by the depositary from its Participants with respect to
ownership of beneficial interests in such Global Security.
MISCELLANEOUS
The Indenture will provide that the Company will pay all fees and expenses
related to (i) the offering of the Trust Securities and the Junior Subordinated
Debt Securities, (ii) the organization, maintenance and dissolution of Williams
Capital, (iii) the retention of the Williams Trustees and (iv) the enforcement
by the Institutional Trustee of the rights of the holders of the Preferred
Securities.
DESCRIPTION OF GUARANTEE
Set forth below is a summary of information concerning the Guarantee that
will be executed and delivered by the Company for the benefit of the holders of
Preferred Securities. The Guarantee will be qualified as an indenture under the
Trust Indenture Act. The Chase Manhattan Bank will act as indenture trustee
under the Guarantee (the "Guarantee Trustee"). The terms of the Guarantee will
be those set forth in the Guarantee and those made part of the Guarantee by the
Trust Indenture Act. This description supplements the description of the general
terms and provisions of the Guarantee set forth in the accompanying Prospectus
under the caption "Description of Guarantees." The summary does not purport to
be complete and is subject in all respects to the provisions of, and is
qualified in its entirety by reference to, the form of Guarantee, which is filed
as an exhibit to the Registration Statement of which this Prospectus Supplement
forms a part, and the Trust Indenture Act. The Guarantee will be held by the
Guarantee Trustee for the benefit of the holders of the Preferred Securities.
GENERAL
Pursuant to and to the extent set forth in the Guarantee, the Company will
irrevocably and unconditionally agree to pay in full to the holders of the
Preferred Securities (except to the extent paid by Williams Capital), as and
when due, regardless of any defense, right of set-off or counterclaim which
Williams Capital may have or assert, the following payments (the "Guarantee
Payments"), without duplication: (i) any accrued and unpaid distributions that
are required to be paid on the Preferred Securities, to the extent Williams
Capital has funds available therefor, and (ii) the redemption price of $25 per
Preferred Security, plus all accrued and unpaid distributions (the "Redemption
Price"), to the extent Williams Capital has funds available therefor, with
respect to any Preferred Securities called for redemption by Williams Capital,
and (iii) upon a voluntary or involuntary dissolution, winding-up or termination
of Williams Capital (other than in connection with the distribution of Junior
Subordinated Debt Securities to the holders of Preferred Securities or the
redemption of all of the Preferred Securities) the lesser of (a) the aggregate
of the liquidation amount and all accrued and unpaid distributions on the
Preferred Securities to the date of payment or (b) the amount of assets of
Williams Capital remaining for distribution to holders of the Preferred
Securities in liquidation of Williams Capital. The Company's obligation to make
a Guarantee Payment may be satisfied by direct payment of the required amounts
by the Company to the holders of Preferred Securities or by causing Williams
Capital to pay such amounts to such holders.
The Guarantee will be a guarantee on a subordinated basis with respect to
the Preferred Securities from the time of issuance of the Preferred Securities
but will not apply to any payment of distributions or Redemption Price, or to
payments upon the dissolution, winding-up or termination of Williams Capital,
except to the extent Williams Capital shall have funds available therefor. If
the Company does not make interest payments on the Junior Subordinated Debt
Securities, Williams Capital will not pay distributions on the Preferred
Securities and will not have funds available therefor. See "Description of
Junior Subordinated Debt Securities." The Guarantee, when taken together with
the Company's obligations under the Junior Subordi-
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nated Debt Securities, the Indenture and the Declaration, including its
obligations to pay costs, expenses, debts and liabilities of Williams Capital
(other than with respect to Trust Securities), will provide a full and
unconditional guarantee on a subordinated basis by the Company of payments due
on the Preferred Securities.
CERTAIN COVENANTS OF THE COMPANY
In the Guarantee, the Company will covenant that, so long as any Preferred
Securities remain outstanding, if there shall have occurred any event that would
constitute an Event of Default under such Guarantee or the Declaration, then (a)
the Company shall not declare or pay any dividend on, make any distributions
with respect to, or redeem, purchase, acquire or make a liquidation payment with
respect to, any of its capital stock or make any guarantee payment with respect
thereto (other than (i) repurchases, redemptions or other acquisitions of shares
of capital stock of the Company in connection with any employment contract,
benefit plan or other similar arrangement with or for the benefit of employees,
officers, directors or consultants, (ii) as a result of an exchange or
conversion of any class or series of the Company's capital stock for any other
class or series of the Company's capital stock, or (iii) the purchase of
fractional interests in shares of the Company's capital stock pursuant to the
conversion or exchange provisions of such capital stock or the security being
converted or exchanged) and (b) the Company shall not make any payment of
interest on, or principal of (or premium, if any, on), or repay, repurchase or
redeem, any debt securities issued by the Company which rank pari passu with or
junior to the Junior Subordinated Debt Securities. The Guarantee, however, will
except from the foregoing any stock dividends paid by the Company where the
dividend stock is the same stock as that on which the dividend is being paid.
MODIFICATION OF THE GUARANTEE; ASSIGNMENT
Except with respect to any changes that do not adversely affect the rights
of holders of Preferred Securities (in which case no vote will be required), the
Guarantee may be amended only with the prior approval of the holders of not less
than a majority in aggregate liquidation amount of the outstanding Preferred
Securities. All guarantees and agreements contained in the Guarantee shall bind
the successors, assignees, receivers, trustees and representatives of the
Company and shall inure to the benefit of the holders of the Preferred
Securities then outstanding.
EVENTS OF DEFAULT
An Event of Default under the Guarantee will occur upon the failure of the
Company to perform any of its payment or other obligations thereunder. The
holders of a majority in aggregate liquidation amount of the Preferred
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Guarantee Trustee in respect of the
Guarantee or to direct the exercise of any trust or power conferred upon the
Guarantee Trustee under the Guarantee. If the Guarantee Trustee fails to enforce
the Guarantee Trustee's rights under the Guarantee, any holder of related
Preferred Securities may directly institute a legal proceeding against the
Company to enforce the Guarantee Trustee's rights under the Guarantee without
first instituting a legal proceeding against Williams Capital, the Guarantee
Trustee or any other person or entity. A holder of Preferred Securities may also
directly institute a legal proceeding against the Company to enforce such
holder's right to receive payment under the Guarantee without first (i)
directing the Guarantee Trustee to enforce the terms of the Guarantee or (ii)
instituting a legal proceeding against Williams Capital or any other person or
entity.
The Company will be required to provide annually to the Guarantee Trustee a
statement as to the performance by the Company of certain of its obligations
under the Guarantee and as to any default in such performance.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, prior to the occurrence of a default with respect to
the Guarantee, undertakes to perform only such duties as are specifically set
forth in the Guarantee and, after default with respect to the Guarantee, shall
exercise the same degree of care as a prudent individual would exercise in the
conduct of his
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or her own affairs. Subject to such provision, the Guarantee Trustee is under no
obligation to exercise any of the powers vested in it by the Guarantee at the
request of any holder of Preferred Securities unless it is offered reasonable
indemnity against the costs, expenses and liabilities that might be incurred
thereby.
TERMINATION OF THE GUARANTEE
The Guarantee will terminate as to the Preferred Securities upon full
payment of the Redemption Price of all Preferred Securities, upon distribution
of the Junior Subordinated Debt Securities to the holders of the Preferred
Securities or upon full payment of the amounts payable in accordance with the
Declaration upon liquidation of Williams Capital. The Guarantee will continue to
be effective or will be reinstated, as the case may be, if at any time any
holder of Preferred Securities must restore payment of any sums paid under the
Preferred Securities or the Guarantee.
STATUS OF THE GUARANTEE
The Guarantee will constitute an unsecured obligation of the Company and
will rank subordinate and junior in right of payment to all Senior Indebtedness
of the Company and pari passu with any guarantee now or hereafter entered into
by the Company in respect of any preferred or preference stock of any affiliate
of the Company. The terms of the Preferred Securities provide that each holder
of Preferred Securities by acceptance thereof agrees to the subordination
provisions and other terms of the Guarantee.
The Guarantee will constitute a guarantee of payment and not of collection
(that is, the guaranteed party may institute a legal proceeding directly against
the guarantor to enforce its rights under the Guarantee without instituting a
legal proceeding against any other person or entity).
GOVERNING LAW
The Guarantee will be governed by, and construed in accordance with, the
internal laws of the State of New York.
EFFECT OF OBLIGATIONS UNDER THE
JUNIOR SUBORDINATED DEBT SECURITIES AND THE GUARANTEE
As set forth in the Declaration, the sole purpose of Williams Capital is to
issue the Trust Securities evidencing undivided beneficial interests in the
assets of Williams Capital, and to invest the proceeds from such issuance and
sale in the Junior Subordinated Debt Securities.
As long as payments of interest and other payments are made when due on the
Junior Subordinated Debt Securities, such payments will be sufficient to cover
distributions and payments due on the Trust Securities because of the following
factors: (i) the aggregate principal amount of Junior Subordinated Debt
Securities will be equal to the sum of the aggregate stated liquidation amount
of the Trust Securities; (ii) the interest rate and the interest and other
payment dates on the Junior Subordinated Debt Securities will match the
distribution rate and distribution and other payment dates for the Preferred
Securities; (iii) pursuant to the Indenture, the Company shall pay, and Williams
Capital shall not be obligated to pay, directly or indirectly, all costs,
expenses, debt and obligations of Williams Capital other than with respect to
the Trust Securities; and (iv) the Declaration further provides that the
Williams Trustees shall not cause or permit Williams Capital to, among other
things, engage in any activity that is not consistent with the purposes of
Williams Capital.
Payments of distributions (to the extent funds therefor are available) and
other payments due on the Preferred Securities (to the extent funds therefor are
available) are guaranteed by the Company as and to the extent set forth under
"Description of Guarantees" in the accompanying Prospectus. If the Company does
not make interest payments on the Junior Subordinated Debt Securities purchased
by Williams Capital, it is expected that Williams Capital will not have
sufficient funds to pay distributions on the Preferred Securities. The Guarantee
is a guarantee on a subordinated basis with respect to the Preferred Securities
from the time of its issuance but does not apply to any payment of distributions
unless and until Williams Capital has sufficient funds for the payment of such
distributions.
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The Guarantee covers the payment of distributions and other payments on the
Preferred Securities only if and to the extent that the Company has made a
payment of interest or principal or other payments on the Junior Subordinated
Debt Securities held by Williams Capital as its sole asset. The Guarantee, when
taken together with the Company's obligations under the Junior Subordinated Debt
Securities and the Indenture and its obligations under the Declaration,
including its obligations to pay costs, expenses, debts and liabilities of
Williams Capital (other than with respect to the Trust Securities), will provide
a full and unconditional guarantee of distributions, redemption payments and
liquidation payments on the Preferred Securities.
If the Company fails to make interest or other payments on the Junior
Subordinated Debt Securities when due (taking account of any Extension Period),
the Declaration provides a mechanism whereby the holders of the Preferred
Securities, using the procedures described in "Description of the Preferred
Securities -- Book Entry Only Issuance -- The Depository Trust Company" and
"-- Voting Rights," may direct the Institutional Trustee to enforce its rights
under the Junior Subordinated Debt Securities. If the Institutional Trustee
fails to enforce its rights under the Junior Subordinated Debt Securities, any
holder of Preferred Securities may directly institute a legal proceeding against
the Company to enforce the Institutional Trustee's rights under the Junior
Subordinated Debt Securities without first instituting any legal proceeding
against the Institutional Trustee or any other person or entity. If a
Declaration Event of Default has occurred and is continuing and such event is
attributable to the failure of the Company to pay interest or principal on the
Junior Subordinated Debt Securities on the date such interest or principal is
otherwise payable (or in the case of redemption, on the redemption date), then a
holder of Preferred Securities may also institute a Direct Action for payment on
or after the respective due date specified in the Junior Subordinated Debt
Securities without first (i) directing the Institutional Trustee to enforce the
terms of the Junior Subordinated Debt Securities or (ii) instituting a legal
proceeding against the Company to enforce the Institutional Trustee's rights
under the Junior Subordinated Debt Securities. In connection with such Direct
Action, the Company will be subrogated to the rights of such holder of Preferred
Securities under the Declaration to the extent of any payment made by the
Company to such holder of Preferred Securities in such Direct Action.
Consequently, the Company will be entitled to payment of amounts that a holder
of Preferred Securities receives in respect of an unpaid distribution that
resulted in the bringing of a Direct Action to the extent that such holder
receives or has already received full payment with respect to such unpaid
distribution from Williams Capital. The Company, under the Guarantee,
acknowledges that the Guarantee Trustee shall enforce the Guarantee on behalf of
the holders of the Preferred Securities. If the Company fails to make payments
under the Guarantee, the Guarantee provides a mechanism whereby the holders of
the Preferred Securities may direct the Guarantee Trustee to enforce its rights
thereunder. If the Guarantee Trustee fails to enforce the Guarantee, any holder
of Preferred Securities may directly institute a legal proceeding against the
Company to enforce the Guarantee Trustee's rights under the Guarantee without
first instituting a legal proceeding against Williams Capital, the Guarantee
Trustee, or any other person or entity. A holder of Preferred Securities may
also directly institute a legal proceeding against the Company to enforce such
holder's right to receive payment under the Guarantee without first (i)
directing the Guarantee Trustee to enforce the terms of the Guarantee or (ii)
instituting a legal proceeding against Williams Capital or any other person or
entity.
The Company and Williams Capital believe that the above mechanisms and
obligations, taken together, are equivalent to a full and unconditional
guarantee by the Company of payments due on the Preferred Securities. See
"Description of Guarantee--General."
UNITED STATES FEDERAL INCOME TAXATION
In the opinion of the Davis Polk & Wardwell, tax counsel to the Company and
Williams Capital, the following are the material United States federal income
tax consequences of the ownership and disposition of Preferred Securities.
Unless otherwise stated, this summary deals only with Preferred Securities held
as capital assets by holders who acquire the Preferred Securities upon original
issuance at the initial public offering price set forth on the cover of this
Prospectus Supplement ("Initial Holders"). It does not deal with special classes
of holders such as banks, thrifts, real estate investment trusts, regulated
investment companies, insurance companies, dealers in securities or currencies,
tax-exempt investors, persons that have a functional
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<PAGE> 37
currency other than the U.S. Dollar or persons that will hold the Preferred
Securities as a position in a "straddle," as part of a "synthetic security" or
"hedge," as part of a "conversion transaction" or other integrated investment,
or as other than a capital asset. This summary is based on the Internal Revenue
Code of 1986, as amended (the "Code"), Treasury Regulations thereunder and
administrative and judicial interpretations thereof as of the date hereof, all
of which are subject to change (possibly on a retroactive basis).
INVESTORS ARE ADVISED TO CONSULT THEIR TAX ADVISORS AS TO THE UNITED STATES
FEDERAL INCOME TAX CONSEQUENCES OF THE OWNERSHIP AND DISPOSITION OF PREFERRED
SECURITIES IN LIGHT OF THEIR PARTICULAR CIRCUMSTANCES, AS WELL AS THE EFFECT OF
ANY STATE, LOCAL OR OTHER TAX LAWS.
CLASSIFICATION OF WILLIAMS CAPITAL
In connection with the issuance of the Preferred Securities, Davis Polk &
Wardwell, tax counsel to the Company and Williams Capital, will render its
opinion generally to the effect that, under then current law and assuming full
compliance with the terms of the Declaration and the Indenture, and based on
certain facts and assumptions contained in such opinion, Williams Capital will
be classified for United States federal income tax purposes as a grantor trust
and not as an association taxable as a corporation. Accordingly, each holder of
Preferred Securities (a "Securityholder") will be considered the owner of a pro
rata portion of the Junior Subordinated Debt Securities held by Williams
Capital. Accordingly, each Securityholder will be required to include in gross
income his pro rata share of income accrued on the Junior Subordinated Debt
Securities.
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
Under recently issued Treasury regulations applicable to debt instruments
issued on or after August 13, 1996 (the "Regulations"), a "remote" contingency
that stated interest will not be timely paid will be ignored in determining
whether a debt instrument is issued with original issue discount ("OID"). The
Company believes that the likelihood of its exercising its option to defer
payments is remote. Based on the foregoing, the Company believes that the Junior
Subordinated Debt Securities will not be considered to be issued with OID at the
time of their original issuance and, accordingly, a holder of the Preferred
Securities should include in gross income such holder's allocable share of
interest on the Junior Subordinated Debt Securities in accordance with such
holder's method of tax accounting.
Under the Regulations, however, if the Company exercises its right to defer
payments of interest, the Junior Subordinated Debt Securities will become OID
instruments, and all Securityholders (including those Securityholders that
otherwise report income based on the cash method of accounting) will be required
to accrue interest on a daily basis during the extended interest period even
though the Company will not pay the interest in cash until the end of the
extended interest period. A Securityholder who disposes of the Preferred
Securities during an extended interest period may suffer a loss because the
market value of the Preferred Securities will likely fall if the Company
exercises its option to defer payments of interest on the Junior Subordinated
Debt Securities. Furthermore, the market value of the Preferred Securities may
not reflect the accumulated distributions that will be paid at the end of the
extended interest period, and a Securityholder who sells the Preferred
Securities during the extended interest period will not receive from the Company
any cash related to the interest income the Securityholder accrued and included
in its taxable income under the OID rules (because that cash will be paid to the
holder of record at the end of the extended interest period).
If the Junior Subordinated Debt Securities become OID instruments (i.e., if
the Company ever exercises its right to defer payments of interest), the Debt
Securities will be taxed as OID instruments for as long as they remain
outstanding. Thus, even after the end of the extended interest period, all
Securityholders will be required to continue accruing interest on the Junior
Subordinated Debt Securities on a daily basis, regardless of their method of
accounting. Under the OID rules, a Securityholder would accrue an amount of
interest income each year that approximates the stated interest payments called
for under the terms of the Junior Subordinated Debt Securities, and actual cash
payments of interest on the Junior Subordinated Debt Securities would not be
reported separately as taxable income.
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<PAGE> 38
The Regulations have not yet been addressed in any rulings or other
interpretations by the Internal Revenue Service (the "IRS"), and it is possible
that the IRS could take a position contrary to tax counsel's interpretation.
Because income on the Preferred Securities will constitute interest or OID,
corporate holders of the Preferred Securities will not be entitled to a
dividends-received deduction with respect to any income recognized with respect
to the Preferred Securities.
DISTRIBUTION OF JUNIOR SUBORDINATED DEBT SECURITIES TO HOLDERS OF PREFERRED
SECURITIES
Under current law, a distribution by Williams Capital of the Junior
Subordinated Debt Securities as described under the caption "Description of the
Preferred Securities -- Special Event Redemption or Distribution", will be
non-taxable and will result in each Securityholder receiving directly his pro
rata share of the Junior Subordinated Debt Securities previously held indirectly
through Williams Capital, with a holding period and tax basis equal to the
holding period and adjusted tax basis such Securityholder was considered to have
had in his pro rata share of the underlying Junior Subordinated Debt Securities
prior to such distribution.
DISPOSITION OF THE PREFERRED SECURITIES
Upon a sale, exchange or other disposition of the Preferred Securities
(including a distribution of cash in redemption of a Securityholder's Preferred
Securities upon redemption or repayment of the underlying Junior Subordinated
Debt Securities, but excluding the distribution of Junior Subordinated Debt
Securities), a Securityholder will be considered to have disposed of all or part
of his pro rata share of the Junior Subordinated Debt Securities, and will
recognize gain or loss equal to the difference between the amount realized
(which, for this purpose, will exclude amounts attributable to accrued interest
not previously included in income) and the Securityholder's adjusted tax basis
in his pro rata share of the underlying Junior Subordinated Debt Securities of
which he is deemed to have disposed. Such gain or loss will generally be long-
term capital gain or loss if the Preferred Securities have been held for more
than one year. Amounts attributable to accrued interest with respect to a
Securityholder's pro rata share of the Junior Subordinated Debt Securities not
previously included in income will be taxable as ordinary income.
PROPOSED TAX LEGISLATION
On March 19, 1996, as a part of President Clinton's Fiscal 1997 Budget
Proposal, the Treasury Department proposed legislation (the "Proposed
Legislation") that, among other things, would (i) treat as equity for United
States federal income tax purposes certain debt instruments with a maximum term
of more than 20 years and (ii) disallow interest deductions on debt instruments
with a maturity of more than 40 years. The Proposed Legislation was proposed to
be effective for debt instruments issued on or after December 7, 1995.
On March 29, 1996, Senate Finance Committee Chairman William V. Roth, Jr.
and House Ways and Means Committee Chairman Bill Archer issued a joint statement
(the "Joint Statement") indicating their intent that the Proposed Legislation,
if adopted by either of the tax-writing committees of Congress, would have an
effective date that is no earlier than the date of "appropriate Congressional
action." The proposals were not adopted in the recently concluded session of
Congress. There can be no assurance, however, that final legislation similar to
the Bill or future legislative proposals, future regulations or official
administrative pronouncements or future judicial decisions will not affect the
ability of the Company to deduct interest on the Junior Subordinated Debt
Securities. Such a change could give rise to a Tax Event, which may permit the
company to cause a redemption of the Preferred Securities. See "Description of
the Preferred Securities -- Special Event Redemption or Distribution."
UNITED STATES ALIEN HOLDERS
For purposes of this discussion, a "United States Alien Holder" is any
corporation, individual, partnership, estate or trust that is as to the United
States, a foreign corporation, a non-resident alien individual, a foreign
partnership or a non-resident fiduciary of a foreign estate or trust. This
discussion assumes
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<PAGE> 39
that income with respect to the Preferred Securities is not effectively
connected with any trade or business in the United States in which the United
States Alien Holder is engaged.
Under present United States federal income tax law:
(i) payments by Williams Capital or any of its paying agents to any
holder of a Preferred Security who or which is a United States Alien Holder
will not be subject to United States federal withholding tax, provided that
(a) the beneficial owner of the Preferred Security does not actually or
constructively own 10% or more of the total combined voting power of all
classes of stock of the Company entitled to vote, (b) the beneficial owner
of the Preferred Security is not a controlled foreign corporation that is
related to the Company through stock ownership, and (c) either (A) the
beneficial owner of the Preferred Security certifies to Williams Capital or
its agent, under penalties of perjury, that it is not a United States
holder and provides its name and address or (B) a securities clearing
organization, bank or other financial institution that holds customer's
securities in the ordinary course of its trade or business (a "Financial
Institution"), and holds the Preferred Security in such capacity certifies
to Williams Capital or its agent, under penalties of perjury, that such
statement has been received from the beneficial owner by it or by a
Financial Institution holding such security for the beneficial owner and
furnishes Williams Capital or its agent with a copy thereof; and
(ii) A United States Alien Holder of a Preferred Security generally
will not be subject to United States federal withholding tax on any gain
realized upon the sale or other disposition of a Preferred Security.
INFORMATION REPORTING TO HOLDERS
Williams Capital will report the interest and original issue discount (if
any) that accrued during the year with respect to the Junior Subordinated Debt
Securities, and any gross proceeds received by Williams Capital from the
retirement or redemption of the Junior Subordinated Debt Securities, annually to
the holders of record of the Preferred Securities and the IRS. Williams Capital
currently intends to deliver such reports to holders of record prior to January
31 following each calendar year. It is anticipated that persons who hold
Preferred Securities as nominees for beneficial holders will report the required
tax information to beneficial holders on Forms 1099.
BACKUP WITHHOLDING
Payments made on, and proceeds from the sale of, the Preferred Securities
may be subject to a "backup" withholding tax of 31% unless the holder complies
with certain identification requirements. Any withheld amounts will generally be
allowed as a credit against the holder's United States federal income tax,
provided the required information is timely filed with the IRS.
