As filed with the Securities and Exchange Commission on , 1994
Registration No. 33-. . .. . . . .
SECURITIES AND EXCHANGE COMMISSION
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
VALERO ENERGY CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 74-1244795
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
530 McCullough Avenue
San Antonio, Texas 78215
(210) 246-2000
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
RAND C. SCHMIDT, ESQ.
Secretary
530 McCullough Avenue
San Antonio, Texas 78215
(210) 246-2000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copy to:
R. JOEL SWANSON, ESQ.
Baker & Botts, L.L.P.
910 Louisiana
One Shell Plaza
Houston, Texas 77002-4995
Approximate date of commencement of proposed sale to the
public: From time to time after the effective date of this
Registration Statement.
If the only securities being registered on this Form are
being offered pursuant to dividend or interest reinvestment plans,
please check the following box.
If any of the securities being registered on this Form are
to be offered on a delayed or continuous basis pursuant to Rule 415
under the Securities Act of 1933, other than securities offered
only in connection with dividend or interest reinvestment plans,
check the following box. (The box is checked.)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed
Proposed maximum
Title of each maximum aggregate Amount of
class of securities Amount to be offering price offering registration
to be registered registered<F1> per unit<F2> price<F2> fee<F1>
<S> <C> <C> <C> <C>
Debt Securities $250,000,000<F3> 100%<F4> $250,000,000 $86,207
<FN>
<F1>
Does not include $34,000,000 aggregate principal amount of
the Registrant's Debt Securities that were previously registered
under its Registration Statement on Form S-3 (Registration No.
33-45457) and remain unsold as of the date hereof. As permitted by Rule
429 under the Securities Act of 1933, the Prospectus filed as part of
this Registration Statement on Form S-3 will also be used in
connection with the offering of such previously registered and
unsold Debt Securities and the Debt Securities covered hereby.
The registration fee specified in the table has been computed on
the basis of $250,000,000 principal amount of Debt Securities
covered hereby, prior to including the previously registered and
unsold Debt Securities referred to above. The requisite
registration fee with respect to such previously registered and
unsold Debt Securities was paid upon the filing of the
Registration Statement on Form S-3 (Registration No. 33-45457).
<F2>
Estimated solely for the purpose of calculating the registration fee.
<F3>
If any Debt Securities are issued at an original issue
discount, such greater amount as shall result in the Debt
Securities having an aggregate maximum public offering price of
$250,000,000.
<F4>
Unless otherwise specified in a Prospectus Supplement.
</FN>
</TABLE>
The registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective
date until the registrant shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, or until the Registration Statement shall
become effective on such date as the Commission, acting pursuant
to said Section 8(a), may determine.
The Prospectus in this Registration Statement also relates to
Registration Statement No. 33-45457.
<PAGE>
Subject to completion, dated November 10, 1994
PROSPECTUS $284,000,000
[Logo] VALERO ENERGY CORPORATION
Debt Securities
Valero Energy Corporation (the "Company") may from time to
time offer or solicit offers to purchase its unsecured debt
securities consisting of debentures, notes or other unsecured
evidences of indebtedness in one or more series ("Debt
Securities"), having an aggregate initial offering price not to
exceed US$284,000,000 at prices and on terms to be determined at
the time of offering.
All specified terms of the offering and sale of the Debt
Securities will be set forth in one or more supplements to this
Prospectus ("Prospectus Supplement"), including the title,
aggregate principal amount, denominations, maturity, rate of
interest (if any, which may be fixed or variable) or method of
calculation thereof, and time of payment of any interest, the
coin or currency in which principal, premium and interest (if any)
will be payable, any terms for redemption or extension of maturity at
the option of the Company or the holder, any terms for sinking
fund payments, any conversion or exchange rights, any listing on a
securities exchange, the initial public offering price and any
other terms in connection with the offering and sale of the Debt
Securities. The Debt Securities will rank equally with all other
unsecured, unsubordinated indebtedness of the Company. See
"Description of Debt 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.
The Debt Securities may be sold directly to purchasers or
through underwriters, dealers or agents. The Prospectus
Supplement will set forth the names of any underwriters, dealers or agents
involved in the sale of the Debt Securities, the amounts, if any,
to be purchased by underwriters, and the compensation of such
underwriters, dealers or agents. The net proceeds to the Company
from sales of Debt Securities will be set forth in the Prospectus
Supplement and will be the purchase price of the Debt Securities
less attributable issuance expenses, including underwriters',
dealers' or agents' compensation arrangements. See "Plan of
Distribution" for indemnification arrangements for underwriters,
dealers and agents.
This Prospectus may not be used to consummate sales of Debt
Securities unless accompanied by a Prospectus Supplement.
, 1994.
<PAGE>
[The following language shall appear in red ink along the left
margin of the outside front cover page of the
Prospectus:]
Information contained herein is subject to completion or
amendment.
A registration statement relating to these
securities has been filed with the Securities and Exchange
Commission. These securities may not be sold nor may offers to
buy be accepted prior to the time the Registration Statement becomes
effective. This Prospectus shall not constitute an offer to sell
or the solicitation of an offer to buy nor shall there be any
sale of these securities in any state in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such state.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith, files reports, proxy
statements, and other information with the Securities and
Exchange Commission (the "Commission"). The reports, proxy statements,
and other information filed by the Company can be inspected and
copied at the Public Reference Room of the Commission at Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the public
reference facilities maintained by the Commission at Seven World
Trade Center, Suite 1300, New York, New York 10048 and at Room
1400, Northwestern Atrium Center, 500 West Madison Street,
Chicago, Illinois 60661. Copies of the materials can be obtained at
prescribed rates from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549.
Documents filed by the Company can also be inspected at the
offices of the New York Stock Exchange, 20 Broad Street, New York, New
York 10005, on which exchange certain of the Company's securities are
listed.
This Prospectus constitutes a part of a Registration
Statement on Form S-3 (the "Registration Statement") filed by the Company
with the Commission under the Securities Act of 1933, as amended
(the "Securities Act"), relating to the securities offered
hereby. This Prospectus also relates to an earlier Registration Statement
on Form S-3 (Registration No. 33-45457, filed February 4, 1992).
This Prospectus omits certain of the information contained in the
Registration Statements, as permitted by the Commission's rules
and regulations, and reference is hereby made to each Registration
Statement and to the exhibits relating thereto for further
information with respect to the Company and the securities
offered hereby. Any statements contained herein concerning the
provisions of any document are not necessarily complete, and in each
instance reference is made to the copy of such document filed as an
exhibit to the Registration Statements or otherwise filed with the
Commission. Each such statement is qualified in its entirety by
such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company hereby incorporates into this Prospectus by
reference its Annual Report on Form 10-K for the year ended
December 31, 1993 (the "Form 10-K"), its Quarterly Reports on
Form 10-Q for the quarters ended March 31, 1994, June 30, 1994, and
September 30, 1994 and its Current Report on Form 8-K dated May
31, 1994.
All documents subsequently filed by the Company pursuant to
Section 13(a), 13(c), 14, or 15(d) of the Exchange Act,
subsequent to the date of this Prospectus and prior to the termination of
the offering made hereby, shall be deemed incorporated by reference
in this Prospectus and to be a part of this Prospectus from the date
of the filing of those 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 subsequently filed document which also is or is deemed to
be incorporated by reference herein modifies or supersedes that
statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part
of this Prospectus.
Any person receiving a copy of this Prospectus may obtain,
without charge, upon written or oral request, a copy of any of
the documents incorporated by reference herein, except for the
exhibits to those documents (other than the exhibits expressly
incorporated by reference into the information that this Prospectus
incorporates). Written requests should be directed to: Investor
Relations, Valero Energy Corporation, P.O. Box 500, San Antonio,
Texas 78292-0500 (telephone 210-246-2000).
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.
<PAGE>
THE COMPANY
The Company was incorporated under the laws of the State of
Delaware in 1955 and became a publicly held corporation in 1979.
Its principal executive offices are located at 530 McCullough
Avenue, San Antonio, Texas 78215 and its telephone number is
(210) 246-2000.
