<PAGE>
As filed with the Securities and Exchange Commission on September __, 1996
Registration No. 333-_________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
----------------------------------
WESTERN GAS RESOURCES, INC.
(Exact name of registrant as specified in its charter)
Delaware 84-1127613
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
12200 North Pecos Street
Denver, Colorado 80234-3439
(303) 452-5603
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
John C. Walter, Esq.
Executive Vice President
Western Gas Resources, Inc.
12200 North Pecos Street
Denver, Colorado 80234-3439
(303) 452-5603
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
Robert M. Chilstrom, Esq.
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, NY 10022
Tel: (212) 735-3000
Fax: (212) 735-2001
Approximate date of commencement of proposed sale to the public: From
time to time after the effective date of the Registration Statement.
If any of the securities being registered on this Form are to be
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. [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. [_]
------------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
==============================================================================================================
Amount Proposed maximum Proposed maximum
Title of Shares to be to be offering price aggregate Amount of
registered registered per share (1) offering price (1) registration fee (2)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock par value
$.10 per share (1) 150,000 $14.625 $2,193,750 $756
==============================================================================================================
</TABLE>
(1) Estimated solely for the purpose of computing the amount of the
registration fee in accordance with Rule 457(c) of the Securities and
Exchange Act of 1933 based upon the average of the high and low prices for
shares of the Registrant's Common Stock on September 27, 1996 on the New
York Stock Exchange.
(2) Pursuant to Rule 429, the Prospectus included herein also relates to (i)
$62,000,000 remaining of $200,000,000 of Securities registered as Debt
Securities and Preferred Stock, in relation to which a registration fee of
$62,500 was previously paid, (ii) 4,000,000 shares of Common Stock, in
relation to which a registration fee of $42,734 was previously paid, (iii)
$138,000,000 of Securities registered as Debt Securities and Preferred
Stock, in relation to which a registration fee of $47,586 was previously
paid and (iv) $100,000,000 of Securities registered as Debt Securities,
Preferred Stock or Common Stock, in relation to which a registration fee of
$34,583 was previously paid.
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.
================================================================================
Pursuant to Rule 429, the Prospectus included herein also relates to (i)
$62,000,000 of Securities registered as Debt Securities and Preferred Stock and
4,000,000 shares of Common Stock registered under registration statement No. 33-
66516 (to which this registration statement constitutes post-effective Amendment
No. 1) (ii) $138,000,000 of Securities registered as Debt Securities and
Preferred Stock under registration statement No. 33-54741 (to which this
registration statement constitutes post-effective Amendment No. 1) and (iii)
$100,000,000 of Securities registered as Debt Securities, Preferred Stock and
Common Stock registered under registration statement No. 333-00903 (to which
this registration statement constitutes post-effective Amendment No. 1). In the
event any such previously registered Debt Securities, Preferred Stock or Common
Stock are offered prior to the effective date of this registration statement,
the amount of such Debt Securities, Preferred Stock or Common Stock will not be
included in any Prospectus hereunder. The amount of Securities being registered,
together with the remaining Securities registered under registration statement
No. 33-66516, registration statement No. 33-54741 and registration statement No.
333-00903, represents the maximum amount of Securities which are expected to be
offered for sale.
<PAGE>
SUBJECT TO COMPLETION - September ____, 1996
PROSPECTUS
WESTERN GAS RESOURCES, INC.
Debt Securities, Preferred Stock and Common Stock
Western Gas Resources, Inc. (the "Company"), directly, through agents
designated from time to time, or through dealers or underwriters also to be
designated, may offer and issue from time to time debt securities (the "Debt
Securities") in one or more series, on terms to be determined at the time of
sale. The Company may also offer and issue from time to time in one or more
series its Preferred Stock, par value $.10 per share (the "Preferred Stock"),
and its Common Stock, par value $.10 per share (the "Common Stock"), on terms to
be determined at the time of sale. The Debt Securities and Preferred Stock will
be limited to an aggregate initial public offering price of up to $300,000,000
or the equivalent thereof in one or more foreign currencies or composite
currencies and the Common Stock will be limited to an aggregate initial public
offering price of $100,000,000 plus up to an additional 4,000,000 shares. In
addition, up to 150,000 shares of Common Stock may be offered by the Selling
Stockholder of the Company. See "Selling Stockholder." The Company will not
receive any of the proceeds from the sale of such Common Stock (the "Selling
Stockholder Shares"). The Common Stock is listed on the New York Stock Exchange
(the "NYSE") under the symbol "WGR." The Debt Securities, the Preferred Stock
and the Common Stock, including the Selling Stockholder Shares except as
otherwise indicated, are hereafter collectively referred to as the "Securi
ties." The aggregate initial public offering price of all the Securities that
may be offered pursuant to this Prospectus, exclusive of the 4,000,000 shares of
Common Stock and Selling Stockholder Shares, will not exceed $300,000,000 or the
equivalent thereof.
The accompanying Prospectus Supplement will set forth specific terms
of the Securities, including (i) in the case of Debt Securities, specific
designation, ranking as senior or subordinated Debt Securities, aggregate
principal amount, maturity, rate and time of payment of interest, purchase
price, any terms for redemption, whether and on what terms the Debt Securities
may be converted into the Company's Common Stock, and any other specific terms
of the Debt Securities, (ii) in the case of a particular series of Preferred
Stock, specific designation, aggregate number of shares offered, dividend rate
(or manner of calculation thereof), dividend periods (or manner of calculation
thereof), liquidation preference, voting rights, any terms for redemption,
whether and on what terms the shares of such series may be converted into the
Company's Common Stock at the option of the holder, whether depositary shares
representing shares of such series of Preferred Stock will be offered and, if
so, the fraction of a share of Preferred Stock represented by each depositary
share, listing, if any, on a securities exchange and any other specific terms of
such series of Preferred Stock and (iii) in the case of Common Stock, the number
of shares offered and the purchase price thereof. The accompanying Prospectus
Supplement will also set forth the name of and compensation to each dealer,
underwriter or agent, if any, involved in the sale of the Securities being
offered and the managing underwriters with respect to each series of Securities
sold to or through underwriters. The Company reserves the sole right to accept
and, together with its agents from time to time, to reject, in whole or in part,
any proposed purchase of Securities, exclusive of the Selling Stockholder
Shares, to be made directly or through agents.
-------------------------
See "Risk Factors" beginning on page 5 for discussion of material risks in
connection with the purchase of the 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.
-------------------------
If an agent of the Company or, if applicable, the Selling Stockholder, or
a dealer or underwriter is involved in the sale of the Securities in respect of
which this Prospectus is being delivered, the agent's commission, dealer's
purchase price or underwriter's discount is set forth in, or may be calculated
from, the accompanying Prospectus Supplement and the net proceeds to the Company
and, if applicable, the Selling Stockholder, from such sale will be the purchase
price of such Securities less such commission in the case of an agent, the
purchase price of such Securities in the case of a dealer or the public offering
price less such discount in the case of an underwriter, and less, in each case,
the other attributable issuance expenses. The Company may pay all registration
expenses of the Selling Stockholder. See "Plan of Distribution" for possible
indemnification arrangements for any agents, dealers or underwriters.
-------------------------
September _____, 1996
1
<PAGE>
No person has been authorized in connection with any offering made hereby to
give any information or to make any representations other than those contained
or incorporated by reference in this Prospectus or any Prospectus Supplement,
and, if given or made, such information or representa tions must not be relied
upon as having been authorized by the Company, the selling stockholder or any
underwriter or agent. This Prospectus or any Prospectus Supplement does not
constitute an offer to sell or the solicitation of an offer to buy any
securities other than the securities to which it relates or any offer to sell or
the solicitation of an offer to buy such securities in any circumstances in
which such offer or solicitation is unlawful. Neither the delivery of this
Prospectus or any Prospectus Supplement nor any sale made hereunder or
thereunder shall, under any circumstances, create any implication that the
information contained herein or therein is correct as of any time subsequent to
the date hereof and thereof.
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 and information statements and other
information with the Securities and Exchange Commission (the "Commission"). Such
reports, proxy statements and other information can be inspected and copied at
the public reference facilities maintained by the Commission at Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, and at the following Regional
Offices of the Commission: Northwestern Atrium Center, 500 West Madison Street,
Suite 1400, Chicago, IL 60661 and 7 World Trade Center, 13th Floor, New York, NY
10048 and through the Commission's Internet site at www.sec.gov. Copies of such
material can also be obtained from the Public Reference Section of the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549,
at prescribed rates. In addition, such material can be inspected at the offices
of the New York Stock Exchange, 20 Broad Street, New York, New York 10005.
The Company has filed a registration statement (the "Registration
Statement") on Form S-3 with respect to the Securities offered hereby with the
Commission under the Securities Act of 1933, as amended (the "Securities Act").
This Prospectus, which constitutes a part of the Registration Statement, relates
only to the Securities offered by the Company and the Selling Stockholder and
does not contain all the informa tion set forth in the Registration Statement,
certain items of which are contained in schedules and exhibits to the
Registration Statement as permitted by the rules and regulations of the
Commission. Statements contained in this Prospectus as to the contents of any
agreement, instrument or other document referred to are not necessarily
complete. With respect to each such agreement, instrument or other document
filed as an exhibit to the Registration Statement, reference is made to the
exhibit for a more complete description of the matter involved, and each such
statement shall be deemed qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's (i) Annual Report on Form 10-K for the year ended December
31, 1995; (ii) Quarterly Reports on Form 10-Q for the quarters ended March 31
and June 30, 1996; (iii) Proxy Statement for the Annual Meeting of Stockholders
held on May 15, 1996; (iv) Registration Statement on Form 8-A with respect to
the Company's $2.28 Cumulative Convertible Preferred Stock, declared effective
on November 12, 1992; (v) Registration Statement on Form 8-A with respect to the
Company's $2.625 Cumulative Convertible Preferred Stock, declared effective by
the Commission on February 17, 1994; and (vi) Current Report on Form 8-K dated
January 11, 1996, all of which have previously been filed by the Company with
the Commission, are incorporated by reference in this Prospectus.
2
<PAGE>
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Securities 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 this Prospectus or
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 subse quently filed
document that also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus has been delivered, upon the written or oral request of such
person, a copy of any or all of the documents referred to above which have been
or may be incorporated by reference herein (other than exhibits to such
documents unless such exhibits are specifically incorporated by reference in
such documents). Requests for such copies should be directed to John C. Walter,
Executive Vice President, Western Gas Resources, Inc., 12200 North Pecos Street,
Denver, Colorado 80234-3439 (telephone (303) 452-5603).
3
<PAGE>
WESTERN GAS RESOURCES, INC.
Western Gas Resources, Inc. is an independent gas gatherer and processor
and an energy marketer providing a full range of services to its customers from
the wellhead to the delivery point. The Company designs, constructs, owns and
operates natural gas gathering, processing, treating and storage facilities in
major gas-producing basins in the Rocky Mountain, Mid-Continent, Gulf Coast and
Southwestern regions of the United States. The Company connects producers' wells
to its gathering systems for delivery to its processing or treating plants,
processes the natural gas to extract natural gas liquids ("NGLs") and treats the
natural gas in order to meet pipeline specifications. The Company is a
nationwide marketer of natural gas, NGLs and wholesale electric power, providing
a full range of services including risk management, storage, transportation,
scheduling and peaking services to a variety of customers. The Company was
incorporated in Delaware in 1989. The Company's principal offices are located at
12200 North Pecos Street, Denver, Colorado 80234-3439, and its telephone number
is (303) 452-5603.
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
AND
EARNINGS TO FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
The following table sets forth the unaudited consolidated ratios of
earnings to fixed charges and earnings to fixed charges and preferred stock
dividends of the Company for the periods indicated.
<TABLE>
<CAPTION>
Year Ended December 31,
Six Months Ended -----------------------------------------
June 30, 1996 1995 1994 1993 1992 1991
-------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed
charges.................. 2.17 .76 1.29 3.73 5.30 3.19
Ratio of earnings to fixed
charges and preferred stock
dividends................ 1.55 .50 .83 2.52 3.87 2.10
</TABLE>
For the purpose of computing the ratio of earnings to fixed charges,
earnings consist of income before income taxes and fixed charges. For the
purpose of computing the ratio of earnings to fixed charges and preferred stock
dividends, earnings consist of income before income taxes and fixed charges and
preferred stock dividends. For purposes of calculating both ratios, fixed
charges consist of interest (including capitalized interest, but excluding
amortization of amounts previously capitalized) on all indebtedness,
amortization of debt discount and expense and that portion (one-third) of rental
expense which the Company believes to be representative of interest. For the
year ended December 31, 1995, the Company's earnings before fixed charges were
insufficient to cover its fixed charges by approximately $9.7 million. In
addition, for the years ended December 31, 1995 and 1994, the Company's earnings
before fixed charges and preferred stock dividends were insufficient to cover
its fixed charges and preferred stock dividends by approximately $30.6 million
and $9.1 million, respectively. Excluding the effect of the adoption of
Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of,"
which resulted in a non-cash expense of $17.6 million, the Company's ratio of
earnings to fixed charges and ratio of earnings to fixed charges and preferred
stock dividends would have been 1.19 and .76, respectively, for the year ended
December 31, 1995. See further discussion in "Risk Factors." Statements setting
forth the unaudited computations of the consolidated ratio of earnings to fixed
charges and consolidated ratio of earnings to
4
<PAGE>
fixed charges and preferred stock dividends are filed as exhibits to the
Registration Statement of which this Prospectus is a part.