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<PAGE> 40
UNDERWRITING
Under the terms and subject to the conditions of the Underwriting Agreement
dated , 1997 (the "Underwriting Agreement"), each Underwriter named
below (the "Underwriters") has severally agreed to purchase from Williams
Capital, and Williams Capital has agreed to sell to such Underwriter, the number
of Preferred Securities set forth opposite the name of such Underwriter below.
<TABLE>
<CAPTION>
NUMBER OF
PREFERRED
UNDERWRITERS SECURITIES
- ---------------------------------------------------------------------------------- ----------
<S> <C>
---------
Total...................................................................
=========
</TABLE>
The Underwriters are obligated to take and pay for the total number of
Preferred Securities offered hereby if any such Preferred Securities are
purchased. In the event of default by any Underwriter, the Underwriting
Agreement provides that, in certain circumstances, purchase commitments of the
non-defaulting Underwriters may be increased or the Underwriting Agreement may
be terminated.
The Underwriting Agreement provides that Williams Capital and the Company
will indemnify the several Underwriters against certain liabilities, including
liabilities under the Securities Act of 1933, as amended, and to make certain
contributions in respect thereof.
Williams Capital and the Company have agreed, during the period beginning
on the date of the Underwriting Agreement and continuing to and including the
date that is 60 days after the closing date for the purchase of the Preferred
Securities, not to offer, sell, contract to sell or otherwise dispose of any
preferred securities, any preferred stock or any other securities (including any
backup undertakings of such preferred stock or other securities) of the Company
or of Williams Capital, in each case that are substantially similar to the
Preferred Securities, or any securities convertible into or exchangeable for the
Preferred Securities or such substantially similar securities of either Williams
Capital or the Company, except preferred securities offered pursuant to the
accompanying Prospectus, without the prior written consent of .
In view of the fact that the proceeds of the sale of the Preferred
Securities will ultimately be used to purchase the Junior Subordinated Debt
Securities of the Company, the Underwriting Agreement provides that the Company
will pay as compensation to the Underwriters $ per Preferred Security
for the accounts of the several Underwriters.
The Underwriters propose to offer the Preferred Securities, in part,
directly to the public at the initial public offering price set forth on the
cover page of this Prospectus Supplement, and to certain dealers at a price that
represents a concession not in excess of $ . The Underwriters may
allow, and such dealers may reallow, a concession not in excess of $
per Preferred Security to certain brokers and dealers. After the Preferred
Securities are released for sale to the public, the offering price and other
selling terms may from time to time be varied by the Representatives.
The Company intends to apply for listing of the Preferred Securities on the
New York Stock Exchange. Trading of the Preferred Securities on the New York
Stock Exchange is expected to commence within a 30-day period after the date of
this Prospectus Supplement.
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<PAGE> 41
LEGAL MATTERS
The validity of the Preferred Securities, the Junior Subordinated Debt
Securities, the Guarantee and certain matters relating thereto will be passed
upon by William G. Von Glahn, Esq., Senior Vice President and General Counsel of
the Company. Certain matters of Delaware law will be passed upon for the Company
and Williams Capital by Morris, James, Hitchens & Williams, Wilmington,
Delaware. Certain United States federal income tax matters will be passed upon
for the Company and Williams Capital by Davis Polk & Wardwell, New York, New
York. Certain legal matters will be passed upon for the Underwriters by Davis
Polk & Wardwell, New York, New York.
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<PAGE> 42
PROSPECTUS
THE WILLIAMS COMPANIES, INC.
JUNIOR SUBORDINATED DEBT SECURITIES
------------------
WILLIAMS CAPITAL I
WILLIAMS CAPITAL II
TRUST PREFERRED SECURITIES
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY
THE WILLIAMS COMPANIES, INC.
------------------
The Williams Companies, Inc., a Delaware corporation (the "Company"), may
offer, from time to time, its unsecured junior subordinated debt securities (the
"Junior Subordinated Debt Securities"), consisting of debentures, notes or other
evidences of indebtedness, in one or more series and in amounts, at prices and
on terms to be determined at or prior to the time of any such offering. The
Company's obligations under the Junior Subordinated Debt Securities will be
subordinate and junior in right of payment to certain other indebtedness of the
Company as described herein or as may be described in an accompanying Prospectus
Supplement (the "Prospectus Supplement").
Williams Capital I and Williams Capital II (each, a "Williams Trust" and,
together, the "Williams Trusts"), each a statutory business trust formed under
the laws of the State of Delaware, may offer, from time to time, trust preferred
securities, representing undivided beneficial interests in the assets of the
respective Williams Trust ("Preferred Securities") with the payment of periodic
cash distributions ("distributions") and payments on liquidation, redemption or
otherwise of such Preferred Securities guaranteed (each, a "Guarantee") on a
subordinated basis by the Company to the extent described herein. See
"Description of Guarantees." The Company's obligations under the Guarantees are
subordinate and junior in right of payment to all Senior Indebtedness of the
Company and pari passu with any guarantee now or hereafter entered into by the
Company in respect of any preferred or preference stock of any affiliate of the
Company. See "Description of Guarantees -- Status of Guarantees." Junior
Subordinated Debt Securities may be issued and sold from time to time in one or
more series by the Company to a Williams Trust, or a trustee of such trust, in
connection with the investment of the proceeds from the offering of Preferred
Securities and Common Securities (as defined herein) of such Williams Trust, but
the Company does not intend to issue and sell the Junior Subordinated Debt
Securities directly to other purchasers, including the general public. The
Junior Subordinated Debt Securities purchased by a Williams Trust may be
subsequently distributed pro rata to holders of Preferred Securities and Common
Securities in connection with the dissolution of such Williams Trust upon the
occurrence of certain events as may be described in an accompanying Prospectus
Supplement. The Guarantee, when taken together with the Company's obligations
under the Junior Subordinated Debt Securities, the Indenture and the
Declaration, including its obligations to pay costs, expenses, debts and
liabilities of such Williams Trust (other than with respect to the Preferred
Securities and the Common Securities), will provide a full and unconditional
guarantee on a subordinated basis by the Company of payments due on Preferred
Securities.
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.
THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALES OF SECURITIES UNLESS
ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
------------------
, 1997
<PAGE> 43
Specific terms of the Junior Subordinated Debt Securities of any series or
the Preferred Securities of any Williams Trust in respect of which this
Prospectus is being delivered (the "Offered Securities") will be set forth in a
Prospectus Supplement with respect to such Offered Securities, which will
describe, without limitation and where applicable, the following: (i) in the
case of Junior Subordinated Debt Securities, the specific designation, aggregate
principal amount, denomination, maturity, premium, if any, redemption or sinking
fund provisions, if any, interest rate (which may be fixed or variable), if any,
the time and method of calculating interest payments, if any, dates on which
premium, if any, and interest, if any, will be payable, the right of the
Company, if any, to defer payment of interest on the Junior Subordinated Debt
Securities and the maximum length of such deferral period, the initial public
offering price, subordination terms, and any listing on a securities exchange
and other specific terms of the offering of Junior Subordinated Debt Securities,
and (ii) in the case of Preferred Securities, the designation, number of
securities, liquidation preference per security, initial public offering price,
any listing on a securities exchange, distribution rate (or method of
calculation thereof), dates on which distributions shall be payable and dates
from which distributions shall accrue, any voting rights, any redemption or
sinking fund provisions, any other rights, preferences, privileges, limitations
or restrictions relating to the Preferred Securities and the terms upon which
the proceeds of the sale of the Preferred Securities shall be used to purchase a
specific series of Junior Subordinated Debt Securities. If so specified in the
applicable Prospectus Supplement, Offered Securities may be issued in whole or
in part in the form of one or more temporary or permanent global securities.
If as set forth in the applicable Prospectus Supplement, the Company has
the right to defer payments of interest on a series of Junior Subordinated Debt
Securities by extending the interest payment period of such series of Junior
Subordinated Debt Securities (each, an "Extension Period"), distributions on the
corresponding series of Preferred Securities will also be deferred.
The Offered Securities may be offered in amounts, at prices and on terms to
be determined at the time of offering; provided, however, that the aggregate
initial public offering price of all Offered Securities shall not exceed $300
million. Any Prospectus Supplement relating to any series of Offered Securities
will contain information concerning certain United States federal income tax
considerations, if applicable, to the Offered Securities.
The Company or any of the Williams Trusts may sell the Offered Securities
directly, through agents designated from time to time or through underwriters or
dealers. See "Plan of Distribution." If any agents of the Company, any of the
Williams Trusts or any underwriters or dealers are involved in the sale of the
Offered Securities, the names of such agents, underwriters or dealers and any
applicable commissions and discounts will be set forth in any related Prospectus
Supplement.
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS OR ANY ACCOMPANYING PROSPECTUS
SUPPLEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY OF THE WILLIAMS
TRUSTS, OR ANY UNDERWRITER, AGENT OR DEALER. NEITHER THE DELIVERY OF THIS
PROSPECTUS AND ANY PROSPECTUS SUPPLEMENT NOR ANY SALE MADE THEREUNDER SHALL,
UNDER ANY CIRCUMSTANCE, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF THE COMPANY OR ANY OF THE WILLIAMS TRUSTS SINCE THE DATE HEREOF
OR THEREOF. THIS PROSPECTUS AND ANY RELATED PROSPECTUS SUPPLEMENT DO 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.
---------------------
IN CONNECTION WITH THE OFFERING OF CERTAIN OF THE OFFERED SECURITIES, THE
UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN
THE MARKET PRICES OF SUCH OFFERED SECURITIES OR OTHER SECURI-
2
<PAGE> 44
TIES OF THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE
OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission"). Such reports and other information can be
inspected and copied at the public reference facilities maintained by the
Commission at: Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549;
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511; and Seven World Trade Center, New York, New York 10048. Copies of
such material can also be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. The Commission also maintains a site on the World Wide Web, the address
of which is http://www.sec.gov, that contains reports, proxy and information
statements and other information regarding issuers, such as the Company, that
file electronically with the Commission. Certain other securities of the Company
are listed on the New York Stock Exchange, Inc. (the "NYSE") and The Pacific
Stock Exchange Incorporated, and such reports, proxy statements, and other
information can also be inspected at the offices of the New York Stock Exchange,
Inc., 20 Broad Street, New York, New York 10005, and The Pacific Stock Exchange
Incorporated, 301 Pine Street, San Francisco, California 94104, and 233 South
Beaudry Avenue, Los Angeles, California 90012.
The Company and the Williams Trusts have filed with the Commission a
Registration Statement on Form S-3 (the "Registration Statement," which term
shall include all amendments, exhibits, annexes and schedules thereto) pursuant
to the Securities Act of 1933, as amended (the "Act"), with respect to the
Offered Securities. 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. For further
information with respect to the Company, the Williams Trusts and the Offered
Securities, reference is made to the Registration Statement and exhibits
thereto. Statements contained in this Prospectus as to the contents of any
contract or other document are not necessarily complete, and in each instance
reference is made to the copy of such contract or document filed as an exhibit
to the Company's Registration Statement, each such statement being qualified in
all respects by such reference.
No separate financial statements of the Williams Trusts have been included
or incorporated by reference herein. The Company does not consider that such
financial statements would be material to holders of the Preferred Securities
because (i) all of the voting securities of the Williams Trusts will be owned,
directly or indirectly, by the Company, a reporting company under the Exchange
Act, (ii) the Williams Trusts have no independent operations but exist for the
sole purpose of issuing securities representing undivided beneficial interests
in their respective assets and investing the proceeds thereof in Junior
Subordinated Debt Securities issued by the Company, and (iii) the obligations of
the Williams Trusts under the Preferred Securities are fully and unconditionally
guaranteed by the Company to the extent that the respective Williams Trust has
funds available to meet such obligations. See "Description of Junior
Subordinated Debt Securities" and "Description of Guarantees."
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company incorporates by reference the following documents heretofore
filed with the Commission pursuant to the Exchange Act:
1. Annual Report on Form 10-K, as amended, of the Company for the
fiscal year ended December 31, 1995;
2. Quarterly Reports on Form 10-Q of the Company for the quarters
ended March 31, 1996, June 30, 1996 and September 30, 1996; and
3
<PAGE> 45
3. Current Reports on Form 8-K of the Company, dated January 21, 1996,
July 21, 1996 and December 30, 1996.
All 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 later of (i) the termination of the offering of Offered Securities hereby
and (ii) the date on which the underwriters cease offering and selling Offered
Securities pursuant to this Prospectus shall be deemed to be incorporated by
reference in this Prospectus and to be a part hereof from the date of filing of
such documents.
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 to constitute a part of
this Prospectus except as so modified or superseded.
The Company will provide without charge to each person to whom this
Prospectus is delivered, on the written or oral request of any such person, a
copy of any or all of the documents incorporated by reference in the
Registration Statement of which this Prospectus forms a part other than exhibits
to such documents unless such exhibits are specifically incorporated by
reference into such documents. Requests should be directed to The Williams
Companies, Inc., One Williams Center, Tulsa, Oklahoma 74172; Attention:
Corporate Secretary, (918) 588-2000.
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<PAGE> 46
THE COMPANY
The Company, through subsidiaries, is engaged in the transportation and
sale of natural gas and related activities, natural gas gathering, processing
and production activities, the transportation of petroleum products, natural gas
trading, natural gas liquids marketing and provides a variety of other products
and services to the energy industry. The Company also is engaged in the
telecommunications business. The Company's subsidiaries own and operate: (i)
five interstate natural gas pipeline systems; (ii) a common carrier crude and
petroleum products pipeline system; and (iii) natural gas gathering and
processing facilities and production properties. The Company also trades natural
gas and markets natural gas liquids. The Company's telecommunications
subsidiaries offer data, voice and video-related products and services and
customer premises equipment nationwide. The Company also has investments in the
equity of certain other companies.
Substantially all operations of the Company are conducted through
subsidiaries. The Company performs management, legal, financial, tax,
consultative, administrative and other services for its subsidiaries. The
Company's principal sources of cash are from dividends and advances from its
subsidiaries, investments, payments by subsidiaries for services rendered by its
staff and interest payments from subsidiaries on cash advances. The amount of
dividends available to the Company from subsidiaries largely depends upon each
subsidiary's earnings and operating capital requirements. The terms of certain
subsidiaries' borrowing arrangements limit the transfer of funds to the Company.
The Company was incorporated under the laws of the State of Nevada in 1949
and was reincorporated under the laws of the State of Delaware in 1987. The
principal executive offices of the Company are located at One Williams Center,
Tulsa, Oklahoma 74172 (telephone (918) 588-2000).
WILLIAMS TRUSTS
Each of the Williams Trusts is a statutory business trust formed under
Delaware law pursuant to (i) a declaration of trust executed by the Company, as
sponsor for such trust (the "Sponsor"), and the trustees of such trust dated as
of January 31, 1997 and (ii) the filing of a certificate of trust with the
Secretary of State of the State of Delaware on January 31, 1997. Each such
declaration will be amended and restated in its entirety (as so amended and
restated, each a "Declaration"), and is substantially in the form filed as an
exhibit to the Registration Statement of which this Prospectus forms a part.
Each of the Williams Trusts exists for the exclusive purposes of (i) issuing the
Preferred Securities and common securities representing undivided beneficial
interests in the assets of the Trust (the "Common Securities" and, together with
the Preferred Securities, the "Trust Securities"), (ii) investing the gross
proceeds from the sale of the Trust Securities in the Junior Subordinated Debt
Securities and (iii) engaging in only those other activities necessary or
incidental thereto. All of the Common Securities will be directly or indirectly
owned by the Company. The Common Securities will rank pari passu, and payments
will be made thereon pro rata, with the Preferred Securities, except that, upon
an event of default under the Declaration, the rights of the holders of the
Common Securities to payment in respect of distributions and payments upon
liquidation, redemption and otherwise will be subordinated to the rights of the
holders of the Preferred Securities. The Company will directly or indirectly
acquire Common Securities in an aggregate liquidation amount equal to 3% or more
of the total capital of each Williams Trust.
Each Williams Trust has a term of approximately 55 years but may terminate
earlier, as provided in each Declaration. Each Williams Trust's business and
affairs will be conducted by the trustees of each applicable Trust (the
"Williams Trustees")appointed by the Company as the direct or indirect holder of
all the Common Securities. The holder of the Common Securities will be entitled
to appoint, remove or replace any of, or increase or reduce the number of, the
Williams Trustees of the Williams Trusts. The duties and obligations of the
Williams Trustees shall be governed by the Declaration of such Williams Trust.
Each Williams Trust will have two Williams Trustees (the "Regular Trustees") who
are employees or officers of or who are affiliated with the Company. One
Williams Trustee of each Williams Trust will be a financial institution that is
not affiliated with the Company and that has a specified minimum amount of
aggregate capital, surplus, and undivided profits of not less than $50,000,000,
which shall act as property trustee and as indenture trustee for the purposes of
compliance with the provisions of Trust Indenture Act of 1939, as amended (the
"Trust
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<PAGE> 47
Indenture Act"), pursuant to the terms set forth in a Prospectus Supplement (the
"Institutional Trustee"). In addition, unless the Institutional Trustee
maintains a principal place of business in the State of Delaware and otherwise
meets the requirements of applicable law, one Williams Trustee of each Williams
Trust will have a principal place of business or reside in the State of Delaware
(the "Delaware Trustee"). The Company will pay all fees and expenses related to
the Williams Trusts and the offering of the Trust Securities.
The office of the Delaware Trustee for each of the Williams Trusts is Chase
Manhattan Bank Delaware, 1201 Market Street, Wilmington, Delaware 19801. The
address for each Williams Trust is c/o the Company, the Sponsor of the Williams
Trusts, at the Company's corporate headquarters located at One Williams Center,
Tulsa, Oklahoma 74172 (telephone (918) 588-2000).
USE OF PROCEEDS
All of the net proceeds from the sale of any Preferred Securities offered
hereby will be invested by the Williams Trust in Junior Subordinated Debt
Securities. The Company will use the proceeds from the sale of the Junior
Subordinated Debt Securities to the Williams Trusts for general corporate
purposes.
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS
<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEAR ENDED DECEMBER 31,
SEPTEMBER 30, --------------------------------
1996 1995 1994 1993 1992 1991
------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to combined fixed charges and
Preferred Stock dividend requirements............. 2.22 2.06 2.15 2.30 1.59 1.43
</TABLE>
For the purpose of this ratio (i) earnings consist of income from
continuing operations before fixed charges and incomes taxes for the Company,
its majority-owned subsidiaries and its proportionate share of 50 percent-owned
companies, less undistributed earnings of less than 50 percent-owned companies;
and (ii) fixed charges consist of interest and debt expense on all indebtedness
(without reduction for interest capitalized), that portion of rental payments on
operating leases estimated to represent an interest factor, plus the pretax
effect of preferred stock dividends of the Company and its subsidiaries.
DESCRIPTION OF JUNIOR SUBORDINATED DEBT SECURITIES
The following description sets forth certain general terms and provisions
of the Junior Subordinated Debt Securities to which any Prospectus Supplement
may relate. The particular terms of the Junior Subordinated Debt Securities
offered by any Prospectus Supplement and the extent, if any, to which such
general provisions may apply to the Junior Subordinated Debt Securities so
offered will be described in the Prospectus Supplement relating to such Junior
Subordinated Debt Securities.
The Junior Subordinated Debt Securities may be issued, from time to time,
in one or more series, under an Indenture, dated as of ,
1997 (the "Indenture"), between the Company and The Chase Manhattan Bank, as
trustee (the "Indenture Trustee"), the form of which is filed as an exhibit to
the Registration Statement of which this Prospectus forms a part.
The following summary of certain provisions of the Junior Subordinated Debt
Securities and the Indenture does not purport to be complete and is subject to,
and is qualified in its entirety by express reference to, all of the provisions
of the Indenture, including the definitions therein of certain terms. All
article and section references appearing herein are to articles and sections of
the Indenture, unless otherwise indicated, and capitalized terms which are not
otherwise defined in this Prospectus shall have the meanings specified in the
Indenture.
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<PAGE> 48
General. The Junior Subordinated Debt Securities will be direct, unsecured
obligations of the Company. The Indenture does not limit the amount of Junior
Subordinated Debt Securities which may be issued thereunder, and provides that
Junior Subordinated Debt Securities may be issued thereunder in series up to the
aggregate principal amount which may be authorized from time to time by the
Board of Directors of the Company. (Section 3.1)
Reference is made to the Prospectus Supplement which accompanies this
Prospectus for the following terms and other information with respect to the
Junior Subordinated Debt Securities being offered thereby: (i) the designation,
priority, aggregate principal amount and authorized denominations; (ii) the
percentage of their principal amount at which such Junior Subordinated Debt
Securities will be issued; (iii) the date on which such Junior Subordinated Debt
Securities will mature; (iv) the rate per annum at which such Junior
Subordinated Debt Securities will bear interest or the method of determination
of such rate; (v) the dates on which such interest will be payable; (vi) the
rights, if any, to defer payments of interest on the Junior Subordinated Debt
Securities by extending the interest payment period, and the maximum duration of
such extensions; (vii) the place or places where payments on such Junior
Subordinated Debt Securities shall be made; (viii) any redemption terms or
sinking fund provisions; (ix) the terms of subordination of Junior Subordinated
Debt Securities; (x) whether Junior Subordinated Debt Securities issued in fully
registered form will be represented by either a global security delivered to a
depositary and recorded in a book-entry system maintained by such depositary or
by a certificate delivered to the Holder; (xi) the restrictions, if any,
applicable to the exchange of Junior Subordinated Debt Securities of a series of
one form for another of such series and to the offer, sale and delivery of the
Junior Subordinated Debt Securities; (xii) whether and under what circumstances
the Company will pay additional amounts in the event of certain developments
with respect to United States withholding tax or information reporting laws; or
(xiii) other specific terms.
Unless otherwise specified in the applicable Prospectus Supplement, Junior
Subordinated Debt Securities will be issued in fully registered form without
coupons, will be exchangeable for other Junior Subordinated Debt Securities of
the same series, registered in the same name, for a like aggregate principal
amount in authorized denominations, and will be transferable at any time or from
time to time at the Corporate Trust Office of the Indenture Trustee or at any
other office or agency of the Company maintained for that purpose. No charge
will be made to the Holder for any such exchange or transfer except for any tax
or governmental charge incidental thereto.
Unless otherwise described in the Prospectus Supplement accompanying this
Prospectus, there are no covenants or provisions contained in the Indenture
which afford the Holders of the Junior Subordinated Debt Securities protection
in the event of a highly leveraged transaction involving the Company.
