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REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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WILLIAMS HOLDINGS OF DELAWARE, INC. DELAWARE 75-1455707
WILLIAMS DELAWARE CAPITAL I DELAWARE APPLICATION PENDING
WILLIAMS DELAWARE CAPITAL II DELAWARE APPLICATION PENDING
(Exact name of Registrant (State or other jurisdiction of (I.R.S. employer
identification
as specified in its charter) incorporation or organization) numbers)
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ONE WILLIAMS CENTER
TULSA, OKLAHOMA 74172
(918) 588-2000
(Address, including zip code, and telephone number, including area code, of each
registrant's principal executive offices)
WILLIAM G. VON GLAHN, ESQ.
SENIOR VICE PRESIDENT AND GENERAL COUNSEL
THE WILLIAMS COMPANIES, INC.
ONE WILLIAMS CENTER
TULSA, OKLAHOMA 74172
(918) 588-2000
(Name, address, including zip code, and telephone number, including area code,
of agent for service for each registrant)
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Copy to:
KEITH L. KEARNEY, ESQ.
DAVIS POLK & WARDWELL
450 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
(212) 450-4000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: From time to
time after the effective date of the registration statement, as determined by
market conditions.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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PROPOSED
MAXIMUM
AGGREGATE
TITLE OF EACH CLASS OF OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED PRICE(1)(2)(3) REGISTRATION FEE
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Junior Subordinated Debt Securities of Williams Holdings of Delaware, Inc. for
issuance to Williams Delaware Capital I and Williams Delaware Capital II......
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Preferred Securities of Williams Delaware Capital I and Williams Delaware
Capital II severally ("Preferred Securities")................................. $200,000,000 $60,607
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Guarantees of Preferred Securities of Williams Delaware Capital I and Williams
Delaware Capital II by Williams Holdings of Delaware, Inc.....................
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(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o) and exclusive of accrued interest and dividends, if
any.
(2) Williams Holdings of Delaware, Inc. is also registering under this
Registration Statement all other obligations that it may have with respect
to Preferred Securities issued by Williams Delaware Capital I and Williams
Delaware Capital II. No separate consideration will be received for any
Guarantee or any other such obligations.
(3) Includes the rights of holders of the Preferred Securities of Williams
Delaware Capital I and Williams Delaware Capital II under the Trust
Preferred Securities Guarantee and back-up undertakings, consisting of
obligations by Williams Holdings of Delaware, Inc. to provide Williams
Delaware Capital I and Williams Delaware Capital II in respect of, and pay
and be responsible for certain expenses, costs, liabilities, and debts of,
as applicable, Williams Delaware Capital I, Williams Delaware Capital II and
such other obligations of Williams Holdings of Delaware, Inc. set forth in
the Amended and Restated Declaration of Trust and the Junior Subordinated
Debt Trust Securities Indenture, in each cases as further described in the
Registration Statement. No separate consideration will be received for any
Guarantees or any back-up undertakings.
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THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED , 1997
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED , 1997)
TRUST PREFERRED SECURITIES
WILLIAMS DELAWARE CAPITAL I
% TRUST PREFERRED SECURITIES
(LIQUIDATION AMOUNT $25 PER TRUST PREFERRED SECURITY)
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY
WILLIAMS HOLDINGS OF DELAWARE, INC.
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The % Trust Preferred Securities (the "Preferred Securities") offered
hereby represent preferred undivided beneficial interests in the assets of
Williams Delaware Capital I, a statutory business trust formed under the laws of
the State of Delaware ("Williams Delaware Capital" or the "Trust"). Williams
Holdings of Delaware, Inc., a Delaware corporation (the "Company"), will
directly or indirectly own all the common securities (the "Common Securities"
and, together with the Preferred Securities, the "Trust Securities")
representing undivided beneficial interests in the assets of
(Continued on next page)
SEE "RISK FACTORS" BEGINNING ON PAGE S-8 FOR A DISCUSSION OF FACTORS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS, INCLUDING THE PERIOD AND
CIRCUMSTANCES DURING AND UNDER WHICH PAYMENTS OF DISTRIBUTIONS ON THE PREFERRED
SECURITIES MAY BE DEFERRED AND THE RELATED UNITED STATES FEDERAL INCOME TAX
CONSEQUENCES OF SUCH DEFERRAL.
The Company intends to apply for listing of the Preferred Securities on the
New York Stock Exchange, Inc. (the "New York Stock Exchange"). Trading of the
Preferred Securities on the New York Stock Exchange is expected to commence
within a 30-day period after the initial delivery of the Preferred Securities.