USE OF PROCEEDS
Unless otherwise set forth in the accompanying Prospectus Supplement, the
net proceeds from the sale of the Securities by the Company will be used for
general corporate purposes, which may include repayment of debt, acquisitions,
working capital and capital expenditures. Pending application for specific
purposes, the net proceeds will be invested in short-term marketable securities.
The Company will not receive any of the proceeds from the sale of the Selling
Stockholder Shares.
RISK FACTORS
Prospective investors should carefully review the following factors
together with the other information contained in this Prospectus and any
accompanying Prospectus Supplement prior to making an investment decision.
Effect of Volatile Product Prices; Hedging Transactions
The Company's future financial condition and results of operations will
depend significantly upon the prices received for the Company's natural gas and
NGLs. Prices for natural gas and NGLs are subject to fluctuations in response to
changes in supply, market uncertainty and a variety of additional factors that
are beyond the control of the Company. These factors include the level of
domestic production, the availability of imported oil and gas, actions taken by
foreign oil and gas producing nations, the availability of transportation
systems with adequate capacity, the availability of competitive fuels,
fluctuating and seasonal demand for oil, gas and NGLs, conservation and the
extent of governmental regulation of production and the overall economic
environment. A substantial or extended decline in gas and/or NGL prices would
have a material adverse effect on the Company's financial position, results of
operations and access to capital.
The Company's risk management policy is to enter into futures, swaps and
option contracts primarily to reduce risk and lock-in profit margins on its
marketing and storage activities. Over-the-counter derivatives, with
creditworthy counterparties, also permit the Company to offer its gas customers
alternate pricing and delivery mechanisms meeting their specific needs. To
ensure a known price for future equity production and a fixed margin between gas
injected into storage and gas withdrawn from storage, the Company typically will
sell a futures contract and related basis swap and thereafter, either (i) make
physical delivery of its product to comply with such futures contract and settle
its basis swap or (ii) buy matching futures and basis position contracts to
unwind its position and sell its production to a customer in the cash market.
The Company also may contract to sell future production to a customer at a fixed
price and then purchase futures contracts to lock-in a margin. These same
techniques also may be utilized to manage price risk for product purchased from
marketing customers. Such contracts may expose the Company to the risk of
financial loss in certain circumstances, including instances where production is
less than expected, the Company's customers fail to purchase or deliver the
contracted quantities of natural gas or NGLs or credit risk with derivatives
counterparties. Furthermore, to the extent that the Company engages in hedging
activities, it may be prevented from realizing the benefits of price increases
above the levels of such hedges.
5
<PAGE>
Gas Supply
The Company must continually connect new wells to its gathering systems in
order to maintain or increase throughput levels to offset natural declines in
dedicated volumes. Historically, while certain individual plants have
experienced declines in dedicated reserves, the Company has been successful in
connecting additional reserves to more than offset the natural declines and
reserves dedicated to existing facilities. Drilling activity in certain basins
in which the Company operates has continued to be significantly reduced from
levels that existed in prior years. Higher residue gas and NGL prices
experienced since the beginning of 1996 and improved technology (e.g., 3-D
seismic and horizontal drilling) have stimulated drilling in certain of the
basins in which the Company operates, primarily the Permian and Anadarko basins.
The level of drilling will depend upon, among other factors, the prices for gas
and oil, the energy policy of the federal government and the availability of
foreign oil and gas, none of which is within the Company's control. There is no
assurance that the Company will continue to be successful in replacing the
dedicated reserves processed at its facilities.
Uncertainty of Estimates of Oil and Gas Reserves
Reserve estimates are subject to numerous uncertainties inherent in the
estimation of quantities of proved reserves and in the projection of future
rates of production and the timing of development expenditures. The accuracy of
such estimates is a function of the quality of available data and of engineering
and geological interpretation and judgement. Reserve estimates are imprecise and
should be expected to change as additional information becomes available.
Results of subsequent drilling, testing and production may cause either upward
or downward revisions of previous estimates. In addition, the estimates of
future net revenues from proved reserves of the Company and the present value
thereof are based upon certain assumptions about production levels, prices and
costs, which may not be correct. Further, the volumes considered to be
commercially recoverable fluctuate with changes in prices and operating costs.
The meaningfulness of such estimates is highly dependent upon the accuracy of
the assumptions upon which they were based. Actual results may differ materially
from the results estimated.
The Company has experienced unexpected water production in one of the wells
at its Black Lake Field. The Company retained an independent engineering firm to
perform an evaluation of the reserves. The evaluation has confirmed the reserves
previously estimated by the Company do not need revision at this time. The
Company will continue to monitor the field performance closely and will revise
the estimate as appropriate.
Ability to Pay Fixed Charges and Preferred Stock Dividends
For the year ended December 31, 1995, the Company's earnings before fixed
charges were insufficient to cover its fixed charges by approximately $9.7
million. In addition, for the years ended December 31, 1995 and 1994, the
Company's earnings before fixed charges and preferred stock dividends were
insufficient to cover its fixed charges and preferred stock dividends by
approximately $30.6 million and $9.1 million, respectively. Excluding the effect
of the adoption of Statement of Financial Accounting Standards No.
121,"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of," which resulted in a non-cash expense of $17.6
million, the Company's ratio of earnings to fixed charges and ratio of earnings
to fixed charges and preferred stock dividends would have been 1.19 and .76,
respectively, for the year ended December 31, 1995. The Company has historically
met its fixed charges, including interest, and preferred stock dividends through
cash flow from operations. There can be no assurance that the Company will have
sufficient cash flow from operations to satisfy anticipated cash
6
<PAGE>
requirements for these items and its planned capital expenditures. See "Ratio of
Earnings to Fixed Charges and Ratio of Earnings to Fixed Charges and Preferred
Stock Dividends."
Expansion Opportunities and Availability of Financing
In order for the Company to expand its business through either the purchase
or construction of new gathering and processing facilities, the Company will be
required to identify expansion opportunities and to finance such activities,
using cash flow, equity or debt financing or a combination thereof. No assurance
can be given that appropriate opportunities for expansion at levels of
profitability which satisfy the Company's target rates can be obtained or that
financing on terms acceptable to the Company can be obtained. Natural gas and
NGL price volatility make it difficult to estimate the value of acquisitions and
to budget and forecast the return on the Company's projects. In addition,
unusually volatile prices often disrupt the market for gas and NGL properties,
as buyers and sellers have more difficulty agreeing on the purchase price of
properties.
Competition
The Company competes with other companies in the gathering, processing and
marketing business both for supplies of natural gas and for customers for its
natural gas and NGLs. Competition for natural gas supplies is primarily based on
efficiency, reliability, availability of transportation and ability to obtain a
satisfactory price for the producers' natural gas. Competition for customers is
primarily based upon reli ability and price of deliverable natural gas and NGLs.
For customers that have the capability of using alternative fuels, such as oil
and coal, the Company also competes based primarily on price against companies
capable of providing such alternative fuels. The Company's competitors for
obtaining additional gas supplies, for gathering and processing gas and for
marketing gas and NGLs include national and local gas gatherers, brokers,
marketers and distributors of various size, financial resources and experience.
Until recently, the Company had experienced narrowing margins related to third-
party sales due to the increasing availability of pricing information in the
natural gas industry. The Company believes, by targeting end-use markets, these
margins will continue to stabilize. These sales are highly competitive and there
is no assurance that the Company will be able to expand its current end-use
business.
Environmental Matters
The construction and operation of the Company's gathering lines, plants and
other facilities used for the gathering, transporting, processing, treating or
storing of natural gas and NGLs are subject to federal, state and local
environmental laws and regulations, including those that can impose obligations
to clean-up hazardous substances at the Company's facilities or at facilities to
which the Company sends wastes for disposal. In most instances, the applicable
regulatory requirements relate to water and air pollution control or waste
management. The Company believes that it is in substantial compliance with
applicable material environmental laws and regulations. Environmental regulation
can increase the cost of planning, designing, constructing and operating the
Company's facilities. The Company believes that the costs for compliance with
current environmental laws and regulations have not had and will not have a
material effect on the Company's financial position or results of operation.
In 1990, the Congress enacted the Clean Air Act Amendments of 1990 (the
"Clean Air Amendments") which impose more stringent standards on emissions of
certain pollutants and establish an operating permit program for certain new and
existing air emissions sources. Under the Clean Air Amendments, individual
states are required to adopt regulations to implement the operating permit
7
<PAGE>
program. The Company does not believe that compliance with the Clean Air
Amendments will require any material capital expenditures, although it will
increase permitting costs in 1996 and will increase certain operating costs,
such as emissions fees, on an on-going basis. The Company does not believe that
such cost increases will have a material effect on the Company's financial
position or results of operations.
The Company believes that it is reasonably likely that the trend in
environmental legislation and regulation will continue to be towards stricter
standards. The Company is unaware of future environmental standards that are
reasonably likely to be adopted that will have a material effect on the
Company's financial position or results of operations, but cannot rule out that
possibility.
Regulation
Many aspects of the gathering, processing, marketing and transportation of
natural gas and NGLs by the Company are subject to federal, state and local laws
and regulations which can have a significant impact upon the Company's overall
operations. However, the gathering, processing and marketing activities of the
Company have generally not been subject to regulation, and therefore, except as
con strained by competitive factors, the Company has considerable pricing
flexibility.
As a processor and marketer of natural gas, the Company depends on the
transportation and storage services offered by various interstate and intrastate
pipeline companies for the delivery and sale of its own gas supplies as well as
those it processes and/or markets for others. Both the performance of
transportation and storage services by interstate pipelines and the rates
charged for such services are subject to the jurisdiction of the Federal Energy
Regulatory Commission or state regulatory agencies. An inability to obtain
transportation and/or storage services at competitive rates can hinder the
Company's processing and marketing operations and/or affect its sales margins.
Insurance and Operational Risks
The Company is subject to various hazards which are inherent in the
industry in which it operates such as explosions, product spills, leaks and
fires, each of which could cause personal injury and loss of life, severe damage
to and destruction of property and equipment, and pollution or other
environmental damage, and may result in curtailment or suspension of operations
at the affected facility. The Company maintains physical damage, comprehensive
general liability, workers' compensation and business interruption insurance.
Such insurance is subject to deductibles that the Company considers reasonable.
The Company is not fully insured against all risks in its business, however, the
Company believes that the coverage it maintains is adequate and consistent with
other companies in the industry. Consistent with insurance coverage typically
available to the natural gas industry, the Company's insurance policies do not
provide coverage for losses or liabilities relating to pollution, except for
sudden and accidental occurrences.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities will be issued under an indenture (the "Indenture")
between the Company and Texas Commerce Bank National Association, as trustee
(the "Trustee"). The Debt Securities may constitute either senior or
subordinated debt of the Company as set forth in any accompanying Prospectus
Supplement for a specific series of Debt Securities. The following statements
are subject to the detailed provisions of the Indenture, a copy of the form of
which is filed as an exhibit to the Registration Statement. Wherever references
are made to particular provisions of the Indenture, such provisions are
incorporated
8
<PAGE>
by reference as a part of the statements made and such statements are qualified
in their entirety by such reference. Capitalized terms are defined in the
Indenture unless otherwise defined herein.
General
The Indenture does not limit the amount of the Debt Securities which may be
issued thereunder and provides that Debt Securities may be issued in one or more
series thereunder up to the aggregate principal amount that may be authorized
from time to time by the Company's Board of Directors or an authorized committee
thereof. The Debt Securities will be either unsecured senior obligations of the
Company, ranking equally and ratably with all other unsecured and unsubordinated
indebtedness of the Company or subordinated in right of payment to the prior
payment in full of all Senior Indebtedness of the Company as described below
under "Subordinated Debt" and in the Prospectus Supplement applicable to an
offering of subordinated Debt Securities ("Subordinated Debt Securities").