Consolidation, Merger and Sale of Assets. The Indenture provides that the
Company will not consolidate with or merge into any other corporation or convey,
transfer or lease its assets substantially as an entirety unless (a) the
successor is a corporation organized in the United States and expressly assumes
the due and punctual payment of the principal of (and premium, if any) and
interest on all Junior Subordinated Debt Securities issued thereunder and the
performance of every other covenant of the Indenture on the part of the Company
and (b) immediately thereafter no Event of Default and no event which, after
notice or lapse of time, or both, would become an Event of Default, shall have
happened and be continuing. Upon any such consolidation, merger, conveyance or
transfer, the successor corporation shall succeed to and be substituted for the
Company under the Indenture and thereafter, except in the case of a lease, the
predecessor corporation shall be relieved of all obligations and covenants under
the Indenture and the Junior Subordinated Debt Securities. (Article Eight)
Events of Default. The Indenture provides that the following are Events of
Default thereunder with respect to any series of the Junior Subordinated Debt
Securities: (a) default in the payment of the principal of (or premium, if any,
on) any Junior Subordinated Debt Security of such series at its maturity; (b)
default in making a sinking fund payment, if any, when and as the same shall be
due and payable by the terms of the Junior Subordinated Debt Securities of such
series; (c) default for 30 days in the payment of any installment of interest on
any Junior Subordinated Debt Security of such series; (d) default for 90 days
after written notice in the performance of any other covenant in respect of the
Junior Subordinated Debt Securities of such
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<PAGE> 49
series contained in the Indenture; (e) certain events of bankruptcy, insolvency
or reorganization, or court appointment of a receiver, liquidator or trustee of
the Company; (f) any other Event of Default provided in the applicable
resolution of the Board of Directors or supplemental indenture under which the
Junior Subordinated Debt Securities are issued; and (g) in the event Junior
Subordinated Debt Securities of a series are issued and sold to a Williams Trust
or a trustee of such trust in connection with the issuance of Trust Securities
by such Williams Trust, such Williams Trust shall have voluntarily or
involuntarily dissolved, wound-up its business or otherwise terminated its
existence, except in connection with (i) the distribution of Junior Subordinated
Debt Securities to holders of Trust Securities in liquidation or redemption of
their interests in such Williams Trust upon a Special Event, (ii) the redemption
of all of the outstanding Trust Securities of such Williams Trust or (iii)
certain mergers, consolidations or amalgamations, each as permitted by the
Declaration of such Williams Trust. (Section 5.1) The Indenture Trustee may
withhold notice to the Holders of the Junior Subordinated Debt Securities of any
default with respect thereto (except in the payment of principal, premium or
interest) if it considers such withholding to be in the interests of such
Holders. (Section 6.2)
If an Event of Default with respect to the Junior Subordinated Debt
Securities shall have occurred and be continuing, the Indenture Trustee or the
Holders of 25% in aggregate principal amount of the Junior Subordinated Debt
Securities may declare the principal of all the Junior Subordinated Debt
Securities to be due and payable immediately. (Section 5.2)
The Indenture contains a provision entitling the Indenture Trustee to be
indemnified by the Holders before proceeding to exercise any right or power
under the Indenture at the request of any of the Holders. (Section 6.3). The
Indenture provides that the Holders of a majority in principal amount of the
outstanding Junior Subordinated Debt Securities may direct the time, method and
place of conducting any proceeding for any remedy available to the Indenture
Trustee, or exercising any trust or power conferred upon the Indenture Trustee,
with respect to the Junior Subordinated Debt Securities. (Section 5.12) The
right of a Holder to institute a proceeding with respect to the Indenture is
subject to certain conditions precedent including notice and indemnity to the
Indenture Trustee, but the Holder has an absolute right to receipt of principal,
premium, if any, and interest on the Junior Subordinated Debt Securities at the
Stated Maturity (or, in the case of redemption, on the Redemption Date) or to
institute suit for the enforcement thereof. (Sections 5.7 and 5.8)
The Holders of not less than a majority in principal amount of the
Outstanding Junior Subordinated Debt Securities may on behalf of the Holders of
all the Junior Subordinated Debt Securities waive any past defaults except (a) a
default in payment of the principal of (or premium, if any) or interest on any
Junior Subordinated Debt Security and (b) a default in respect of a covenant or
provision of the Indenture which cannot be amended or modified without the
consent of the Holder of each affected Junior Subordinated Debt Security;
provided, however, that if the Junior Subordinated Debt Securities are held by a
Williams Trust or a trustee of such trust, such waiver or modification to such
waiver shall not be effective until the holders of a majority in liquidation
preference of Trust Securities of the applicable Williams Trust shall have
consented to such waiver or modification to such waiver; provided further, that
if the consent of the Holder of each outstanding Junior Subordinated Debt
Security is required, such waiver shall not be effective until each holder of
the Trust Securities of the applicable Williams Trust shall have consented to
such waiver. (Section 5.13). The Indenture requires the Company to furnish to
the Indenture Trustee an annual statement as to defaults, if any, by the Company
under the Indenture. (Section 10.4)
Modifications and Amendments. Modifications and amendments to the
Indenture may be made by the Company and the Indenture Trustee with the consent
of the Holders of a majority in principal amount of the Junior Subordinated Debt
Securities at the time outstanding of each series which is affected thereby,
provided, that no such modification or amendment may, without the consent of the
Holder of each Junior Subordinated Debt Security affected thereby: (i) modify
the terms of payment of principal, premium, if any, or interest or modify the
subordination provisions in a manner adverse to the holders; or (ii) reduce the
percentage of Holders of Junior Subordinated Debt Securities necessary to modify
or amend the Indenture or waive compliance by the Company with any covenant or
past default or (iii) remove or impair the rights of any holder to bring a
Direct Action under certain circumstances, provided, further, that if the Junior
Subordinated Debt Securities of such series are held by a Williams Trust or a
trustee of such trust, such
8
<PAGE> 50
supplemental indenture shall not be effective until the holders of a majority in
liquidation preference of Trust Securities of the applicable Williams Trust
shall have consented to such supplemental indenture; provided further, that if
the consent of the Holder of each outstanding Junior Subordinated Debt Security
is required, such supplemental indenture shall not be effective until each
holder of the Trust Securities of the applicable Williams Trust shall have
consented to such supplemental indenture. (Section 9.2)
Discharge and Defeasance. The Company may discharge all of its obligation
(except those set forth below) to holders of any series of Junior Subordinated
Debt Securities issued under the Indenture, which Junior Subordinated Debt
Securities have not already been delivered to the Indenture Trustee for
cancellation and which either have become due and payable or are by their terms
due and payable within one year (or are to be called for redemption within one
year) by depositing with the Indenture Trustee an amount certified to be
sufficient to pay when due the principal of and premium, if any, and interest on
all outstanding Junior Subordinated Debt Securities of such series and to make
any mandatory sinking fund payments thereon when due. (Section 4.1)
Unless otherwise specified in the applicable Prospectus Supplement with
respect to the Junior Subordinated Debt Securities of a series, the Company, at
its option, (i) will be discharged from any and all obligations in respect of
the Junior Subordinated Debt Securities of such series (except for certain
obligations to pay all expenses of the applicable Williams Trust, to register
the transfer or exchange of Junior Subordinated Debt Securities of such series,
to replace mutilated, defaced, destroyed, lost or stolen Junior Subordinated
Debt Securities of such series, and to maintain Paying Agents and hold monies
for payment in trust), or (ii) need not comply with certain covenants specified
in the applicable Prospectus Supplement with respect to the Junior Subordinated
Debt Securities of that series, and the occurrence of an event described in
clause (d) under "Events of Default" above with respect to any defeased covenant
and clause (f) of the "Events of Default" above shall no longer be an Event of
Default if, in either case, the Company deposits with the Indenture Trustee, in
trust, money or U.S. Government Obligations that through the payment of interest
thereon and principal thereof in accordance with their terms will provide money
in an amount sufficient to pay all the principal of (and premium, if any) and
any interest on the Junior Subordinated Debt Securities of such series on the
dates such payments are due (which may include one or more redemption dates
designated by the Company) in accordance with the terms of such Junior
Subordinated Debt Securities. Such a trust may only be established, if, among
other things, the Company shall have delivered an Opinion of Counsel, which, in
the case of a discharge pursuant to clause (i), must be based upon a ruling or
administrative pronouncement of the Internal Revenue Service, to the effect that
the Holders of the Junior Subordinated Debt Securities will not recognize gain
or loss for federal income tax purposes as a result of such deposit or
defeasance and will be subject to federal income tax in the same manner as if
such defeasance had not occurred. (Sections 4.2, 4.3 and 4.4) In the event the
Company omits to comply with its remaining obligations under the Indenture after
a defeasance of the Indenture with respect to the Junior Subordinated Debt
Securities of any series as described under clause (ii) above and the Junior
Subordinated Debt Securities of such series are declared due and payable because
of the occurrence of any undefeased Event of Default, the amount of money and
U.S. Government Obligations on deposit with the Indenture Trustee may be
insufficient to pay amounts due on the Junior Subordinated Debt Securities of
such series at the time of the acceleration resulting from such Event of
Default. However, the Company will remain liable in respect of such payments.
Concerning the Indenture Trustee. The Indenture Trustee is the trustee
under indentures pursuant to which various debt securities of the Company have
been issued and participates in the Company's principal bank agreement (the
borrowings under which constitute Senior Indebtedness). The Company and certain
of its subsidiaries also maintain bank accounts, borrow money and have other
customary commercial banking or investment banking relationships with the
Indenture Trustee in the ordinary course of business.
Global Securities. The Indenture provides that the registered Junior
Subordinated Debt Securities of a series may be issued in the form of one or
more fully registered Global Securities (a "Registered Global Security") that
will be deposited with a depositary (a "Depositary") or with a nominee for a
Depositary identified in the Prospectus Supplement relating to such series and
registered in the name of the Depositary or a nominee thereof. (Section 3.1) In
such case, one or more Registered Global Securities will be issued in a
denomination or aggregate denominations equal to the portion of the aggregate
principal amount of
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<PAGE> 51
outstanding registered Junior Subordinated Debt Securities to be represented by
such Registered Global Security or Securities. Unless and until it is exchanged
in whole for Junior Subordinated Debt Securities in definitive registered form,
a Registered Global Security may not be transferred except as a whole by the
Depositary for such Registered Global Security to a nominee of such Depositary
or by a nominee of such Depositary to such Depositary or another nominee of such
Depositary or by such Depositary or any such nominee to a successor of such
Depositary or a nominee of such successor. The Depositary currently accepts only
debt securities that are payable in U.S. dollars. The specific terms of the
depositary arrangement with respect to any portion of a series of Junior
Subordinated Debt Securities to be represented by a Registered Global Security
will be described in the Prospectus Supplement relating to such series.
Ownership of beneficial interests in a Registered Global Security will be
limited to persons that have accounts with the Depositary for such Registered
Global Security ("participants") or persons that may hold interests through
participants. Upon the issuance of a Registered Global Security, the Depositary
for such Registered Global Security will credit, on its book-entry registration
and transfer system, the participants' accounts with the respective principal
amounts of the Debt Securities represented by such Registered Global Security
beneficially owned by such participants. The accounts to be credited shall be
designated by any dealers, underwriters or agents participating in the
distribution of such Junior Subordinated Debt Securities. Ownership of
beneficial interests in such Registered Global Security will be shown on, and
the transfer of such ownership interests will be effected only through, records
maintained by the Depositary for such Registered Global Security (with respect
to interests of participants) and on the records of participants (with respect
to interests of persons holding through participants). The laws of some states
may require that certain purchasers of securities take physical delivery of such
securities in definitive form. Such limits and such laws may impair the ability
to own, transfer or pledge beneficial interests in Registered Global Securities.
So long as the Depositary for a Registered Global Security, or its nominee,
is the registered owner of such Registered Global Security, such Depositary or
such nominee, as the case may be, will be considered the sole owner or holder of
the Junior Subordinated Debt Securities represented by such Registered Global
Security for all purposes under the Indenture. Except as set forth below, owners
of beneficial interests in a Registered Global Security will not be entitled to
have the Junior Subordinated Debt Securities represented by such Registered
Global Security registered in their names, will not receive or be entitled to
receive physical delivery of such Junior Subordinated Debt Securities in
definitive form and will not be considered the owners or holders thereof under
the Indenture. Accordingly, each person owning a beneficial interest in a
Registered Global Security must rely on the procedures of the Depositary for
such Registered Global Security 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 Indenture. The Company understands
that under existing industry practices, if the Company requests any action of
holders or if an owner of a beneficial interest in a Registered Global Security
desires to give or take any action which a holder is entitled to give or take
under the Indenture, the Depositary for such Registered Global Security 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 holding through them.
Principal, premium, if any, and interest payments on Junior Subordinated
Debt Securities represented by a Registered Global Security registered in the
name of a Depositary or its nominee will be made to such Depositary or its
nominee, as the case may be, as the registered owner of such Registered Global
Security. None of the Company, the Indenture Trustee or any other agent of the
Company or agent of the Indenture Trustee will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of beneficial ownership interests in such Registered Global Security or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
The Company expects that the Depositary for any Junior Subordinated Debt
Securities represented by a Registered Global Security, upon receipt of any
payment of principal, premium or interest in respect of such Registered Global
Security, will immediately credit participants' accounts with payments in
amounts proportionate to their respective beneficial interests in such
Registered Global Security as shown on the records of such Depositary. The
Company also expects that payments by participants to owners of beneficial
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<PAGE> 52
interests in such Registered Global Security held through such participants will
be governed by standing customer instructions and customary practices, as is now
the case with the securities held for the accounts of customers in bearer form
or registered in "street name," and will be the responsibility of such
participants.
If the Depositary for any Junior Subordinated Debt Securities represented
by a Registered Global Security is at any time unwilling or unable to continue
as Depositary or ceases to be a clearing agency registered under the Exchange
Act, and a successor Depositary registered as a clearing agency under the
Exchange Act is not appointed by the Company within 90 days, the Company will
issue such Junior Subordinated Debt Securities in definitive form in exchange
for such Registered Global Security. In addition, the Company may at any time
and in its sole discretion determine not to have any of the Junior Subordinated
Debt Securities of a series represented by one or more Registered Global
Securities and, in such event, will issue Junior Subordinated Debt Securities of
such series in definitive form in exchange for all of the Registered Global
Security or Securities representing such Junior Subordinated Debt Securities.
Any Junior Subordinated Debt Securities issued in definitive form in exchange
for a Registered Global Security will be registered in such name or names as the
Depositary shall instruct the relevant Trustee. It is expected that such
instructions will be based upon directions received by the Depositary from
participants with respect to ownership of beneficial interests in such
Registered Global Security.
The Junior Subordinated Debt Securities of a series may also be issued in
the form of one or more bearer global Securities (a "Bearer Global Security")
that will be deposited with a common depositary for Euro-clear and Cedel Bank,
societe anonyme, or with a nominee for such depositary identified in the
Prospectus Supplement relating to such series. The specific terms and
procedures, including the specific terms of the depositary arrangement, with
respect to any portion of a series of Junior Subordinated Debt Securities to be
represented by a Bearer Global Security will be described in the Prospectus
Supplement relating to such series.
Ranking of Junior Subordinated Debt Securities. The Junior Subordinated
Debt Securities will be subordinated and junior in right of payment to certain
indebtedness of the Company to the extent set forth in the Prospectus Supplement
that will accompany this Prospectus and will rank pari passu with the 9.60%
Quarterly Income Capital Securities of the Company.
Certain Provisions Applicable to Williams Trusts. In the event Junior
Subordinated Debt Securities of a series are issued and sold to a Williams Trust
or a trustee of such trust in connection with the issuance of Trust Securities
by such Williams Trust, such Junior Subordinated Debt Securities subsequently
may be distributed pro rata to the holders of such Trust Securities in
connection with the dissolution of such Williams Trust upon the occurrence of
certain events described in the Prospectus Supplement relating to such Trust
Securities. Only one series of Junior Subordinated Debt Securities will be
issued to a Williams Trust, or a trustee of such trust, in connection with the
issuance of Trust Securities by such Williams Trust. If Junior Subordinated Debt
Securities are issued to a Williams Trust or a trustee of such trust in
connection with the issuance of Trust Securities by such Williams Trust and (i)
there shall have occurred and be continuing an Event of Default, (ii) the
Company shall be in default with respect to its payment of any obligations under
the related Guarantee, or (iii) the Company shall have given notice of its
election to defer payments of interest on such Junior Subordinated Debt
Securities by extending the interest payment period as provided in the Indenture
and such period, or any extension thereof, shall be continuing, then (a) the
Company shall not declare or pay any dividend on, make any distributions with
respect to, or redeem, purchase, acquire or make a liquidation payment with
respect to, any of its capital stock or make any guarantee payment with respect
thereto (other than (i) repurchases, redemptions or other acquisitions of shares
of capital stock of the Company in connection with any employment contract,
benefit plan or other similar arrangement with or for the benefit of employees,
officers, directors or consultants, (ii) as a result of an exchange or
conversion of any class or series of the Company's capital stock for any other
class or series of the Company's capital stock, or (iii) the purchase of
fractional interests in shares of the Company's capital stock pursuant to the
conversion or exchange provisions of such capital stock or the security being
converted or exchanged), and (b) the Company shall not make any payment of
interest on or principal of (or premium, if any, on), or repay, repurchase or
redeem any debt securities issued by the Company which rank pari passu with or
junior to such
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Junior Subordinated Debt Securities. The foregoing, however, will not apply to
any stock dividends paid by the Company where the dividend stock is the same
stock as that on which the dividend is being paid.
In the event Junior Subordinated Debt Securities are issued to a Williams
Trust or a trustee of such trust in connection with the issuance of Trust
Securities of such Williams Trust, for so long as such Trust Securities remain
outstanding, the Company will covenant (i) to directly or indirectly maintain
100% ownership of the Common Securities of such Williams Trust; provided,
however, that any permitted successor of the Company under the Indenture may
succeed to the Company's ownership of such Common Securities, (ii) to not
voluntarily dissolve, wind-up or terminate such Williams Trust, except in
connection with a distribution of Junior Subordinated Debt Securities upon a
Special Event and in connection with certain mergers, consolidations or
amalgamations permitted by the Declaration of the applicable Williams Trust,
(iii) to timely perform its duties as Sponsor of the applicable Williams Trust
and (iv) to use its reasonable efforts to cause such Williams Trust (a) to
remain a statutory business trust, except in connection with the distribution of
Junior Subordinated Debt Securities to the holders of Trust Securities in
liquidation of such Williams Trust, the redemption of all of the Trust
Securities of such Williams Trust, or certain mergers, consolidations or
amalgamations, each as permitted by the Declaration of such Williams Trust, and
(b) to otherwise continue to be classified as a grantor trust for United States
federal income tax purposes. (Section 10.5)
DESCRIPTION OF PREFERRED SECURITIES
The following description sets forth certain general terms and provisions
of the Preferred Securities to which any Prospectus Supplement may relate. The
particular terms of the Preferred Securities offered by any Prospectus
Supplement and the extent, if any, to which such general provisions may apply to
the Preferred Securities so offered will be described in the Prospectus
Supplement relating to such Preferred Securities. The description does not
purport to be complete and is subject in all respects to the provisions of, and
is qualified in its entirety by reference to, the forms of Declarations, which
are filed as exhibits to the Registration Statement of which this Prospectus
forms a part.
Each Williams Trust may issue, from time to time, only one series of
Preferred Securities having terms described in the Prospectus Supplement
relating thereto. The Declaration of each Williams Trust authorizes the Regular
Trustees of such Williams Trust to issue on behalf of such Williams Trust one
series of Preferred Securities. Each Declaration will be qualified as an
indenture under the Trust Indenture Act. The Preferred Securities will have such
terms, including distributions, redemption, voting, liquidation rights and such
other preferred, deferred or other special rights or such restrictions as shall
be set forth in the Declaration of the Williams Trust issuing such Preferred
Securities or made part of such Declaration by the Trust Indenture Act.
Reference is made to any Prospectus Supplement relating to the Preferred
Securities of a Williams Trust for specific terms, including (i) the distinctive
designation of such Preferred Securities, (ii) the number of Preferred
Securities issued by such Williams Trust, (iii) the annual distribution rate (or
method of determining such rate) for Preferred Securities issued by such
Williams Trust and the date or dates upon which such distributions shall be
payable, (iv) whether distributions on Preferred Securities issued by such
Williams Trust shall be cumulative, and, in the case of Preferred Securities
having such cumulative distribution rights, the date or dates or method of
determining the date or dates from which distributions on Preferred Securities
issued by such Williams Trust shall be cumulative, (v) the amount or amounts
which shall be paid out of the assets of such Williams Trust to the Holders of
Preferred Securities of such Williams Trust upon voluntary or involuntary
dissolution, winding-up or termination of such Williams Trust, (vi) the
obligation, if any, of such Williams Trust to purchase or redeem Preferred
Securities issued by such Williams Trust and the price or prices at which, the
period or periods within which and the terms and conditions upon which Preferred
Securities issued by such Williams Trust shall be purchased or redeemed, in
whole or in part, pursuant to such obligation, (vii) the voting rights, if any,
of Preferred Securities issued by such Williams Trust in addition to those
required by law, including the number of votes per Preferred Security and any
requirement for the approval by the holders of Preferred Securities, or of
Preferred Securities issued by one or more Williams Trusts, or of both, as a
condition to specified action or amendments to the Declaration of such Williams
Trust, and (viii) any other relevant rights, preferences, privileges,
limitations or restrictions of Preferred Securities issued by such Williams
Trust consistent with the Declaration of such Williams Trust or
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<PAGE> 54
with applicable law. All Preferred Securities offered hereby will be guaranteed
by the Company to the extent set forth below under "Description of Guarantees."
Certain United States federal income tax considerations applicable to any
offering of Preferred Securities will be described in the Prospectus Supplement
relating thereto.
In connection with the issuance of Preferred Securities, each Williams
Trust will issue one series of Common Securities. The Declaration of each
Williams Trust authorizes the Regular Trustees of such trust to issue on behalf
of such Williams Trust one series of Common Securities having such terms
including distributions, redemption, voting, liquidation rights or such
restrictions as shall be set forth therein. The terms of the Common Securities
issued by such Williams Trust will be substantially identical to the terms of
the Preferred Securities issued by such Williams Trust and the Common Securities
will rank pari passu, and payments will be made thereon pro rata with such
Preferred Securities except that, upon an Event of Default under the Declaration
of such Williams Trust, the rights of the holders of such Common Securities to
payment in respect of distributions and payments upon liquidation, redemption
and otherwise will be subordinated to the rights of the holders of such
Preferred Securities. Except in certain limited circumstances, the Common
Securities of a Williams Trust will also carry the right to vote and to appoint,
remove or replace any of the Williams Trustees of such Williams Trust. All of
the Common Securities of a Williams Trust will be directly or indirectly owned
by the Company.
If an Event of Default with respect to a Declaration of any Williams Trust
occurs and is continuing, then the holders of Preferred Securities of such
Williams Trust would rely on the enforcement by the Institutional Trustee of its
rights as a holder of the Junior Subordinated Debt Securities against the
Company. In addition, the holders of a majority in liquidation amount of such
Preferred Securities will have the right to direct the time, method, and place
of conducting any proceeding for any remedy available to the Institutional
Trustee or to direct the exercise of any trust or power conferred upon the
Institutional Trustee under such Declaration, including the right to direct the
Institutional Trustee to exercise the remedies available to it as a holder of
the Junior Subordinated Debt Securities. If the Institutional Trustee fails to
enforce its rights under the Junior Subordinated Debt Securities, any holder of
such Preferred Securities may directly institute a legal proceeding against the
Company to enforce the Institutional Trustee's rights under the Junior
Subordinated Debt Securities without first instituting any legal proceeding
against the Institutional Trustee or any other person or entity. If an Event of
Default with respect to the Declaration of any Williams Trust has occurred and
is continuing and such event is attributable to the failure of the Company to
pay interest or principal on the Junior Subordinated Debt Securities on the date
such interest or principal is otherwise payable (or in the case of redemption,
on the redemption date), then a holder of Preferred Securities of such Williams
Trust may also directly institute a proceeding for enforcement of payment to
such holder of the principal of or interest on the Junior Subordinated Debt
Securities having a principal amount equal to the aggregate liquidation amount
of such Preferred Securities of such holder (a "Direct Action") on or after the
respective due date specified in the Junior Subordinated Debt Securities without
first (i) directing the Institutional Trustee to enforce the terms of the Junior
Subordinated Debt Securities or (ii) instituting a legal proceeding against the
Company to enforce the Institutional Trustee's Rights under the Junior
Subordinated Debt Securities. In connection with such Direct Action, the Company
will be subrogated to the rights of such holder of such Preferred Securities
under such Declaration to the extent of any payment made by the Company to such
holder of such Preferred Securities in such Direct Action. Consequently, the
Company will be entitled to payment of amounts that a holder of Preferred
Securities receives in respect of an unpaid distribution that resulted in the
bringing of a Direct Action to the extent that such holder receives or has
already received full payment with respect to such unpaid distribution from a
Williams Trust. The holders of Preferred Securities of a Williams Trust will not
be able to exercise directly any other remedy available to the holders of the
Junior Subordinated Debt Securities.