See "Underwriting."
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH IT
RELATES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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PROCEEDS TO WILLIAMS
INITIAL PUBLIC UNDERWRITING DELAWARE
OFFERING PRICE(1) COMMISSIONS(2) CAPITAL(3)(4)
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Per Preferred Security..................... $ (3) $
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Total...................................... $ (3) $
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(1) Plus accrued distributions, if any, from , 1997.
(2) For information regarding indemnification of the Underwriters, see
"Underwriting."
(3) Because the proceeds of the sale of the Preferred Securities will be
invested in the Junior Subordinated Debt Securities, the Company has agreed
to pay to the Underwriters, as compensation for their arranging the
investment therein of such proceeds, $ per Preferred Security
($ in the aggregate). See "Underwriting."
(4) Expenses of the offering, which are payable by the Company, are estimated to
be $ .
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The Preferred Securities offered hereby are being offered by the several
Underwriters named herein, subject to prior sale, when, as and if accepted by
them and subject to certain conditions. It is expected that delivery of the
Preferred Securities will be made only in book-entry form through the facilities
of The Depository Trust Company, on or about , 1997.
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, 1997
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(Continued from previous page)
Williams Delaware Capital. Williams Delaware Capital exists for the sole purpose
of issuing the Preferred Securities and Common Securities and investing the
proceeds thereof in an equivalent amount of % Junior Subordinated Deferrable
Interest Debentures due , 203 (the "Junior Subordinated Debt
Securities") of the Company.
Upon the occurrence of an event of a default under the Declaration (as
defined herein), the holders of Preferred Securities will have a preference over
the holders of the Common Securities with respect to payments in respect of
distributions and payments upon redemption, liquidation and otherwise.
Holders of the Preferred Securities are entitled to receive cumulative cash
distributions at an annual rate of % of the liquidation amount of $25 per
Preferred Security, accruing from, and including, and payable
quarterly in arrears on March 31, June 30, September 30 and December 31 of each
year, commencing ("distributions"). The payment of distributions out
of monies held by Williams Delaware Capital and payments on liquidation of
Williams Delaware Capital or the redemption of Preferred Securities out of
monies held by Williams Delaware Capital, as set forth below, are guaranteed by
the Company (the "Guarantee") to the extent described under "Description of
Guarantee." The Guarantee covers payments of distributions and other payments on
the Preferred Securities only if and to the extent that the Company has made a
payment of interest or principal or other payments on the Junior Subordinated
Debt Securities held by Williams Delaware Capital as its sole asset. The
Guarantee, when taken together with the Company's obligations under the Junior
Subordinated Debt Securities, the Indenture (as defined herein) pursuant to
which the Junior Subordinated Debt Securities are issued and its obligations
under the Declaration, including its liabilities to pay costs, expenses, debts
and liabilities of Williams Delaware Capital (other than with respect to the
Trust Securities), provides a full and unconditional guarantee of amounts due on
the Preferred Securities. The obligations of the Company under the Guarantee
rank subordinate and junior in right of payment to all Senior Indebtedness of
the Company and pari passu with any guarantee now or hereafter entered into by
the Company in respect of any preferred or preference stock of any affiliate of
the Company. The obligations of the Company under the Junior Subordinated Debt
Securities are subordinate and junior in right of payment to all present and
future Senior Indebtedness (as defined herein) of the Company.
The distribution rate and the distribution payment date and other payment
dates for the Preferred Securities will correspond to the interest rate and
interest payment dates and other payment dates on the Junior Subordinated Debt
Securities, which will be the sole assets of Williams Delaware Capital. As a
result, if principal or interest is not paid on the Junior Subordinated Debt
Securities by the Company, no amounts will be paid on the Preferred Securities
because Williams Delaware Capital will not have sufficient funds to make
distributions on the Preferred Securities. In such event, the Guarantee will not
apply to such distributions until Williams Delaware Capital has sufficient funds
available therefor.