Through subsidiaries, the Company engages in three principal
businesses: petroleum refining, natural gas operations and
processing of natural gas for the extraction of natural gas
liquids ("NGLs"). The Company's subsidiary, Valero Refining Company,
owns a specialized petroleum refinery (the "Refinery") in Corpus
Christi, Texas, and engages in petroleum refining and marketing
operations. The Refinery can produce approximately 153,000
barrels per day of refined products, with gasoline and gasoline-related
products comprising approximately 85% of the Refinery's
throughput.
Through Valero Natural Gas Company ("VNGC") and its
subsidiaries, the Company owns and operates natural gas pipeline
systems with approximately 8,000 miles of mainlines, lateral
lines and gathering lines principally serving Texas intrastate markets.
The Company also markets gas throughout the United States and
into Mexico and provides gas transportation services to third parties.
Through VNGC, the Company also owns and operates 11 natural gas
processing plants in Texas which extract NGLs comprised of
ethane, propane, butanes and natural gasoline. The Company's plants
process approximately 1.3 billion cubic feet of gas per day.
VNGC's natural gas and NGL operations are conducted
primarily through Valero Natural Gas Partners, L.P. and its subsidiaries
(the "Natural Gas Partnership"). Effective May 31, 1994, the Company
acquired through a merger (the "Merger") the approximate 51%
effective equity interest in the Natural Gas Partnership
previously owned by the public. As a result of the Merger, the Company
changed its method of accounting for its investment in the
Natural Gas Partnership from the equity method to the full consolidation
method as of May 31, 1994.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth for the periods indicated the
ratio of earnings to fixed charges for the Company. The ratio of
earnings to fixed charges is computed by dividing (i) the sum of
pretax income, amortization of previously capitalized interest,
distributions in excess of/(less than) equity in earnings of the
Natural Gas Partnership (prior to the Merger) and fixed charges
(excluding capitalized interest) by (ii) fixed charges. Fixed
charges consist of total interest, whether expensed or
capitalized, amortization of debt expense and one-third of rents, which is
deemed representative of the interest portion of rental expense.
<TABLE>
<CAPTION>
Nine Months Ended Year Ended
September 30, 1994 December 31, 1993 Year Ended December 31,
Pro Forma<F1> Historical Pro Forma<F1> Historical 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to
Fixed Charges. 1.35x 2.00x 1.62x 2.04x 3.36x 4.00x 5.75x 3.50x
<FN>
<F1>
Assuming that the Company owned 100% of the Natural Gas
Partnership during the period indicated.
</FN>
</TABLE>
<PAGE>
USE OF PROCEEDS
The Debt Securities may be offered by the Company from time
to time when the Company determines that market conditions are
favorable. Unless otherwise indicated in the applicable
Prospectus Supplement, the net proceeds from the sale of the Debt Securities
will be added to the Company's funds and used for general
corporate purposes, including the repayment of existing indebtedness,
financing of capital projects and additions to working capital.
The Company expects that it will raise additional funds from time
to time through equity or debt financings, including borrowings
under bank credit agreements.
DESCRIPTION OF THE DEBT SECURITIES
The following description of the Debt Securities sets forth
certain general terms and provisions of the Debt Securities to
which any Prospectus Supplement may relate. The particular terms
of the Debt Securities offered by any Prospectus Supplement (the
"Offered Debt Securities") and the extent, if any, to which these
general provisions do not apply to the Offered Debt Securities
will be described in the Prospectus Supplement relating to the Offered
Debt Securities. The Offered Debt Securities may contain any
terms and provisions not inconsistent with the Indenture (hereinafter
defined).
The Debt Securities to which this Prospectus relates will be
issued under an Indenture, dated as of March 30, 1992, as
supplemented and amended by a First Supplemental Indenture (the
"First Supplemental Indenture") dated as of November ___, 1994
(the "Indenture"), between the Company and Bankers Trust Company, as
trustee (the "Trustee"). The Indenture is filed as an exhibit to
the Registration Statement. The following summary of certain
provisions of the Indenture do not purport to be complete and are
subject to and are qualified in their entirety by reference to
all the provisions of the Indenture, including its definitions of
certain capitalized terms used herein. Numerical references in
parentheses below are to sections in the Indenture.
General
The Indenture does not limit the amount of Debt Securities
that may be issued thereunder. Debt Securities may be issued
under the Indenture from time to time in one or more series up to the
aggregate principal amount that may be authorized by the Company.
All Debt Securities will be unsecured and will rank pari passu
with all other unsecured, unsubordinated indebtedness of the Company.
Unless otherwise specified in the Prospectus Supplement, the
principal and any premium and interest on the Debt Securities
will be payable in U.S. Dollars.
The Company is primarily a holding company and the Debt
Securities will not be guaranteed by any of the Company's
subsidiaries. Thus, the ability of the Company to pay the
principal of and any premium and interest on the Debt Securities
is largely dependent upon the receipt by the Company of dividends or
other payments from its subsidiaries. Certain of the Company's
subsidiaries are parties to agreements containing net worth
maintenance covenants or other provisions that restrict the
subsidiaries ability to make distributions to the Company. None
of the Company's subsidiaries is prohibited by the Indenture from
entering into agreements limiting its ability to make
distributions to the Company. Furthermore, because the Company's
subsidiaries are incorporated in Delaware, they are subject to the
restrictions of Delaware law that permit a corporation to pay dividends
to its stockholders only out of its surplus or out of its net profits
for the current and/or preceding fiscal year. The Company does not
believe, however, that existing contractual or statutory
restrictions should reduce the level of dividends and other
payments that the Company is able to receive from its
subsidiaries below the level necessary for the Company to meet all of
its debt service obligations, including obligations with respect to any
series of Offered Debt Securities.
The rights of creditors of the Company upon its liquidation,
reorganization, or otherwise are necessarily subject to the prior
claims of lenders and other creditors of the Company's
subsidiaries, except to the extent that claims of the Company
itself as a creditor of any of its subsidiaries may be
recognized. As a result, the Debt Securities will be structurally
subordinated to any indebtedness of the Company's subsidiaries. Except as
described below, the Indenture does not limit the amount of other
indebtedness or securities that may be issued by the Company or
its subsidiaries.
Reference is made to the Prospectus Supplement regarding the
particular series of Offered Debt Securities offered thereby for
the following terms: (i) the designation, aggregate principal
amount, and authorized denominations of the Offered Debt
Securities; (ii) the purchase price of the Offered Debt
Securities (expressed as a percentage of the principal amount thereof);
(iii) the date or dates on which the Offered Debt Securities will
mature; (iv) the rate or rates, if any (which may be fixed or variable),
at which the Offered Debt Securities will bear interest or the
method by which the rate or rates will be determined; (v) the dates on
which any interest will be payable and the record dates for
payment of interest; (vi) the coin or currency in which payment of the
principal of and any premium or interest on the Offered Debt
Securities will be payable; (vii) the terms of any mandatory or
optional redemption (including any sinking fund) or any
obligation of the Company to repurchase Offered Debt Securities; (viii) the
terms of any option of the Company to extend the stated maturity
of the Offered Debt Securities; (ix) whether the Offered Debt
Securities will be issued in whole or in part in the form of one
or more temporary or permanent global Debt Securities ("Global
Securities") and, if so, the identity of any depositary for the
Global Security or Securities; and (x) any additional provisions
or specific terms not inconsistent with the Indenture applicable to
the series of Offered Debt Securities, including any additional
events of default or specific covenants with respect to the
Offered Debt Securities.
Debt Securities may be presented for exchange, and
registered Debt Securities may be presented for transfer, in the manner
prescribed in the Indenture, the Debt Securities and the
Prospectus Supplement. No service fee will be charged for any registration
of transfer or exchange of the Debt Securities, but the Company may
require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith (Section
305).
Principal, premium and interest (if any) will be payable at
the office or agency of the Company designated for that purpose
in San Antonio, Texas (initially at the offices of the Company), or
in New York City (initially at the office of the Trustee). Unless
otherwise indicated in the Prospectus Supplement, the Company may
act as paying agent for payments of interest (other than interest
payable at the stated maturity of the Debt Securities) on the
Debt Securities in San Antonio, Texas. Payments of interest (other
than interest payable at the stated maturity of the Debt
Securities) may be made at the option of the Company by check
mailed to the registered holders. Upon written notice to the
Trustee on or before the record date for any interest payment,
the interest payment may be made by wire transfer to an account
designated by a registered holder of $1 million or more in
aggregate principal amount of Debt Securities of a series
pursuant to arrangements satisfactory to the Trustee and the Company.