DESCRIPTION OF GUARANTEES
Set forth below is a summary of information concerning the Guarantees that
will be executed and delivered by the Company for the benefit of the holders,
from time to time, of Preferred Securities. Each Guarantee will be qualified as
an indenture under the Trust Indenture Act. The Chase Manhattan Bank will act as
indenture trustee under each Guarantee (the "Guarantee Trustee"). The terms of
each Guarantee will
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<PAGE> 55
be those set forth in such Guarantee and those made part of such Guarantee by
the Trust Indenture Act. The summary does not purport to be complete and is
subject in all respects to the provisions of, and is qualified in its entirety
by reference to, the form of Guarantee, which is filed as an exhibit to the
Registration Statement of which this Prospectus forms a part, and the Trust
Indenture Act. Each Guarantee will be held by the Guarantee Trustee for the
benefit of the holders of the Preferred Securities of a Williams Trust.
GENERAL
Pursuant to and to the extent set forth in each Guarantee, the Company will
irrevocably and unconditionally agree to pay in full to the holders of the
Preferred Securities issued by a Williams Trust (except to the extent paid by
such Williams Trust), as and when due, regardless of any defense, right of
set-off or counterclaim which such Williams Trust may have or assert, the
following payments (the "Guarantee Payments"), without duplication: (i) any
accrued and unpaid distributions that are required to be paid on such Preferred
Securities, to the extent such Williams Trust has funds available therefor, and
(ii) the redemption price of $25 per Preferred Security, plus all accrued and
unpaid distributions (the "Redemption Price"), to the extent such Williams Trust
has funds available therefor, with respect to any Preferred Securities called
for redemption by such Williams Trust, and (iii) upon a voluntary or involuntary
dissolution, winding-up or termination of such Williams Trust (other than in
connection with the distribution of Junior Subordinated Debt Securities to the
holders of Preferred Securities or the redemption of all of the Preferred
Securities) the lesser of (a) the aggregate of the liquidation amount and all
accrued and unpaid distributions on such Preferred Securities to the date of
payment or (b) the amount of assets of such Williams Trust remaining for
distribution to holders of such Preferred Securities in liquidation of such
Williams Trust. The Company's obligation to make a Guarantee Payment may be
satisfied by direct payment of the required amounts by the Company to the
holders of Preferred Securities or by causing such Williams Trust to pay such
amounts to such holders.
Each Guarantee will be a guarantee on a subordinated basis with respect to
the Preferred Securities issued by a Williams Trust from the time of issuance of
such Preferred Securities but will not apply to any payment of distributions or
Redemption Price, or to payments upon the dissolution, winding-up or termination
of such Williams Trust, except to the extent such Williams Trust shall have
funds available therefor. If the Company does not make interest payments on the
Junior Subordinated Debt Securities purchased by a Williams Trust, such Williams
Trust will not pay distributions on the Preferred Securities issued by such
Williams Trust and will not have funds available therefor. See "Description of
Junior Subordinated Debt Securities." The Guarantee, when taken together with
the Company's obligations under the Junior Subordinated Debt Securities, the
Indenture and the Declaration of any Williams Trust, including its obligations
to pay costs, expenses, debts and liabilities of such Williams Trust (other than
with respect to Trust Securities) will provide a full and unconditional
guarantee on a subordinated basis by the Company of payments due on the
Preferred Securities issued by such Williams Trust.
CERTAIN COVENANTS OF THE COMPANY
In each Guarantee, the Company will covenant that, so long as any Preferred
Securities issued by a Williams Trust remain outstanding, if there shall have
occurred any event that would constitute an Event of Default under such
Guarantee or the Declaration of such Williams Trust, then (a) the Company shall
not declare or pay any dividend on, make any distributions with respect to, or
redeem, purchase, acquire or make a liquidation payment with respect to, any of
its capital stock or make any guarantee payment with respect thereto (other than
(i) repurchases, redemptions or other acquisitions of shares of capital stock of
the Company in connection with any employment contract, benefit plan or other
similar arrangement with or for the benefit of employees, officers, directors or
consultants, (ii) as a result of an exchange or conversion of any class or
series of the Company's capital stock for any other class or series of the
Company's capital stock, or (iii) the purchase of fractional interests in shares
of the Company's capital stock pursuant to the conversion or exchange provisions
of such capital stock or the security being converted or exchanged) and (b) the
Company shall not make any payment of interest on, or principal of (or premium,
if any, on), or repay, repurchase or redeem, any debt securities issued by the
Company which rank pari passu with or junior to such Junior
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<PAGE> 56
Subordinated Debt Securities. Each Guarantee, however, will except from the
foregoing any stock dividends paid by the Company where the dividend stock is
the same stock as that on which the dividend is being paid.
MODIFICATION OF THE GUARANTEES; ASSIGNMENT
Except with respect to any changes that do not adversely affect the rights
of holders of Preferred Securities to which a Guarantee relates (in which case
no vote will be required), each Guarantee may be amended only with the prior
approval of the holders of not less than a majority in aggregate liquidation
amount of the outstanding related Preferred Securities issued by a Williams
Trust. The manner of obtaining any such approval of holders of such Preferred
Securities will be set forth in an accompanying Prospectus Supplement. All
guarantees and agreements contained in a Guarantee shall bind the successors,
assignees, receivers, trustees and representatives of the Company and shall
inure to the benefit of the holders of the related Preferred Securities of a
Williams Trust then outstanding.
EVENTS OF DEFAULT
An Event of Default under a Guarantee will occur upon the failure of the
Company to perform any of its payment or other obligations thereunder. The
holders of a majority in aggregate liquidation amount of the Preferred
Securities to which a Guarantee relates have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Guarantee Trustee in respect of the Guarantee or to direct the exercise of any
trust or power conferred upon the Guarantee Trustee under the Guarantee. If the
Guarantee Trustee fails to enforce the Guarantee Trustee's rights under a
Guarantee, any holder of related Preferred Securities may directly institute a
legal proceeding against the Company to enforce the Guarantee Trustee's rights
under such Guarantee without first instituting a legal proceeding against the
Williams Trust that issued such Preferred Securities, the Guarantee Trustee or
any other person or entity. A holder of Preferred Securities may also directly
institute a legal proceeding against the Company to enforce such holder's right
to receive payment under such Guarantee without first (i) directing the
Guarantee Trustee to enforce the terms of the Guarantee or (ii) instituting a
legal proceeding against the Williams Trust that issued such Preferred
Securities or any other person or entity.
The Company will be required to provide annually to the Guarantee Trustee a
statement as to the performance by the Company of certain of its obligations
under each of the Guarantees and as to any default in such performance.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, prior to the occurrence of a default with respect to
a Guarantee, undertakes to perform only such duties as are specifically set
forth in the Guarantee and, after default with respect to a Guarantee, shall
exercise the same degree of care as a prudent individual would exercise in the
conduct of his or her own affairs. Subject to such provision, the Guarantee
Trustee is under no obligation to exercise any of the powers vested in it by a
Guarantee at the request of any holder of Preferred Securities to which such
Guarantee relates unless it is offered reasonable indemnity against the costs,
expenses and liabilities that might be incurred thereby.
TERMINATION OF THE GUARANTEES
Each Guarantee will terminate as to the Preferred Securities issued by a
Williams Trust upon full payment of the Redemption Price of all Preferred
Securities of such Williams Trust, upon distribution of the Junior Subordinated
Debt Securities held by such Williams Trust to the holders of the Preferred
Securities of such Williams Trust or upon full payment of the amounts payable in
accordance with the Declaration of such Williams Trust upon liquidation of such
Williams Trust. Each Guarantee will continue to be effective or will be
reinstated, as the case may be, if at any time any holder of related Preferred
Securities issued by a Williams Trust must restore payment of any sums paid
under such Preferred Securities or such Guarantee.
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STATUS OF THE GUARANTEES
Each Guarantee will constitute an unsecured obligation of the Company and
will rank subordinate and junior in right of payment to all other liabilities of
the Company and pari passu with any guarantee now or hereafter entered into by
the Company in respect of any preferred or preference stock of any affiliate of
the Company. The terms of the Preferred Securities provide that each holder of
Preferred Securities issued by a Williams Trust by acceptance thereof agrees to
the subordination provisions and other terms of the applicable Guarantee.
Each Guarantee will constitute a guarantee of payment and not of collection
(that is, the guaranteed party may institute a legal proceeding directly against
the guarantor to enforce its rights under a Guarantee without instituting a
legal proceeding against any other person or entity).
GOVERNING LAW
The Guarantees will be governed by, and construed in accordance with, the
internal laws of the State of New York.
PLAN OF DISTRIBUTION
Any Williams Trust may sell Preferred Securities in one or more of the
following ways from time to time: (i) to or through underwriters or dealers,
(ii) directly to purchasers, or (iii) through agents. Any such underwriters,
dealers or agents may include . The Prospectus Supplement with
respect to any Offered Securities will set forth (i) the terms of the offering
of the Offered Securities, including the name or names of any underwriters,
dealers or agents, (ii) the purchase price of the Offered Securities and the
proceeds to the Company or a Williams Trust as the case may be, from such sale,
(iii) any underwriting discounts and commissions or agency fees and other items
constituting underwriters' or agents' compensation, (iv) any initial public
offering prices, (v) any discounts or concessions allowed or reallowed or paid
to dealers and (vi) any securities exchange on which such Offered Securities may
be listed. Any initial public offering price, discounts or concessions allowed
or reallowed or paid to dealers may be changed from time to time.
If underwriters are used in the sale, the Offered 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 Offered Securities may be offered to the public either through underwriting
syndicates represented by one or more managing underwriters or directly by one
or more firms acting as underwriters. The underwriter or underwriters with
respect to a particular underwritten offering of Offered Securities will be
named in the Prospectus Supplement relating to such offering and, if an
underwriting syndicate is used, the managing underwriter or underwriters will be
set forth on the cover of such Prospectus Supplement. Unless otherwise set forth
in the Prospectus Supplement relating thereto, the obligations of the
underwriters to purchase the Offered Securities will be subject to certain
conditions precedent, and the underwriters will be obligated to purchase all the
Offered Securities if any are purchased.
If dealers are utilized in the sale of Offered Securities, the Company or
the applicable Williams Trust will sell such Offered Securities to the dealers
as principals. The dealers may then resell such Offered Securities to the public
at varying prices to be determined by such dealers at the time of resale. The
names of the dealers and the terms of the transaction will be set forth in the
Prospectus Supplement relating thereto.
Any series of Preferred Securities may be sold from time to time either
directly by a Williams Trust or by its designated agents. Any agent involved in
the offer or sale of the Offered Securities in respect to which this Prospectus
is delivered will be named, and any commissions payable by the Company or the
applicable Williams Trust to such agent will be set forth in the Prospectus
Supplement relating thereto. Unless otherwise indicated in the Prospectus
Supplement, any such agent will be acting on a best efforts basis for the period
of its appointment.
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The Preferred Securities may be sold directly by a Williams Trust to
institutional investors or others who may be deemed to be underwriters within
the meaning of the Securities Act with respect to any resale thereof. The terms
of any such sales will be described in the Prospectus Supplement relating
thereto.
If so indicated in the Prospectus Supplement, the Company or the applicable
Williams Trust will authorize agents, underwriters or dealers to solicit offers
from certain types of institutions to purchase Offered Securities from the
Company or such Williams Trust at the public offering price set forth in the
Prospectus Supplement pursuant to delayed delivery contracts (the "Contracts")
providing for payment and delivery on a specified date or dates in the future.
Such Contracts will not be subject to any conditions except (a) the purchase by
an institution of the Offered Securities covered by its Contracts shall not at
the time of delivery be prohibited under the laws of any jurisdiction in the
United States to which such institution is subject and (b) if the Offered
Securities are being sold to underwriters, the Company shall have sold to such
underwriters the total principal amount of the Offered Securities less the
principal amount thereof covered by the Contracts. The Prospectus Supplement
will set forth the commission payable for solicitation of such Contracts.
Agents, dealers and underwriters may be entitled, under agreements with the
Company or a Williams Trust, to indemnification by the Company or the applicable
Williams Trust against certain civil liabilities, including liabilities under
the Securities Act, or to contribution with respect to payments that such
agents, dealers or underwriters may be required to make in respect thereof.
Agents, dealers and underwriters may be customers of, engage in transactions
with, or perform services for the Company or a Williams Trust in the ordinary
course of business.
Each series of Offered Securities will be a new issue of securities and
will have no established trading market. Any underwriters to whom Offered
Securities are sold for public offering and sale may make a market in such
Offered Securities, but such underwriters will not be obligated to do so and may
discontinue any market making at any time without notice. The Offered Securities
may or may not be listed on a national securities exchange. No assurance can be
given that there will be a market for the Offered Securities.
LEGAL MATTERS
The validity of the Preferred Securities, the Junior Subordinated Debt
Securities, the Guarantee and certain matters relating thereto will be passed
upon by William G. Von Glahn, Esq., Senior Vice President and General Counsel of
the Company. Certain matters of Delaware law will be passed upon for the Company
and Williams Capital by Morris, James, Hitchens & Williams, Wilmington,
Delaware. Certain United States federal income tax matters will be passed upon
for the Company and Williams Capital by Davis Polk & Wardwell, New York, New
York. Certain legal matters will be passed upon for the Underwriters by Davis
Polk & Wardwell, New York, New York.
EXPERTS
The consolidated financial statements and schedules of the Company
appearing in the Company's Annual Report on Form 10-K for the year ended
December 31, 1995, have been audited by Ernst & Young LLP, independent auditors,
as set forth in their report included therein and incorporated herein by
reference. The financial statements and schedules referred to above are
incorporated herein by reference in reliance upon such report given upon the
authority of said firm as experts in auditing and accounting.
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NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING
PROSPECTUS, IN CONNECTION WITH THE OFFER CONTAINED IN THIS PROSPECTUS SUPPLEMENT
AND THE ACCOMPANYING PROSPECTUS, AND, IF GIVEN OR MADE, ANY SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE WILLIAMS
COMPANIES, INC., WILLIAMS CAPITAL I OR ANY UNDERWRITER, DEALER OR AGENT. THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS DO NOT CONSTITUTE AN OFFER
TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED
HEREBY BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE
ACCOMPANYING PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE WILLIAMS COMPANIES, INC. OR WILLIAMS CAPITAL I SINCE THE DATE
HEREOF.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
Summary...............................
Risk Factors..........................
Use of Proceeds.......................
Ratio of Earnings to Combined Fixed
Charges and Preferred Stock
Dividends...........................
Accounting Treatment..................
Capitalization........................
Description of the Preferred
Securities..........................
Description of the Junior Subordinated
Debt Securities.....................
Description of Guarantee..............
Effect of Obligations Under the Junior
Subordinated Debt Securities and the
Guarantee...........................
United States Federal Income
Taxation............................
Underwriting..........................
Legal Matters.........................
PROSPECTUS
Available Information.................
Incorporation of Certain Documents by
Reference...........................
The Company...........................
Williams Trusts.......................
Use of Proceeds.......................
Ratio of Earnings to Combined Fixed
Charges and Preferred Stock
Dividends...........................
Description of Junior Subordinated
Debt Securities.....................
Description of Preferred Securities...
Description of Guarantees.............
Plan of Distribution..................
Legal Matters.........................
Experts...............................
</TABLE>
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TRUST PREFERRED SECURITIES
WILLIAMS CAPITAL I
% TRUST PREFERRED SECURITIES
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY
THE WILLIAMS COMPANIES, INC.
---------------------------------------------
PROSPECTUS SUPPLEMENT
, 1997
---------------------------------------------
(INCLUDING PROSPECTUS
DATED ,1997)
------------------------------------------------------
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<PAGE> 60
PROSPECTUS
THE WILLIAMS COMPANIES, INC.
COMMON STOCK, PREFERRED STOCK,
DEBT SECURITIES,
WARRANTS TO PURCHASE COMMON STOCK AND
WARRANTS TO PURCHASE DEBT SECURITIES
------------------------
The Williams Companies, Inc. (the "Company") may offer and sell from time
to time (a) shares of its Common Stock, $1.00 par value per share ("Common
Stock"), accompanied by preferred stock purchase rights ("Rights"), (b) shares
of its Preferred Stock, $1.00 par value per share ("Preferred Stock"), in one or
more series, (c) unsecured debentures, notes or other evidences of indebtedness
("Debt Securities"), (d) warrants to purchase shares of Common Stock ("Stock
Warrants"), and (e) warrants to purchase Debt Securities ("Debt Warrants" and,
collectively with Common Stock, Rights, Preferred Stock, Debt Securities and
Stock Warrants, the "Securities"), or any combination of the foregoing, either
individually or as units consisting of one or more of Securities, each on terms
to be determined at the time of sale, with an initial offering price not to
exceed $430,000,000 in the aggregate (or the equivalent in foreign denominated
currency or units based on or related to currencies, including European Currency
Units). All specific terms of the offering and sale of the Securities, including
the specific (a) designation, rights, preferences, privileges and restrictions
of the Preferred Stock, including dividend rate or rates (or method of
ascertaining the same), dividend payment dates, voting rights, liquidation
preference, and any conversion, exchange, redemption or sinking fund provisions,
(b) designation, rights and restrictions of the Debt Securities, including
whether the Debt Securities are senior or subordinated, the currencies or
composite currencies in which the Debt Securities are denominated, the aggregate
principal amount, the maturity, rate and time of payment of interest, and any
conversion, exchange, redemption or sinking fund provisions, and (c) initial
public offering price, listing on any securities exchange, and the agents,
dealers or underwriters, if any, to be utilized in connection with the sale of
the Securities, will be set forth in an accompanying Prospectus Supplement (the
"Prospectus Supplement"). With regard to the Stock Warrants and Debt Warrants,
if any, the Prospectus Supplement will contain a description of the Common Stock
and Debt Securities, respectively, for which each warrant is exercisable and the
offering price, if any, exercise price, duration, detachability, call provisions
and other principal terms of the warrants. Debt Securities of a series may be
issuable as individual securities in registered form without coupons or in
bearer form with or without coupons attached. Debt Warrants may be offered with
the Debt Securities or separately. Securities may be sold for U.S. dollars,
foreign denominated currency or currency units; principal of and any interest on
Debt Securities may likewise be payable in U.S. dollars, foreign denominated
currency or currency units -- in each case, as the Company specifically
designates. The managing underwriters with respect to each series sold to or
through underwriters will be named in the Prospectus Supplement.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
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 Securities may be offered through dealers, through underwriters or
through agents designated from time to time as set forth in the Prospectus
Supplement. Net proceeds to the Company will be the purchase price in the case
of a dealer, the public offering price less discount in the case of an
underwriter or the purchase price less commission in the case of an agent -- in
each case, less other expenses attributable to issuance and distribution. See
"Plan of Distribution" for possible indemnification arrangements for dealers,
underwriters and agents.
This Prospectus does not constitute an offer to sell or the solicitation of
an offer to buy any of the Securities other than the Securities described in the
accompanying Prospectus Supplement.
, 1997
<PAGE> 61
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") in Washington, D.C., a Registration Statement on From S-3 under
the Securities Act of 1933, as amended (the "Securities Act"), with respect to
the Securities offered hereby. Certain portions of the Registration Statement
have not been included in this Prospectus as permitted by the Commission's rules
and regulations. For further information, reference is made to the Registration
Statement and the exhibits thereto. The Company is subject to the informational
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith files reports and other information with the
Commission. The Registration Statement (with exhibits), as well as such reports
and other information filed by the Company with the Commission, can be inspected
and copied at the public reference facilities maintained by the Commission at
its principal offices at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549 and its regional offices at Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661 and Seven World Trade
Center, New York, New York 10048. Copies of such material can be obtained at
prescribed rates from the Public Reference Section of the Commission at its
principal office at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549. The Commission also maintains a site on the World Wide Web, the address
of which is http://www.sec.gov, that contains reports, proxy and information
statements and other information regarding issuer, such as the Company that file
electronically with the Commission. In addition, certain other securities of the
Company are listed on the New York Stock Exchange and the Pacific Stock
Exchange, and copies of reports and other material concerning the Company can be
inspected at the offices of the New York Stock Exchange, Inc., 20 Broad Street,
New York, New York 10005 and the Pacific Stock Exchange, Inc., 301 Pine Street,
San Francisco, California 94104 or 233 South Beaudry Avenue, Los Angeles,
California 90012.
------------------------
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR ANY UNDERWRITER, DEALER OR AGENT. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY SECURITIES IN ANY JURISDICTION TO ANY PERSON TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION.
------------------------
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission under the
Exchange Act are incorporated herein by reference.
1. The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995.
2. The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1996, June 30, 1996 and September 30, 1996.
3. Current Reports on Form 8-K of the Company dated January 21, 1996,
July 21, 1996 and December 30, 1996.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of this offering shall be deemed to be incorporated by reference in
this Prospectus and to be a part hereof from the date of filing of such
documents.
The Company undertakes to provide without charge to each person to whom a
copy of this Prospectus has been delivered, upon the written or oral request of
any such person, a copy of any or all of the documents incorporated by reference
herein, other than exhibits to such documents, unless such exhibits are
specifically incorporated by reference into the information that this Prospectus
incorporates. Written or oral requests for such copies should be directed to:
The Williams Companies, Inc., One Williams Center, Tulsa, Oklahoma 74172,
Attention: Corporate Secretary, (918) 588-2000.
------------------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS, IF ANY, MAY OVERALLOT
OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE
SECURITIES OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN
THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON ANY EXCHANGES ON WHICH THE
SECURITIES ARE LISTED, IN THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
2
<PAGE> 62
THE COMPANY
The Company, through subsidiaries, is engaged in the transportation and
sale of natural gas and related activities, natural gas gathering, processing
and production activities, the transportation of petroleum products, natural gas
trading, natural gas liquids marketing and provides a variety of other products
and services to the energy industry. The Company also is engaged in the
telecommunications business. The Company's subsidiaries own and operate: (i)
five interstate natural gas pipeline systems; (ii) a common carrier crude and
petroleum products pipeline system; and (iii) natural gas gathering and
processing facilities and production properties. The Company also trades natural
gas and markets natural gas liquids. The Company's telecommunications
subsidiaries offer data, voice and video-related products and services and
customer premises equipment nationwide. The Company also has investments in the
equity of certain other companies.
Substantially all operations of the Company are conducted through
subsidiaries. The Company performs management, legal, financial, consultative,
administrative and other services for its subsidiaries. The Company's principal
sources of cash are from dividends and advances from its subsidiaries,
investments, payment by subsidiaries for services rendered by its staff and
interest payments from subsidiaries on cash advances. The amount of dividends
available to the Company from subsidiaries largely depends upon each
subsidiary's earnings and operating capital requirements. The terms of certain
subsidiaries' borrowing arrangements limit the transfer of funds to the Company.
The Company was originally incorporated under the laws of the State of
Nevada in 1949 and was reincorporated under the laws of the State of Delaware in
1987. The Company maintains its principal executive offices at One Williams
Center, Tulsa, Oklahoma 74172 (telephone (918) 588-2000).
USE OF PROCEEDS
Unless otherwise indicated in the applicable Prospectus Supplement, the net
proceeds from the sale of the Securities will be used for general corporate
purposes, including funding of the Company's capital program. The Company
anticipates that it will raise additional funds from time to time through equity
or debt financings, including further borrowings under its bank Credit
Agreement.
RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDEND REQUIREMENTS
The following table represents the Company's consolidated ratio of earnings
to combined fixed charges and Preferred Stock dividend requirements for the
periods shown.
<TABLE>
<CAPTION>
NINE MONTHS YEAR ENDED DECEMBER 31,
ENDED -----------------------------------------
SEPTEMBER 31, 1996 1995 1994 1993 1992 1991
- ------------------ ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
2.22.................................................... 2.06 2.15 2.30 1.59 1.43
</TABLE>
For the purpose of this ratio (i) earnings consist of income from
continuing operations before fixed charges and income taxes for the Company, its
majority-owned subsidiaries and its proportionate share of 50 percent-owned
companies, less undistributed earnings of less than 50 percent-owned companies
and (ii) fixed charges consist of interest and debt expense on all indebtedness
(without reduction for interest capitalized), that portion of rental payments on
operating leases estimated to represent an interest factor, plus the pretax
effect of preferred dividends of the Company and its subsidiaries.