The Company has the right to defer payments of interest on the Junior
Subordinated Debt Securities by extending the interest payment period on the
Junior Subordinated Debt Securities at any time for up to 20 consecutive
quarters (each, an "Extension Period"), provided, that no Extension Period may
extend beyond the maturity of the Junior Subordinated Debt Securities. If
interest payments are so deferred, distributions on the Preferred Securities
will also be deferred. During any Extension Period, distributions on the
Preferred Securities will continue to accrue with interest thereon (to the
extent permitted by applicable law) at an annual rate of % per annum
compounded quarterly. Additionally, during any Extension Period, holders of
Preferred Securities will be required to include deferred interest income in the
form of original issue discount ("OID") in their gross income for United States
federal income tax purposes in advance of receipt of the cash distributions with
respect to such deferred interest payments. See "Description of the Junior
Subordinated Debt Securities -- Option to Extend Interest Payment Period," "Risk
Factors Relating to the Preferred Securities -- Option to Extend Interest
Payment Period" and "United States Federal Income Taxation -- Interest Income
and Original Issue Discount."
The Junior Subordinated Debt Securities are redeemable by the Company, in
whole or in part, from time to time, on or after , 200 or at any
time, in whole or in part, in certain circumstances upon the occurrence of a Tax
Event (as defined herein). If the Company redeems Junior Subordinated Debt
Securities,
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Williams Delaware Capital must redeem Trust Securities having an aggregate
liquidation amount equal to the aggregate principal amount of the Junior
Subordinated Debt Securities so redeemed at $25 per Trust Security plus accrued
and unpaid distributions thereon (the "Redemption Price") to the date fixed for
redemption. See "Description of the Preferred Securities -- Mandatory Redemption
of Trust Securities." The Preferred Securities will be redeemed upon maturity of
the Junior Subordinated Debt Securities. The Junior Subordinated Debt Securities
mature on , 203 . In addition, upon the occurrence of a Special
Event arising from a change in law or a change in legal interpretation regarding
tax or investment company matters, unless the Junior Subordinated Debt
Securities are redeemed in the limited circumstances described herein, Williams
Delaware Capital shall be dissolved, with the result that the Junior
Subordinated Debt Securities will be distributed to the holders of the Trust
Securities, on a pro rata basis, in lieu of any cash distribution. See
"Description of the Preferred Securities -- Special Event Redemption or
Distribution." In certain circumstances, the Company will have the right to
redeem the Junior Subordinated Debt Securities prior to , 200 ,
which would result in the redemption by Williams Delaware Capital of Trust
Securities in the same amount on a pro rata basis. If the Junior Subordinated
Debt Securities are distributed to the holders of the Preferred Securities, the
Company will use its best efforts to have the Junior Subordinated Debt
Securities listed on the New York Stock Exchange or on such other exchange as
the Preferred Securities are then listed. See "Description of the Preferred
Securities -- Special Event Redemption or Distribution" and "Description of the
Junior Subordinated Debt Securities."
In the event of the involuntary or voluntary dissolution, winding up or
termination of Williams Delaware Capital, the holders of the Preferred
Securities will be entitled to receive for each Preferred Security a liquidation
amount of $25 plus accrued and unpaid distributions thereon (including interest
thereon) to the date of payment, unless, in connection with such dissolution,
the Junior Subordinated Debt Securities are distributed to the holders of the
Preferred Securities. See "Description of the Preferred Securities--Liquidation
Distribution Upon Dissolution."
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IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES
OFFERED HEREBY AT LEVELS ABOVE THOSE THAT MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING TRANSACTIONS, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
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SUMMARY
The following information is qualified in its entirety by the more detailed
information appearing elsewhere in this Prospectus Supplement and the
accompanying Prospectus.
THE COMPANY
The Company is a wholly-owned subsidiary of The Williams Companies, Inc.
("Williams"). The Company through subsidiaries, is engaged in natural gas
gathering, processing and production, the transportation of crude oil and
petroleum products, natural gas trading activities, natural gas liquids
marketing and provides a variety of other products and services to the energy
industry. The Company's telecommunications subsidiaries offer data, voice and
video-related products and services and customer premise equipment nationwide.
The Company also has certain other equity investments.
Substantially all of the Company's operations are conducted through
subsidiaries. Williams performs management, legal, financial, tax, consultative,
administrative and other services for the Company and its subsidiaries. The
Company's principal sources of cash are from external financings, dividends and
advances from its subsidiaries, advances from Williams, investments and interest
payments from subsidiaries and Williams on cash advances. The amount of
dividends available to the Company from subsidiaries largely depends on each
subsidiary's earnings and capital requirements. Terms of one subsidiary's
borrowing arrangements limit the transfer of funds to the Company.
The Company was incorporated under the laws of the State of Delaware in
July 1994. The principal executive offices are located at One Williams Center,
Tulsa Oklahoma 74172 (telephone (918) 588-2000).