Interest, if any, will be payable on any interest payment date to
the persons in whose names the Debt Securities are registered at
the close of business on the record date (Sections 305, 307 and
1202). Specific details regarding the payment of principal and
any premium and interest on any series of Offered Debt Securities
will be stated in the Prospectus Supplement.
Unless otherwise indicated in the Prospectus Supplement
relating thereto, the Debt Securities will be issued only in
fully registered form, without coupons, in denominations of $1,000 or
any integral multiple thereof (Section 302). Some or all of the Debt
Securities may be issued as discounted Debt Securities (bearing
no interest or interest at a rate which at the time of issuance is
below market rates) to be sold at a substantial discount below
their stated principal amount. Federal income tax consequences
and other special considerations applicable to discounted Debt
Securities will be described in any Prospectus Supplement
relating thereto.
Neither the Indenture nor any Debt Securities will contain
any provision permitting the holders of the Debt Securities to
require prepayment in the event of a change in the management or control
of the Company, or in the event the Company enters into one or more
highly leveraged transactions, nor are any such events deemed to
be events of default under the terms of the Indenture or the Debt
Securities.
Global Securities
The Debt Securities of a series may be issued in whole or in
part in the form of one or more Global Securities that will be
deposited with or on behalf of a depositary located in the United
States (the "Depositary"). The Depositary and the specific
depositary arrangements with respect to any Debt Securities of a
series will be described in the Prospectus Supplement relating to
such series. The Company anticipates that the following
provisions will apply to all depositary arrangements.
Unless otherwise specified in an applicable Prospectus
Supplement, Debt Securities that are to be represented by a
Global Security to be deposited with or on behalf of the Depositary will
be represented by a Global Security registered in the name of the
Depositary or its nominee. Upon the issuance of a Global
Security in registered form, the Depositary for the Global Security will
credit, on its book-entry registration and transfer system, the
respective principal amounts of the Debt Securities represented
by the Global Security to the accounts of institutions that have
accounts with the Depositary or its nominee ("participants").
The accounts to be credited will be designated by the underwriters or
agents of the Debt Securities or by the Company, if the Debt
Securities are offered and sold directly by the Company.
Ownership of beneficial interests in the Global Securities will be limited
to participants or persons that may hold interests through
participants. Ownership of beneficial interests by participants
in the Global Securities will be shown on, and the transfer of that
ownership interest will be effected only through, records
maintained by the Depositary or its nominee for the Global
Security. Ownership of beneficial interests in Global Securities
by persons that hold through participants will be shown on, and
the transfer of that ownership interest within such participant will
be effected only through, records maintained by such participant.
The laws of some jurisdictions may require that certain purchasers of
securities take physical delivery of the securities in definitive
form. Such limits and laws may impair the ability to transfer
beneficial interests in a Global Security.
So long as the Depositary for a Global Security in
registered form, or its nominee, is the registered owner of the Global
Security, the Depositary or nominee, as the case may be, will be
considered the sole owner or holder of the Debt Securities
represented by the Global Security for all purposes under the
Indenture. Except as set forth below, owners of beneficial
interests in the Global Security will not be entitled to have
Debt Securities of the series represented by the Global Security
registered in their names, will not receive or be entitled to
receive physical delivery of Debt Securities of such series in
definitive form, and will not be considered the owners or holders
thereof under the Indenture.
Payment of principal of, premium and interest (if any) on
Debt Securities registered in the name of or held by a Depositary or
its nominee will be made to the Depositary or its nominee, as the
case may be, as the registered owner or the holder of the Global
Security representing the Debt Securities. Neither the Company,
the Trustee, any paying agent, nor the security registrar for the
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 a Global Security for the Debt
Securities, or for maintaining, supervising, or reviewing any
records relating to such beneficial ownership interests.
The Company expects that the Depositary for Debt Securities
of a series represented by a Global Security, upon receipt of any
payment of principal, premium, or interest in respect of a
permanent Global Security, will credit immediately the
participants' accounts with payments in amounts proportionate to
their respective beneficial interests in the principal amount of
the Global Security as shown on the records of the Depositary.
The Company also expects that payments by participants to owners of
beneficial interests in the Global Security will be governed by
standing instructions and customary practices, as is now the
customary practice with respect to securities held for the
accounts of customers in bearer form or registered in "street name," and
will be the responsibility of the participants. However, the
Company has no control over the practices of the Depositary or
the participants and there can be no assurance that these practices
will not change.
A Global Security may be transferred only as a whole by the
Depositary for the Global Security to a nominee of such
Depositary, or by a nominee of such Depositary to the Depositary or another
nominee of the Depositary, or by the Depositary or any nominee to
a successor of the Depositary or a nominee of the successor. If
a Depositary for Debt Securities of a series is unwilling or unable
to continue as Depositary and a successor Depositary is not
appointed by the Company within 90 days, the Company will issue
Debt Securities in definitive registered form in exchange for the
Global Security or Securities representing the Debt Securities.
In addition, the Company may at any time and in its sole discretion
determine not to have any Debt Securities in registered form
represented by one or more Global Securities and, in such event,
will issue Debt Securities in definitive form in exchange for the
Global Security or Securities representing the Debt Securities,
whereupon, an owner of a beneficial interest in a Global Security
will be entitled to physical delivery in definitive form of Debt
Securities of the series represented by the Global Security equal
in principal amount to its beneficial interest and to have the
Debt Securities registered in its name. (Section 304).
Certain Covenants of the Company
Limitations on Mortgages. The Indenture provides that
neither the Company nor any Subsidiary may create or assume any mortgage,
lien, pledge, security interest or other encumbrance ("Mortgage")
upon any of its assets or upon any stock or indebtedness of any
Subsidiary, whether now owned or hereafter acquired (all property
and assets of whatever kind or description being referred to
herein as "property"), without effectively providing that all Debt
Securities then outstanding and thereafter created under the
Indenture (together with, if the Company so determines, any other
indebtedness or obligation then existing and any other
indebtedness or obligation thereafter created ranking equally with the Debt
Securities) will be secured equally and ratably with (or prior
to) any Mortgage as long as such Mortgage is so secured. The
foregoing restriction does not apply to, among others:
(i) Mortgages securing all or part of the purchase
price of any property (or to refinance all or part of the purchase
price within 12 months of the acquisition of the property) or to secure
a loan made to enable the Company or a Subsidiary to acquire the
property described in the Mortgage;
(ii) Mortgages existing on any property at the time of
its acquisition by the Company or a Subsidiary, whether or not
assumed by the Company or a Subsidiary; Mortgages on property
acquired or constructed by the Company or a Subsidiary and
created not later than 12 months after the acquisition or completion of
construction or commencement of full operation of the property,
whichever is later; and Mortgages on any property with respect
to which the Company or a Subsidiary has made additions,
substantial repairs, alterations or improvements and created not
later than 12 months after completion thereof; provided, that
in the case of any Mortgage described in clause (i) above or this
clause (ii), the principal amount of the indebtedness secured
by such Mortgage, together with all other indebtedness secured
by a Mortgage on the property, does not exceed the purchase price
of the property acquired, the cost of the property constructed
or the cost of additions, repairs, alterations or improvements,
and, except as described in clause (xi) below, such Mortgage does
not extend to or cover any property other than the property
acquired, constructed, repaired, altered or improved;
(iii) Mortgages created or assumed by the Company or
a Subsidiary on any contract for the sale of any product or
service or any rights thereunder or any proceeds therefrom, including
accounts and other receivables, related to the operation or use
of any property acquired or constructed by the Company or a
Subsidiary and created not later than 12 months after the acquisition, or
completion of construction, or commencement of full operation of
the property, whichever is later;
(iv) Mortgages existing on any property of an entity
at the time it is acquired by the Company or a Subsidiary, whether
through merger, consolidation, purchase of assets or otherwise;
provided that, except as described in clause (xi) below, the
Mortgage does not extend to any other property of the Company or
its Subsidiaries;
(v) Mortgages incidental to the conduct of the
business of the Company or its Subsidiaries or the ownership of the
property of the Company and its Subsidiaries (including warehousemen's and
attorneys' liens, operators' liens, brokers' liens, landlords'