DESCRIPTION OF SECURITIES
The Company may offer under this Prospectus shares of Common Stock
(accompanied by Rights), Preferred Stock, Debt Securities, Stock Warrants or
Debt Warrants, or any combination of the foregoing, either individually or as
units consisting of one or more Securities, provided that the aggregate initial
offering price of the Securities offered by the Company will not exceed
$430,000,000. If Securities are offered as units, the terms of the units will be
set forth in a Prospectus Supplement.
3
<PAGE> 63
DESCRIPTION OF COMMON STOCK
The Company is authorized to issue 120,000,000 shares of Common Stock,
$1.00 par value per share. As of September 30, 1996, shares of Common
Stock were outstanding. The following description of the shares of Common Stock
does not purport to be complete and is qualified in its entirety by reference to
the pertinent sections of the Company's Restated Certificate of Incorporation,
which is incorporated by reference in this Registration Statement.
Holders of Common Stock are entitled to dividends as declared by the Board
of Directors. Certain of the Company's loan agreements contain provisions
restricting the payment of dividends. Under the most restrictive of such
provisions, the Company had approximately $ million available at September 30,
1996, for the payment of dividends. Debt instruments of certain subsidiaries of
the Company limit the amount of dividend payments to the Company which may
adversely impact the funds available to the Company to pay dividends on its
Common Stock.
Subject to the rights of the holders of any outstanding shares of Preferred
Stock, holders of Common Stock are entitled to cast one vote for each share held
of record on all matters. Voting securities do not have cumulative voting
rights. This means that the holders of more than 50 percent of the voting power
of all securities outstanding voting for the election of directors can elect 100
percent of the directors if they choose to do so; and in such event, the holders
of the remaining voting power will not be able to elect any person or persons to
the Board of Directors.
Stockholders have no preemptive or subscription rights upon the issuance of
additional shares of the Company's stock of any class or series. Upon
liquidation or dissolution of the Company, whether voluntary or involuntary, the
holders of Common Stock are entitled to share ratably in the assets of the
Company available for distribution after provision for creditors and holders of
preferred stock. All of the issued and outstanding Common Stock is duly
authorized, validly issued, fully paid and will not be subject to further calls
or assessments.
ANTITAKEOVER PROVISIONS
The provisions of the Company's Restated Certificate of Incorporation
summarized in the succeeding paragraphs may be deemed to have an antitakeover
effect and may delay a tender offer or takeover attempt which a stockholder
might consider in such stockholder's best interest, including those attempts
which might result in a premium over the market price for the shares held by
stockholders.
The Board of Directors of the Company is divided into three classes which
are elected for three-year terms. Stockholders may only remove any one or all of
the directors for cause and by an affirmative vote of 75 percent of the voting
power of the stock.
The Restated Certificate of Incorporation provides that the approval of 75
percent of the voting power of the stock is required for the authorization of
certain mergers and sales or leases of substantial parts of the assets of the
Company.
The affirmative vote of 75 percent of the voting power of the stock is
required to amend the provisions of the Restated Certificate of Incorporation
referred to in the preceding two paragraphs.
On January 26, 1986, the Board of Directors of the Company declared a
dividend distribution of one Right for each outstanding share of Common Stock.
Each Right entitles the registered holder to purchase from the Company a unit
consisting of one two-hundredth of a share (a "Unit") of Series A Junior
Participating Preferred Stock, par value $1 per share (the "Junior Preferred
Stock"), at a price of $75 per Unit, subject to adjustment (the "Purchase
Price"). This description of the Rights is qualified in its entirety by
reference to the Amended and Restated Rights Agreement, dated as of February 6,
1996, between Williams and First Chicago Trust Company of New York (the "Rights
Agreement") which is incorporated herein by reference and which is an exhibit to
this Registration Statement of which this Prospectus forms a part.
4
<PAGE> 64
The Rights attach to all Common Stock certificates representing outstanding
shares. No separate Rights certificates have been distributed. The Rights will
separate from the Common Stock and a Distribution Date will occur upon the
earliest of (i) ten days following a public announcement that a person or group
of affiliated or associated persons (an "Acquiring Person") has acquired, or
obtained the right to acquire, beneficial ownership of 20 percent or more of the
outstanding shares of Common Stock (the "Stock Acquisition Date"), (ii) ten
business days following the commencement of a tender offer or exchange offer
that would result in a person or group beneficially owning 30 percent or more of
such outstanding shares, or (iii) ten business days after the Board of Directors
of the Company determines any person, alone or together with its affiliates and
associates, has become the beneficial owner of an amount of Common Stock which
the Board of Directors determines to be substantial (which amount shall in no
event be less than 10 percent of the shares of Common Stock outstanding) and at
least a majority of the Board of Directors who are not officers of the Company,
after reasonable inquiry and investigation, including consultation with such
persons as such directors shall deem appropriate, shall determine that (a) such
beneficial ownership by such person is intended to cause the Company to
repurchase the Common Stock beneficially owned by such persons or to cause
pressure on the Company to take action or enter into a transaction or series of
transactions intended to provide such person with short-term financial gain
under circumstances where the Board of Directors determines that the best
long-term interests of the Company and its stockholders would not be served by
taking such action or entering into such transactions or series of transactions
at that time or (b) such beneficial ownership is causing or reasonably likely to
cause a material adverse impact (including, but not limited to, impairment of
relationships with customers or impairment of the Company's ability to maintain
its competitive position) on the business or prospects of the Company (any such
person being referred to herein and in the Rights Agreement as an "Adverse
Person"). Until the Distribution Date, (i) the Rights will be evidenced by the
Common Stock certificates and will be transferred with and only with such Common
Stock certificates, (ii) new Common Stock certificates will contain a notation
incorporating the Rights Agreement by reference, and (iii) the surrender for
transfer of any certificates for Common Stock outstanding will also constitute
the transfer of the Rights associated with the Common Stock represented by such
certificate. As soon as practicable following the Distribution Date, Rights
certificates will be mailed to holders of record of Common Stock as of the close
of business on the Distribution Date and, thereafter, such separate Rights
certificates alone will evidence the Rights. Except as otherwise determined by
the Board of Directors and as described in the Rights Agreement, only shares of
Common Stock issued prior to the Distribution Date will be issued with Rights.
Pursuant to the Rights Agreement, the Company reserves the right to require
prior to the occurrence of a Triggering Event (as defined below) that, upon any
exercise of Rights, a number of Rights be exercised so that only whole shares of
Junior Preferred Stock will be issued.
The Rights are not exercisable until the Distribution Date and will expire
at the close of business on February 6, 2006, unless earlier redeemed by the
Company as described below.
In the event that, at any time following the Distribution Date, (i) a
Person becomes the beneficial owner of more than 20 percent of the then
outstanding shares of Common Stock (except pursuant to an offer for all
outstanding shares of Common Stock which the independent directors determine to
be fair to and otherwise in the best interests of the Company and its
shareholders) or (ii) the Board of Directors determines that a Person is an
Adverse Person, each holder of a Right will thereafter have the right to
receive, upon exercise, Common Stock (or, in certain circumstances, cash,
property or other securities of the Company) having a value equal to two times
the exercise price of the Right. 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 or Adverse Person shall immediately
become null and void. However, Rights are not exercisable following the
occurrence of either of
5
<PAGE> 65
the events set forth above until such time as the Rights are no longer
redeemable by the Company as set forth below.
In the event that, at any time following the Stock Acquisition Date, (i)
the Company is acquired in a merger or other business combination transaction in
which the Company is not the surviving corporation (other than a merger which
follows an offer described in the preceding paragraph) or (ii) 50 percent or
more of the Company's assets or earning power is sold or transferred, each
holder of a Right (except Rights which previously have been voided as set forth
above) shall thereafter have the right to receive, upon exercise, common stock
of the acquiring company having a value equal to two times the exercise price of
the Right. The events set forth in this paragraph and the preceding paragraph
are referred to as the "Triggering Events."
The Purchase Price payable, and the number of Units of Junior Preferred
Stock or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on, or a subdivision, combination or reclassification of, the
Junior Preferred Stock; (ii) if holders of the Junior Preferred Stock are
granted certain rights or warrants to subscribe for Junior Preferred Stock or
convertible securities at less than the current market price of the Junior
Preferred Stock; or (iii) upon the distribution to holders of the Junior
Preferred Stock of evidences of indebtedness or assets (excluding regular
quarterly cash dividends) or of subscription rights or warrants (other than
those referred to above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1 percent of the
Purchase Price. No fractional Units will be issued and, in lieu thereof, an
adjustment in cash will be made based on the market price of the Junior
Preferred Stock on the last trading date prior to the date of exercise.
At any time until ten days following the Stock Acquisition Date, the
Company may redeem the Rights in whole, but not in part, at a price of $.05 per
Right (the "Redemption Price"), payable in cash, Common Stock or other
consideration deemed appropriate by the Board of Directors. Immediately upon the
action of the Board of Directors of the Company ordering redemption of the
Rights, the Rights will terminate and the only right of the holders of Rights
will be to receive the Redemption Price.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends. While the distribution of the Rights will not
be taxable to stockholders or to the Company, stockholders may, depending upon
the circumstances, recognize taxable income in the event that the Rights become
exercisable for Common Stock (or other consideration) of the Company or for
common stock of the acquiring company as set forth above.
Other than those provisions relating to the principal economic terms of the
Rights, any of the provisions of the Rights Agreement may be amended by the
Board of Directors of the Company prior to the Distribution Date. After the
Distribution Date, the provisions of the Rights Agreement may be amended by the
Board in order to cure any ambiguity, to make changes which do not adversely
affect the interests of holders of Rights (excluding the interests of any
Acquiring Person or Adverse Person), or to shorten or lengthen any time period
under the Rights Agreement; provided, however, that no amendment to adjust the
time period governing redemption shall be made at such time as the Rights are
not redeemable.
DESCRIPTION OF SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
Units of the Junior Preferred Stock may be purchased pursuant to the terms
and conditions of the Rights Agreement. See "Description of Common
Stock -- Antitakeover Provisions." The Restated Certificate of Incorporation
authorizes the issuance of 400,000 shares of Junior Preferred Stock, par value
$1.00 per share. No shares of Junior Preferred Stock are outstanding. The
following summary of the terms and provisions of the Junior Preferred Stock does
not purport to be complete and is qualified in its entirety by reference to the
pertinent sections of the Restated Certificate of Incorporation.
6
<PAGE> 66
DIVIDENDS
Holders of shares of Junior Preferred Stock are entitled to receive, when
and if declared by the Board of Directors, quarterly dividends payable in cash
on the last day of February, May, August and November in each year in an amount
per share equal to the greater of (a) $20 or (b) subject to the adjustments set
forth below, 200 times the aggregate per share amount of all cash dividends and
200 times the aggregate per share amount (payable in kind) of all noncash
dividends or other distributions (other than a dividend payable in shares of
Common Stock or a subdivision of the outstanding shares of Common Stock, by
reclassification or otherwise) declared on the Common Stock since the
immediately preceding quarterly dividend payment date, or with respect to the
first quarterly dividend payment date since the first issuance of any share or
fraction of a share of Junior Preferred Stock. The amount specified in clause
(a) and (b) of the preceding sentence shall be adjusted in the event of any
stock dividend, any stock split, recombination or any reclassification with
respect to the Common Stock.
If dividends are not paid in full upon the Junior Preferred Stock and any
other preferred stock ranking on a parity as to dividends with the Junior
Preferred Stock, all dividends declared upon shares of Junior Preferred Stock
and such other preferred stock will be declared pro rata so that in all cases
the amount of dividends declared per share on the Junior Preferred Stock and
such other preferred stock bear to each other the same ratio that accumulated
dividends per share on the shares of the Junior Preferred Stock and such other
preferred stock bear to each other. Except as set forth above, unless full
cumulative dividends on the Junior Preferred Stock have been paid, dividends
(other than in Common Stock) may not be paid or declared and set aside for
payment and other distributions may not be made upon the Common Stock or on any
other stock of the Company ranking junior to or on a parity with the Junior
Preferred Stock as to dividends. In such a situation, no Common Stock or any
other stock of the Company ranking junior to or on a parity with the Junior
Preferred Stock as to dividends may be redeemed, purchased or otherwise acquired
for any consideration by the Company or by any subsidiary of the Company (except
by conversion into or exchange for stock of the Company ranking junior to the
Junior Preferred Stock as to dividends).
The Board of Directors may establish a record date for the determination of
holders of shares of Junior Preferred Stock entitled to receive a dividend or
distribution declared thereon, which record date shall be no more than 30 days
prior to the date fixed for the payment thereof.
VOTING RIGHTS
Each share of Junior Preferred Stock shall entitle the holder thereof to
200 votes on all matters submitted to a vote of the stockholders of the Company.
This number is subject to adjustment in the event of any stock dividend, any
stock split, recombination or any reclassification with respect to the Common
Stock. If the equivalent of six quarterly dividends payable on any Junior
Preferred Stock is in arrears, the number of directors of the Company will be
increased by two and the holders of all outstanding shares of preferred stock,
voting as a single class without regard to series, will be entitled to elect the
additional two directors until all dividends in arrears have been paid or
declared and set apart for payment.
LIQUIDATION RIGHTS
In the event of any liquidation, dissolution or winding up of the Company,
the holders of shares of Junior Preferred Stock are entitled to receive out of
assets of the Company available for distribution to shareholders, before any
distribution of assets is made to holders of Common Stock, but after any
distribution of assets is made to holders of Preferred Stock, liquidating
distributions in the amount of $200 per share plus accumulated and unpaid
dividends (the "Series A Liquidation Preference"). Following the payment of the
full amount of the Series A Liquidation Preference, no additional distributions
shall be made to the holders of Junior Preferred Stock, unless, prior thereto,
the holders of shares of Common Stock shall have received an amount per share
(the "Common Adjustment") equal to the quotient obtained by dividing the Series
A Liquidation Preference by 200, as adjusted to reflect stock splits, stock
dividends and recapitalizations with respect to the Common Stock (the
"Adjustment Number"). Following the payment of the full amount of the Series A
Liquidation Preference and the Common Adjustment in respect of all outstanding
shares of Junior Preferred
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<PAGE> 67
Stock and Common Stock, respectively, holders of Junior Preferred Stock and
holders of shares of Common Stock shall receive their ratable and proportionate
share of the remaining assets to be distributed in the ratio of the Adjustment
Number to one. If upon any liquidation, dissolution or winding up of the
Company, the amount payable with respect to the Junior Preferred Stock and any
other preferred stock ranking as to any such distribution on a parity with the
Junior Preferred Stock are not paid in full, the holders of the Junior Preferred
Stock and of such other preferred stock will share ratably in any such
distribution of assets in proportion to the full respective preferential amounts
to which they are entitled.
In the event, however, that there are not sufficient assets available to
permit payment in full of the Common Adjustment, then such remaining assets
shall be distributed ratably to the holders of Common Stock. Neither a
consolidation or merger of the Company with another corporation nor a sale or
transfer of all or part of the Company's assets for cash or securities shall be
considered a liquidation, dissolution or winding up of the Company.
DESCRIPTION OF PREFERRED STOCK
Under the Company's Restated Certificate of Incorporation, as amended, the
Company is authorized to issue up to 30,000,000 shares of Preferred Stock, par
value $1.00 per share, in one or more series. The following description of
Preferred Stock sets forth certain general terms and provisions of the series of
Preferred Stock to which any Prospectus Supplement may relate. Certain other
terms of a particular series of Preferred Stock will be described in the
Prospectus Supplement relating to such series of Preferred Stock. If so
indicated in the Prospectus Supplement relating thereto, the terms of any such
series of Preferred Stock may differ from the terms set forth below. The
description of Preferred Stock set forth below and the description of the terms
of a particular series of Preferred Stock set forth in the Prospectus Supplement
relating thereto do not purport to be complete and are qualified in their
entirety by reference to the Restated Certificate of Incorporation and to the
certificate of designation relating to that series.
As of September 30, 1996, there were shares of the Company's
$2.21 Cumulative Preferred Stock outstanding with a liquidation preference of
$25 per share.
The Preferred Stock will rank senior to the Company's Junior Preferred
Stock as to dividends and amounts payable upon liquidation.
The rights of the holders of each series of Preferred Stock will be
subordinate to those of the Company's general creditors.
GENERAL
The designations, preferences and relative, participating, optional and
other special rights, and the qualifications, limitations and restrictions
thereof, of the Preferred Stock of each series shall be such as are stated and
expressed in the Restated Certificate of Incorporation and, to the extent not
stated and expressed therein, shall be such as may be fixed by the certificate
of designation relating to such series. A Prospectus Supplement, relating to
each series, shall specify the terms of the Preferred Stock as follows:
(a) the distinctive designation of such series and the number of
shares which shall constitute such series;
(b) the rate of dividends, if any, payable on shares of such series,
the dates, if any, from which such dividends shall accrue, the dates when
such dividends shall be payable, and whether such dividends shall be
cumulative or noncumulative;
(c) the amounts which the holders of the Preferred Stock of such
series shall be entitled to be paid in the event of a voluntary or
involuntary liquidation, dissolution or winding up of the Company;
(d) whether or not the Preferred Stock of such series shall be
redeemable and at what times and under what conditions and the amount or
amounts payable thereon in the event of redemption; and
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<PAGE> 68
(e) may, in a manner not inconsistent with the provisions of the
Restated Certificate of Incorporation, (i) limit the number of shares of
such series which may be issued; (ii) provide for a sinking fund for the
purchase or redemption or a purchase fund for the purchase of shares of
such series and the terms and provisions governing the operation of any
such fund and the status as to reissue of shares of Preferred Stock
purchased or otherwise reacquired or redeemed or retired through the
operation thereof; (iii) grant voting rights to the holder of shares of
such series, in addition to and not inconsistent with those granted by the
Restated Certificate of Incorporation to the holders of Preferred Stock;
(iv) impose conditions or restrictions upon the creation of indebtedness of
the Company or upon the issue of additional Preferred Stock or other
capital stock ranking equally therewith or prior thereto as to dividends or
distribution of assets on liquidation; (v) impose conditions or
restrictions upon the payment of dividends upon, or the making of other
distributions to, or the acquisition of, junior stock; (vi) grant to the
holders of the Preferred Stock of such series the right to convert such
stock into shares of another series or class of capital stock; and (vii)
grant such other special rights to the holders of shares of such series as
the Board of Directors may determine and as shall not be inconsistent with
the provisions of the Restated Certificate of Incorporation.
DIVIDENDS
Subject to any limitations specified in the certificate of designation
providing for the issuance thereof, the holders of the Preferred Stock of any
series shall be entitled to receive, when and as declared by the Board of
Directors, preferential dividends in cash, at the rate per annum, if any, fixed
for such series, payable on such dates as may be specified in the certificate of
designation providing for the issuance of Preferred Stock of such series, to
stockholders of record on a date, preceding each such dividend payment date,
fixed for the purpose by the Board of Directors in advance of payment of each
particular dividend. Each share of Preferred Stock shall rank on a parity with
each other share of Preferred Stock, irrespective of series, with respect to
preferential dividends accrued on the shares of such series, and no dividend
shall be declared or paid or set apart for payment for the Preferred Stock of
any series unless at the same time a dividend in like proportion to the
dividends accrued upon the Preferred Stock of each other series shall be
declared or paid or set apart for payment, as the case may be, on Preferred
Stock of each other series then outstanding; but this does not prevent the
authorization or issuance of one or more series of Preferred Stock bearing
dividends subject to contingencies as to the existence or amount of earnings of
the Company during one or more fiscal periods, or as to other events, to which
dividends on other series of Preferred Stock are not subject.
So long as any shares of Preferred Stock shall remain outstanding, in no
event shall any dividends whatsoever, whether in cash, stock or otherwise, be
paid or declared, or any distribution be made on any class of junior stock, nor
shall any shares of Preferred Stock (subject to certain limited exceptions) or
junior stock be purchased, retired or otherwise acquired for a valuable
consideration by the Company, unless all dividends accrued on outstanding shares
of Preferred Stock for all past dividend periods shall have been paid, or
declared and a sum sufficient for the payment thereof set apart.
Certain of the Company's loan agreements contain provisions restricting the
payment of dividends. Under the most restrictive of such provisions, the Company
had approximately $698 million available at March 31, 1993, for the payment of
dividends. In addition, the ability of the Company, as a holding company, to pay
dividends on the Preferred Stock will depend upon the payment of dividends,
interest or other charges by subsidiaries to it. Debt instruments of certain
subsidiaries of the Company limit the amount of payments to the Company which
could affect the amount of funds available to the Company to pay dividends on
the Preferred Stock. However, based on the current financial status of its
subsidiaries, the Company believes that such restrictions will not impair the
Company's ability to pay dividends on the Preferred Stock.
First Chicago Trust Company of New York is the registrar, transfer agent
and dividend disbursing agent for the shares of the Preferred Stock.
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REDEMPTION
The Company, at the option of the Board of Directors, may redeem all or any
part of the Preferred Stock of any series which by its terms is redeemable, at
the time or times and on the terms and conditions fixed for such series, upon
notice duly given in the manner provided in the certificate of designation
providing for such series, by paying therefor in cash the sum fixed for such
series, together, in each case, with an amount equal to accrued and unpaid
dividends thereon. The certificate of designation providing for a series subject
to redemption may provide that when notice of redemption of all or part of the
shares of such series shall have been given, and the redemption price of such
shares, together with accrued dividends to the date fixed as the redemption
date, has been set aside by the Company, or deposited with a suitable
depositary, for the pro rata benefit of the holders of the shares called for
redemption, then the shares so called shall no longer be deemed outstanding, and
all rights with respect to such shares, including the accrual of further
dividends, other than the right to receive the redemption price of such shares
without interest, shall cease.
VOTING RIGHTS
Except as stated herein or expressly provided by law or except as may be
provided for any series of Preferred Stock by the certificate of designation
relating thereto, the Preferred Stock shall have no right or power to vote on
any question or in any proceeding or to be represented at or to receive notice
of any meeting of stockholders. On any matters on which the holders of the
Preferred Stock or any series thereof shall be entitled to vote separately as a
class or series, they shall be entitled to one vote for each share held.
So long as any shares of Preferred Stock are outstanding, the Company shall
not, without the consent of the holders of at least a majority of the number of
shares of the Preferred Stock at the time outstanding, given in person or by
proxy, either in writing or by vote at any annual meeting, or any special
meeting called for the purpose, purchase, redeem or otherwise acquire for value
any shares of the Preferred Stock or of any other stock ranking on a parity with
the Preferred Stock in respect of dividends or distribution of assets on
liquidation during the continuance of any default in the payment of dividends on
the Preferred Stock.