Reference is made to the Prospectus Supplement relating to the particular Debt
Securities offered thereby for the following terms, where applicable, of the
Debt Securities: (1) the designation of such Debt Securities; (2) classification
as senior or subordinated Debt Securities; (3) the aggregate principal amount of
such Debt Securities; (4) the percentage of their principal amount at which such
Debt Securities will be issued; (5) the date or dates on which such Debt
Securities will mature; (6) the rate or rates (which may be fixed or variable),
if any, per annum, at which such Debt Securities will bear interest, or the
method of determination of such rate or rates; (7) the dates at which such
interest, if any, will be payable; (8) the places where principal of, premium,
if any, and interest will be payable; (9) provisions for sinking, purchase or
other analogous fund, if any; (10) the date or dates, if any, after which such
Debt Securities may be redeemed at the option of the Company or of the holder
and the redemption price or prices; (11) the terms and conditions, if any,
pursuant to which the Debt Securities are convertible or exchangeable into
Common Stock or Preferred Stock or other debt or exchange provisions; (12) any
index or formula used to determine the amount of payments of principal of and
premium, if any, and interest on, such Debt Securities; (13) if other than the
principal amount thereof, the portion of the principal amount of such Debt
Securities that will be payable upon declaration of the acceleration of the
maturity thereof or the method by which such portion shall be determined; (14)
the person to whom any interest on any such Debt Security shall be payable if
other than the person in whose name such Debt Security is registered on the
applicable record date; (15) any addition to, or modification or deletion of,
any event of Default or any covenant of the Company specified in the Indenture
with respect to such Debt Securities; (16) the application, if any, of such
means of defeasance or covenant defeasance as may be specified for such Debt
Securities; (17) whether such Debt Securities are to be issued in whole or in
part in the form of one or more temporary or permanent global securities and, if
so, the identity of the depositary for such global security or securities; and
(18) any other specific terms of the Debt Securities. Principal, premium, if
any, and interest, if any, will be payable and the Debt Securities offered
hereby will be transferable, at the corporate trust office of the Trustee's
agent in the borough of Manhattan, the City of New York, provided that payment
of interest, if any, may be made at the option of the Company by check mailed to
the address of the person entitled thereto as it appears in the Security
Register. Unless otherwise specified in the applicable Prospectus Supplement,
the Debt Securities will not be listed on any securities exchange.
If the accompanying Prospectus Supplement specifies that a series of Debt
Securities is denominated in a currency or currency unit other than United
States dollars, such Prospectus Supplement shall also specify the denomination
in which such Debt Securities will be issued and the coin or currency in which
the principal, premium, if any, and interest, if any, on such Debt Securities
will be payable, which may be United States dollars based upon the exchange rate
for such other currency or currency unit existing on or about the time a payment
is due. Special material United States federal income tax
9
<PAGE>
considerations applicable to any Debt Securities so denominated shall
also be described in the applicable Prospectus Supplement.
The Debt Securities offered hereby will be issued only in fully
registered form without coupons and, unless otherwise specified in the
Prospectus Supplement, in denominations of $1,000 and multiples of
$1,000. Debt Securities may be issued in book-entry form, without
certificates. Any such issue will be described in the Prospectus
Supplement relating to such Debt Securities. No service charge will
be made for any transfer or exchange of the Debt Securities, but the
Company or the Trustee may require payment of a sum sufficient to
cover any tax or other government charge payable in connection
therewith.
Debt Securities may be issued under the Indenture as Original
Issue Discount Securities to be sold at a substantial discount from
their stated principal amount. Material federal income tax
consequences and other considerations applicable thereto will be
described in the applicable Prospectus Supplement.
The Indenture contains no covenants or other provisions affording
protection to holders of the Debt Securities in the event of a highly
leveraged transaction, other transactions that may adversely affect
the Holders or a change in control of the Company, except to the
limited extent described under "Limitations on Mergers and Sales of
Assets."
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 (the "Global Depositary"), or its
nominee, identified in the Prospectus Supplement relating to such
series. In such a case, one or more Global Securities will be issued
in a denomination or aggregate denomination equal to the portion of
the aggregate principal amount of Outstanding Debt Securities of the
series to be represented by such Global Security or Securities.
Unless and until it is exchanged in whole or in part for Debt
Securities in definitive registered form, a Global Security may not be
registered for transfer or exchange except as a whole by the Global
Depositary for such Global Security to a nominee for such Global
Depositary and except in the circumstances described in the applicable
Prospectus Supplement.
The specific terms of the depositary arrangement with respect to
any portion of a series of Debt Securities to be represented by a
Global Security and a description of the Global Depositary will be
provided in the applicable Prospectus Supplement.
Senior Debt
The Debt Securities that will be designated and will constitute
part of the Senior Indebtedness (hereafter defined) of the Company,
will rank pari passu with all other unsecured and unsubordinated debt
of the Company.
Subordinated Debt
The Debt Securities that will constitute part of the subordinated
debt of the Company (the "Subordinated Debt Securities"), will be
subordinated in right of payment, as set forth in the Indenture, to
the prior payment in full of all existing and future Senior
Indebtedness of the Company. "Senior Indebtedness" means the
principal of (and premium, if any) and interest on (including interest
accrued after the filing of a petition initiating any proceeding
pursuant to any Bankruptcy Law, but only to the extent
10
<PAGE>
allowed or permitted to the holder of such Indebtedness against the
bankruptcy or any other insolvency estate of the Company in such
proceeding) or accrued Original Issue Discount on and other amounts
due on or in connection with any Indebtedness incurred, assumed or
guaranteed by the Company, whether outstanding on the date of the
Indenture or thereafter incurred, assumed or guaranteed, and all
renewals, extensions and refunding of any such Indebtedness; provided,
however, that the following will not constitute Senior Indebtedness:
(a) any Indebtedness which expressly provides (i) that such
Indebtedness shall not be senior in right of payment to the
Subordinated Debt Securities or (ii) that such Indebtedness shall be
subordinated to any other Indebtedness of the Company, unless such
Indebtedness expressly provides that such Indebtedness shall be senior
in right of payment to the Subordinated Debt Securities; (b) any
Indebtedness or liability for compensation to employees, for goods or
materials purchased in the ordinary course of business or for
services; (c) any Indebtedness of the Company to any Subsidiary for
money borrowed or advanced from such Subsidiary; and (d) any liability
for federal, state, local or other taxes owed or owing by the Company.
"Indebtedness" means any and all obligations of a corporation for
money borrowed which in accordance with generally accepted accounting
principles would be reflected on the balance sheet of such corporation
as a liability on the date as of which Indebtedness is to be
determined.
By reason of the subordination described herein, in the event of
insolvency, upon any distribution of the assets of the Company, (i)
the Holders of the Subordinated Debt Securities are required to pay
over their share of such distribution to the trustee in bankruptcy,
receiver or other person distributing the assets of the Company for
application to the payment of all Senior Indebtedness remaining
unpaid, to the extent necessary to pay all holders of Senior
Indebtedness in full and (ii) unsecured creditors of the Company who
are not Holders of Subordinated Debt Securities or Holders of Senior
Indebtedness of the Company may recover less, ratably, than Holders of
Senior Indebtedness of the Company and may recover more, ratably, than
the Holders of Subordinated Debt Securities.
In the event that the Subordinated Debt Securities are declared
due and payable prior to their Stated Maturity by reason of the
occurrence of an Event of Default, then the Company is obligated to
notify promptly holders of Senior Indebtedness of such acceleration.
The Company may not pay the Subordinated Debt Securities until 120
days have passed after such acceleration occurs and may thereafter pay
the Subordinated Debt Securities if the terms of the Indenture
otherwise permit payment at that time.
No payment of the principal amount at maturity, Issue Price plus
accrued Original Issue Discount, in the case of Original Issue
Discount Securities, any redemption price, or interest, if any, in
respect of the Subordinated Debt Securities may be made, nor may the
Company otherwise acquire any Subordinated Debt Securities except as
set forth in the Indenture, if any default with respect to Senior
Indebtedness occurs and is continuing that permits the acceleration of
the maturity thereof and the Company has actual knowledge of the
default, unless (a) 120 days pass after notice of the default is given
to the Trustee and such default is not then the subject of judicial
proceedings or the default with respect to the Senior Indebtedness is
cured (including, without limitation, by the payment of such Senior
Indebtedness in full) or waived and (b) the terms of the Indenture
otherwise permit the payment or acquisition of the Subordinated Debt
Securities at that time. The Company is required to give the Trustee
notice of a default with respect to Senior Indebtedness within five
Business Days after the Company has actual knowledge of the default.
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
11
<PAGE>
the approximate amount of Senior Indebtedness outstanding as of the
end of the most recent fiscal quarter for which the Company has filed
an Annual Report on Form 10-K or a Quarterly Report on Form 10-Q.
Conversion or Exchange of Debt Securities
No series of Debt Securities will be convertible into, or
exchangeable for, other securities or properties except as set forth
in the applicable Prospectus Supplement.
Certain Covenants Applicable to Senior Debt Securities
Unless otherwise set forth in the applicable Prospectus
Supplement, the following covenants will be applicable to Debt
Securities that constitute Senior Indebtedness.
Limitations on Liens. The Company will not, and will not permit
any Restricted Subsidiary to, incur, issue, assume or guarantee any
Indebtedness secured by a Lien on any Restricted Property, or on any
shares of stock or Indebtedness of a Restricted Subsidiary, without
providing that the Debt Securities shall be secured equally and
ratably with (or prior to) such secured Indebtedness, unless after
giving effect thereto the aggregate amount of all such Indebtedness so
secured (other than Indebtedness secured by excepted Liens referred to
in the following sentence), together with all Attributable Debt of the
Company and its Restricted Subsidiaries in respect of Sale-Leaseback
Transactions except Sale-Leaseback Transactions the proceeds of which
are applied to the retirement of Funded Debt, would not exceed 10% of
Consolidated Adjusted Net Assets as shown on the Company's latest
audited consolidated financial statements. This restriction will not
apply to (a) Liens on property of, or on any shares of stock or
Indebtedness of, any corporation existing at the time such corporation
becomes a Subsidiary, (b) Liens on property existing at the time of
acquisition thereof (including acquisition through merger or
consolidation) or to secure the payment of all or any part of the
purchase price or construction cost thereof or to secure any
Indebtedness incurred prior to, at the time of, or within six months
after such acquisition or completion of such property for the purpose
of financing all or any part of the purchase price or construction
cost thereof, (c) Liens on substantially unimproved property to secure
the cost of exploration, drilling or development of, or improvements
to, such property, (d) Liens in favor of the Company or a Restricted
Subsidiary, and (e) any extension, renewal or replacement of any Lien
referred to in the foregoing clauses (a) through (d) inclusive,
provided that such extension, renewal or replacement Liens shall be
limited to all or part of the same property that secured the Liens
extended, renewed or replaced (plus improvements on such property).
The following types of transactions are not deemed to create
Indebtedness secured by a Lien: (i) a sale or transfer of crude oil,
natural gas or NGLs in place for a period of time until, or in an
amount such that, the purchaser will realize therefrom a specified
amount of money or of such oil, natural gas or NGLs, or any other
interest in property commonly referred to as a "production payment,"
or (ii) the Lien on any property of the Company or any Subsidiary in
favor of governmental bodies to secure partial, progress, advance or
other payments to the Company or any Subsidiary pursuant to any
contract or statute, or the Lien of any property to secured
Indebtedness of the pollution control or industrial revenue bond type.
Limitation on Sale-Leaseback Transactions. The Indenture
provides that the Company shall not, and it shall not permit any
Restricted Subsidiary to, enter into a Sale-Leaseback Transaction
unless: (1) the lease has a term of three years or less; (2) the
lease is between the Company and a Restricted Subsidiary or between
Restricted Subsidiaries; (3) the Company or a Restricted Subsidiary
could create a Lien under the terms of the Indenture on the Restricted
Property to secure Funded Debt at least equal in amount to the
Attributable Debt for the lease; or (4) the Company or a Restricted
Subsidiary could
12
<PAGE>
create a Lien on Restricted Property under the terms of the Indenture
to secure Funded Debt at least equal in amount to the Attributable
Debt for the lease without having to secure equally and ratably any
Debt Securities that constitute Senior Indebtedness or (5) the Company
or a Restricted Subsidiary within 120 days of the effective date of
the Sale-Leaseback Transaction (i) retires Funded Debt of the Company
or of a Restricted Subsidiary at least equal in amount to the fair
value (as determined by the Company's Board of Directors) of the
Restricted Property at the time of the Sale-Leaseback Transaction or
(ii) if the net proceeds of the Sale-Leaseback Transaction equal or
exceed the fair value of the Restricted Property (as determined by the
Company's Board of Directors), applies the net proceeds to fund
investment in other Restricted Properties which investments were made
within 12 months prior to or subsequent to the Sale-Leaseback
Transaction.
Limitation on Mergers and Sales of Assets
The Company shall not consolidate with, merge with, or merge into
any corporation or convey or transfer its properties and assets
substantially as an entirety to any Person unless the successor entity
shall be a corporation organized under the laws of the United States
or any state or the District of Columbia and shall expressly assume
the obligations of the Company under the Indenture. If, with respect
to Debt Securities that constitute Senior Indebtedness, upon any such
consolidation, merger, conveyance or transfer of the Company with or
into any Person or of any such Subsidiary with or to any other
Subsidiary, any Property of the Company or of any Restricted
Subsidiary or any shares of stock or indebtedness of any Restricted
Subsidiary would thereupon become subject to any Lien (other than a
Lien permitted under "Limitation on Liens" without the Company's
having to secure such Debt Securities equally and ratably), the
Company will secure such Debt Securities (together with, if the
Company shall so determine, other securities ranking on a parity with
such Debt Securities) prior to all Liens other than any theretofore
existing.
Although the amount of the Company's property that will
constitute a sale of such property "substantially as an entirety" is
not readily quantifiable, a determination whether such a sale has
occurred will depend on the percentage of operating and total assets
transferred, among other measurements, and other facts and
circumstances of the transaction. In any particular transaction, this
determination will be made by the Company and, if such a transaction
occurs, the person to which such amount of the Company's property is
transferred shall enter into a supplemental Indenture satisfactory in
form to the Trustee.