liens and liens granted in favor of partnerships or joint
ventures or the participants therein) that were not incurred in connection
with the borrowing of money (or as payment for property) or the
obtaining of advances or credit (other than trade credit,
including margin accounts with brokerage firms), and that do not materially
interfere with the conduct of the business of the Company and of
its Subsidiaries taken as a whole;
(vi) Mortgages on property of any Subsidiary to secure
obligations of the Subsidiary to the Company or to another
Subsidiary; provided that the obligation secured thereby is not
thereafter assigned, sold or otherwise transferred to a Person
other than the Company or a Subsidiary unless otherwise permitted
under the Indenture;
(vii) Mortgages on current assets of the Company or
a Subsidiary created to secure indebtedness and letter of credit
reimbursement obligations incurred in connection with the
extension of working capital financing;
(viii) Mortgages existing on any property of the
Company or any Subsidiary at the date of the Indenture;
(ix) Mortgages incurred in connection with the
borrowing of funds if, within 120 days following the date of such
borrowing, the funds are used to repay indebtedness in the same (or greater)
principal amount secured by other Mortgages (other than Mortgages
referred to in clause (vii) above) on property of the Company or
any Subsidiary having a fair market value at least equal to the
fair market value of the property that secures the new Mortgage;
(x) Mortgages incurred within 90 days (or any longer
period, not in excess of one year, as permitted by law) after
acquisition of the property subject to the Mortgage arising
solely in connection with certain transfers of tax benefits;
(xi) Mortgages on property constituting substitutions
or replacements for or accessions to property which is encumbered
pursuant to after-acquired property provisions of other permitted
Mortgages; and
(xii) Mortgages on any property of the Natural Gas
Partnership or any Subsidiary thereof existing as of the date of
the First Supplemental Indenture (or property constituting
substitutions or replacements for, or accessions to, property
that is encumbered pursuant to after-acquired property provisions of
the agreements in accordance with which such Mortgages were granted);
(xiii) renewals, refundings or extensions of any
Mortgage referred to in clauses (i), (ii), (iii), (iv), (viii),
(ix), (x), (xi) or (xii) above; provided that the principal
amount of the indebtedness secured is not increased and the Mortgage is
limited, except as provided in clause (xi) above, to the same
property that secured the prior Mortgage (Section 1205).
Limitations on Sale and Leaseback Transactions. The
Indenture provides that neither the Company nor any Subsidiary may enter
into any arrangement with any Person (other than the Company or a
Subsidiary) providing for the leasing to the Company or a
Subsidiary for a period of more than three years of any asset
that has been or is to be sold or transferred by the Company or the
Subsidiary to such Person or to any other Person (other than the
Company or a Subsidiary), and with respect to which the funds
have been or are to be advanced by the Person on the security of the
leased property (a "Sale and Leaseback Transaction"), unless
either (i) the Company or such Subsidiary would be entitled, pursuant to
the provisions described under "Limitations on Mortgages" above,
to incur debt secured by a Mortgage on the asset to be leased
without equally and ratably securing the Debt Securities, or (ii) the
Company during or immediately after the expiration of 90 days
after the effective date of the transaction applies to the voluntary
retirement of its funded debt an amount equal to the greater of
the net proceeds of the sale of the property leased in the
transaction or the fair value of the leased property at the time the
transaction was entered into, in each case net of the principal
amount of all Debt Securities delivered for retirement and
cancellation under the Indenture and the principal amount of
other funded debt voluntarily retired by the Company during such 90-day
period (Section 1206).
Exempted Transactions. Notwithstanding the foregoing, the
Company and any one or more Subsidiaries may, without securing
the Debt Securities, issue, assume, or guarantee debt secured by
Mortgages and enter into Sale and Leaseback Transactions that
would otherwise be subject to the foregoing restrictions in an
aggregate principal amount which, together with (i) all other such debt of
the Company and its Subsidiaries secured by Mortgages that would
otherwise be subject to the restrictions on the creation of
Mortgages described under "Limitations on Mortgages" above (not
including Mortgages permitted to be created under "Limitations on
Mortgages" above) and (ii) the aggregate Attributable Debt (as
defined below) in respect of Sale and Leaseback Transactions (not
including those permitted as described under "Limitations on Sale
and Leaseback Transactions" above), does not exceed, at the time
of incurrence thereof, 10% of Consolidated Net Tangible Assets (as
defined below) of the Company and its consolidated Subsidiaries
(Section 1207).
Certain Definitions. The term "Consolidated Net Tangible
Assets" at any date means the total assets shown on a
consolidated balance sheet of the Company and its Subsidiaries, prepared in
accordance with generally accepted accounting principles, less
(i) all current liabilities (other than current maturities of
long-term debt and notes payable), and (ii) goodwill and other intangible
assets included on such balance sheet.
The term "Attributable Debt" means (a) for any capitalized
lease obligations, the debt carried on the balance sheet in
accordance with generally accepted accounting principles, and (b)
for any operating leases, the total net amount of rent required
to be paid under such leases during the remaining term thereof
discounted at the rate of 1% per annum plus the weighted average
yield to maturity of all Debt Securities issued and outstanding
under the Indenture, compounded semi-annually.
The term "Subsidiary" means, with respect to any Person, (i)
a corporation of which at least a majority of the outstanding
stock having ordinary voting rights is owned or controlled directly or
indirectly by that Person or (ii) any other Person in which the
Person has directly or indirectly a greater than 50% equity
interest. Notwithstanding the foregoing, neither the Natural Gas
Partnership nor any Subsidiary thereof that may otherwise be
deemed a "Subsidiary" pursuant to the provisions of the foregoing
sentence shall be deemed a "Subsidiary" for any purposes of the Indenture
for any period prior to the date of the First Supplemental
Indenture to the Indenture.
Consolidation, Merger, Conveyance of Assets. The Indenture
provides that the Company may not consolidate with or merge into
any other Person or convey, transfer or lease its properties and
assets substantially as an entirety to any Person, unless (i) the
Person formed by the consolidation or into which the Company is
merged or the Person that acquires such assets is a corporation
organized under the laws of the United States or any State
thereof and such corporation expressly assumes the Company's obligations
under the Indenture and the Debt Securities issued thereunder,
(ii) immediately after giving effect to the transaction, no Event of
Default, and no event which, after notice or lapse of time or
both, would become an Event of Default, has happened and is continuing
and (iii) certain other conditions are met (Section 1001).
Events of Default
The following are "Events of Default" under the Indenture
with respect to Debt Securities of any series: (i) failure to pay
principal of or any premium on any Debt Security of that series
when due and payable; (ii) failure to pay any interest on any
Debt Security of that series when due and payable, and the
continuation of the default for 30 days; (iii) failure to deposit any sinking
fund payment or analogous obligation in respect of any Debt
Security of that series when due; (iv) failure to perform any
other covenant, or breach of any warranty, of the Company in the
Indenture (other than a covenant or warranty included in the
Indenture solely for the benefit of a series of Debt Securities
other than such series), continued for 60 days after written
notice is given or received as provided in the Indenture; (v) certain
events of bankruptcy, insolvency, or reorganization; (vi) failure
to pay at final maturity or upon the declaration of acceleration
of payment of indebtedness for borrowed money of the Company or any
Subsidiary in excess of $10 million (whether the indebtedness now
exists or is hereafter created) as a result of the occurrence of
one or more events of default as defined in any mortgages,
indentures, or instruments under which such indebtedness may have
been issued or by which the indebtedness may have been secured,
and the failure to pay is not cured or the acceleration is not
rescinded, annulled, or cured, in any case prior to the
expiration of 30 days after the date the failure to pay or acceleration
occurred; and (vii) any other Event of Default provided with
respect to Debt Securities of that series (Section 501). If any
Event of Default (except an Event of Default described in clause
(v) above) with respect to Debt Securities of any series at any
time outstanding occurs and is continuing, either the Trustee or
the holders of at least 25% in aggregate principal amount of the
outstanding Debt Securities of that series may declare the
principal amount (or, if the Debt Securities of that series are
discounted Debt Securities, such portion of the principal amount
as may be specified in the terms of that series) of all the Debt
Securities of that series to be due and payable immediately. If
an Event of Default with respect to Debt Securities of any series at
any time outstanding described in clause (v) above occurs and is
continuing, then the principal amount of all the Debt Securities
of such series will be immediately due and payable without any act
on the part of the Trustee or any holder. At any time after a
declaration or occurrence of acceleration with respect to Debt
Securities of any series has been made, but before a judgment or
decree based on acceleration has been obtained, the holders of a
majority in aggregate principal amount of outstanding Debt
Securities of that series may, under certain circumstances,
rescind and annul the acceleration (Section 502).