LIQUIDATION RIGHTS
In the event of any liquidation, dissolution or winding up of the affairs
of the Company, voluntary or involuntary, then, before any distribution or
payment can be made to the holders of any class of stock of the Company ranking
junior to the Preferred Stock as to dividends or distribution of assets on
liquidation, the holders of the Preferred Stock of the respective series shall
be entitled to be paid in full the respective amount fixed, with respect to
liquidation, dissolution or winding up, voluntary or involuntary, as the case
may be, in the certificate of designation providing for the issue of shares of
such series, plus a sum equal to all accrued and unpaid dividends thereon to the
date of payment thereof. After such payment shall have been made in full to the
holders of the Preferred Stock, the remaining assets and funds of the Company
shall be distributed among the holders of the stocks of the Company ranking
junior to the Preferred Stock according to their respective rights. In the event
that the assets of the Company available for distribution to holders of
Preferred Stock shall not be sufficient to make the payment herein required to
be made in full, such assets shall be distributed to the holders of the
respective shares of Preferred Stock pro rata in proportion to the amounts
payable upon each share thereof.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities will constitute either senior or subordinated debt of
the Company and will be issued, in the case of Debt Securities that will be
senior debt, under an indenture (the "Senior Debt Indenture"), between the
Company and Chemical Bank, as Trustee, and, in the case of Debt Securities that
will be subordinated debt, under an indenture (the "Subordinated Debt
Indenture"), between the Company and Chemical Bank, as Trustee. The Senior Debt
Indenture and the Subordinated Debt Indenture are sometimes hereinafter referred
to individually as an "Indenture" and collectively as the "Indentures." Chemical
Bank is hereinafter referred to as the "Trustee." The forms of the Indentures
are filed as exhibits to the Registration Statement of which this Prospectus is
a part. The following summaries of certain provisions of the Indentures
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and the Debt Securities do not purport to be complete and such summaries are
subject to the detailed provisions of the applicable Indenture to which
reference is hereby made for a full description of such provisions, including
the definition of certain terms used herein, and for other information regarding
the Debt Securities. Numerical references in parentheses below are to sections
in the applicable Indenture. Wherever particular sections or defined terms of
the applicable Indenture are referred to, such sections or defined terms are
incorporated herein by reference as part of the statement made, and the
statement is qualified in its entirety by such reference. The Indentures are
substantially identical, except for the provisions relating to subordination and
the Company's limitation on liens and sale and lease-back transactions. See
"Subordinated Debt" and "Certain Covenants of the Company." Neither Indenture
contains any covenant or provisions which affords debt holders protection in the
event of a highly leveraged transaction.
CERTAIN DEFINITIONS
Certain terms defined in the Indentures (Article One and Section 3.7) are
summarized as follows:
"Attributable Debt" means, with respect to any sale and lease-back
transaction as of any particular time, the present value discounted at the
rate of interest implicit in the terms of the lease of the obligations of
the lessee under such lease for net rental payments during the remaining
term of the lease (including any period for which such lease has been
extended or may, at the option of the Company, be extended).
"Consolidated Funded Indebtedness" means the aggregate of all
outstanding Funded Indebtedness of the Company and its consolidated
Subsidiaries, determined on a consolidated basis in accordance with
generally accepted accounting principles.
"Consolidated Net Tangible Assets" means the total assets appearing on
a consolidated balance sheet of the Company and its consolidated
Subsidiaries less, in general: (i) intangible assets; (ii) current and
accrued liabilities (other than Consolidated Funded Indebtedness and
capitalized rentals or leases), deferred credits, deferred gains and
deferred income; (iii) reserves; (iv) advances to finance oil or natural
gas exploration and development to the extent that the indebtedness related
thereto is excluded from Funded Indebtedness; (v) an amount equal to the
amount excluded from Funded Indebtedness representing "production payment"
financing of oil or natural gas exploration and development; and (vi)
minority stockholder interests.
"Funded Indebtedness" means any Indebtedness which matures more than
one year after the date as of which Funded Indebtedness is being determined
less any such Indebtedness as will be retired through or by means of any
deposit or payment required to be made within one year from such date under
any prepayment provision, sinking fund, purchase fund or otherwise;
provided, however, that such term shall not include Indebtedness of the
Company or any of its Subsidiaries incurred to finance outstanding advances
to others to finance oil or natural gas exploration and development to the
extent that the latter are not in default in their obligations to the
Company or such Subsidiary, nor shall such term include Indebtedness of the
Company or any of its Subsidiaries incurred to finance oil or natural gas
exploration and development by means commonly referred to as a "production
payment" to the extent that the Company or any of its Subsidiaries have not
guaranteed the repayment of the production payment.
"Holder" means a Person in whose name Securities are registered, or,
if not registered, the bearer thereof.
"Indebtedness" means indebtedness which is for money borrowed from
others.
"Person" means any individual, corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
"Principal Property" means any natural gas pipeline, gathering
property, natural gas processing plant or refined products pipeline located
in the United States, except any such property that in the opinion of the
Board of Directors is not of material importance to the total business
conducted by the Company and its consolidated Subsidiaries; provided that
"Principal Property" shall not include (i) any oil or natural
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gas property or the production or proceeds from production from an oil or
natural gas producing property or production or proceeds from production
from gas processing plants or oil or natural gas or petroleum products in
any pipeline or storage field; (ii) any property owned by Williams
Telecommunications Group, Inc. or any of its subsidiaries; and (iii) any
property acquired or constructed by any Subsidiary of the Company after the
end of the first fiscal quarter immediately preceding the issuance of
Securities hereunder.
"Subsidiary" means any corporation at least a majority of the
outstanding securities of which having ordinary voting power shall be owned
by the Company and/or another Subsidiary or Subsidiaries.
GENERAL
Neither of the Indentures limits the amount of Debt Securities, debentures,
notes or other evidences of indebtedness that may be issued by the Company or
any of its Subsidiaries. The Debt Securities will be unsecured senior or
subordinated obligations of the Company. All of the operating assets of the
Company and its Subsidiaries are owned by its Subsidiaries. Therefore, the
Company's rights and the rights of its creditors, including Holders of Debt
Securities, to participate in the assets of any Subsidiary upon the latter's
liquidation or recapitalization will be subject to the prior claims of the
Subsidiary's creditors, except to the extent that the Company may itself be a
creditor with recognized claims against the Subsidiary. The ability of the
Company to pay principal of and interest on the Debt Securities is, to a large
extent, dependent upon the receipt by it of dividends or other payments from its
Subsidiaries.
The Indentures provide that Debt Securities may be issued from time to time
in one or more series and may be denominated and payable in foreign currencies
or units based on or relating to foreign currencies, including European Currency
Units. Special United States federal income tax considerations applicable to any
Debt Securities so denominated are described in the relevant Prospectus
Supplement.
Reference is made to the Prospectus Supplement for the following terms of
and information relating to the Debt Securities (to the extent such terms are
applicable to such Debt Securities): (i) classification as senior or
subordinated Debt Securities, the specific designation, aggregate principal
amount, purchase price and denomination; (ii) currency or units based on or
relating to currencies in which such Debt Securities are denominated and/or in
which principal, premium, if any, and/or any interest will or may be payable;
(iii) any date of maturity; (iv) interest rate or rates (or method by which such
rate will be determined), if any; (v) the dates on which any such interest will
be payable; (vi) the place or places where the principal of and interest, if
any, on the Debt Securities will be payable; (vii) any redemption or sinking
fund provisions; (viii) whether the Debt Securities will be issuable in
registered or bearer form or both and, if Debt Securities in bearer form are
issuable, restrictions applicable to the exchange of one form for another and to
the offer, sale and delivery of Debt Securities in bearer form; (ix) any
applicable United States federal income tax consequences, including whether and
under what circumstances the Company will pay additional amounts on Debt
Securities held by a Person who is not a U.S. Person (as defined in the
Prospectus Supplement) in respect of any tax, assessment or governmental charge
withheld or deducted, and if so, whether the Company will have the option to
redeem such Debt Securities rather than pay such additional amounts; and (x) any
other specific terms of the Debt Securities, including any additional events of
default or covenants provided for with respect to such Debt Securities, and any
terms which may be required by or advisable under United States laws or
regulations.
Debt Securities may be presented for exchange, and registered Debt
Securities may be presented for transfer in the manner, at the places and
subject to the restrictions set forth in the Debt Securities and the Prospectus
Supplement. Such services will be provided without charge, other than any tax or
other governmental charge payable in connection therewith, but subject to the
limitations provided in the applicable Indenture. Debt Securities in bearer form
and the coupons, if any, appertaining thereto will be transferable by delivery.
Debt Securities that bear interest will do so at a fixed rate or a floating
rate. Debt Securities bearing no interest or interest at a rate that at the time
of issuance is below the prevailing market rate will be sold at a discount below
their stated principal amount. Special United States federal income tax
considerations applicable to any such discounted Debt Securities or to certain
Debt Securities issued at par which are treated
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as having been issued at a discount for United States federal income tax
purposes will be described in the relevant Prospectus Supplement.
REGISTERED GLOBAL SECURITIES
The registered Debt Securities of a series may be issued in the form of one
or more fully registered global Securities (a "Registered Global Security") that
will be deposited with a depositary (the "Depositary"), or with a nominee for a
Depositary identified in the Prospectus Supplement relating to such series. In
such case, one or more Registered Global Securities will be issued in a
denomination or aggregate denominations equal to the portion of the aggregate
principal amount of outstanding registered Debt Securities of the series to be
represented by such Registered Global Security or Securities. Unless and until
it is exchanged in whole or in part for Debt Securities in definitive registered
form, a Registered Global Security may not be transferred except as a whole by
the Depositary for such Registered Global Security to a nominee of such
Depositary or by a nominee of such Depositary to such Depositary or another
nominee of such Depositary or by such Depositary or any such nominee to a
successor of such Depositary or a nominee of such successor.
The specific terms of the depositary arrangement with respect to any
portion of a series of Debt Securities to be represented by a Registered Global
Security will be described in the Prospectus Supplement relating to such series.
The Company anticipates that the following provisions will apply to all
depositary arrangements.
Upon the issuance of a Registered Global Security, the Depositary for such
Registered Global Security will credit, on its book-entry registration and
transfer system, the respective principal amounts of the Debt Securities
represented by such Registered Global Security to the accounts of Persons that
have accounts with such Depositary ("participants"). The accounts to be credited
shall be designated by any underwriters or agents participating in the
distribution of such Debt Securities. Ownership of beneficial interests in a
Registered Global Security will be limited to participants or Persons that may
hold interests through participants. Ownership of beneficial interests in such
Registered Global Security will be shown on, and the transfer of that ownership
will be effected only through, records maintained by the Depositary for such
Registered Global Security (with respect to interests of participants) or by
participants or Persons that hold through participants (with respect to
interests of Persons other than participants). So long as the Depositary for a
Registered Global Security, or its nominee, is the registered owner of such
Registered Global Security, such Depositary or such nominee, as the case may be,
will be considered the sole owner or Holder of the Debt Securities represented
by such Registered Global Security for all purposes under the applicable
Indenture. Except as set forth below, owners of beneficial interests in a
Registered Global Security will not be entitled to have the Debt Securities
represented by such Registered Global Security registered in their names, will
not receive or be entitled to receive physical delivery of such Debt Securities
in definitive form and will not be considered the owners or Holders thereof
under the applicable Indenture.
Principal, premium, if any, and interest payments on Debt Securities
represented by a Registered Global Security registered in the name of a
Depositary or its nominee will be made to such Depositary or its nominee, as the
case may be, as the registered owner of such Registered Global Security. None of
the Company, the Trustees or any paying agent for such Debt Securities will have
any responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in such Registered
Global Security or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests.
The Company expects that the Depositary for any Debt Securities represented
by a Registered Global Security, upon receipt of any payment of principal,
premium or interest, will immediately credit participants' accounts with
payments in amounts proportionate to their respective beneficial interests in
the principal amount of such Registered Global Security as shown on the records
of such Depositary. The Company also expects that payments by participants to
owners of beneficial interests in such Registered Global Security held through
such participants will be governed by standing instructions and customary
practices, as is now the case with the securities held for the accounts of
customers registered in "street names" and will be the responsibility of such
participants.
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If the Depositary for any Debt Securities represented by a Registered
Global Security is at any time unwilling or unable to continue as Depositary and
a successor Depositary is not appointed by the Company within ninety days, the
Company will issue such Debt Securities in definitive form in exchange for such
Registered Global Security. In addition, the Company may at any time and in its
sole discretion determine not to have any of the Debt Securities of a series
represented by one or more Registered Global Securities and, in such event, will
issue Debt Securities of such series in definitive form in exchange for all of
the Registered Global Security or Securities representing such Debt Securities.
SENIOR DEBT
The Debt Securities and any coupons appertaining thereto (the "Coupons")
that will constitute part of the senior debt of the Company will be issued under
the Senior Debt Indenture and will rank equally and pari passu with all other
unsecured and unsubordinated debt of the Company.
SUBORDINATED DEBT
The Debt Securities and Coupons that will constitute part of the
subordinated debt of the Company will be issued under the Subordinated Debt
Indenture and will be subordinate and junior in right of payment, to the extent
and in the manner set forth in the Subordinated Debt Indenture, to all "Senior
Indebtedness" of the Company. The Subordinated Debt Indenture defines "Senior
Indebtedness" as obligations (other than nonrecourse obligations, the
subordinated Debt Securities or any other obligations specifically designated as
being subordinate in right of payment to Senior Indebtedness) of, or guaranteed
or assumed by, the Company for borrowed money or evidenced by bonds, debentures,
notes or other similar instruments, and amendments, renewals, extensions,
modifications and refundings of any such indebtedness or obligation.
(Subordinated Debt Indenture, Section 1.1)
In the event (a) of any insolvency or bankruptcy proceedings, or any
receivership, liquidation, reorganization or other similar proceedings in
respect of the Company or a substantial part of its property or (b) that (i) a
default shall have occurred with respect to the payment of principal, premium,
if any, or interest on or other monetary amounts due and payable on any Senior
Indebtedness or (ii) there shall have occurred an Event of Default (other than a
default in the payment of principal, premium, if any, or interest, or other
monetary amounts due and payable) with respect to any Senior Indebtedness, as
defined therein or in the instrument under which the same is outstanding,
permitting the holder or holders thereof to accelerate the maturity thereof
(with notice or lapse of time, or both), and such Event of Default shall have
continued beyond the period of grace, if any, in respect thereof, and such
default or Event of Default shall not have been cured or waived or shall not
have ceased to exist, or (c) that the principal of and accrued interest on the
subordinated Debt Securities shall have been declared due and payable upon an
Event of Default pursuant to Section 5.1 of the Subordinated Debt Indenture and
such declaration shall not have been rescinded and annulled as provided therein,
then the holders of all Senior Indebtedness shall first be entitled to receive
payment of the full amount unpaid thereon, or provision shall be made for such
payment in money or money's worth, before the Holders of any of the subordinated
Debt Securities or Coupons are entitled to receive a payment on account of the
principal, premium, if any, or interest on the Indebtedness evidenced by such
subordinated Debt Securities or any Coupons appertaining thereto. (Subordinated
Debt Indenture, Section 13.1) If this Prospectus is being delivered in
connection with a series of subordinated Debt Securities, the accompanying
Prospectus Supplement or the information incorporated herein by reference will
set forth the approximate amount of Senior Indebtedness outstanding as of the
end of the most recent fiscal quarter.
CERTAIN COVENANTS OF THE COMPANY
Liens. The Senior Debt Indenture provides that, subject to certain
exceptions, the Company will not, nor will it permit any Subsidiary to, issue,
assume or guarantee any Indebtedness secured by a mortgage, pledge, lien,
security interest or encumbrance ("mortgage"), upon any of its properties
without effectively providing that the senior Debt Securities issued thereunder
shall be equally and ratably secured with such Indebtedness. Among the
exceptions are purchase money mortgages; preexisting mortgages on any property
acquired or constructed by the Company or a Subsidiary and mortgages created
within one year after completion of such
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acquisition or construction; mortgages created on any contract for the sale of
products or services related to the operation or use of any property acquired or
constructed within one year after completion of such acquisition or
construction; mortgages on property of a Subsidiary existing at the time it
became a Subsidiary of the Company; mortgages on oil or gas properties owned by
the Company or a Subsidiary; other mortgages in an aggregate amount which, at
the time of incurrence and together with the Attributable Debt in respect of
sale and lease-back transactions permitted by paragraph (a) of Section 3.7 of
the Senior Debt Indenture, does not exceed 5 percent of the Consolidated Net
Tangible Assets. (Senior Debt Indenture, Section 3.6)
Limitation on Sale and Lease-Back Transactions. The Senior Debt Indenture
provides that the Company will not, nor will it permit any Subsidiary to, sell
and lease back for more than three years any Principal Property acquired or
placed into service more than 180 days before such lease arrangement, unless (a)
the lessee would be entitled to incur indebtedness secured by a mortgage on such
Principal Property in a principal amount equivalent to the Attributable Debt in
respect of such arrangement without equally and ratably securing the senior Debt
Securities issued thereunder or (b) the Company retires Funded Indebtedness or
causes Funded Indebtedness to be retired within 90 days of the effective date of
such sale and lease-back transaction equal to the net proceeds of such sale.
This limitation does not apply to sale and lease-back transactions (i) relating
to industrial development or pollution control financing or (ii) involving only
the Company and any Subsidiary or Subsidiaries, nor are such transactions
included in any computation of Attributable Debt. (Senior Debt Indenture,
Section 3.7)
Consolidation, Merger, Conveyance of Assets. Each Indenture provides that
the Company will not consolidate with or merge into any other corporation or
convey, transfer or lease its properties and assets substantially as an entirety
to any Person, unless the corporation formed by such consolidation or into which
the Company is merged or the Person which acquires such assets shall expressly
assume the Company's obligations under such Indenture and the Debt Securities
issued thereunder and immediately after giving effect to such transaction, no
Event of Default, and no event which, after notice or lapse of time or both,
would become an Event of Default, shall have happened and be continuing.
(Section 9.1)
EVENTS OF DEFAULT
An Event of Default is defined under each Indenture with respect to Debt
Securities of any series issued under such Indenture as being: (a) default in
payment of any principal of the Debt Securities of such series, either at
maturity, upon any redemption, by declaration or otherwise; (b) default for 30
days in payment of any interest on any Debt Securities of such series; (c)
default for 90 days after written notice in the observance or performance of any
covenant or warranty in the Debt Securities of such series or such Indenture
other than a covenant a default in whose performance, or whose breach, is dealt
with otherwise below or, if certain conditions are met, the Events of Default
described in this clause (c) are the result of changes in generally accepted
accounting principles; or (d) certain events of bankruptcy, insolvency or
reorganization of the Company. (Section 5.1)
Each Indenture provides that, (a) if an Event of Default described in
clauses (a), (b) or (c) above (if the Event of Default under clause (c) is with
respect to less than all series of Debt Securities then outstanding) occurs, the
Trustee or the Holders of not less than 25 percent in principal amount of the
Debt Securities of each affected series (treated as one class) issued under such
Indenture and then outstanding may then declare the entire principal of all Debt
Securities of each such affected series and interest accrued thereon to be due
and payable immediately and (b) if an Event of Default due to a default
described in clause (c) above which is applicable to all series of Debt
Securities then outstanding or due to certain events of bankruptcy, insolvency
and reorganization of the Company, shall have occurred and be continuing, the
Trustee or the Holders of not less than 25 percent in principal amount of all
Debt Securities issued under such Indenture and then outstanding (treated as one
class) may declare the entire principal of all such Debt Securities and interest
accrued thereon to be due and payable immediately, but upon certain conditions
such declarations may be annulled and past defaults may be waived (except a
continuing default in payment of principal of, premium, if any, or interest on
such Debt Securities) by the holders of a majority in aggregate principal amount
of the Debt Securities of all such affected series then outstanding. (Sections
5.1 and 5.10)
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Each Indenture contains a provision entitling the Trustee, subject to the
duty of the Trustee during a default to act with the required standard of care,
to be indemnified by the Holders of Debt Securities (treated as one class)
issued under such Indenture before proceeding to exercise any right or power
under such Indenture at the request of such Holders. (Section 6.2) Subject to
such provisions in each Indenture for the indemnification of the Trustee and
certain other limitations, the Holders of a majority in aggregate principal
amount of the outstanding Debt Securities of each series affected (treated as
one class) issued under such Indenture may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred on the Trustee. (Section 5.9)
Each Indenture provides that no Holder of Debt Securities issued under such
Indenture may institute any action against the Company under such Indenture
(except actions for payment of overdue principal or interest) unless such Holder
previously shall have given to the Trustee written notice of default and
continuance thereof and unless the Holders of not less than 25 percent in
principal amount of the Debt Securities of each affected series (treated as one
class) issued under such Indenture and then outstanding shall have requested the
Trustee to institute such action and shall have offered the Trustee reasonable
indemnity and the Trustee shall not have instituted such action within 60 days
of such request and the Trustee shall not have received direction inconsistent
with such written request by the Holders of a majority in principal amount of
the Debt Securities of each affected series (treated as one class) issued under
such Indenture and then outstanding. (Sections 5.6, 5.7 and 5.9)
Each Indenture contains a covenant that the Company will file annually with
the Trustee a certificate of no default or a certificate specifying any default
that exists. (Section 3.5)
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
The Company can discharge or defease its obligations under each Indenture
as set forth below. (Section 10.1)
Under terms satisfactory to the Trustee, the Company may discharge certain
obligations to Holders of any series of Debt Securities issued under such
Indenture which have not already been delivered to the Trustee for cancellation
and which have either become due and payable or are by their terms due and
payable within one year (or scheduled for redemption within one year) by
irrevocably depositing with the Trustee cash or, in the case of Debt Securities
payable only in U.S. dollars, U.S. Government Obligations (as defined in such
Indenture) as trust funds in an amount certified to be sufficient to pay at
maturity (or upon redemption) the principal of and interest on such Debt
Securities.
The Company may also, upon satisfaction of the condition listed below,
discharge certain obligations to Holders of any series of Debt Securities issued
under such Indenture at any time ("defeasance"). Under terms satisfactory to the
Trustee, the Company may instead be released with respect to any outstanding
series of Debt Securities issued under the relevant Indenture from the
obligations imposed by Sections 3.6, 3.7 and 9.1, in the case of the Senior Debt
Indenture, and Section 9.1, in the case of the Subordinated Debt Indenture
(which contain the covenants described above limiting liens, sale and lease-back
transactions and consolidations, mergers and conveyances of assets), and omit to
comply with such Sections without creating an Event of Default ("covenant
defeasance"). Defeasance or covenant defeasance may be effected only if, among
other things: (i) the Company irrevocably deposits with the Trustee cash or, in
the case of Debt Securities payable only in U.S. dollars, U.S. Government
Obligations, as trust funds in an amount certified to be sufficient to pay at
maturity (or upon redemption) the principal of and interest on all outstanding
Debt Securities of such series issued under such Indenture; (ii) the Company
delivers to the Trustee an opinion of counsel to the effect that the Holders of
such series of Debt Securities will not recognize income, gain or loss for
United States federal income tax purposes as a result of such defeasance or
covenant defeasance and will be subject to United States federal income tax on
the same amounts, in the same manner and at the same times as would have been
the case if defeasance or covenant defeasance had not occurred (in the case of a
defeasance, such opinion must be based on a ruling of the Internal Revenue
Service or a change in United States federal income tax law occurring after the
date of such Indenture, since such a result would not occur under current tax
law); and (iii) in the case of the Subordinated Debt Indenture (a) no event or
condition shall exist that,
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pursuant to certain provisions described under "Subordinated Debt" above, would
prevent the Company from making payments of principal of or interest on the
subordinated Debt Securities at the date of the irrevocable deposit referred to
above or at any time during the period ending on the 91st day after such deposit
date and (b) the Company delivers to the Trustee for the Subordinated Debt
Indenture an opinion of counsel to the effect that (1) the trust funds will not
be subject to any rights of holders of Senior Indebtedness and (2) after the
91st day following the deposit, the trust funds will not be subject to the
effect of any applicable bankruptcy, insolvency, reorganization or similar laws
affecting creditors' rights generally, except that if a court were to rule under
any such law in any case or proceeding that the trust funds remained property of
the Company, then the Trustee and the Holders of the subordinated Debt
Securities would be entitled to certain rights as secured creditors in such
trust funds.