Certain Definitions
Set forth below is a summary of certain of the defined terms used
in the Indenture. Reference is made to the Indenture for the full
definition of all such terms as well as any other capitalized terms
used herein for which no definition is provided.
"Attributable Debt" means the total net amount of rent
(discounted at the rate per annum indicated in the Indenture) required
to be paid during the remaining term of any lease.
"Consolidated Adjusted Net Assets" means the total amount of
assets after deducting therefrom (a) all current liabilities
(excluding any thereof which are by their terms extendible or
renewable at the option of the obligor thereon to a time more than 12
months after the time as of which the amount thereof is being
computed), and (b) total prepaid expenses and deferred charges.
13
<PAGE>
"Funded Debt" means, with respect to any Person, all Indebtedness
having a maturity of more than 12 months from the date as of which the
amount thereof is to be determined or having a maturity of less than
12 months but by its terms being renewable or extendible beyond 12
months from such date at the option of such Person.
"Restricted Property" means (a) any interest in property located
in the United States, Puerto Rico or Canada (including any interest in
property located off the coast of the United States operated pursuant
to leases from any governmental body) which is producing crude oil,
natural gas or NGLs in paying quantities, or (b) any manufacturing
plant or transportation or storage facility located in the United
States, Puerto Rico or Canada, in each case now owned or hereafter
acquired by the Company or a Restricted Subsidiary except any such
plant or facility or portion thereof which has a book value equal to
not more than 2% of the Consolidated Adjusted Net Assets of the
Company as shown on the Company's latest audited consolidated balance
sheet.
"Restricted Subsidiary" means a corporation (a) organized under
the laws of the United States, Puerto Rico or Canada or a jurisdiction
thereof, (b) that conducts substantially all of its business and has
substantially all of its Property within the United States, Puerto
Rico and Canada, and (c) at least 80% (by number of votes) of each
class of Voting Stock of which and 100% of all other Capital Stock and
all other securities convertible into, exchangeable for, or
representing the right to purchase, Voting Stock, of which are legally
and beneficially owned by the Company and its wholly owned Restricted
Subsidiaries.
"Sale and Leaseback Transaction" means an arrangement (other than
an arrangement made for the purposes of Section 168(f)(8) of the
Internal Revenue Code) with any bank, insurance company or other
lender or investor (collectively "lenders") or to which the lender is
a party where the Company or a Restricted Subsidiary now owns or
hereafter acquires a Restricted Property, transfers it to a lender, or
to any person to whom funds have been or are to be advanced by a
lender on the security of such Restricted Property on the rental
payments under the lease, and leases it back from the lender or other
person.
"Subsidiary" means, at any time, a corporation more than 50% of
the outstanding voting stock of which is owned, directly or
indirectly, by the Company or by one or more other Subsidiaries or by
the Company and one or more other Subsidiaries.
Events of Default
The following are Events of Default under the Indenture with
respect to Debt Securities of any series: (a) failure to pay
principal of or premium, if any, on any Debt Security of that series
at its Maturity (in the case of any Subordinated Debt Securities,
whether or not payment is prohibited by the provisions described under
"Subordinated Debt"); (b) failure to pay any interest on any Debt
Security of that series when due, continued for 30 days (in the case
of any Subordinated Debt Securities, whether or not payment is
prohibited by the provisions described under "Subordinated Debt"); (c)
failure to deposit any sinking fund payment, when due, in respect of
any Debt Security of that series (in the case of any Subordinated Debt
Securities, whether or not payment is prohibited by the provisions
described under "Subordinated Debt"); (d) any other defaults in the
performance, or breach, of any covenant of the Company in the
Indenture, continued for 90 days after notice of such default or
breach from the Trustee or the Holders of at least 25% in principal
amount of the Outstanding Debt Securities of that series (other than a
covenant included in the Indenture solely for the benefit of any
series of Debt Securities other than that series); (e) certain events
of bankruptcy, insolvency or reorganization; and (f) any other Event
of Default provided with respect to Debt Securities of that series.
14
<PAGE>
If an Event of Default with respect to Outstanding Debt
Securities of any series shall occur and be continuing, either the
Trustee or the Holders of at least 25% in principal amount of the
Outstanding Debt Securities of that series may declare the principal
amount (or, if the Debt Securities of that series are Original Issue
Discount Securities, such portion of the principal amount as may be
specified in the terms of that series) of all Debt Securities of that
series to be due and payable immediately. However, at any time after
a declaration of acceleration with respect to Debt Securities of any
series has been made, but before a judgment or decree based on such
acceleration has been obtained, the Holders of a majority in principal
amount of Outstanding Debt Securities of that series may, under
certain circumstances, rescind and annul such acceleration.
Notwithstanding the foregoing, if any Subordinated Debt Securities are
declared due and payable prior to their Stated Maturity by reason of
the occurrence of an Event of Default, the Company may not pay the
Subordinated Debt Securities until 120 days have passed after such
acceleration occurs and may thereafter pay the Subordinated Debt
Securities if the terms of the Indenture otherwise permit payment at
the time. See "Subordinated Debt." For information as to waiver of
defaults, see "Modification and Waiver."
The Indenture provides that, subject to the provisions of the
Trust Indenture Act of 1939, as amended, 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 such Holders
shall have offered to the Trustee reasonable indemnity. Subject to
such provisions for indemnification of the Trustee, the Holders of a
majority in 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.
The Company will be required to furnish annually to the Trustee a
statement as to the performance by the Company of certain of its
obligations under the Indenture and as to any default in such
performance.
Modification and Waiver
Modifications and amendments to the Indenture may be made by the
Company and the Trustee with the consent of the Holders of a majority
in principal amount of the Debt Securities of each series affected
thereby; provided, however, that no such modification or amendment
may, without the consent of the Holder of each Outstanding Debt
Security affected thereby, (a) change the Stated Maturity of the
principal of, or any installment of principal of or interest on, any
Debt Security, (b) reduce the principal amount of, or the premium, if
any, or interest, if any, on, any Debt Security, (c) reduce the amount
of principal of any Original Issue Discount Security payable upon
acceleration of the Maturity thereof, (d) change the coin or currency
in which any Debt Securities or premium, if any, or interest, if any,
thereon is payable, (e) in the case of convertible Debt Securities,
adversely affect the right to convert any Debt Security, or (f) reduce
the percentage in principal amount of Outstanding Debt Securities of
any series, the consent of the Holders of which is required for (i)
modification or amendment of the Indenture, (ii) in the case of any
Subordinated Debt Securities, modification of the subordination
provisions in a manner adverse to the Holders of the Subordinated
Debt Securities, (iii) waiver of compliance with certain provisions of
the Indenture, or (iv) waiver of certain defaults.
Modifications and amendments of the Indenture may be made by the
Company and the Trustee without the consent of any Holder to evidence
a successor to the Company, to add to, modify or delete any of the
Company's covenants or Events of Default, to permit or facilitate Debt
Securities to be issued by book entry or in bearer form or relating to
the place of payment thereof, to provide for a successor trustee,
15
<PAGE>
to establish forms or terms of Debt Securities, to change or eliminate
any provision not adversely affecting any interests of Holders of
Outstanding Debt Securities in any material respect or to cure any
ambiguity or inconsistency.
The Holders of a majority in principal amount of the Outstanding
Debt Securities of any series may on behalf of the Holders of all Debt
Securities of that series waive, insofar as that series is concerned,
compliance by the Company with certain restrictive provisions of the
Indenture. The Holders of a majority in principal amount of the
Outstanding Debt Securities of any series may on behalf of the Holders
of all Debt Securities of that series waive any past default under the
Indenture with respect to Debt Securities of that series, except a
default in the payment of the principal of, or premium, if any, or
interest, if any, on, any Debt Security of that series or in respect
to any provision which under the Indenture cannot be modified or
amended without the consent of the Holder of each Outstanding Debt
Security of that series affected.
Defeasance
The following provisions of the Indenture are applicable to the
Debt Securities. The Company (a) shall be discharged from its
obligations in respect of the Debt Securities of such series
("defeasance and discharge"), or (b) may cease to comply with certain
restrictive covenants ("covenant defeasance") including those
described under "Certain Covenants" and "Limitations on Mergers and
Sales of Assets" and, in the case of any Subordinated Debt Securities,
the provisions described under "Subordinated Debt," and any such
omission shall not be an Event of Default with respect to the Debt
Securities of such series, in each case at any time prior to the
Stated Maturity or redemption thereof, when the Company has
irrevocably deposited with the Trustee, in trust, (i) sufficient funds
in the currency or currency unit in which the Debt Securities are
denominated to pay the principal of (and premium, if any), and
interest to Stated Maturity (or redemption) on, the Debt Securities of
such series, or (ii) such amount of direct obligations of, or
obligations the principal of and interest on which are fully
guaranteed by, the government which issued the currency in which the
Debt Securities are denominated, and which are not subject to
prepayment, redemption or call, as will, together with the
predetermined and certain income to accrue thereon without
consideration of any reinvestment thereof, be sufficient to pay when
due the principal of (and premium, if any), and interest to Stated
Maturity (or redemption) on, the Debt Securities of such series. Such
defeasance and discharge and covenant defeasance are conditioned upon,
among other things, the Company's delivery of (i) an opinion of
counsel that the Holders of the Debt Securities will not recognize
income, gain or loss for United States federal income tax purposes as
a result of such defeasance, and will be taxed in the same manner as
if no defeasance and discharge or covenant defeasance, as the case may
be, had occurred and (ii) an opinion of counsel that such defeasance
would not cause the Debt Securities to be delisted from any national
securities exchange on which such Debt Securities may then be listed.
Upon such defeasance and discharge, the Holders of the Debt Securities
of such series shall no longer be entitled to the benefits of the
Indenture, except for the purposes of registration of transfer and
exchange of the Debt Securities of such series and replacement of
lost, stolen or mutilated Debt Securities and shall look only to such
deposited funds or obligations for payment.
Governing Law
The Indenture and Debt Securities will be governed by, and
construed in accordance with, the laws of the State of New York.
16
<PAGE>
The Trustee
The Company may have customary banking relationships with the
Trustee in the ordinary course of business.
DESCRIPTION OF CAPITAL STOCK
The Company is authorized to issue up to 100,000,000 shares of
Common Stock, par value $.10 per share, and up to 10,000,000 shares of
Preferred Stock, par value $.10 per share. As of March 31, 1996,
there were 25,773,553 shares of Common Stock outstanding. The Company
also had outstanding on such date 1,400,000 shares of $2.28
Cumulative Preferred Stock with a liquidation preference of $25 per
share (the "$2.28 Preferred Stock") and 2,760,000 shares of $2.625
Cumulative Convertible Preferred Stock with a liquidation preference
of $50 per share (the "$2.625 Convertible Preferred Stock"). Unless
otherwise provided in any Prospectus Supplement for a series of
Preferred Stock offered hereby (the "Offered Preferred Stock"), the
$2.28 Preferred Stock and the $2.625 Preferred Stock (collectively,
the "Existing Preferred Stock") will rank on a parity with the Offered
Preferred Stock.
The Board of Directors of the Company has the power, without
further action by the stockholders unless action is required by
applicable laws or regulations or by the terms of any outstanding
Preferred Stock, to issue Preferred Stock in one or more series and
to fix the designations, preferences and voting rights, and relative,
participating, optional and other special rights, and the
qualifications, limitations and restrictions applicable thereto. The
rights of holders of any Offered Preferred Stock will be subject to,
and may be adversely affected by, the rights of holders of any
Preferred Stock which may be issued in the future. The Board of
Directors may cause Preferred Stock to be issued to obtain additional
financing, in connection with acquisitions and for other proper
corporate purposes. Issuance of shares of Preferred Stock by the
Company may have the effect, under certain circumstances, alone or in
combination with certain of the provisions of the Company's
Certificate of Incorporation, as amended (the "Certificate of
Incorporation"), described below, of rendering more difficult or
discouraging an acquisition of the Company deemed undesirable by the
Board of Directors.
The following summary does not purport to be complete and is,
subject to, and qualified in its entirety by, the Company's
Certificate of Incorporation, including the Certificate of Designation
relating to a specific series of the Offered Preferred Stock (the
"Certificate of Designation"), which will be in the form filed as an
exhibit to or incorporated by reference in the Registration Statement
of which this Prospectus is a part at or prior to the time of issuance
of such series of Offered Preferred Stock, the Certificate of
Designation of the $2.28 Preferred Stock and the Certificate of
Designation of the $2.625 Convertible Preferred Stock.
Offered Preferred Stock
The following is a description of certain general terms and
provisions of the Offered Preferred Stock. The particular terms of
any series of Offered Preferred Stock will be described in the
applicable Prospectus Supplement. If so indicated in a Prospectus
Supplement, the terms of any such series may differ from the terms set
forth below. The summary of terms of the Company's Offered Preferred
Stock contained in this Prospectus does not purport to be complete and
is subject to, and qualified in its entirety by, the provisions of the
Company's Certificate of Incorporation and the Certificate of
Designation.