The Indenture provides that, subject to the duty of the
Trustee during the continuance of an Event of Default to act with
the required standard of care, the Trustee will be under no
obligation to exercise any of its rights or powers under the
Indenture at the request or direction of any of the holders
unless the holders have offered to the Trustee reasonable indemnity
(Section 603). Subject to such provisions for the
indemnification of the Trustee, the holders of a majority in aggregate
principal amount of the outstanding Debt Securities of any series will have
the right to 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, with respect to the
Debt Securities of that series (Section 512). The Company is
required to furnish the Trustee annually with a statement of the
performance by the Company of certain of its obligations under
the Indenture and of any default in such performance (Section 1208).
Modification and Waiver
The 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 in order to, among other things: (i) secure any Debt
Securities; (ii) evidence the assumption by a successor Person of
the obligations of the Company; (iii) add further covenants for
the protection of the holders or additional events of default; (iv)
cure any ambiguity or correct any inconsistency in the Indenture,
so long as such action will not adversely affect the interests of
the holders; (v) establish the form or terms of Debt Securities
of any series; and (vi) evidence the acceptance of appointment by a
successor trustee (Section 1101).
Modifications of and amendments to the Indenture may also be
made by the Company and the Trustee with the consent of the
holders of not less than a majority in aggregate principal amount of the
outstanding Debt Securities of each series affected by the
modification or amendment; provided that no such modification or
amendment may, without the consent of the holder of each
outstanding Debt Security affected thereby, (i) change the stated
maturity of the principal of or any installment of interest on
any Debt Security, (ii) reduce the principal amount of, or any
premium or interest on, any Debt Security, (iii) reduce the amount of
principal of discounted Debt Securities payable upon acceleration
of the stated maturity thereof, (iv) change the currency of
payment for any Debt Security, (v) impair the right to institute suit for
the enforcement of any payment with respect to any Debt Security,
or (vi) reduce the percentage in principal amount of outstanding
Debt Securities of any series, the consent of whose holders is
required for modification or amendment of the Indenture or for
waiver of compliance with certain provisions of the Indenture or
for waiver of certain defaults (Section 1102).
The holders of a majority in aggregate principal amount of
the outstanding Debt Securities of each series, on behalf of all
holders of Debt Securities of that series, may waive any past
default under the Indenture with respect to Debt Securities of
that series, except a default in the payment of principal, premium or
interest, or in the payment of any sinking fund installment, or a
covenant or provision that cannot be modified or amended without
the consent of the holders of each outstanding Debt Security
affected thereby (Section 513).
Defeasance
The Indenture provides that the Company, at its option, (i)
will be discharged from any and all obligations in respect of any
series of Debt Securities except for certain obligations to
register the transfer or exchange of the Debt Securities; replace
stolen, lost, or mutilated Debt Securities; maintain paying
agencies; and hold money for payment in trust, or (ii) will not
be subject to provisions of the Indenture concerning limitations
upon Mortgages, Sale and Leaseback Transactions and consolidation,
merger, and sale of assets, or (iii) may obtain the benefits
described in both clauses (i) and (ii), in each case if the
Company deposits with the Trustee, in trust, money, or U.S. Government
Obligations (as defined in the Indenture) 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
principal, premium and interest on the Debt Securities of such
series on the dates the payments are due in accordance with the
terms of the Debt Securities. To exercise this option, the
Company is required, among other things, to deliver to the Trustee an
opinion of counsel to the effect that (a) the deposit and related
defeasance would not cause the holders of that series of Debt
Securities to recognize income, gain, or loss for United States
federal income tax purposes and (b) with respect to any such
series of Debt Securities then listed on any national securities
exchange, if any, the Debt Securities would not be delisted from such
exchange as a result of the exercise of such option (Article
Four).
Notices
Notices to holders will be given by mail to the addresses of
such holders as they appear in the Security Register (Sections
105 and 703).
Governing Law
The Indenture and the Debt Securities will be governed by
and construed in accordance with the laws of the State of New York
(Section 111).
Concerning the Trustee
Bankers Trust Company is Trustee under the Indenture.
Bankers Trust Company is a party to and serves as agent under bank loan
agreements with the Company and certain of its Subsidiaries.
Bankers Trust Company also serves as one of the depositaries of
funds of, and has other financial relationships with, the Company
and its Subsidiaries.
PLAN OF DISTRIBUTION
The Company may sell the Debt Securities in the following
ways: (i) through agents, (ii) through underwriters, (iii)
through dealers and (iv) directly to purchasers. Sales of Debt
Securities may be made in or outside the United States. Any sales of Debt
Securities outside the United States will comply with all
applicable laws of the jurisdiction in which any sale of Debt
Securities is made.
The Prospectus Supplement with respect to the Debt
Securities will set forth the terms of the offering of the Debt Securities,
including the name or names of any underwriters, dealers, or
agents, the purchase price of the Debt Securities and the
proceeds to the Company from such sale, any delayed delivery arrangements,
any underwriting discounts and other items constituting
underwriters' compensation, the initial public offering price,
any discounts or concessions allowed or reallowed or paid to dealers,
and any securities exchanges on which the Debt Securities may be
listed. No assurances can be given that there will be a market
for the Debt Securities or, if a market is created, that it will
continue.
If underwriters are used in the sale, the Debt 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 Debt
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 Debt 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 the Prospectus Supplement. Unless otherwise set forth in the
Prospectus Supplement, the obligations of the underwriters or
agents to purchase the Debt Securities will be subject to
conditions precedent and the underwriters will be obligated to
purchase all the Debt Securities if any are purchased. The
initial public offering price and any discounts or concessions allowed or
reallowed or paid to dealers may be changed from time to time.
If dealers are used in the sale of Debt Securities with
respect to which this Prospectus is delivered, the Company will
sell the Debt Securities to the dealers as principals. The
dealers may then resell the Debt Securities to the public at varying
prices to be determined by the 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.
The Debt Securities may be sold directly by the Company or
through agents designated by the Company from time to time at
fixed prices, which may be changed, or at varying prices determined at
the time of sale. Any agent involved in the offer or sale of the
Debt Securities with respect to which this Prospectus is
delivered will be named, and any commissions payable by the Company to the
agent will be set forth, in the Prospectus Supplement relating
thereto. Any such agent will act on a best efforts basis for the
period of its appointment.
In connection with the sale of the Debt Securities,
underwriters or agents may receive compensation from the Company
or from purchasers of Debt Securities for whom they may act as
agents in the form of discounts, concessions, or commissions.
Underwriters, agents, and dealers participating in the
distribution of the Debt Securities may be deemed to be underwriters, and
any discounts or commissions received by them from the Company and
any profit on the resale of the Debt Securities by them may be deemed
to be underwriting discounts or commissions under the Securities
Act.
Debt Securities may be sold directly by the Company 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 sales to institutional
investors will be described in the Prospectus Supplement relating
thereto.
If so indicated in the Prospectus Supplement, the Company
will authorize agents, underwriters, or dealers to solicit offers from
certain types of institutions to purchase Debt 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. These
contracts will be subject only to those conditions set forth in
the Prospectus Supplement, and the Prospectus Supplement will set
forth the commission payable for solicitation of the contracts.
Agents, dealers, and underwriters may be entitled under
agreements 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 that
such agents, dealers, or underwriters may be required to make
with respect thereto. Agents, dealers, and underwriters may be
customers of, engage in transactions with, or perform services
for the Company in the ordinary course of business.