MODIFICATION OF THE INDENTURES
Each Indenture provides that the Company and the Trustee may enter into
supplemental indentures (which conform to the provisions of the Trust Indenture
Act of 1939) without the consent of the Holders to: (a) secure any Debt
Securities; (b) evidence the assumption by a successor Person of the obligations
of the Company; (c) add further covenants for the protection of the Holders; (d)
cure any ambiguity or correct any inconsistency in such Indenture, so long as
such action will not adversely affect the interests of the Holders; (e)
establish the form or terms of Debt Securities of any series; and (f) evidence
the acceptance of appointment by a successor trustee. (Section 8.1)
Each Indenture also contains provisions permitting the Company and the
Trustee, with the consent of the Holders of not less than the majority in
principal amount of Debt Securities of each series issued under such Indenture
then outstanding and affected (voting as one class) to add any provisions to, or
change in any manner or eliminate any of the provisions of, such Indenture or
modify in any manner the rights of the Holders of the Debt Securities of each
series so affected; provided that such changes conform to provisions of the
Trust Indenture Act of 1939 and provided that the Company and the Trustee may
not, without the consent of each Holder of outstanding Debt Securities affected
thereby, (a) extend the final maturity of the principal of any Debt Securities,
or reduce the principal amount thereof or reduce the rate or extend the time of
payment of interest thereon, or reduce any amount payable on redemption thereof
or change the currency in which the principal thereof (including any amount in
respect of original issue discount) or interest thereon is payable, or reduce
the amount of any original issue discount security payable upon acceleration or
provable in bankruptcy or alter certain provisions of such Indenture relating to
Debt Securities not denominated in U.S. dollars or for which conversion to
another currency is required to satisfy the judgment of any court, or impair the
right to institute suit for the enforcement of any payment on any Debt
Securities when due or (b) reduce the aforesaid percentage in principal amount
of Debt Securities of any series issued under such Indenture, the consent of the
Holders of which is required for any such modification. (Section 8.2)
The Subordinated Debt Indenture may not be amended to alter the
subordination of any outstanding subordinated Debt Securities without the
consent of each Holder of Senior Indebtedness then outstanding that would be
adversely affected thereby. (Subordinated Debt Indenture, Section 8.6)
CONCERNING THE TRUSTEE
Chemical Bank is one of a number of banks with which the Company and its
Subsidiaries maintain ordinary banking relationships and with which the Company
and its Subsidiaries maintain credit facilities.
WARRANTS TO PURCHASE COMMON STOCK
The following statements with respect to the Stock Warrants are summaries
of, and subject to, the detailed provisions of a warrant agreement ("Stock
Warrant Agreement") to be entered into by the Company and a warrant agent to be
selected at the time of issue (the "Stock Warrant Agent"), filed as an exhibit
to the Registration Statement.
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<PAGE> 77
GENERAL
The Stock Warrants, evidenced by warrant certificates (the "Stock Warrant
Certificates"), may be issued under the Stock Warrant Agreement independently or
together with any Securities offered by any Prospectus Supplement and may be
attached to or separate from such Securities. If Stock Warrants are offered, the
Prospectus Supplement will describe the terms of the warrants, including the
following: (i) the offering price, if any; (ii) the designation and terms of the
Common Stock purchasable upon exercise of the warrants; (iii) the number of
shares of Common Stock purchasable upon exercise of one Stock Warrant and the
initial price at which such shares may be purchased upon exercise; (iv) the date
on which the right to exercise the Stock Warrants shall commence and the date on
which such right shall expire; (v) federal income tax consequences; (vi) call
provisions, if any; and (vii) any other terms of the Stock Warrants. The shares
of Common Stock issuable upon exercise of the Stock Warrants will, when issued
in accordance with the Stock Warrant Agreement, be fully paid and nonassessable.
EXERCISE OF STOCK WARRANTS
Stock Warrants may be exercised by surrendering to the Stock Warrant Agent
the Stock Warrant Certificate signed by the warrantholder, or his duly
authorized agent, indicating the warrantholder's election to exercise all or a
portion of the Stock Warrants evidenced by the certificate. Surrendered Stock
Warrant Certificates shall be accompanied by payment of the aggregate exercise
price of the Stock Warrants to be exercised, as set forth in the Prospectus
Supplement. Certificates evidencing duly exercised Stock Warrants shall be
delivered by the Stock Warrant Agent to the transfer agent for the Common Stock.
Upon receipt thereof, the transfer agent shall deliver or cause to be delivered,
to or upon the written order of the exercising warrantholder, a certificate
representing the number of shares of Common Stock purchased. If fewer than all
of the Stock Warrants evidenced by any certificate are exercised, the Stock
Warrant Agent shall deliver to the exercising warrantholder a new Stock Warrant
Certificate representing the unexercised Stock Warrants.
ANTIDILUTION PROVISIONS
The exercise price payable and the number of shares of Common Stock
purchasable upon the exercise of each Stock Warrant will be subject to
adjustment in certain events, including (i) the issuance of a stock dividend to
holders of Common Stock or a combination, subdivision or reclassification of
Common Stock; (ii) the issuance of Common Stock or of rights, warrants or
options to all holders of the Company's Common Stock entitling the holders
thereof to purchase Common Stock for an aggregate consideration per share less
than 95 percent of the current market price per share of Common Stock; or (iii)
any distribution by the Company to the holders of its Common Stock of evidences
of indebtedness of the Company or of assets (excluding cash dividends or
distributions payable out of consolidated earnings and earned surplus and
dividends or distributions referred to in (i) above). In lieu of adjusting the
number of shares of Common Stock purchasable upon exercise of each Stock
Warrant, the Company may elect to adjust the number of Stock Warrants. No
adjustment in the number of shares purchasable upon exercise of the Stock
Warrants will be required until cumulative adjustments require an adjustment of
at least 1 percent thereof. The Company may, at its option, reduce the exercise
price at any time. No fractional shares will be issued upon exercise of Stock
Warrants, but the Company will pay the cash value of any fractional shares
otherwise issuable. Notwithstanding the foregoing, in case of any consolidation,
merger, sale or conveyance of the property of the Company as an entirety or
substantially as an entirety, the holder of each outstanding Stock Warrant shall
have the right to the kind and amount of shares of stock and other securities
and property (including cash) receivable by a holder of the number of shares of
Common Stock into which such Stock Warrants were exercisable immediately prior
thereto.
NO RIGHTS AS STOCKHOLDERS
Holders of Stock Warrants will not be entitled, by virtue of being such
holders, to vote, to consent, to receive dividends, to receive notice as
stockholders with respect to any meeting of stockholders for the election of
directors of the Company or any other matter, or to exercise any rights
whatsoever as stockholders of the Company.
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DESCRIPTION OF DEBT WARRANTS
The Company may issue, together with Debt Securities or separately, Debt
Warrants for the purchase of Debt Securities. If the Debt Warrants are issued
together with any Debt Securities, they may be attached to or separate from such
Debt Securities. The Offered Debt Warrants are to be issued under a Debt Warrant
Agreement (the "Debt Warrant Agreement") to be entered into between the Company
and a bank or trust company, as Warrant Agent (the "Debt Warrant Agent") and may
be issued in one or more series, all as shall be set forth in the Prospectus
Supplement relating thereto. The forms of the Debt Warrant Agreement and the
certificates for the Debt Warrants are filed as exhibits to the Registration
Statement of which this Prospectus is a part. The following summaries of certain
provisions of the Debt Warrant Agreement and Debt Warrants do not purport to be
complete, and such summaries are subject to the detailed provisions of the Debt
Warrant Agreement to which reference is hereby made for a full description of
such provisions, including the definition of certain terms used herein, and for
other information regarding the Debt Warrants. References under this caption are
to the Debt Warrant Agreement. Wherever particular provisions of the Debt
Warrant Agreement are referred to, such provisions are incorporated by reference
as a part of the statements made, and the statements are qualified in their
entirety by such reference.
GENERAL
Reference is made to the Prospectus Supplement for the following terms of
and information relating to the Debt Warrants: (i) the price at which the Debt
Warrants will be issued; (ii) the currency or composite currency for which the
Debt Warrants may be purchased; (iii) the designation, aggregate principal
amount, currency or composite currency and terms of the Debt Securities that may
be purchased upon exercise of the Debt Warrants; (iv) if applicable, the
designation and terms of the Debt Securities with which the Debt Warrants are
issued and the number of Debt Warrants issued with each of such Debt Securities;
(v) if applicable, the date on and after which the Debt Warrants and the related
Debt Securities will be separately transferable; (vi) the principal amount of
Debt Securities purchasable upon exercise of each Debt Warrant and the price at
which and the currency or composite currency in which such principal amount of
Debt Securities may be purchased upon such exercise; (vii) the date on which the
right to exercise the Debt Warrants shall commence and the date (the "Debt
Warrant Expiration Date") on which such right shall expire or, if the Debt
Warrants are not continuously exercisable throughout such period, the specific
date or dates on which they will be exercisable (each, a "Debt Warrant Exercise
Date," which term shall also mean, with respect to Debt Warrants continuously
exercisable for a period of time, every date during such period); (viii) whether
the Debt Warrant certificates representing the Debt Warrants (the "Debt Warrant
Certificates") will be in registered form ("Registered Warrants") or bearer form
("Bearer Warrants") or both; (ix) any applicable United States federal income
tax consequences; (x) the identity of the Debt Warrant Agent in respect of the
Debt Warrants; (xi) the proposed listing, if any, of the Debt Warrants or the
Debt Securities purchasable upon exercise thereof on any securities exchange;
and (xii) any other terms of the Debt Warrants.
Registered Warrants of each series will be evidenced by Debt Warrant
Certificates in registered form, and Bearer Warrants of each series will be
evidenced by a global Debt Warrant Certificate in bearer form (the "Global Debt
Warrant Certificate"). Bearer Warrants will not be issued in definitive form.
The Global Debt Warrant Certificate will be deposited with a common depositary
for Euro-clear and Cedel, for credit to the accounts of the purchasers of the
Bearer Warrants on the related date of issue. (Sections 1.02 and 1.03)
Subject to the terms of the Debt Warrant Agreement, Registered Warrants may
be presented for exchange and for registration of transfer (with the form of
transfer endorsed thereon duly executed) at the corporate trust office of the
Debt Warrant Agent for such series of Debt Warrants (or any other office
indicated in the Prospectus Supplement relating to such series of Debt Warrants)
without service charge and upon payment of any taxes and other governmental
charges as described in the relevant Debt Warrant Agreement. (Section 4.01)
Bearer Warrants will not be offered, sold, resold or delivered, directly or
indirectly, at any time, in the United States or to United States persons other
than to offices located outside the United States of certain United States
financial institutions. Purchasers of Bearer Warrants will be subject to
certification procedures
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<PAGE> 79
and may be affected by certain limitations under United States federal income
tax laws in connection with the exercise of their Debt Warrants. See
"Limitations on Issuance of Bearer Debt Securities and Bearer Warrants."
EXERCISE OF DEBT WARRANTS
Each Debt Warrant will entitle the Holder to purchase for cash such
principal amount of Debt Securities at such exercise price as shall in each case
be set forth in, or be determinable as set forth in, the Prospectus Supplement.
Debt Warrants may be exercised at any time up to the close of business on the
Debt Warrant Expiration Date set forth in the Prospectus Supplement. After the
close of business on the Debt Warrant Expiration Date (or such later date to
which the Debt Warrant Expiration Date may be extended by the Company),
unexercised Debt Warrants will become void. (Section 2.02)
Subject to any restrictions and additional requirements that may be set
forth in the Prospectus Supplement, Registered Warrants may be exercised by
delivery to the Debt Warrant Agent of the Debt Warrant Certificate evidencing
such Registered Warrants properly completed and duly executed and of payment as
provided in the Prospectus Supplement of the amount required to purchase the
Debt Securities purchasable upon such exercise. (Section 2.03) Subject to any
such restrictions and additional requirements, Bearer Warrants may be exercised
by the beneficial owner thereof delivering to Euro-clear or Cedel a duly
completed exercise letter, in the form obtainable from Euro-clear or Cedel or
the Debt Warrant Agent, setting forth, among other things, instructions for
payment as provided in the Prospectus Supplement on the date of exercise of the
amount required to purchase the Debt Securities purchasable upon exercise of
Bearer Warrants. Purchasers of Bearer Securities to be delivered upon exercise
of the Bearer Warrants will be subject to certification procedures and may be
affected by certain limitations under United States federal income tax laws. See
"Limitations on Issuance of Bearer Debt Securities and Bearer Debt Warrants."
The procedures to be followed in connection with the delivery of the exercise
letter will be set forth in the Prospectus Supplement. The exercise price of
Debt Warrants will be that price applicable on the date of receipt of payment in
full of the requisite amount of funds, determined as set forth in the Prospectus
Supplement. Upon receipt of such payment (plus payment of any accrued interest
on the Debt Securities being purchased, from and including the immediately
preceding interest payment date for such Debt Securities to and including the
Debt Warrant Exercise Date (unless the Debt Warrant Exercise Date is after the
record date, if any, but on or before the immediately succeeding interest
payment date, if any, for the Debt Securities being purchased, in which case no
accrued interest is payable in respect of Debt Securities to be issued as
Registered Securities)) and upon either (i) surrender of such Debt Warrant
Certificate at the corporate trust office of the Debt Warrant Agent or any other
office indicated in the Prospectus Supplement, in the case of Registered
Warrants, or (ii) satisfaction of the certification procedures referred to above
under "General," in the case of
Bearer Warrants, the Company will, as soon as practicable, forward the Debt
Securities purchasable upon such exercise. Only Registered Securities will be
deliverable upon exercise of Registered Warrants. Registered Securities or,
subject to the certification procedures referred to above under "General,"
Bearer Securities will be delivered upon exercise of Bearer Warrants, as may be
specified in the exercise letter. If fewer than all of the Registered Warrants
represented by a Debt Warrant Certificate are exercised, a new Debt Warrant
Certificate will be issued representing the remaining number of Registered
Warrants. (Section 2.03)
MODIFICATIONS
The Debt Warrant Agreement and the terms of the Debt Warrants and the Debt
Warrant Certificates may be amended by the Company and the Debt Warrant Agent,
without the consent of the Holders, for the purpose of curing any ambiguity, or
of curing, correcting or supplementing any defective or inconsistent provision
therein or in any other manner which the Company may deem necessary or desirable
and which will not adversely affect the interests of the Holders in any material
respect. (Section 6.01)
MERGER, CONSOLIDATION, SALE OR OTHER DISPOSITION
If at any time there shall be a merger or consolidation of the Company or
transfer of substantially all of its assets as permitted under the Indentures,
the successor Person thereunder shall succeed to and assume all
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<PAGE> 80
obligations of the Company under the Debt Warrant Agreement and the Debt Warrant
Certificates. (Section 3.04) See "Description of Debt Securities -- Certain
Covenants of the Company."
ENFORCEABILITY OF RIGHTS OF DEBT WARRANTHOLDERS: GOVERNING LAW
The Debt Warrant Agent will act solely as an agent of the Company in
connection with the Debt Warrant Certificates and will not assume any obligation
or relationship of agency or trust for or with any Holders of Debt Warrant
Certificates or beneficial owners of Debt Warrants. (Section 5.02) Any Holder of
Debt Warrant Certificates evidencing Registered Warrants and any beneficial
owner of Bearer Warrants may, without the consent of the Debt Warrant Agent, any
other Holder, the relevant Trustee, the Holder of any Debt Securities issued
upon exercise of Debt Warrants or, if applicable, the common depositary for
Euro-clear and Cedel, enforce by appropriate legal action, on its own behalf,
its right to exercise the Debt Warrants evidenced by such Debt Warrant
Certificates or the Global Debt Warrant Certificates evidencing such Bearer
Warrants, as the case may be, in the manner provided therein and in the Debt
Warrant Agreement. (Section 3.03) No Holder of any Debt Warrant Certificate or
beneficial owner of any Debt Warrants evidenced thereby shall be entitled to any
of the rights of a Holder of the Debt Securities purchasable upon exercise of
such Debt Warrants, including, without limitation, the right to receive the
payment of principal of or premium, if any, or interest, if any, on such Debt
Securities or to enforce any of the covenants in the relevant Indenture.
(Section 3.01) The Debt Warrants and each Debt Warrant Agreement will be
governed by, and construed in accordance with the laws of the State of New York.
(Section 6.04)
LIMITATIONS ON ISSUANCE OF BEARER DEBT
SECURITIES AND BEARER DEBT WARRANTS
Except as may otherwise be provided in the Prospectus Supplement applicable
thereto, in compliance with United States federal income tax laws and
regulations, Debt Securities that are Bearer Securities (including Debt
Securities in global form) will not be offered, sold, resold or delivered,
directly or indirectly, in connection with their original issuance, and Debt
Warrants that are Bearer Warrants will not be offered, sold, resold or
delivered, directly or indirectly, at any time, in the United States or to
United States persons (as defined below) other than to offices located outside
the United States of United States financial institutions (as defined in United
States Treasury Regulations Section 1.165-12(c)(1)(v)) that are purchasing for
their own account or for the account of a customer and that agree in writing to
comply with the requirements of Sections 165(j)(3)(A), (B) or (C) of the
Internal Revenue Code and the regulations thereunder. Any underwriters, agents
and dealers participating in the offerings of Bearer Securities or Bearer
Warrants, directly or indirectly, must agree that (i) they will not, in
connection with the original issuance of any Bearer Securities or during the
period set forth in the Prospectus Supplement following the original issuance of
such Bearer Securities offer, sell, resell or deliver, directly or indirectly,
any Bearer Securities in the United States or to United States persons (other
than the financial institutions described above) and (ii) they will not, at any
time, offer, sell, resell or deliver, directly or indirectly, any Bearer
Warrants in the United States or to United States persons (other than the
financial institutions described above). In addition, any such underwriters,
agents and dealers must agree to send a written confirmation (i) to each
purchaser from or through it of Bearer Securities in connection with their
original issuance or during the period set forth in the Prospectus Supplement
following the original issuance of such Bearer Securities and (ii) to each
purchaser from or through it of a Bearer Warrant at any time, and Euro-clear or
Cedel, as the case may be, must send a written confirmation to each purchaser of
Bearer Securities upon exercise of Bearer Warrants, in every case confirming
that such purchaser represents that it is not a United States person or, if it
is a United States person, that it is a financial institution described above
purchasing for its own account or the account of a customer and, if such person
is a dealer, that it will send similar confirmations to purchasers from it.
Bearer Securities (other than temporary global Debt Securities) and any
Coupons appertaining thereto will bear a legend substantially to the following
effect: "Any United States person who holds this obligation will be subject to
limitations under the United States federal income tax laws, including the
limitations provided in Sections 165(j) and 1287(a) of the Internal Revenue
Code." The sections referred to in such legend provide that a United States
person (other than a United States financial institution described above or
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<PAGE> 81
United States person holding through such a financial institution) who holds a
Bearer Security or Coupon will not be allowed to deduct any loss realized on the
sale, exchange or redemption of such Bearer Security and any gain (which might
otherwise be characterized as capital gain) recognized on such sale, exchange or
redemption will be treated as ordinary income.
As used herein, "United States person" means a citizen, national or
resident of the United States, a corporation, partnership or other entity
created or organized in or under the laws of the United States or any political
subdivision thereof, or an estate or trust the income of which is subject to
United States federal income taxation regardless of its source.
PLAN OF DISTRIBUTION
The Company may sell the Securities in the following ways: (i) through
agents; (ii) through underwriters; (iii) through dealers; and (iv) directly to
purchasers.
Offers to purchase the Securities may be solicited by agents designated by
the Company from time to time. Any such agent, who may be deemed to be an
underwriter as that term is defined in the Securities Act of 1933, as amended
(the "Securities Act"), involved in the offer or sale of the Securities in
respect of which this Prospectus is delivered will be named, and any commissions
payable by the Company to such agent set forth, in the Prospectus Supplement.
Unless otherwise indicated in the Prospectus Supplement, any such agent will be
acting on a best efforts basis for the period of its appointment.
If any underwriters are utilized in the sale, the Company will enter into
an underwriting agreement with such underwriters at the time of sale to them and
the names of the underwriters and the terms of the transaction will be set forth
in the Prospectus Supplement, which will be used by the underwriters to make
resales to the public of the Securities in respect of which this Prospectus is
delivered.
If a dealer is utilized in the sale of the Securities in respect of which
this Prospectus is delivered, the Company will sell such Securities to the
dealer, as principal. The dealer may then resell such Securities to the public
at varying prices to be determined by such dealer at the time of resale.
Agents, dealers and underwriters may be entitled under agreements entered
into with the Company to indemnification by the Company against certain civil
liabilities, including liabilities under the Securities Act, or to contribution
with respect to payments which such agents, dealers or underwriters may be
required to make in respect thereof. Agents, dealers and underwriters may be
customers of, engage in transactions with, or perform services for the Company
in the ordinary course of business.
The Securities may also be offered and sold, if so indicated in the
Prospectus Supplement, in connection with a remarketing upon their purchase, in
accordance with a redemption or repayment pursuant to their terms, or otherwise,
by one or more firms ("remarketing firms"), acting as principals for their own
accounts or as agents for the Company. Any remarketing firm will be identified
and the terms of its agreement, if any, with the Company and its compensation
will be described in the Prospectus Supplement. Remarketing firms may be deemed
to be underwriters in connection with the Securities remarketed thereby.
Remarketing firms may be entitled under agreements which may be entered into
with the Company to indemnification by the Company against certain civil
liabilities, including liabilities under the Securities Act, and may be
customers of, engage in transactions with or perform services for the Company in
the ordinary course of business.
If so indicated in the Prospectus Supplement, the Company will authorize
agents and underwriters or dealers to solicit offers by certain purchasers to
purchase the 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 to only those conditions set forth in the Prospectus Supplement, and
the Prospectus Supplement will set forth the commission payable for solicitation
of such offers.
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EXPERTS
The consolidated financial statements and schedules of the Company
appearing in the Company's Annual Report on Form 10-K for the year ended
December 31, 1995, have been audited by Ernst & Young, independent auditors, as
set forth in their report included therein and incorporated herein by reference.
The financial statements and schedules referred to above are incorporated herein
by reference in reliance upon such report given upon the authority of such firm
as experts in auditing and accounting.
LEGAL MATTERS
Certain legal matters in connection with the Offered Securities will be
passed upon for the Company by William G. Von Glahn, Senior Vice President and
General Counsel of the Company, and for the Underwriters by Davis Polk &
Wardwell, New York, New York.
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<PAGE> 83
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the various expenses payable by the Company
in connection with the Securities being registered hereby. All of the fees set
forth below are estimates except for the SEC registration fee, the NASD fee and
the NYSE listing fee.
<TABLE>
<S> <C>
Securities and Exchange Commission Filing Fee............................... $9,191
NASD Filing Fee.............................................................
Rating Agency Fees..........................................................
Blue Sky Fees and Expenses..................................................
Trustees' Fees and Expenses.................................................
Printing Fees and Expenses..................................................
Accounting Fees and Expenses................................................
New York Stock Exchange Listing Fee.........................................
Legal Fees and Expenses.....................................................
Miscellaneous...............................................................
-------
---
Total............................................................. $
==========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company, a Delaware corporation, is empowered by Section 145 of the
General Corporation Law of the State of Delaware, subject to the procedures and
limitations stated therein, to indemnify any person against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by them in connection with any threatened, pending or
completed action, suit or proceeding in which such person is made party by
reason of their being or having been a director, officer, employee or agent of
the Company. The statute provides that indemnification pursuant to its
provisions is not exclusive of other rights of indemnification to which a person
may be entitled under any by-law, agreement, vote of stockholders or
disinterested directors or otherwise. The By-laws of the Company provide for
indemnification by the Company of its directors and officers to the fullest
extent permitted by the General Corporation Law of the State of Delaware. In
addition, the Company has entered into indemnity agreements with its directors
and certain officers providing for, among other things, the indemnification of
and the advancing of expenses to such individuals to the fullest extent
permitted by law, and to the extent insurance is maintained, for the continued
coverage of such individuals.
Policies of insurance are maintained by the Company under which the
directors and officers of the Company are insured, within the limits and subject
to the limitations of the policies, against certain expenses in connection with
the defense of such actions, suits or proceedings, and certain liabilities which
might be imposed as a result of such actions, suits or proceedings, to which
they are parties by reason of being or having been such directors or officers.