17
<PAGE>
The Board of Directors is authorized to determine for each series
of Offered Preferred Stock, and the Prospectus Supplement shall set
forth with respect to such series: (i) the number of shares that
constitute such series, (ii) the dividend rate (or the method of
calculation thereof) on the shares of such series, (iii) the dividend
periods (or the method of calculation thereof), (iv) the voting rights
of the shares, (v) the liquidation preference and any other rights of
the shares of such series upon any liquidation or winding-up of the
Company, (vi) whether or not and on what terms the shares of such
series will be subject to redemption at the option of the Company,
(vii) whether and on what terms the shares of such series will be
convertible into shares of Common Stock of the Company, (viii) whether
depositary shares representing shares of such series of Preferred
Stock will be offered and, if so, the fraction of a share of such
series of Offered Preferred Stock represented by each depositary share
(see "Depositary Shares" below), (ix) whether the shares of such
series of Offered Preferred Stock will be listed on a securities
exchange and (x) the other rights and privileges and any
qualifications, limitations or restrictions of such rights or
privileges of such series.
Dividends
Holders of shares of Offered Preferred Stock shall be entitled to
receive, when and as declared by the Board of Directors out of funds
of the Company legally available therefor, an annual cash dividend
payable at such dates and at such rates per share per annum as set
forth in the applicable Prospectus Supplement.
Unless otherwise set forth in the applicable Prospectus
Supplement, each series of Offered Preferred Stock will be junior as
to dividends to any Preferred Stock that may be issued in the future
that is expressly senior as to dividends to the Offered Preferred
Stock. If at any time the Company has failed to pay accrued dividends
upon any such senior shares at the time such dividends are payable,
the Company may not pay any dividend on the Offered Preferred Stock or
redeem or otherwise repurchase shares of Offered Preferred Stock until
such accumulated but unpaid dividends on such senior shares have been
paid or set aside for payment in full by the Company.
No dividends may be declared or paid or set apart for payment on
any Preferred Stock, including the Existing Preferred Stock, ranking
on parity as to dividends with the Offered Preferred Stock unless
there shall also be or have been declared and paid or set apart for
payment on the outstanding shares of Offered Preferred Stock dividends
for all dividend payment periods of the Offered Preferred Stock ending
on or before the dividend payment date of such parity Preferred Stock,
ratably in proportion to the respective amounts of dividends, (i)
accumulated and unpaid or payable on such parity Preferred Stock, on
the one hand, and (ii) accumulated and unpaid or payable through the
dividend payment period of the Offered Preferred Stock next preceding
such dividend payment date, on the other hand. Except as set forth
above, 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 Preferred Stock of the
Company ranking junior to or on parity as to dividends with the
Offered Preferred Stock, including the Existing Preferred Stock, nor
may any Common Stock or such other Preferred Stock of the Company be
redeemed, purchased or otherwise acquired by the Company for any
consideration or any payment be made to or available for a sinking
fund for the redemption of any shares of such stock; provided,
however, that any monies theretofore deposited in any sinking fund
with respect to any Preferred Stock in compliance with the provisions
of such sinking fund may thereafter be applied to the purchase or
redemption of such Preferred Stock in accordance with the terms of
such sinking fund, regardless of whether at the time of such
applications full cumulative dividends upon shares of the Offered
Preferred Stock outstanding on the last dividend payment date shall
have been paid or declared and set apart for payment; and provided,
18
<PAGE>
further, that any such junior or parity Preferred Stock or Common
Stock may be converted into or exchanged for stock of the Company
ranking junior to the Offered Preferred Stock as to dividends.
The amount of dividends payable for the initial dividend period
or any period shorter than a full dividend period shall be computed
on the basis of a 360-day year of twelve 30-day months. Accrued but
unpaid dividends will not bear interest.
Convertibility
No series of Offered Preferred Stock will be convertible into, or
exchangeable for, other securities or property except as set forth in
the applicable Prospectus Supplement.
Redemption and Sinking Fund
No series of Offered Preferred Stock will be redeemable or
receive the benefit of a sinking fund except as set forth in the
applicable Prospectus Supplement.
Liquidation Rights
In the event of any liquidation, dissolution or winding up of the
Company, the holders of shares of each series of Offered Preferred
Stock are entitled to receive out of assets of the Company available
for distribution to stockholders, before any distribution of assets is
made to holders of: (i) any other shares of Preferred Stock ranking
junior to such series of Offered Preferred Stock as to rights upon
liquidation, dissolution or winding up and (ii) Common Stock,
liquidating distributions per share in the amount of the liquidation
preference specified in the applicable Prospectus Supplement for such
series of Offered Preferred Stock plus dividends accrued and
accumulated but unpaid to the date of final distribution; but the
holders of each series of Offered Preferred Stock will not be entitled
to receive the liquidating distribution of, plus such dividends on,
such shares until the liquidation preference of any shares of the
Company's capital stock ranking senior to such series of the Offered
Preferred Stock as to the rights upon liquidation, dissolution or
winding up shall have been paid (or a sum set aside therefor
sufficient to provide for payment) in full. If upon any liquidation,
dissolution or winding up of the Company, the amounts payable with
respect to the Offered Preferred Stock, the Existing Preferred Stock
and any other Preferred Stock ranking as to any such distribution on a
parity with the Offered Preferred Stock are not paid in full, the
holders of the Offered Preferred Stock, the Existing Preferred Stock
and such other parity Preferred Stock will share ratably in any such
distribution of assets in proportion to the full respective
preferential amount to which they are entitled. Unless otherwise
specified in a Prospectus Supplement for a series of Offered Preferred
Stock, after payment of the full amount of the liquidating
distribution to which they are entitled, the holders of shares of
Offered Preferred Stock will not be entitled to any further
participation in any distribution of assets by the Company. Neither a
consolidation or merger of the Company with another corporation nor a
sale of securities shall be considered a liquidation, dissolution or
winding up the Company.
Voting Rights
Holders of Offered Preferred Stock will not have any voting
rights except as set forth below or in the applicable Prospectus
Supplement or as otherwise from time to time required by law. Whenever
dividends on any applicable series of Offered Preferred Stock or any
other class or series of stock ranking on a parity with the applicable
series of Offered Preferred Stock with respect to the payment of
dividends
19
<PAGE>
shall be in arrears for dividend periods, whether or not consecutive
containing in the aggregate a number of days equivalent to six
calendar quarters, the holders of shares of such series of Offered
Preferred Stock (voting separately as a class with all other series of
Preferred Stock, upon which like voting rights have been conferred and
are exercisable) will be entitled to vote for the election of two of
the authorized number of directors of the Company at the next annual
meeting of stockholders and at each subsequent meeting until all
dividends accumulated on such series of Offered Preferred Stock shall
have been fully paid or set apart for payment. The term of office of
all directors elected by the holders of such Offered Preferred Stock
shall terminate immediately upon the termination of the rights of the
holders of such Offered Preferred Stock to vote for directors. Unless
otherwise set forth in the applicable Prospectus Supplement, holders
of shares of Offered Preferred Stock will have one vote for each share
held.
So long as any shares of any series of Offered Preferred Stock
remain outstanding, the Company shall not, without the consent of
holders of at least two-thirds of the shares of such series of Offered
Preferred Stock outstanding at the time, voting separately as a class
with all other series of Preferred Stock upon which like voting rights
have been conferred and are exercisable (i) issue or increase the
authorized amount of any class or series of stock ranking prior to the
outstanding Offered Preferred Stock as to dividends or upon
liquidation or (ii) amend, alter or repeal the provisions of the
Company's Certificate of Incorporation or of the resolutions contained
in the Certificate of Designation relating to such series of Offered
Preferred Stock, whether by merger, consolidation or otherwise, so as
to materially adversely affect any power, preference or special right
of such series of Offered Preferred Stock or the holders thereof;
provided, however, that any increase in the amount of the authorized
Common Stock or authorized Preferred Stock or any increase or decrease
in the number of shares of any series of Preferred Stock or the
creation and issuance of other series of Common Stock or Preferred
Stock ranking on a parity with or junior to Preferred Stock as to
dividends and upon liquidation, dissolution or winding up shall not be
deemed to materially adversely affect such powers, preferences or
special rights.
Miscellaneous
The holders of Offered Preferred Stock will have no preemptive
rights. Offered Preferred Stock, upon issuance against full payment of
the purchase price therefor, will be fully paid and nonassessable.
Shares of Offered Preferred Stock redeemed or otherwise reacquired by
the Company shall resume the status of authorized and unissued shares
of Offered Preferred Stock undesignated as to series, and shall be
available for subsequent issuance. There are no restrictions on
repurchase or redemption of the Offered Preferred Stock while there is
any arrearage on sinking fund installments except as may be set forth
in an applicable Prospectus Supplement. Neither the par value nor the
liquidation preference is indicative of the price at which the Offered
Preferred Stock will actually trade on or after the date of issuance.
Payment of dividends on any series of Offered Preferred Stock may be
restricted by loan agreements, indentures and other transactions
entered into by the Company. The accompanying Prospectus Supplement or
information incorporated by reference will describe any material
contractual restrictions on dividend payments.
No Other Rights
The shares of a series of Offered Preferred Stock will not have
any preferences, voting powers or relative, participating, optional or
other special rights except as set forth above or in the applicable
Prospectus Supplement, the Certificate of Incorporation or Certificate
of Designation or as otherwise required by law.
20
<PAGE>
Transfer Agent and Registrar
The transfer agent and registrar for each series of Offered
Preferred Stock will be designated in the applicable Prospectus
Supplement.
Depositary Shares
General
The Company may, at its option, elect to offer fractional shares
of the Offered Preferred Stock, rather than full shares of the Offered
Preferred Stock. In the event such option is exercised, the Company
will issue receipts for Depositary Shares, each of which will
represent a fraction (to be set forth in the Prospectus Supplement
relating to a particular series of Offered Preferred Stock) of a share
of a particular series of Preferred Stock as described below.
The shares of any series of Offered Preferred Stock represented
by Depositary Shares will be deposited under a Deposit Agreement (the
"Deposit Agreement") among the Company, a depositary to be named in
the applicable Prospectus Supplement (the "Preferred Stock
Depositary"), and the holders from time to time of depositary receipts
issued thereunder. Subject to the terms of the Deposit Agreement, each
holder of a Depositary Share will be entitled, in proportion to the
applicable fraction of a share of Offered Preferred Stock represented
by such Depositary Share, to all the rights and preferences of the
Offered Preferred Stock represented thereby (including dividend,
voting, redemption, subscription and liquidation rights).
The Depositary Shares will be evidenced by depositary receipts
issued pursuant to the Deposit Agreement ("Depositary Receipts").
Depositary Receipts will be distributed to those persons purchasing
the fractional shares of the related series of Offered Preferred
Stock. Copies of the forms of Deposit Agreement and Depositary Receipt
are filed as an exhibit to the Registration Statement of which this
Prospectus is a part, and the following summary is qualified in its
entirety by reference to such exhibit. Immediately following the
issuance of shares of a series of Offered Preferred Stock by the
Company, the Company will deposit such shares with the Preferred Stock
Depositary, which will then issue and deliver the Depositary Receipts
to the purchasers thereof. Depositary Receipts will only be issued
evidencing whole Depositary Shares. A Depositary Receipt may evidence
any number of whole Depositary Shares.
Pending the preparation of definitive Depositary Receipts, the
Preferred Stock Depositary may, upon the written order of the Company,
issue temporary Depositary Receipts substantially identical to (and
entitling the holders thereof to all the rights pertaining to) the
definitive Depositary Receipts but not in definitive form. Definitive
Depositary Receipts will be prepared thereafter without unreasonable
delay, and such temporary Depositary Receipts will be exchangeable for
definitive Depositary Receipts at the Company's expense.
Dividends and Other Distributions
The Preferred Stock Depositary will distribute all cash dividends
or other cash distributions received in respect of the related series
of Offered Preferred Stock to the record holders of Depositary Shares
relating to such series of Offered Preferred Stock in proportion to
the number of such Depositary Shares owned by such holders.
21
<PAGE>
In the event of a distribution other than in cash, the Preferred
Stock Depositary will distribute property received by it to the record
holders of Depositary Shares entitled thereto in proportion to the
number of Depositary Shares owned by such holders, unless the
Preferred Stock Depositary determines that such distribution cannot be
made proportionately among such holders or that it is not feasible to
make such distributions, in which case the Preferred Stock Depositary
may, with the approval of the Company, adopt such method as it deems
equitable and practicable for the purpose of effecting such
distribution, including the sale (at public or private sale) of the
Securities or property thus received, or any part thereof, at such
place or places and upon such terms as it may deem proper.
The amount distributed in any of the foregoing cases will be
reduced by any amounts required to be withheld by the Company or the
Preferred Stock Depositary on account of taxes or other governmental
charges.
Redemption of Depositary Shares
If a series of the Offered Preferred Stock underlying the
Depositary Shares is subject to redemption, the Depositary Shares will
be redeemed from the proceeds received by the Preferred Stock
Depositary resulting from any redemption, in whole or in part, of such
series of the Preferred Stock held by the Preferred Stock Depositary.
The redemption price per Depositary Share will be equal to the
applicable fraction of the redemption price per share payable with
respect to such series of the Offered Preferred Stock. If the Company
redeems shares of a series of Offered Preferred Stock held by the
Preferred Stock Depositary, the Preferred Stock Depositary will redeem
as of the same redemption date the number of Depositary Shares
representing the shares of Preferred Stock so redeemed. If less than
all the Depositary Shares are to be redeemed, the Depositary Shares to
be redeemed will be selected by lot or substantially equivalent method
determined by the Preferred Stock Depositary.