<PAGE>
LEGAL OPINIONS
The validity of the Debt Securities will be passed upon for
the Company by Stan L. McLelland, Esq., Executive Vice President
and General Counsel of the Company. Mr. McLelland is an employee
of the Company and at January 31, 1994, beneficially owned
approximately 99,000 shares of the Company's Common Stock
(including shares held under employee benefit plans) and held
options under employee stock option plans of the Company to
purchase an additional 48,190 shares of the Company's Common
Stock. None of such shares or options were granted in connection with
the offering of the Debt Securities. Fulbright & Jaworski L.L.P.,
Dallas, Texas, may render an opinion to the Company regarding
certain tax matters in connection with the issuance of the Debt
Securities. Certain legal matters in connection with the Debt
Securities may be passed upon for underwriters, dealers or agents
by Baker & Botts, L.L.P., Houston, Texas.
EXPERTS
The audited consolidated financial statements and schedules
of the Company contained in the Form 10-K incorporated by reference
herein have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their reports with respect thereto,
and are included herein in reliance upon the authority of said
firm as experts in accounting and auditing in giving said reports.
The reports of independent auditors relating to the audited
consolidated financial statements and schedules of the Company in
any documents filed 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 the offering will, to the extent covered by
consents thereto filed with the Commission, be incorporated by
reference in reliance upon the authority of such independent
auditors as experts in accounting and auditing.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth all expenses payable by the
Company in connection with the issuance and distribution of the
securities being registered. All the amounts shown are
estimates, except the registration fee.
SEC Registration Fee . . . . . . . . . . .$ 86,207
Printing and Engraving Expenses. . . . . . 10,000
Legal Fees and Expenses. . . . . . . . . . 35,000
Accounting Fees and Expenses . . . . . . . 75,000
Fees and Expenses of Trustee and Counsel . 15,000
Blue Sky Fees and Expenses . . . . . . . . 9,000
Rating Agency Fees . . . . . . . . . . . . 100,000
Total. . . . . . . . . . . . . . . . . .$ 330,207
Item 15. Indemnification of Directors and Officers.
The Company's Restated Certificate of Incorporation (the
"Restated Certificate of Incorporation") contains a provision
that eliminates the personal liability of a director to the Company
and its stockholders for monetary damages for breach of the
director's fiduciary duty to the extent currently allowed under the Delaware
General Corporation Law. Except as provided below, if a director
is found to have breached his or her fiduciary duty as a
director, neither the Company nor its stockholders could recover monetary
damages from the director, and the only course of action
available to the Company's stockholders would be equitable remedies,
including an action to enjoin or rescind a transaction involving
a breach of fiduciary duty. To the extent certain claims against
directors are limited to equitable remedies, the provision in the
Company's Restated Certificate of Incorporation may reduce the
likelihood of derivative litigation and may discourage
stockholders or management from initiating litigation against directors for
breach of their fiduciary duty. Additionally, equitable remedies
may not be effective in many situations. If a stockholder's only
remedy is to enjoin the completion of the Board of Directors'
action, this remedy would be ineffective if the stockholder does
not become aware of a transaction or event until after it has
been completed. In these situations, it is possible that the
stockholders and the Company would have no effective remedy
against the directors. Under the Company's Restated Certificate of
Incorporation, liability for monetary damages remains for (i) any
breach of the duty of loyalty to the Company or its stockholders,
(ii) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii)
payment of an improper dividend or improper repurchase or redemption of
the Company's stock under Section 174 of the Delaware General
Corporation Law, or (iv) any transaction from which the director
derived an improper personal benefit.
Under Article V of the Restated Certificate of
Incorporation, Article VII of the Company's Bylaws and an indemnification
agreement with the Company's officers and directors (the
"Indemnification Agreement"), each person who is or was a
director or officer of the Company or a subsidiary of the Company, or who
serves or served any other enterprise or organization at the
request of the Company or a subsidiary of the Company, shall be
indemnified by the Company to the full extent permitted by the
Delaware General Corporation Law.
Under the Delaware law, to the extent that a person is
successful on the merits or otherwise in defense of a suit or
proceeding brought against that person by reason of the fact that
he or she is or was a director or officer of the Company, or
serves or served any other enterprise or organization at the request of
the Company, then that person shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred in
connection with such action.
Under the Delaware law, the Company generally has the power
to indemnify its present and former directors, officers, employees
and agents against expenses and liabilities incurred by them in
connection with any suit to which they are or are threatened to
be made a party by reason of their office so long as they acted in
good faith and in a manner they reasonably believed to be in, or
not opposed to, the best interests of the Company, and with
respect to any criminal action, they had no reasonable cause to believe
their conduct was unlawful. With respect to suits by or in the
right of the Company, however, indemnification is generally
limited to attorneys' fees and other expenses, and indemnification is not
available if the person is adjudged to be liable to the Company
unless the court determines that indemnification is appropriate.
The Indemnification Agreement gives directors and officers
specific contractual assurance that indemnification and
advancement of expenses will be available to them regardless of any
amendments to or revocation of the indemnification provisions of the
Company's Bylaws. The Indemnification Agreement provides for
indemnification of directors and officers against both stockholder
derivative claims and third-party claims. Sections 145(a) and 145(b) of
the Delaware General Corporation Law, which grant corporations the
power to indemnify directors and officers, specifically authorize
lesser indemnification in connection with derivative claims than
in connection with third-party claims. The distinction is that
Section 145(a), concerning third-party claims, authorizes
expenses and judgments and amounts paid in settlement (as is provided in
the Indemnification Agreement), while Section 145(b), concerning
derivative suits, generally authorizes only indemnification of
expenses. However, Section 145(f) expressly provides that the
indemnification and advancement of expenses provided by or
granted pursuant to the subsections of Section 145 shall not be exclusive
of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any agreement. No
Delaware case directly answers the question whether Delaware's
public policy would support this aspect of the Indemnification
Agreement under the authority of Section 145(f), or would cause
its invalidation because it does not conform to the distinctions
contained in Sections 145(a) and 145(b). However, Delaware
courts have determined that a corporation can obligate itself, with
explicit contractual wording, to provide advancement of expenses
not otherwise required by statute, and that the public policy of
Delaware does not prevent a corporation from making such advances
mandatory.
Delaware corporations also are authorized to obtain
insurance to protect officers and directors from certain liabilities,
including liabilities against which the corporation cannot
indemnify its directors and officers. The Company currently has
in effect a directors' and officers' liability insurance policy.
Item 16. Exhibits.
1.1 Form of Agency Agreement (to be filed).
4.1 Form of Indenture between Valero Energy Corporation and
Bankers Trust Company -- incorporated by reference from Exhibit
4.1 to the Valero Energy Corporation Registration Statement on
Form S-3 (Commission File No. 33-45457, filed February 4, 1992).
* 4.2 Form of First Supplemental Indenture dated November ___,
1994, between Valero Energy Corporation and Bankers Trust
Company.
* 5.1 Opinion of Stan L. McLelland, Esq. with respect to
legality of securities.
* 12.1 Computation of ratio of earnings to fixed charges.
* 23.1 Consent of Arthur Andersen LLP
* 23.2 Consent of Stan L. McLelland (contained in Exhibit 5.1).
* 24.1 Powers of Attorney (contained on page II-5 of this
Registration Statement).
* 25.1 Form T-1 Statement of Eligibility and Qualification Under
the Trust Indenture Act of 1939 of a Corporation Designated
to Act as Trustee.
____________________
*Filed herewith.
<PAGE>
Item 17. Undertakings.
(a) The undersigned registrant hereby undertakes:
(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 of 1933, as amended (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) which,
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 paragraphs (a)(1)(i) and
(a)(1)(ii) 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 registrant pursuant to Section 13
or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the 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 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.
(b) The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act,
each filing of the registrant's annual report pursuant to Section
13(a) or Section 15(d) of the Securities Exchange Act of 1934
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.
(c) Insofar as indemnification for liabilities arising
under the Securities Act may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has 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 registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant 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 registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question 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.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the registrant 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 San Antonio, State of Texas, on November 14, 1994.