The Declaration of each Williams Trust provides that no Institutional
Trustee or any of its affiliates, Delaware Trustee or any of its affiliates, or
officer, director, shareholder, member, partner, employee, representative
custodian, nominee or agent of the Institutional Trustee or the Delaware Trustee
(each a "Fiduciary Indemnified Person"), and no Regular Trustee, affiliate of
any Regular Trustee, or any officer, director, shareholder, member, partner,
employee, representative or agent of any Regular Trustee, or any employee or
agent of such Williams Trust or its affiliates (each a "Company Indemnified
Person") shall be liable, responsible or accountable in damages or otherwise to
such Williams Trust, any Affiliate of such Williams Trust or any holder of
securities issued by such Williams Trust, or to any officer, director,
shareholder, partner, member, representative, employee or agent of such Williams
Trust or its Affiliates for any loss, damage or claim incurred by reason of any
act or omission performed or omitted by such Fiduciary Indemnified Person or
Company Indemnified Person in good faith on behalf of such Williams Trust and in
a
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<PAGE> 84
manner such Fiduciary Indemnified Person or Company Indemnified Person
reasonably believed to be within the scope of the authority conferred on such
Fiduciary Indemnified Person or Company Indemnified Person by such Declaration
or by law, except that a Fiduciary Indemnified Person or a Company Indemnified
Person shall be liable for any loss, damage or claim incurred by reason of such
Fiduciary Indemnified Person's or Company Indemnified Person's gross negligence
(or in the case of a Fiduciary Indemnified Person, negligence) or willful
misconduct with respect to such acts or omissions. The Declaration of each
Williams Trust also provides that, to the full extent permitted by law, the
Company shall indemnify any Company Indemnified Person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of such Williams Trust) by reason of
the fact that he is or was a Company Indemnified Person against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Williams Trust, and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
his conduct was unlawful. The Declaration of each Williams Trust also provides
that to the full extent permitted by law, the Company shall indemnify any
Company Indemnified Person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action or suit by or in the right
of such Williams Trust to procure a judgment in its favor by reason of the fact
that he is or was a Company Indemnified Person against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection with the
defense or settlement of such action or suit if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the Williams Trust and except that no indemnification shall be made in respect
of any claim, issue or matter as to which such Company Indemnified Person shall
have been adjudged to be liable to the Williams Trust unless and only to the
extent that the Court of Chancery of Delaware or the court in which such action
or suit was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such expenses which
such Court of Chancery or such other court shall deem proper. The Declaration of
each Williams Trust further provides that expenses (including attorneys' fees)
incurred by a Company Indemnified Person in defending a civil, criminal,
administrative or investigative action, suit or proceeding referred to in the
immediately preceding two sentences shall be paid by the Company in advance of
the final disposition of such action, suit or preceding upon receipt of an
undertaking by or on behalf of such Company Indemnified Person to repay such
amount if it shall ultimately be determined that he is not entitled to be
indemnified by the Company as authorized in the Declaration. The directors and
officers of the Company and the Regular Trustees are covered by insurance
policies indemnifying them against certain liabilities, including certain
liabilities arising under the Securities Act, which might be incurred by them in
such capacities and against which they cannot be indemnified by the Company or
the Williams Trusts. Any agents, dealers or underwriters who execute any of the
agreements filed as Exhibit 1.1 to this Registration Statement will agree to
indemnify the Company's directors and their officers and the Williams Trustees
who signed the Registration Statement against certain liabilities that may arise
under the Securities Act with respect to information furnished to the Company or
any of the Williams Trusts by or on behalf of any such indemnifying party.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENTS.
(a) Exhibits
<TABLE>
<C> <S> <C>
**1.1 -- Form of Underwriting Agreement for Trust Preferred Securities
*1.2 -- Form of Underwriting Agreement (filed as Exhibit 1.1 to the Form S-3 Registration
Statement No. 33-33294 filed February 2, 1990).
*1.3 -- Form of Distribution Agreement (filed as Exhibit 1.2 to the Form S-3 Registration
Statement No. 33-33294 filed February 2, 1990).
*4.1 -- Form of Senior Debt Indenture (filed as Exhibit 4.1 to the Form S-3 Registration
Statement No. 33-33294 filed February 2, 1990).
</TABLE>
II-2
<PAGE> 85
<TABLE>
<C> <S> <C>
*4.2 -- Form of Subordinated Debt Indenture (filed as Exhibit 4.2 to the S-3 Registration
Statement No. 33-33294 filed February 2, 1990).
*4.3 -- Form of Floating Rate Senior Note (filed as Exhibit 4.3 to the S-3 Registration
Statement No. 33-33294 filed February 2, 1990).
*4.4 -- Form of Fixed Rate Senior Note (filed as Exhibit 4.4 to the S-3 Registration
Statement No. 33-33294 filed February 2, 1990).
*4.5 -- Form of Floating Rate Subordinated Note (filed as Exhibit 4.5 to the S-3
Registration Statement No. 33-33294 filed February 2, 1990).
*4.6 -- Form of Fixed Rate Subordinated Note (filed as Exhibit 4.6 to the S-3 Registration
Statement No. 33-33294 filed February 2, 1990).
*4.7 -- Form of Debt Warrant Agreement (filed as Exhibit 4.7 to the Form S-3 Registration
Statement No. 33-33294 filed February 2, 1990).
*4.8 -- Form of Stock Warrant Agreement (filed as Exhibit 4.8 to the Form S-3 Registration
Statement No. 33-49835 filed July 27, 1993).
*4.9 -- Restated Certificate of Incorporation of the Company (filed as Exhibit 4(a) to
Form 8-B Registration Statement filed August 20, 1987).
*4.10 -- Certificate of designation with respect to $2.21 Cumulative Preferred Stock (filed
as Exhibit 4.3 to the Registration Statement on Form S-3 filed August 19, 1992).
*4.11 -- Certificate of Increase of Authorized Number of Shares of Series A Junior
Participating Preferred Stock (filed as Exhibit 3(c) to Form 10-K for the year
ended December 31, 1988).
*4.12 -- Amended and Restated Rights Agreement, dated as of February 6, 1996, between the
Company and First Chicago Trust Company of New York (filed as Exhibit 4 to Form
8-K, dated January 24, 1996).
*4.13 -- By-laws of the Company (filed as Exhibit 4(b) to Form 8-B Registration Statement,
filed August 20, 1987).
**4.14 -- U.S. $1,000,000,000 Credit Agreement, dated as of December 20, 1996, among the
Company and the lenders named therein and Citibank, N.A., as agent.
*4.15 -- Form of Senior Debt Indenture between the Company and Chemical Bank,
Trustee,relating to the 10 1/4% Debentures, due 2020; the 9 3/8% Debentures, due
2021; the 8 1/4% Notes, due 1998; and Medium-Term Notes (8.50%-9.31%), due 1996
through 2001; the 7 1/2% Notes, due 1999, and the 8 7/8% Debentures, due 2012
(filed as Exhibit 4.1 to Form S-3 Registration Statement No. 33-33294, filed
February 2, 1990).
**4.16 -- Certificate of Trust of Williams Capital I
**4.17 -- Certificate of Trust of Williams Capital II
**4.18 -- Form of Amended and Restated Declaration of Trust for Williams Capital I
**4.19 -- Form of Amended and Restated Declaration of Trust for Williams Capital II
**4.20 -- Form of Indenture between The Williams Companies, Inc. and The Chase Manhattan
Bank, as Trustee
**4.21 -- Form of Preferred Security (included in Exhibit 4.22)
**4.22 -- Form of Common Security (included in Exhibit 4.23)
**4.23 -- Form of Guarantee with respect to the Preferred Securities of Williams Capital I
**4.24 -- Form of Guarantee with respect to the Preferred Securities of Williams Capital II
**4.25 -- Form of Junior Subordinated Debt Securities (included in Exhibit 4.24)
**5.1 -- Opinion of Morris, James, Hitchens & Williams
**8.1 -- Opinion of Davis Polk & Wardwell
</TABLE>
II-3
<PAGE> 86
<TABLE>
<C> <S> <C>
**12.1 -- Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock
Dividends of The Williams Companies, Inc.
23.1 -- Consent of Ernst & Young LLP, Independent Certified Public Accountants
**23.2 -- Consent of Morris, James, Hitchens & Williams (included in Exhibit 5.1)
**23.3 -- Consent of Davis Polk & Wardwell (included in Exhibit 8.1)
24.1 -- Powers of Attorney of certain directors
**25.1 -- Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The
Chase Manhattan Bank, as Trustee under the Indenture for Junior Subordinated
Debentures
**25.2 -- Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The
Chase Manhattan Bank, as Trustee under the Declaration of Trust of Williams
Capital I
**25.3 -- Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The
Chase Manhattan Bank, as Trustee under the Declaration of Trust of Williams
Capital II
**25.4 -- Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The
Chase Manhattan Bank, as Guarantee Trustee under the Preferred Securities
Guarantee of The Williams Companies, Inc. for the benefit of the holders of
Preferred Securities of Williams Capital I
**25.5 -- Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The
Chase Manhattan Bank, as Guarantee Trustee under the Preferred Securities
Guarantee of The Williams Companies, Inc. for the benefit of holders of Preferred
Securities of Williams Capital II
**25.6 -- Statement of Eligibility and Qualification under the Trust Indenture Act of 1939,
as amended, of the Chase Manhattan Bank as Trustee under the Senior Debt Indenture
**25.7 -- Statement of Eligibility and Qualification under the Trust Indenture Act of 1939,
as amended, of the Chase Manhattan Bank, as Trustee under the Subordinated Debt
Indenture.
</TABLE>
- ---------------
* Each such exhibit has heretofore been filed with the Securities and Exchange
Commission as part of the filing indicated and is incorporated herein by
reference.
** To be filed by Amendment.
ITEM 17. UNDERTAKING.
The undersigned Registrants hereby undertake:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement;
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) 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) that, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement;
(iii) 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; provided, however, that the undertakings set forth in
paragraphs (i) and (ii) above do not apply if the information required
to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by The Williams Companies, Inc.
pursuant to Section 13 or Section 15(d) of the Exchange Act of 1934, as
amended (the "Exchange Act") that are incorporated by reference in this
Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new Registration Statement relating to the securities
II-4
<PAGE> 87
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.
The undersigned Registrants hereby undertake that, for purposes of
determining any liability under the Securities Act, each filing of The Williams
Companies Inc.'s Annual Report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") (and where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 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.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrants pursuant to the provisions referred to in Item 15 (other than the
insurance policies referred to therein), or otherwise, the Registrants have been
advised that, in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrants of expenses
incurred or paid by a director, officer or controlling person of the Registrants
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 Registrants will, unless in the opinion of their counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
The undersigned Registrants hereby undertake that:
(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of a
registration statement in reliance upon Rule 430A and contained in the form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of the
registration statement as of the time it was declared effective.
(2) For the purposes of determining any liability under the Securities
Act each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-5
<PAGE> 88
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, The Williams
Companies, Inc. hereby certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Tulsa, State of Oklahoma, on the 31st day of
January, 1997.
THE WILLIAMS COMPANIES, INC.
By /s/ JACK D. MCCARTHY
------------------------------------
Name: Jack D. McCarthy
Title: Senior Vice
President -- Finance
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on the 31st day of January, 1997.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- -------------------------------------------- --------------------------------------------
<S> <C>
* Chairman of the Board, President, Chief
- -------------------------------------------- Executive Officer (Principal Executive
Keith E. Bailey Officer) and Director
* Senior Vice President -- Finance (Principal
- -------------------------------------------- Financial Officer)
Jack D. McCarthy
* Controller (Principal Accounting Officer)
- --------------------------------------------
Gary R. Belitz
* Director
- --------------------------------------------
Glenn A. Cox
* Director
- --------------------------------------------
Thomas H. Cruikshank
* Director
- --------------------------------------------
Patricia L. Higgins
* Director
- --------------------------------------------
Robert J. LaFortune
* Director
- --------------------------------------------
James C. Lewis
* Director
- --------------------------------------------
Jack A. MacAllister
* Director
- --------------------------------------------
James A. McClure
* Director
- --------------------------------------------
Peter C. Meinig
</TABLE>
II-6
<PAGE> 89
<TABLE>
<CAPTION>
SIGNATURE TITLE
- -------------------------------------------- --------------------------------------------
<S> <C>
* Director
- --------------------------------------------
Kay A. Orr
* Director
- --------------------------------------------
Gordon R. Parker
* Director
- --------------------------------------------
Joseph H. Williams
*By: /s/ SHAWNA BARNARD
- --------------------------------------------
Attorney-in-Fact
</TABLE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Williams
Capital I and Williams Capital II each hereby certifies that it has reasonable
grounds to believe that it meets all of the requirements for filing on Form S-3
and has duly caused this Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Tulsa, State of
Oklahoma, on the 31st day of January, 1997.
WILLIAMS CAPITAL I
By: /s/ JACK D. MCCARTHY
------------------------------------
Jack D. McCarthy, as Trustee
By: /s/ JAMES G. IVEY
------------------------------------
James G. Ivey, as Trustee
WILLIAMS CAPITAL II
By: /s/ JACK D. MCCARTHY
------------------------------------
Jack D. McCarthy, as Trustee
By: /s/ JAMES G. IVEY
------------------------------------
James G. Ivey, as Trustee
II-7
<PAGE> 90
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION OF EXHIBITS PAGE
- ------- ---------------------------------------------------------------------- -------------
<C> <C> <S> <C>
*1.1 -- Form of Underwriting Agreement for Trust Preferred Securities
*1.2 -- Form of Underwriting Agreement (filed as Exhibit 1.1 to the Form S-3
Registration Statement No. 33-33294 filed February 2, 1990).
*1.3 -- Form of Distribution Agreement (filed as Exhibit 1.2 to the Form S-3
Registration Statement No. 33-33294 filed February 2, 1990).
*4.1 -- Form of Senior Debt Indenture (filed as Exhibit 4.1 to the Form S-3
Registration Statement No. 33-33294 filed February 2, 1990).
*4.2 -- Form of Subordinated Debt Indenture (filed as Exhibit 4.2 to the S-3
Registration Statement No. 33-33294 filed February 2, 1990).
*4.3 -- Form of Floating Rate Senior Note (filed as Exhibit 4.3 to the S-3
Registration Statement No. 33-33294 filed February 2, 1990).
*4.4 -- Form of Fixed Rate Senior Note (filed as Exhibit 4.4 to the S-3
Registration Statement No. 33-33294 filed February 2, 1990).
*4.5 -- Form of Floating Rate Subordinated Note (filed as Exhibit 4.5 to the
S-3 Registration Statement No. 33-33294 filed February 2, 1990).
*4.6 -- Form of Fixed Rate Subordinated Note (filed as Exhibit 4.6 to the S-3
Registration Statement No. 33-33294 filed February 2, 1990).
*4.7 -- Form of Debt Warrant Agreement (filed as Exhibit 4.7 to the Form S-3
Registration Statement No. 33-33294 filed February 2, 1990).
*4.8 -- Form of Stock Warrant Agreement (filed as Exhibit 4.8 to the Form S-3
Registration Statement No. 33-49835 filed July 27, 1993).
*4.9 -- Restated Certificate of Incorporation of the Company (filed as Exhibit
4(a) to Form 8-B Registration Statement filed August 20, 1987).
*4.10 -- Certificate of designation with respect to $2.21 Cumulative Preferred
Stock (filed as Exhibit 4.3 to the Registration Statement on Form S-3
filed August 19, 1992).
*4.11 -- Certificate of Increase of Authorized Number of Shares of Series A
Junior Participating Preferred Stock (filed as Exhibit 3(c) to Form
10-K for the year ended December 31, 1988).
*4.12 -- Amended and Restated Rights Agreement, dated as of February 6, 1996,
between the Company and First Chicago Trust Company of New York (filed
as Exhibit 4 to Form 8-K, dated January 24, 1996).
*4.13 -- By-laws of the Company (filed as Exhibit 4(b) to Form 8-B Registration
Statement, filed August 20, 1987).
**4.14 -- U.S. $1,000,000,000 Credit Agreement, dated as of December 20, 1996,
among the Company and the lenders named therein and Citibank, N.A., as
agent.
*4.15 -- Form of Senior Debt Indenture between the Company and Chemical Bank,
Trustee, relating to the 10 1/4% Debentures, due 2020; the 9 3/8%
Debentures, due 2021; the 8 1/4% Notes, due 1998; and Medium-Term
Notes (8.50%-9.31%), due 1996 through 2001; the 7 1/2% Notes, due
1999, and the 8 7/8% Debentures, due 2012 (filed as Exhibit 4.1 to
Form S-3 Registration Statement No. 33-33294, filed February 2, 1990).
**4.16 -- Certificate of Trust of Williams Capital I
**4.17 -- Certificate of Trust of Williams Capital II
</TABLE>
<PAGE> 91
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION OF EXHIBITS PAGE
- ------- ---------------------------------------------------------------------- -------------
<C> <C> <S> <C>
**4.18 -- Form of Amended and Restated Declaration of Trust for Williams Capital
I
**4.19 -- Form of Amended and Restated Declaration of Trust for Williams Capital
II
**4.20 -- Form of Indenture between The Williams Companies, Inc. and The Chase
Manhattan Bank, as Trustee
**4.21 -- Form of Preferred Security (included in Exhibit 4.22)
**4.22 -- Form of Common Security (included in Exhibit 4.23)
**4.23 -- Form of Guarantee with respect to the Preferred Securities of Williams
Capital I
**4.24 -- Form of Guarantee with respect to the Preferred Securities of Williams
Capital II
**4.25 -- Form of Junior Subordinated Debt Securities (included in Exhibit 4.24)
**5.1 -- Opinion of Morris, James, Hitchens & Williams
**8.1 -- Opinion of Davis Polk & Wardwell
**12.1 -- Computation of Ratio of Earnings to Combined Fixed Charges and
Preferred Stock Dividends of The Williams Companies, Inc.
23.1 -- Consent of Ernst & Young LLP, Independent Certified Public Accountants
**23.2 -- Consent of Morris, James, Hitchens & Williams (included in Exhibit
5.1)
**23.3 -- Consent of Davis Polk & Wardwell (included in Exhibit 8.1)
24.1 -- Powers of Attorney of certain directors
**25.1 -- Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Chase Manhattan Bank, as Trustee under the Indenture
for Junior Subordinated Debentures
**25.2 -- Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Chase Manhattan Bank, as Trustee under the Declaration
of Trust of Williams Capital I
**25.3 -- Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Chase Manhattan Bank, as Trustee under the Declaration
of Trust of Williams Capital II
</TABLE>
<PAGE> 92
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION OF EXHIBITS PAGE
- ------- ---------------------------------------------------------------------- -------------
<C> <C> <S> <C>
**25.4 -- Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Chase Manhattan Bank, as Guarantee Trustee under the
Preferred Securities Guarantee of The Williams Companies, Inc. for the
benefit of the holders of Preferred Securities of Williams Capital I
**25.5 -- Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Chase Manhattan Bank, as Guarantee Trustee under the
Preferred Securities Guarantee of The Williams Companies, Inc. for the
benefit of holders of Preferred Securities of Williams Capital II
**25.6 -- Statement of Eligibility and Qualification under the Trust Indenture
Act of 1939, as amended, of the Chase Manhattan Bank as Trustee under
the Senior Debt Indenture
**25.7 -- Statement of Eligibility and Qualification under the Trust Indenture
Act of 1939, as amended, of the Chase Manhattan Bank, as Trustee under
the Subordinated Debt Indenture.
</TABLE>
- ---------------
* Each such exhibit has heretofore been filed with the Securities and Exchange
Commission as part of the filing indicated and is incorporated herein by
reference.
** To be filed by Amendment.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3, No. 333- ), and related Prospectus of
The Williams Companies, Inc. for the registration of preferred securities and to
the incorporation by reference therein of our report dated February 9, 1996,
with respect to the consolidated financial statements and schedules of The
Williams Companies, Inc. included in its Annual Report (Form 10-K) for the year
ended December 31, 1995, filed with the Securities and Exchange Commission.
ERNST & YOUNG LLP
Tulsa, Oklahoma
January 31, 1997
<PAGE> 1
EXHIBIT 24.1
THE WILLIAMS COMPANIES, INC.
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each of the undersigned individuals, in
their capacity as a director or officer, or both, as hereinafter set forth below
their signature, of THE WILLIAMS COMPANIES, INC., a Delaware corporation
("Williams"), does hereby constitute and appoint WILLIAM G. VON GLAHN, DAVID M.
HIGBEE and SHAWNA L. BARNARD their true and lawful attorneys and each of them
(with full power to act without the others) their true and lawful attorneys for
them and in their name and in their capacity as a director or officer, or both,
of Williams, as hereinafter set forth below their signature, to sign a
registration statement on Form S-3 for the registration under the Securities Act
of 1933, as amended, of shares of Preferred Stock of one or more business trusts
to be formed by Williams such Preferred Stock having a maximum aggregate initial
public offering price not to exceed $200,000,000, and any and all amendments and
post-effective amendments to said registration statement and any and all
instruments necessary or incidental in connection therewith; and
THAT the undersigned Williams does hereby constitute and appoint WILLIAM G.
VON GLAHN, DAVID M. HIGBEE and SHAWNA L. BARNARD its true and lawful attorneys
and each of them (with full power to act without the others) its true and lawful
attorney for it and in its name and on its behalf to sign said registration
statement and any and all amendments and post-effective amendments thereto and
any and all instruments necessary or incidental in connection therewith.
Each of said attorneys shall have full power of substitution and
resubstitution, and said attorneys or any of them or any substitute appointed by
any of them hereunder shall have full power and authority to do and perform in
the name and on behalf of each of the undersigned, in any and all capacities,
every act whatsoever requisite or necessary to be done in the premises, as fully
to all intents and purposes as each of the undersigned might or could do in
person, the undersigned hereby ratifying and approving the acts of said
attorneys or any of them or of any such substitute pursuant hereto.
<PAGE> 2
IN WITNESS WHEREOF, the undersigned have executed this instrument, all as
of the 26th day of January, 1997.
<TABLE>
<S> <C>
/s/ KEITH E. BAILEY /s/ JACK D. MCCARTHY
- --------------------------------------------- ---------------------------------------------
Keith E. Bailey Jack D. McCarthy
Chairman of the Board, Senior Vice President
President and (Principal Financial Officer)
Chief Executive Officer
(Principal Executive Officer)
/s/ GARY R. BELITZ
- ---------------------------------------------
Gary R. Belitz
Controller
(Principal Accounting Officer)
/s/ GLENN A. COX /s/ THOMAS H. CRUIKSHANK
- --------------------------------------------- ---------------------------------------------
Glenn A. Cox Thomas H. Cruikshank
Director Director
/s/ PATRICIA L. HIGGINS /s/ ROBERT J. LAFORTUNE
- --------------------------------------------- ---------------------------------------------
Patricia L. Higgins Robert J. LaFortune
Director Director
/s/ JAMES C. LEWIS /s/ JACK A. MACALLISTER
- --------------------------------------------- ---------------------------------------------
James C. Lewis Jack A. MacAllister
Director Director
/s/ JAMES A. MCCLURE /s/ PETER C. MEINIG
- --------------------------------------------- ---------------------------------------------
James A. McClure Peter C. Meinig
Director Director
/s/ KAY A. ORR /s/ GORDON R. PARKER
- --------------------------------------------- ---------------------------------------------
Kay A. Orr Gordon R. Parker
Director Director
/s/ JOSEPH H. WILLIAMS
- ---------------------------------------------
Joseph H. Williams
Director
</TABLE>
THE WILLIAMS COMPANIES, INC.
By /s/ WILLIAM G. VON GLAHN
----------------------------------
William G. von Glahn
Senior Vice President
ATTEST:
<TABLE>
<S> <C>
/s/ DAVID M. HIGBEE
- ---------------------------------------------
David M. Higbee
Secretary
</TABLE>