After the date fixed for redemption, the Depositary Shares so
called for redemption will no longer be deemed to be outstanding and
all rights of the holders of the Depositary Shares will cease, except
the right to receive the moneys payable upon such redemption and any
money or other property to which the holders of such Depositary Shares
where entitled upon such redemption, upon surrender to the Preferred
Stock Depositary of the Depositary Receipts evidencing such Depositary
Shares. Any funds deposited by the Company with the Preferred Stock
Depositary for any Depositary Shares that the holders thereof fail to
redeem will be returned to the Company after a period of two years
from the date such funds are so deposited.
Voting the Preferred Stock
Upon receipt of notice of any meeting at which the holders of any
series of the Offered Preferred Stock are entitled to vote, the
Preferred Stock Depositary will mail the information contained in such
notice of meeting to the record holders of the Depositary Shares
relating to such series of Offered Preferred Stock. Each record holder
of such Depositary Shares on the record date (which will be the same
date as the record date for the related series of Offered Preferred
Stock) will be entitled to instruct the Preferred Stock Depositary as
to the exercise of the voting rights pertaining to the number of
shares of the series of Offered Preferred Stock represented by such
holder's Depositary Shares. The Preferred Stock Depositary will
endeavor, insofar as practicable, to vote or cause to be voted the
number of shares of the Preferred Stock represented by such Depositary
Shares in accordance with such instructions, provided the Offered
Preferred Stock Depositary receives such instructions sufficiently in
advance of such meeting to enable it to so vote or cause to be voted
the shares of Offered Preferred Stock, and the Company will agree to
take
22
<PAGE>
all reasonable action that may be deemed necessary by the Preferred
Stock Depositary in order to enable the Preferred Stock Depositary to
do so. The Preferred Stock Depositary will abstain from voting shares
of the Offered Preferred Stock to the extent it does not receive
specific instructions from the holders of Depositary Shares
representing such Offered Preferred Stock.
Withdrawal of Preferred Stock
Upon surrender of the Depositary Receipts at the corporate trust
office of the Preferred Stock Depositary and upon payment of the
taxes, charges and fees provided for in the Deposit Agreement and
subject to the terms thereof, the holder of the Depositary Shares
evidenced thereby will be entitled to delivery at such office, to or
upon his or her order, of the number of whole shares of the related
series of Offered Preferred Stock and any money or other property, if
any, represented by such Depositary Shares. Holders of Depositary
Shares will be entitled to receive whole shares of the related series
of Offered Preferred Stock, but holders of such whole shares of
Offered Preferred Stock will not thereafter be entitled to deposit
such shares of Offered Preferred Stock with the Preferred Stock
Depositary or to receive Depositary Shares thereof. If the Depositary
Receipts delivered by the holder evidence a number of Depositary
Shares in excess of the number of Depositary Shares representing the
number of whole shares of the related series of Offered Preferred
Stock to be withdrawn, the Preferred Stock Depositary will deliver to
such holder or upon his or her order at the same time a new Depositary
Receipt evidencing such excess number of Depositary Shares.
Amendment and Termination of the Deposit Agreement
The form of Depositary Receipt evidencing the Depositary Shares
and any provisions of the Deposit Agreement may at any time and from
time to time be amended by agreement between the Company and the
Preferred Stock Depositary. However, any amendment that materially
adversely alters the rights of the holders of Depositary Shares will
not be effective unless such amendment has been approved by the
holders of at least a majority of the Depositary Shares then
outstanding. Every holder of a Depositary Receipt at the time such
amendment becomes effective will be deemed, by continuing to hold such
Depositary Receipt, to be bound by the Deposit Agreement as so
amended. Notwithstanding the foregoing, in no event may any amendment
impair the right of any holder of any Depositary Shares, upon
surrender of the Depositary Receipts evidencing such Depositary Shares
and subject to any conditions specified in the Deposit Agreement, to
receive shares of the related series of Offered Preferred Stock and
any money or other property represented thereby, except in order to
comply with mandatory provisions of applicable law. The Deposit
Agreement may be terminated by the Company at any time upon not less
than 60 days prior written notice to the Preferred Stock Depositary,
in which case, on a date that is not later than 30 days after the date
of such notice, the Preferred Stock Depositary shall deliver or make
available for delivery to holders of Depositary Shares, upon surrender
of the Depositary Receipts evidencing such Depositary Shares, such
number of whole or fractional shares of the related series of Offered
Preferred Stock as are represented by such Depositary Shares. The
Deposit Agreement shall automatically terminate after all outstanding
Depositary Shares have been redeemed or there has been a final
distribution in respect of the related series of Offered Preferred
Stock in connection with any liquidation, dissolution or winding up of
the Company and such distribution has been distributed to the holders
of Depositary Shares.
23
<PAGE>
Charges of Depositary
The Company will pay all transfer and other taxes and the
governmental charges arising solely from the existence of the
depositary arrangements. The Company will pay the charges of the
Preferred Stock Depositary, including charges in connection with the
initial deposit of the related series of Offered Preferred Stock and
the initial issuance of the Depositary Shares and all withdrawals of
shares of the related series of Offered Preferred Stock, except that
holders of Depositary Shares will pay other transfer and other taxes
and governmental charges and such other charges as are expressly
provided in the Deposit Agreement to be for their accounts.
Resignation and Removal of Depositary
The Preferred Stock Depositary may resign at any time by
delivering to the Company written notice of its election to do so, and
the Company may at any time remove the Depositary, any such
resignation or removal to take effect upon the appointment of a
successor Preferred Stock Depositary, which successor Preferred Stock
Depositary must be appointed within 60 days after delivery of the
notice of resignation or removal and must be a bank or trust company
having its principal office in the United States and having a combined
capital and surplus of at least $50,000,000.
Miscellaneous
The Preferred Stock Depositary will forward to the holders of
Depositary Shares all reports and communications from the Company that
are delivered to the Preferred Stock Depositary and which the Company
is required to furnish to the holders of the Offered Preferred Stock.
Neither the Preferred Stock Depositary nor the Company will be
liable if it is prevented or delayed by law or any circumstance beyond
its control in performing its obligations under the Deposit Agreement.
The obligations of the Company and the Preferred Stock Depositary
under the Deposit Agreement will be limited to performance with best
judgment and in the good faith of their duties thereunder, except that
they are liable for gross negligence and willful misconduct in the
performance of their duties thereunder, and they will not be obligated
to appear in, prosecute or defend any legal proceeding in respect of
any Depositary Receipts, Depositary Shares or series of Preferred
Stock unless satisfactory indemnity is furnished. The Preferred Stock
Depositary and the Company may rely on advice of legal counsel or
accountants of their choice, or information provided by persons
presenting Preferred Stock for deposit, holders of Depositary Shares
or other persons believed in good faith to be competent and on
documents believed to be genuine.
The Preferred Stock Depositary's corporate trust office will be
identified in the applicable Prospectus Supplement. Unless otherwise
set forth in the applicable Prospectus Supplement, the Preferred Stock
Depositary will act as transfer agent and registrar for Depositary
Receipts and if shares of a series of Offered Preferred Stock are
redeemable, the Preferred Stock Depositary will act as redemption
agent for the corresponding Depositary Receipts.
Common Stock
The holders of Common Stock are entitled to one vote for each
share held of record on all matters submitted to a vote of
stockholders except as otherwise provided by law. There are no
cumulative voting rights with respect to the election of directors.
Holders of Common Stock are entitled to receive ratably
24
<PAGE>
such dividends as may be declared by the Board of Directors out of
legally available funds. In the event of dissolution of the Company,
they will be entitled to share ratably in all assets remaining after
payment of liabilities and amounts owed in respect of outstanding
Preferred Stock, including any Offered Preferred Stock and the
Existing Preferred Stock. Holders of Common Stock have no preemptive
rights and have no right to convert their Common Stock into any other
securities.
The transfer agent and registrar for the Common Stock is The
First National Bank of Boston.
$2.625 Convertible Preferred Stock
On February 25, 1994, the Company issued 2,760,000 shares of
Preferred Stock designated the "$2.625 Cumulative Convertible
Preferred Stock." Holders of the $2.625 Convertible Preferred Stock
are entitled to receive dividends quarterly at an annual rate of
$2.625 per share, when and as declared by the Board of Directors out
of funds legally available therefor. Such dividends are cumulative.
The $2.625 Convertible Preferred Stock has a Liquidation
Preference of $50 per share. Holders of $2.625 Convertible Preferred
Stock are entitled, in the event of the Company's liquidation, to
share ratably in all of the Company's assets remaining after payment
of all its debts and liabilities up to the amount of the Liquidation
Preference set forth above, plus all accrued and unpaid dividends. The
rights of holders of $2.625 Convertible Preferred Stock rank upon
liquidation of the Company on a parity with the $2.28 Preferred Stock
and prior to the holders of the Common Stock and of any other series
of Preferred Stock which is not specifically on a parity with or
senior to the $2.625 Convertible Preferred Stock.
The $2.625 Convertible Preferred Stock is redeemable on or after
February 16, 1997 at a price per share ranging from 103.675% of the
Liquidation Preference on February 16, 1997 to 100% thereof on or
after February 16, 2004, plus in all instances all accrued and unpaid
dividends.
Each share of $2.625 Convertible Preferred Stock is convertible
into such number of shares of Common Stock as is equal to the
Liquidation Preference of such share divided by the Conversion Price.
As of the date hereof, the Conversion Price is $39.750, subject to
adjustment for stock dividends, stock splits and other dilutive
events.
Holders of $2.625 Preferred Stock have no voting rights except as
set forth below or as otherwise from time to time required by law.
Whenever dividends on the $2.625 Preferred Stock or any other class or
series of stock ranking on a parity with the $2.625 Preferred Stock
with respect to the payment of dividends shall be in arrears for
dividend periods, whether or not consecutive, containing in the
aggregate a number of days equivalent to six calendar quarters, the
holders of shares of $2.625 Preferred Stock (voting separately as a
class with all other series of Preferred Stock upon which like voting
rights have been conferred and are exercisable) will be entitled to
vote for the election of two of the authorized number of directors of
the Company at the next annual meeting of stockholders and at each
subsequent meeting until all dividends accumulated on the $2.625
Preferred Stock and all other series of Preferred Stock ranking on a
parity as to dividends with the $2.625 Preferred Stock shall have been
fully paid or set apart for payment. The term of office of all
directors elected by the holders of such Preferred Stock shall
25
<PAGE>
terminate immediately upon the termination of the right of the holders
of such Preferred Stock to vote for directors. Holders of shares of
$2.625 Preferred Stock have one vote for each share held.
So long as any shares of the $2.625 Preferred Stock remain
outstanding, the Company shall not, without the consent of holders of
at least two-thirds of the shares of $2.625 Preferred Stock
outstanding at the time, voting separately as a class with all other
series of Preferred Stock upon which like voting rights have been
conferred and are exercisable, (i) issue or increase the authorized
amount of any class or series of stock ranking prior to the
outstanding $2.625 Preferred Stock as to dividends or upon liquidation
or (ii) amend, alter or repeal the provisions of the Company's
Certificate of Incorporation or of the resolutions contained in the
Certificate of Designation relating to the $2.625 Preferred Stock,
whether by merger, consolidation or otherwise, so as to materially
adversely affect any power, preference or special right of the
outstanding $2.625 Preferred Stock or the holders thereof; provided,
however, that any increase in the amount of the authorized Common
Stock or authorized Preferred Stock or any increase or decrease in the
number of shares of any series of Preferred Stock or the creation and
issuance of other series of Common Stock or Preferred Stock ranking on
a parity with or junior to the $2.625 Preferred Stock as to dividends
and upon liquidation, dissolution or winding up shall not be deemed to
materially adversely affect such powers, preferences or special
rights.
$2.28 Preferred Stock
On November 19, 1992, the Company authorized and issued 1,400,000
shares of Preferred Stock designated "$2.28 Cumulative Preferred
Stock." Holders of $2.28 Preferred Stock are entitled to receive
dividends quarterly at an annual rate of $2.28125 per share, when and
as declared by the Board of Directors out of funds legally available
therefor. Such dividends are cumulative.
The $2.28 Preferred Stock has a liquidation preference of $25.00
per share. Holders of $2.28 Preferred Stock are entitled, in the event
of the Company's liquidation, to share ratably in all of the Company's
assets remaining after payment of all of its debts and liabilities up
to the amount of the liquidation preference set forth above, plus all
accrued and unpaid dividends. The rights of holders of $2.28 Preferred
Stock rank upon liquidation of the Company on a parity with the $2.625
Preferred Stock and prior to those of the holders of the Common Stock
and of any other series of Preferred Stock which is not specifically
on a parity with or senior to the $2.28 Preferred Stock.
The $2.28 Preferred Stock is redeemable on or after November 15,
1997 at a redemption price equal to $25.00 per share plus in all
instances all accrued and unpaid dividends.
Holders of $2.28 Preferred Stock have no voting rights except as
set forth below or as otherwise from time to time required by law.