VALERO ENERGY CORPORATION
(Registrant)
By: /s/ WILLIAM E. GREEHEY
(William E. Greehey)
Chairman of the Board and
Chief Executive Officer
<PAGE>
KNOW ALL MEN BY THESE PRESENTS, that each person whose
signature appears below hereby constitutes and appoints William
E. Greehey, Stan L. McLelland and Rand C. Schmidt, or any of them,
each with power to act without the other, his or her true and
lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her and in his or her name,
place and stead, in any and all capacities, to sign any or all
subsequent pre- and post-effective amendments and supplements to this
registration statement, and to file the same, or cause to be
filed the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power
to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and
purposes and he or she might or could do in person, hereby
ratifying and confirming all that said attorney-in-fact and
agent, or his or her substitute or substitutes, may lawfully do or cause
to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933,
this registration statement has been signed by the following
persons in the capacities and on the dates indicated.
<TABLE>
<S> <C> <C>
/s/ WILLIAM E. GREEHEY Chairman of the Board and Chief November 14, 1994
William E. Greehey Executive Officer
(Principal Executive Officer),
Valero Energy Corporation
/s/ DON M. HEEP Senior Vice President and November 14, 1994
Don M. Heep Chief Financial Officer
(Principal Financial and Accounting
Officer),
Valero Energy Corporation
/s/ EDWARD C. BENNINGER Director, Valero Energy Corporation November 14, 1994
Edward C. Benninger
/s/ ROBERT G. DETTMER Director, Valero Energy Corporation November 14, 1994
Robert G. Dettmer
/s/ A. RAY DUDLEY Director, Valero Energy Corporation November 14, 1994
A. Ray Dudley
/s/ RUBEN M. ESCOBEDO Director, Valero Energy Corporation November 14, 1994
Ruben M. Escobedo
/s/ JAMES L. JOHNSON Director, Valero Energy Corporation November 14, 1994
James L. Johnson
/s/ LOWELL H. LEBERMANN Director, Valero Energy Corporation November 14, 1994
Lowell H. Lebermann
/s/ SUSAN KAUFMAN PURCELL Director, Valero Energy Corporation November 14, 1994
Susan Kaufman Purcell
</TABLE>
VALERO ENERGY CORPORATION
TO
BANKERS TRUST COMPANY
Trustee
FIRST SUPPLEMENTAL INDENTURE
Dated as of November __, 1994
Supplementing and Amending Indenture Dated as of March 30, 1992
<PAGE>
FIRST SUPPLEMENTAL INDENTURE, dated as of November __,
1994, between VALERO ENERGY CORPORATION, a Delaware corporation
(hereinafter called the "Company"), having its principal
executive office at 530 McCullough Avenue, San Antonio, Texas
78215, and Bankers Trust Company, a New York banking corporation,
as Trustee (hereinafter called the "Trustee"), having its
principal corporate trust office at Four Albany Street, New York,
New York 10006.
RECITALS OF THE COMPANY
The Company has executed and delivered to the Trustee
its Indenture, dated as of March 30, 1992 (hereinafter called the
"Indenture"), to provide for the issuance from time to time of
its debentures, notes, bonds or other evidences of indebtedness,
to be issued in one or more series, as provided in the Indenture.
The Company, in the exercise of the power and authority
conferred upon and reserved to it under the provisions of the
Indenture, and pursuant to appropriate resolutions of the Board
of Directors, has duly determined to make, execute and deliver to
the Trustee this First Supplemental Indenture to the Indenture in
order to reflect the results of the acquisition by the Company of
the approximately 51% effective equity interest in the Natural
Gas Partnership previously owned by the public through a merger.
The Indenture provides that without the consent of any
Holders, the Company and the Trustee may enter into a
supplemental indenture to the Indenture to add to the covenants
of the Company for the benefit of the Holders of all or any
series of Debt Securities appertaining thereto and the Company
has determined that this First Supplemental Indenture may be
entered into without the consent of any Holder in accordance with
Section 1101(2) of the Indenture.
The Company has duly authorized the execution and
delivery of this First Supplemental Indenture and all things
necessary have been done to make this First Supplemental
Indenture a valid agreement of the Company, in accordance with
its terms.
<PAGE>
NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE
WITNESSETH:
For and in consideration of the premises, the
sufficiency of which is hereby acknowledged, the Company and the
Trustee hereby agree and provide as follows:
ARTICLE ONE
CONCERNING THE
NATURAL GAS PARTNERSHIP
SECTION 101. Definition of Subsidiary.
The Indenture is hereby amended by deleting the second
and third sentences of the definition of "Subsidiary" in their
entirety and inserting in lieu thereof the following:
"Notwithstanding the foregoing, neither the Natural Gas
Partnership nor any Subsidiary thereof otherwise constituting a
`Subsidiary' pursuant to the provisions of the foregoing sentence
shall be deemed a `Subsidiary' for any purposes of this Indenture
for any period prior to the date of the First Supplemental
Indenture hereto."
SECTION 102. Mortgages.
The Indenture is hereby (1) amended by deleting the word
"and" at the end of clause (p) of Section 1205, (2) supplemented
by inserting as clause (q) in Section 1205 the following:
"Mortgages on any property of the Natural Gas
Partnership or any Subsidiary thereof existing at the date of the
First Supplemental Indenture (or property constituting
substitutions or replacements for, or accessions to, property
which is encumbered pursuant to after-acquired property
provisions of the agreements in accordance with which such
Mortgages were granted); and"
and (3) amended by renumbering the current clause (q) of Section
1205 as clause (r) and amending so much of the first sentence
thereof as appears prior to the first proviso therein to read in
its entirety as follows:
"Any renewal, refunding or extension of maturity, in
whole or in part, of any Mortgage created or assumed in
accordance with the provisions of subdivision (a), (b), (c), (d),
(n), (o), (p) or (q) above; . . ."
<PAGE>
ARTICLE TWO
CONCERNING THE TRUSTEE
SECTION 201. Terms and Conditions.
The Trustee accepts the trust hereby created and agrees
to perform the same upon the terms and conditions herein and in
the Indenture set forth.
SECTION 202. No Responsibility.
The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of
this First Supplemental Indenture or the due execution thereof by
the Company for or in respect of the recitals herein contained,
all such recitals being made by the Company solely.
ARTICLE THREE
MISCELLANEOUS PROVISIONS
SECTION 301. Defined Terms.
All terms used in this First Supplemental Indenture
which are defined in the Indenture shall have the meanings
specified in the Indenture unless the context of this First
Supplemental Indenture otherwise requires.
SECTION 302. Counterparts.
This First Supplemental Indenture may be executed in
several counterparts, each of which shall be an original and all
of which shall constitute but one and the same instrument.
SECTION 303. Governing Law.
This First Supplemental Indenture shall be governed by
and construed in accordance with the laws of the State of New
York.
SECTION 304. Indenture Remains in Effect.
Except as expressly amended hereby, the Indenture is in
all respects ratified and confirmed and all the terms, conditions
and provisions thereof shall remain in full force and effect.
SECTION 305. Part of Indenture.
This First Supplemental Indenture shall form a part of
the Indenture for all purposes, and every Holder of Debt
Securities heretofore or hereafter authenticated and delivered
shall be bound hereby.
SECTION 306. Effectiveness.
This First Supplemental Indenture shall become effective
as of the date first written above.
IN WITNESS WHEREOF, the parties hereto have caused this
First Supplemental Indenture to be duly executed, and their
respective corporate seals to be hereunto affixed and attested,
all as of the day and year first above written.
VALERO ENERGY CORPORATION
By:
Name:
Title:
Attest:
By:
Name:
Title:
BANKERS TRUST COMPANY, as
Trustee
By:
Name:
Title:
Attest:
By:
Name:
Title:
November 10, 1994
Board of Directors
Valero Energy Corporation
530 McCullough Avenue
San Antonio, Texas 78215
Ladies and Gentlemen:
I am the Executive Vice President and General Counsel of
Valero Energy Corporation, a Delaware corporation ("Valero"), and
have acted as counsel for Valero in connection with the proposed
offering of up to $280,000,000 initial public offering price of
Debt Securities ("Debt Securities") of Valero registered with the
Securities and Exchange Commission (the "Commission") pursuant to
the Registration Statement on Form S-3 (the "Registration
Statement") under the Securities Act of 1933, as amended (the
"Act"), to which this opinion is filed as an Exhibit, and the
Registration Statement No. 33-45457 (filed February 4, 1992). As
used herein, the terms "Prospectus" shall mean the Prospectus filed
as a part of the Registration Statement, while the terms
"Prospectus Supplement," "Pricing Supplement," "Offered Debt
Securities," "Indenture," "First Supplemental Indenture" and
"Trustee" shall have the meanings specified in such Prospectus.