Whenever dividends on the $2.28 Preferred Stock or any other class or
series of stock ranking on a parity with the $2.28 Preferred Stock
with respect to the payment of dividends shall be in arrears for
dividend periods, whether or not consecutive, containing in the
aggregate a number of days equivalent to six calendar quarters, the
holders of shares of $2.28 Preferred Stock (voting separately as a
class with all other series of Preferred Stock upon which like voting
rights have been conferred and are exercisable) will be entitled to
vote for the election of two of the authorized number of directors of
the Company at the next annual meeting of stockholders and at each
subsequent meeting until all dividends accumulated on the $2.28
Preferred Stock and all other series of Preferred Stock ranking on a
parity as to dividends with the $2.625 Preferred Stock shall have been
fully paid or set apart for payment. The term of office of all
directors elected by the holders of such Preferred Stock shall
terminate
26
<PAGE>
immediately upon the termination of the right of the holders of such
Preferred Stock to vote for directors. Holders of shares of $2.28
Preferred Stock have one vote for each share held.
So long as any shares of the $2.28 Preferred Stock remain
outstanding, the Company shall not, without the consent of holders of
at least two-thirds of the shares of $2.28 Preferred Stock outstanding
at the time, voting separately as a class with all other series of
Preferred Stock upon which like voting rights have been conferred and
are exercisable, (i) issue or increase the authorized amount of any
class or series of stock ranking prior to the outstanding $2.28
Preferred Stock as to dividends or upon liquidation or (ii) amend,
alter or repeal the provisions of the Company's Certificate of
Incorporation or of the resolutions contained in the Certificate of
Designation relating to the $2.28 Preferred Stock, whether by merger,
consolidation or otherwise, so as to materially adversely affect any
power, preference or special right of the outstanding $2.28 Preferred
Stock or the holders thereof; provided, however, that any increase in
the amount of the authorized Common Stock or authorized Preferred
Stock or any increase or decrease in the number of shares of any
series of Preferred Stock or the creation and issuance of other series
of Common Stock or Preferred Stock ranking on a parity with or junior
to the $2.28 Preferred Stock as to dividends and upon liquidation,
dissolution or winding up shall not be deemed to materially adversely
affect such powers, preferences or special rights.
Registration Rights
The Company has a registration rights agreement with certain
principal stockholders, including the Selling Stockholder, granting
them the right to require the Company to effect one registration of
any or all of their Common Stock at their expense. In addition, they
have the right to have any or all of such Common Stock included, at
their pro rata expense, in any registration statement relating to the
Common Stock filed by the Company, subject to the right of the
underwriter of that offering to limit the number of shares of such
Common Stock to be included in that registration.
Certain Provisions of Certificate of Incorporation and Delaware Law
The Company's Certificate of Incorporation contains certain
provisions that may have an effect of delaying, deferring or
preventing a change of control of the Company. First, the Certificate
of Incorporation provides that the Board shall consist of three
classes of Directors, each serving a three-year term ending in a
successive year. This provision may make it more difficult to effect a
takeover of the Company because it would generally take two annual
meetings of stockholders for an acquiring party to elect a majority of
the Board. As a result, the classified Board may discourage proxy
contests for the election of Directors or purchases of a substantial
block of stock because it could operate to prevent obtaining control
of the Board in a relatively short period of time.
In addition, the Certificate of Incorporation provides that the
holders of a minimum of 60% of the Company's capital stock entitled to
vote on a manner (or such higher percentage as may otherwise be
required) may take action thereon without a meeting by executing a
written consent or consents. This increases the percentage that would
otherwise be required under Delaware law to take certain actions by
written consent, and thus may make it more difficult to effect a
takeover of the Company involving certain transactions, such as a
merger or sale of assets, by requiring a potential acquiror to obtain
a higher percentage of the Company's voting securities or hold a
stockholders' meeting before such a transaction could be consummated.
27
<PAGE>
The Company is subject to Section 203 of the Delaware General Corporation
Law, which provides for restrictions on business combinations (as defined
therein) with interested persons (any person who acquires 15% or more of the
Company's outstanding voting stock). In general, the Company is prohibited from
engaging in business combinations with an interested person for a period of
three years from the date a person becomes an interested person, subject to
certain exceptions. By restricting the ability of the Company to engage in
business combinations with an interested person, the application of Section 203
to the Company may provide a barrier to hostile or unwanted takeovers.
SELLING STOCKHOLDER
The following table sets forth certain information concerning the
beneficial ownership of Common Stock by the Selling Stockholder as of June 30,
1996 and as adjusted to reflect the sale of 150,000 shares of Common Stock by
the Selling Stockholder.
<TABLE>
<CAPTION>
Ownership Prior Ownership
to this Offering After this Offering
-------------------------- --------------------------
Number of Percent of Number of Number of Percent of
Shares of Common Shares Shares of Common
Name of Beneficial Owner Common Stock Stock Being Offered Common Stock Stock
- ------------------------ ------------ ----------- ------------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Brion G. Wise
Chairman of the Board,
Chief Executive Officer
and Director........... 3,964,430 15.4% 150,000 3,814,430 14.8%
</TABLE>
PLAN OF DISTRIBUTION
The Company and the Selling Stockholder may sell the Securities being
offered hereby directly to purchasers, through agents, through underwriters
and/or through dealers. In addition, any or all of the Selling Stockholder
Shares may be offered and sold to purchasers directly by or on behalf of the
Selling Stockholder from time to time on the NYSE at prices prevailing on such
exchange. Furthermore, any of the Selling Stockholder Shares covered by this
Prospectus which qualify for sale pursuant to Rule 144 may be sold thereunder
rather than pursuant to this Prospectus.
Offers to purchase Securities may be solicited directly by the Company or
the Selling Stockholder or by agents designated by the Company or the Selling
Stockholder 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, 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 or the
Selling Stockholder to such agent will be set forth, in the accompanying
Prospectus Supplement. Unless otherwise indicated in the accompanying Prospectus
Supplement, any such agent will be acting on a best-efforts basis for the period
of its appointment (ordinarily five business days or less).
28
<PAGE>
If an underwriter or underwriters are utilized in the sale, the Company
and, if applicable, the Selling Stockholder, will execute 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
accompa nying Prospectus Supplement, which will be used by the underwriters to
make resales of the Securities in respect of which this Prospectus is delivered
to the public.
If a dealer is utilized in the sale of the Securities in respect of which
this Prospectus is delivered, the Company or the Selling Stockholder 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. The name of the dealer and the terms of the transaction will
be set forth in the accompanying Prospectus Supplement.
Agents, underwriters and dealers may be entitled under the relevant
agreements to indemnification by the Company or the Selling Stockholder against
certain liabilities, including liabilities under the Securities Act. 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 place and time of delivery for the Securities in respect of which
this Prospectus is delivered are set forth in the accompanying Prospectus
Supplement.
LEGAL OPINIONS
The validity of all the Securities in respect of which this Prospectus is
being delivered exclusive of the Selling Stockholder Shares will be passed on
for the Company by Skadden, Arps, Slate, Meagher & Flom, 919 Third Avenue, New
York, New York 10022. The validity of the Selling Stockholder Shares in respect
of which this Prospectus is being delivered will be passed on for the Company by
John C. Walter, Executive Vice President and Secretary of the Company. As of
June 30, 1996, Mr. Walter owned 32,494 shares of Common Stock.
EXPERTS
The financial statements incorporated in this Prospectus by reference to
the Annual Report on Form 10-K of the Company for the year ended December 31,
1995, have been so incorporated in reliance on the report of Price Waterhouse
LLP, independent accountants, given on the authority of said firm as experts in
auditing and accounting.
29
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following sets forth estimated expenses and costs (other than
underwriting discounts and commissions) expected to be incurred in connection
with the issuance and distribution of the securities registered hereby:
SEC registration fee............................. $ 756
Printing costs................................... 2,000
Legal fees and expenses.......................... 6,000
Accounting fees and expenses..................... 3,000
Blue sky fees and expenses....................... 2,000
Trustee's fees................................... -
Fees of rating agencies.......................... -
Miscellaneous.................................... 6,244
____________
Total.......................................... $ 20,000
============
Item 15. Indemnification of Directors and Officers
The Company's Bylaws incorporate substantially the provisions of the
General Corporation Law of the State of Delaware providing for indemnification
of directors, officers, employees and agents of the Company against expenses,
judgments, fines, settlements and other amounts actually and reasonably incurred
in connection with any proceeding arising by reason of the fact that such person
is or was an officer, director, employee or agent of the Company. In addition,
the Company is authorized to enter into indemnification agreements with its
directors and officers providing mandatory indemnification to them to the
maximum extent permissible under Delaware law.
As permitted under Delaware law, the Company's Certificate of
Incorporation provides for the elimination of the personal liability of a
director to the corporation and its stockholders for monetary damages arising
from a breach of the director's fiduciary duty of care. The provision is limited
to monetary damages, applies only to a director's actions while acting within
such person's capacity as a director, and does not entitle the Company to limit
director liability for any judgment resulting from (a) any breach of the
director's duty of loyalty to the Company or its stockholders; (b) acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of the law; (c) paying an illegal dividend or approving an illegal
stock repurchase; or (d) any transaction from which the director derived an
improper benefit. In addition, Section 145 of the General Corporation Law of the
State of Delaware provides generally that a person sued as a director, officer,
employee or agent of a corporation may be indemnified by the corporation for
reasonable expenses, including counsel fees, if in the case of other than
derivative suits, such person has acted in good faith and in a manner such
person reasonably believed to be in or not opposed to the best interests of the
corporation (and in the case of a criminal proceeding, and no reasonable cause
to believe that such person's conduct was unlawful). In the case of a derivative
suit, an officer, employee or agent of the corporation who is not protected by
such provisions
II-1
<PAGE>
in the Certificate of Incorporation, may be indemnified by the corporation for
reasonable expenses, including attorneys' fees, if such person has acted in good
faith and in a manner such person reasonably believed to be in or not opposed to
the best interests of the corporation, except that no indemnification shall be
made in the case of a derivative suit in respect of any claim as to which an
officer, employee or agent has been adjudged to be liable to the corporation
unless the Delaware Court of Chancery or the court in which such action or suit
was brought shall determine that such person is fairly and reasonably entitled
to indemnity for proper expenses. Indemnification is mandatory in the case of a
director, officer, employee or agent who is successful on the merits in defense
of a suit against such person.
Item 16. Exhibits and Financial Statement Schedules
The following exhibits are filed as part of this Registration Statement:
Exhibit
Number Description
- ------ -----------
1.1 Form of Underwriting Agreement for Debt Securities; incorporate by
reference to Exhibit 1.1 to Registrant's Registration Statement on
Form S-3 (No. 33-66516).
1.2 Form of Underwriting Agreement for Preferred Stock; incorporated by
reference to Exhibit 1.2 to Registrant's Registration Statement on
Form S-3 (No. 33-66516).
1.3 Form of Underwriting Agreement for Common Stock; incorporated by
reference to Exhibit 1.3 to Registrant's Registration Statement on
Form S-3 (No. 33-66516).
4.1 Form of Indenture between the Registrant and Texas Commerce Bank
National Association; incorporated by reference to Exhibit 4.1 to
Registrant's Registration Statement on Form S-3 (No. 33-66516).
4.2 Form of Certificate of Designation for Preferred Stock; incorporated
by reference to Exhibit 4.1 to Registrant's Registration Statement on
Form S-3 (No. 33-66516).
4.3 Form of Deposit Agreement; incorporated by reference to Exhibit
4.3 to Registrant's Registration Statement on Form S-3 (No. 33-66516).
4.4 Form of Depositary Receipt (included in Exhibit 4.3).
4.7 Certificate of Designation for $2.625 Cumulative Convertible Preferred
Stock; incorporated by reference to Item 5 to Registrant's Current
Report on Form 8-K dated February 24, 1994.
4.8 Registration Rights Agreement among Western Gas Resources, Inc., WGP,
Inc., Heetco, Inc. N.V., Dean Phillips, Inc., Sauvage Gas Company and
Sauvage Gas Service, Inc. (Filed as exhibit 10.14 to Western Gas
Resources, Inc.'s Registration Statement on Form S-4 dated March 27,
1991 and incorporated herein by reference.)
4.9 Amendment No. 1 to Registration Rights Agreement as of May 1,
1991 between Western Gas Resources, Inc., Bill Sanderson, WGP, Inc.,
Dean Phillips, Inc., Heetco,
II-2
<PAGE>
Inc. N.V., Sauvage Gas Company and Sauvage Gas Service, Inc. (Filed
as exhibit 4.2 to Western Gas Resources. Inc.'s Form 10-Q for the
quarter ended June 30, 1991 and incorporated herein by reference.
5.1 Opinion of Skadden, Arps, Slate, Meagher & Flom with respect to
certain securities that may be offered by the Registrant; incorporated
by reference to (i) Exhibit 5.1 to Registrant's Registration Statement
on Form S-3 (No. 33-66516); (ii) Exhibit 5.1 to Registrant's
Registration Statement on Form S-3 (No. 33-54741) and (iii)
Exhibit 5.1 to Registrant's Registration Statement on Form S-3
(No. 333-00903).
5.2 Opinion of John C. Walter with respect to Common Stock that may be
offered by the Selling Stockholder.
12.1 Computation of Consolidated Ratio of Earnings to Fixed Charges.
12.2 Computation of Consolidated Ratio of Earnings to Fixed Charges and
Preferred Stock Dividends.
23.1 Consent of Skadden, Arps, Slate, Meagher & Flom.
23.2 Consent of John C. Walter.
23.3 Consent of Price Waterhouse LLP.
24.1 Powers of Attorney (see Signature page).
25.1 Form T-1 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of Texas Commerce Bank National Association as
Trustee; incorporated by reference to Exhibit 25.1 to Registrant's
Registration Statement on Form S-3 (No. 33-66516).
Item 17. Undertakings
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;
(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;
II-3
<PAGE>
provided, however, that paragraphs (1)(i) and (1)(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 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 of 1933, each such post-effective amendment shall be deemed to be
a new Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(4) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the Registrant's annual report pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Securities Exchange Act of 1934) that is incorporated by reference
in this Registration Statement shall be deemed to be a new Registration
Statement relating to the securities offered herein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(5) That, for purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of prospectus
filed as part of this Registration Statement in reliance upon Rule 430A and
contained in a 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 this Registration Statement as of the time it was declared effective.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Company pursuant to the foregoing provisions, or otherwise, the Company has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Company of expenses incurred or
paid by a director, officer or controlling person of the Company 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 Company 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 Act and will be governed by the final adjudication of
such issue.
II-4
<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 on Form S-3 to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Denver, State of
Colorado, on September 27, 1996.
WESTERN GAS RESOURCES, INC.
By: /s/ Brion G. Wise
-----------------------------------
Brion G. Wise, Chairman of the Board
and Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints and
hereby authorizes Lanny F. Outlaw, John C. Walter and William J. Krysiak,
severally, such person's true and lawful attorneys-in-fact, with full power of
substitution or resubstitution, for such person's name, place and stead, in any
and all capacities, to sign on such person's behalf, individually and in each
capacity stated below, any and all amendments, including post-effective
amendments to this Registration Statement and to sign any and all additional
registration statements relating to the same offering of securities as this
Registration Statement that are filed pursuant to Rule 462(b) of the Securities
Act of 1933, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact, full power and authority to do and perform
each and every act and thing requisite or necessary to be done in and about the
premises, as fully to all intents and purposes as such person might or could do
in person, hereby ratifying and confirming all that said attorneys-in-fact, or
their 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 below by the following persons in the
capacities stated below on the 27th day of September, 1996.
II-5
<PAGE>
Signature Title Date
- --------- ----- ----
/s/ Brion G. Wise
- --------------------------- Director, Chairman of the September 27, 1996
Brion G. Wise Board and Chief Executive
Officer (Principal Executive
Officer)
/s/ Walter L. Stonehocker September 27, 1996
- --------------------------- Director and Vice Chairman of
Walter L. Stonehocker the Board
/s/ Bill M. Sanderson
- --------------------------- Director September 23, 1996
Bill M. Sanderson
/s/ Dean Phillips
- --------------------------- Director September 20, 1996
Dean Phillips
- --------------------------- Director September 27, 1996
Ward Sauvage
/s/ Richard B. Robinson
- --------------------------- Director September 20, 1996
Richard B. Robinson
/s/ James A. Senty
- --------------------------- Director September 19, 1996
James A. Senty
/s/ Joseph E. Reid
- --------------------------- Director September 19, 1996
Joseph E. Reid
/s/ William J. Krysiak
- --------------------------- Vice President - Finance September 27, 1996
William J. Krysiak (Principal Financial and
Accounting Officer)
II-6
<PAGE>
JOHN C. WALTER
12200 NORTH PECOS STREET
DENVER, COLORADO 80234
September 27, 1996
Western Gas Resources, Inc.
12200 North Pecos Street
Denver, Colorado 80234
Re: Western Gas Resources, Inc.
Shares of Common Stock, par value
$.10 per share, of Selling Stockholder
Dear Sirs,
I am Vice President-General Counsel for Western Gas Resources, Inc., a
Delaware corporation (the "Corporation"). I have participated in the preparation
of a registration statement on Form S-3 (the "Registration Statement") with
respect to the sale by Brian Wise of 150,000 shares (the "Stockholder Shares")
of common stock, par value $.10 per share, of the Corporation.
I have examined the originals, or copies certified or otherwise
authenticated to my satisfaction, of such corporate records of the Corporation,
certificates of public officials and of officers of the Corporation, and other
agreements, instruments and documents as I have deemed necessary as a basis for
the opinions herein expressed.
On the basis of the foregoing and the assumptions hereinafter set forth,
and in reliance thereon, I advise you that, in my opinion:
1. The Corporation has been duly incorporated and is validly
existing and in good standing under the laws of the State of
Delaware.
2. The Stockholder Shares have been duly authorized by the
Corporation and are legally issued, fully paid and non-
assessable.
I am a member of the Bar of the State of Colorado only and do not
purport to be an expert on the laws of any other state or jurisdiction other
than the State of Colorado and the United States. Insofar as opinions herein
expressed relate to matters governed by Delaware law, I have relied solely upon
a reading of the applicable statutes and the records of the Corporation and
certificates of public officials referenced above with respect to the opinions
given herein.
Respectfully submitted,
John C. Walter, Esq.
Exhibit 5.2
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES
($000s, except for ratios)
<TABLE>
<CAPTION>
Six Months
Ended Year Ended December 31,
June 30, --------------------------------------------------
1996 1995 1994 1993 1992 1991
---------- ---------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net income $ 15,665 $ (6,108) $ 7,364 $ 38,102 $ 39,688 $ 20,850
Income taxes 8,301 (2,158) 4,160 17,529 18,757 11,933
-------- --------- -------- -------- -------- --------
Pre-tax income 23,966 (8,266) 11,524 55,631 58,445 32,783
-------- --------- -------- -------- -------- --------
Add:
Interest expense on indebtedness 18,149 37,160 31,434 12,456 10,449 13,022
Amortization of debt expense 978 1,585 1,251 - - -
Portion of rents representative of
the interest factor 260 590 354 1,218 558 85
-------- --------- -------- -------- -------- --------
Total fixed charges 19,387 39,335 33,039 13,674 11,007 13,107
-------- --------- -------- -------- -------- --------
Income as adjusted $ 43,353 $ 31,069 $ 44,563 $ 69,305 $ 69,452 $ 45,890
======== ========= ======== ======== ======== ========
Total fixed charges per above $ 19,387 $ 39,335 $ 33,039 $ 13,674 $ 11,007 $ 13,107
Interest capitalized 634 1,460 1,480 4,905 2,100 1,300
-------- --------- -------- -------- -------- --------
Total fixed charges $20,021 $ 40,795 $ 34,519 $ 18,579 $ 13,107 $ 14,407
======== ========= ======== ======== ======== ========
Ratio of earnings to fixed charges 2.17 .76 1.29 3.73 5.30 3.19
======== ========= ======== ======== ======== ========
For the purpose of computing the ratio of earnings to fixed charges, earnings consist of income
before income taxes and fixed charges. Fixed charges consist of (i) interest (including capitalized
interest, but excluding amortization of amounts previously capitalized) on all indebtedness; (ii)
amortization of debt discount and expense; and (iii) that portion (one-third) of rental expense
which the Company believes to be representative of interest.
</TABLE>
Exhibit 12.1
<PAGE>
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS
($000s, except for ratios)
<TABLE>
<CAPTION>
Six Months
Ended Year Ended December 31,
June 30, --------------------------------------------------
1996 1995 1994 1993 1992 1991
---------- ---------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net income $ 15,665 $ (6,108) $ 7,364 $ 38,102 $ 39,688 $ 20,850
Income taxes 8,301 (2,158) 4,160 17,529 18,757 11,933
-------- --------- -------- -------- -------- --------
Pre-tax income 23,966 (8,266) 11,524 55,631 58,445 32,783
-------- --------- -------- -------- -------- --------
Add:
Interest expense on indebtedness 18,149 37,160 31,434 12,456 10,449 13,022
Amortization of debt expense 978 1,585 1,251 - - -
Portion of rents representative of
the interest factor 260 590 354 1,218 558 85
-------- --------- -------- -------- -------- --------
Total fixed charges 19,387 39,335 33,039 13,674 11,007 13,107
-------- --------- -------- -------- -------- --------
Income as adjusted $ 43,353 $ 31,069 $ 44,563 $ 69,305 $ 69,452 $ 45,890
======== ========= ======== ======== ======== ========
Preferred dividend requirements $ 5,220 $ 15,431 $ 12,212 $ 6,092 $ 3,272 $ 4,758
Ratio of pre-tax income to net income 1.53 1.35 1.56 1.46 1.47 1.57
-------- --------- -------- -------- -------- --------
7,986 20,883 19,111 8,895 4,818 7,481
Total fixed charges per above 19,387 39,335 33,039 13,674 11,007 13,107
Interest capitalized 634 1,460 1,480 4,905 2,100 1,300
-------- --------- -------- -------- -------- --------
Total fixed charges and preferred
dividends $ 28,007 $ 61,678 $ 53,630 $ 27,474 $ 17,925 $ 21,888
======== ========= ======== ======== ======== ========
Ratio of earnings to combined fixed
charges and preferred dividends 1.55 .50 .83 2.52 3.87 2.10
======== ========= ======== ======== ======== ========
For the purpose of computing the ratio of earnings to combined fixed charges and preferred stock
dividends, earnings consist of income before income taxes and fixed charges and preferred stock
dividends. Fixed charges consist of (i) interest (including capitalized interest, but excluding
amortization of amounts previously capitalized) on all indebtedness; (ii) amortization of debt discount
and expense; (iii) that portion (one-third) of rental expense which the Company believes to be
representative of interest; and (iv) preferred dividends as adjusted for taxes. The ratio for the year
ended December 31, 1991 includes approximately $3 million related to the prepayment in the second quarter
of the remaining preference distributions of $1.75 per unit to minority holders in the predecessor
company. Preferred dividends for the years ended December 31, 1991 through December 31, 1994 include
quarterly dividends on the 7.25% Cumulative Senior Perpetual Convertible Preferred Stock. In May of
1995, the Company redeemed the 7.25% Cumulative Senior Perpetual Convertible Preferred Stock; thus, the
ratio for the year ended December 31, 1995 includes dividends paid of $1.2 million, a redemption premium
of $2.0 million and up-front costs of $1.8 million related to this redemption. The ratio also includes
quarterly dividends on the $2.28 Cumulative Convertible Preferred Stock since November 1992 and quarterly
dividends on the $2.625 Cumulative Convertible Preferred Stock since February 1994.
</TABLE>
Exhibit 12.2
<PAGE>
SKADDEN, ARPS, SLATE, MEAGHER & FLOM
919 THIRD AVENUE
NEW YORK 10022-3897
----------
(212) 735-3000
FAX: (212) 735-2000
September 20, 1996
Western Gas Resources, Inc.
12200 North Pecos Street
Denver, Colorado 80234-3439
Re: Western Gas Resources, Inc.
Registration Statement on Form S-3
----------------------------------
Dear Gentlemen:
We hereby consent to the use of our name in the Registration Statement
on Form S-3 of Western Gas Resources, Inc. (the "Registrant"), filed with the
Securities and Exchange Commission (the "Commission") on September 23, 1996
under the caption "Legal Opinions." We also consent to the filing with the
Commission as Exhibit 5.1 to such Registration Statement of (i) our opinion
dated July 26, 1993 (incorporated by reference to Exhibit 5.1 to the
Registrant's Registration Statement on Form S-3 (No. 33-66516)), (ii) our
opinion dated July 26, 1994 (incorporated by reference to Exhibit 5.1 to the
Registrant's Registration Statement on Form S-3 (No. 33-54741)) and (iii) our
opinion dated February 13, 1996 (incorporated by reference to Exhibit 5.1 to the
Registrant's Registration Statement on Form S-3 (No. 333-00903)). In giving this
consent, we do not thereby admit that we are in the category of persons whose
consent is required under Section 7 of the Securities Act of 1933 or the Rules
and Regulations of the Commission.
Very truly yours,
Skadden, Arps, Slate, Meagher & Flom
Exhibit 23.1
<PAGE>
JOHN C. WALTER
12200 NORTH PECOS STREET
DENVER, COLORADO 80234
September 27, 1996
Western Gas Resources, Inc.
12200 North Pecos Street
Denver, Colorado 80234
Re: Consent to Use of Name
----------------------
Dear Sirs,
I hereby consent to the use of my name in the Registration Statement on
Form S-3 of Western Gas Resources, Inc., filed with the Securities and Exchange
Commission (the "Commission") on September 27, 1996 under the caption "Legal
Opinions." I also consent to the filing with the Commission as Exhibit 5.1 to
such Registration Statement of my opinion dated September 27, 1996.
Yours truly,
John C. Walter
Exhibit 23.2
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report dated
February 23, 1996 appearing on page 27 of Western Gas Resources, Inc.'s Annual
Report on Form 10-K for the year ended December 31, 1995. We also consent to the
reference to us under the heading "Experts" in such Prospectus.
PRICE WATERHOUSE LLP
Denver, Colorado
September 27, 1996
Exhibit 23.3