In connection therewith, I have examined, among other things,
the Restated Certificate of Incorporation, as amended, and the
By-laws of Valero, the corporate proceedings with respect to the
offering of the Debt Securities, and the Registration Statement.
Based on the foregoing, and having due regard for such legal
considerations as I have determined relevant, I am of the opinion
that:
1. Valero is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware.
2. The Debt Securities proposed to be sold by Valero have
been duly authorized for issuance and, subject to the Registration
Statement becoming effective under the act and to compliance with
any applicable Blue Sky laws and to the filing, in accordance with
Rule 424(b) under the Act, of a Prospectus Supplement and Pricing
Supplement with respect to each Offered Debt Security, the Offered
Debt Securities, when executed by the Company, duly authenticated
by the Trustee and issued and sold as described in the Prospectus
and the applicable Prospectus Supplement and Pricing Supplement,
will be the lawfully issued, fully paid and non-assessable Debt
Securities of Valero.
3. When executed, authenticated, issued and sold as
described in the preceding paragraph, the Offered Debt Securities
will constitute binding obligations of Valero, entitled to the
benefits of the Indenture and enforceable in accordance with the
terms thereof, except as enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights generally
and by general equitable principles (regardless of whether
enforceability is considered in a proceeding at law or in equity).
In all respects, the opinions expressed herein are as of the
date hereof and I make no undertaking to supplement such opinions
as facts come to my attention or changes in the law occur that
could affect such opinions.
I hereby consent to the filing of this opinion as an Exhibit
to the Registration Statement and the reference to myself under the
caption "Legal Opinions" in the Prospectus as originally filed or
as the same be subsequently amended or supplemented.
Very truly yours,
/s/ Stan L. McLelland
Stan L. McLelland
SLM/pam
<TABLE> EXHIBIT 12.1
VALERO ENERGY CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Dollars in Thousands)
<CAPTION>
Nine Months Ended Year Ended
September 30, 1994 December 31, 1993 Year Ended December 31,
Pro Forma<F1> Historical Pro Forma<F1> Historical 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Pretax income from continuing
operations . . . . . . . . . . . . . . . $ 25,146 $ 36,639 $ 76,698 $ 68,224 $131,419 $146,367 $145,593 $ 59,301
Add (Deduct):
Net interest expense. . . . . . . . . . 74,040 52,266 89,413 37,182 30,423 12,540 18,067 24,361
Amortization of previously capitalized
interest. . . . . . . . . . . . . . . 5,135 4,570 6,300 4,998 4,544 3,457 3,416 3,390
Interest portion of rental expense<F2>. 6,121 4,558 8,003 4,316 4,214 3,913 4,256 4,502
Distributions (less than)/in excess of
equity in earnings of VNGP, L.P.<F3> - 18,968 - (4,970) (1,067) 1,030 (5,603) 11,611
Earnings as defined. . . . . . . . . $110,442 $117,001 $180,414 $109,750 $169,533 $167,307 $165,729 $103,165
Net interest expense . . . . . . . . . . . $ 74,040 $ 52,266 $ 89,413 $ 37,182 $ 30,423 $ 12,540 $ 18,067 $ 24,361
Capitalized interest . . . . . . . . . . . 1,741 1,548 14,048 12,335 15,853 25,408 6,499 610
Interest portion of rental expense<F2> . . 6,121 4,558 8,003 4,316 4,214 3,913 4,256 4,502
Fixed charges as defined . . . . . . $ 81,902 $ 58,372 $111,464 $ 53,833 $ 50,490 $ 41,861 $ 28,822 $ 29,473
Ratio of earnings to fixed charges . . . . 1.35x 2.00x 1.62x 2.04x 3.36x 4.00x 5.75x 3.50x
<FN>
<F1>
The pro forma computation for the periods ended December 31,
1993 and September 30, 1994 assumes that the acquisition of
the outstanding interests in the Natural Gas Partnership
occurred on January 1, 1993 and January 1, 1994,
respectively.
<F2>
The interest portion of rental expense represents one-third
of rents, which is deemed representative of the interest
portion of rental expense.
<F3>
Represents the Company's undistributed equity in earnings or
distributions in excess of equity in earnings of the Natural
Gas Partnership for the periods prior to and including
May 31, 1994. On May 31, 1994, the Merger of the Natural Gas
Partnership with the Company was consummated and the Natural
Gas Partnership became a wholly owned subsidiary of the
Company.
</FN>
</TABLE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this registration statement of our reports dated February
17, 1994 included in Valero Energy Corporation's Form 10-K for the year ended
December 31, 1993 and to all references to our Firm included in this
registration statement.
/s/ ARTHUR ANDERSEN LLP
San Antonio, Texas
November 10, 1994
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE
PURSUANT TO SECTION 305(B)(2)_________________
BANKERS TRUST COMPANY
(Exact name of trustee as specified in its charter)
NEW YORK 13-4941247
(Jurisdiction of Incorporation (I.R.S. Employer
if not a U.S. national bank) Identification n.)
FOUR ALBANY STREET
NEW YORK, NEW YORK 10006
(Address of principal (Zip Code)
executive offices)
VALERO ENERGY CORPORATION
(Exact name of obligor as specified in the charter)
DELAWARE 74-1244795
(State or other jurisdiction of (I.R.S. employer
of Incorporation or organization) Identification
no.)
530 MCCULLOUGH AVENUE
SAN ANTONIO, TEXAS 78215
(Address of principal executive offices) (Zip Code)
DEBT SECURITIES
(Title of the indenture securities)
<PAGE>
Item 1. General Information.
Furnish the following information as to the trustee.
(a) Name and address of each examining or supervising
authority to which it is subject.
Name Address
Federal Reserve Bank (2nd District) New York, NY
Federal Deposit Insurance Corporation Washington, D.C.
New York State Banking Department Albany, NY
(b) Whether it is authorized to exercise corporate
trust powers.
Yes.
Item 2. Affiliation with Obligor.
If the obligor is an affiliate of the Trustee, describe
each such affiliation.
None.
Item 3.-15. Not Applicable
Item 16. List of Exhibits.
Exhibit 1 - Restated Organization Certificate of
Bankers Trust Company dated August 7, 1990 and Certificate of
Amendment of the Organization Certificate of Bankers Trust
Company dated March 28, 1994 - Incorporated herein by reference
to Exhibit 1 filed with Form 1 Statement, Registration No. 33-
79862.
Exhibit 2 - Certificate of Authority to commence
business - Incorporated herein by reference to Exhibit 2 filed
with Form T-1 Statement, Registration No. 33-21047.
Exhibit 3 - Authorization of the Trustee to exercise
corporate trust powers - Incorporated herein by reference to
Exhibit 2 filed with Form T-1 Statement, Registration No. 33-
21047.
Exhibit 4 - Existing By-Laws of Bankers Trust
Company, dated as amended on September 21, 1993 - Incorporated
herein by reference to Exhibit 4 filed with Form T-1 Statement,
Registration No. 33-52359.
Exhibit 5 - Not applicable.
Exhibit 6 - Consent of Bankers Trust Company
required by Section 321(b) of the Act - Incorporated herein by
reference to Exhibit 4 filed with Form T-1 Statement,
Registration No. 22-18864.
Exhibit 7 - A copy of the latest report of condition
of Bankers Trust Company dated as of June 30, 1994 - Incorporated
herein by reference to Exhibit 7 filed with Form T-1 Statement,
Registration No. 33-83618.
Exhibit 8 - Not Applicable
Exhibit 9 - Not Applicable
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of
1939 the trustee, Bankers Trust Company, a corporation organized
and existing under the laws of the State of New York, has duly
caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in The City of
New York, and State of New York, on the 10th day of November,
1994.
BANKERS TRUST COMPANY
By: /s/ Jenna Rossheim
Jenna Rossheim
Assistant Vice President