WILLIAMS DELAWARE CAPITAL
Williams Delaware Capital is a statutory business trust formed under
Delaware law pursuant to (i) a declaration of trust, dated as of January 31,
1997, executed by the Company, as sponsor (the "Sponsor"), and the trustees of
Williams Delaware Capital (as described below) and (ii) the filing of a
certificate of trust with the Secretary of State of the State of Delaware on
January 31, 1997. Such declaration will be amended and restated in its entirety
(as so amended and restated, the "Declaration") substantially in the form filed
as an exhibit to the Registration Statement of which this Prospectus Supplement
and the accompanying Prospectus form a part. The Declaration will be qualified
as an indenture under the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"). Upon issuance of the Preferred Securities, the purchasers
thereof will own all of the Preferred Securities. See "Description of the
Preferred Securities -- Book-Entry Only Issuance -- The Depository Trust
Company." The Company will directly or indirectly acquire Common Securities in
an aggregate liquidation amount equal to % or more of the total capital of
Williams Delaware Capital. Williams Delaware Capital exists for the exclusive
purposes of (i) issuing the Trust Securities representing undivided beneficial
interests in the assets of the Trust, (ii) investing the gross proceeds of the
Trust Securities in the Junior Subordinated Debt Securities and (iii) engaging
in only those other activities necessary or incidental thereto.
Williams Delaware Capital's business and affairs are conducted by its
trustees, each appointed by the Company as holder of the Common Securities.
Pursuant to the Declaration, the number of trustees of Williams Delaware Capital
will be four: The Chase Manhattan Bank, a New York banking association that is
unaffiliated with the Company, as the institutional trustee (the "Institutional
Trustee"), Chase Manhattan Bank Delaware, a banking association with its
principal place of business in the State of Delaware, as the Delaware trustee
(the "Delaware Trustee"), and two individual trustees (the "Regular Trustees"
and, together with the Institutional Trustee and the Delaware Trustee, the
"Williams Delaware Trustees") will be persons who are employees or officers of,
or who are affiliated with the Company. Initially, the Regular Trustees will be
Jack D. McCarthy and James G. Ivey, each of whom is an officer of the Company.
The Institutional Trustee will act as the sole indenture trustee under the
Declaration for purposes of compliance with the Trust Indenture Act until
removed or replaced by the holder of the Common Securities. The Chase Manhattan
Bank will also act as indenture trustee (the "Guarantee Trustee") under the
Guarantee. See "Description of Guarantee" and "Description of Junior
Subordinated Debt Securities."
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The Institutional Trustee will hold title to the Junior Subordinated Debt
Securities for the benefit of the holders of the Trust Securities and, in its
capacity as the holder, the Institutional Trustee will have the power to
exercise all rights, powers and privileges under the indenture pursuant to which
the Junior Subordinated Debt Securities are issued. In addition, the
Institutional Trustee will maintain exclusive control of a segregated
non-interest bearing bank account (the "Property Account") to hold all payments
made in respect of the Junior Subordinated Debt Securities for the benefit of
the holders of the Trust Securities. The Institutional Trustee will make
payments of distributions and payments on liquidation, redemption and otherwise
to the holders of the Trust Securities out of funds from the Property Account.
The Guarantee Trustee will hold the Guarantee for the benefit of the holders of
the Preferred Securities. The Company, as the direct or indirect holder of all
the Common Securities, will have the right, subject to certain restrictions
contained in the Declaration, to appoint, remove or replace any Williams
Delaware Trustee and to increase or decrease the number of Williams Delaware
Trustees. The Company will pay all fees and expenses related to Williams
Delaware Capital and the offering of the Trust Securities. See "Description of
the Junior Subordinated Debt Securities -- Miscellaneous."
The rights of the holders of the Preferred Securities, including economic
rights, rights to information and voting rights, are set forth in the
Declaration, the Delaware Business Trust Act (the "Trust Act") and the Trust
Indenture Act. See "Description of the Preferred Securities."
PREFERRED SECURITIES OFFERING
General.................... The Preferred Securities represent undivided
beneficial interests in Williams Delaware
Capital's assets, which will consist solely of
the Junior Subordinated Debt Securities. The
Junior Subordinated Debt Securities, in which the
proceeds of the Preferred Securities offered
hereby will be invested, mature on ,
203 , unless the Junior Subordinated Debt
Securities are redeemed by the Company prior to
such maturity as described under "Description of
the Preferred Securities -- Mandatory Redemption
of Trust Securities" and "Description of the
Preferred Securities -- Special Event Redemption
or Distribution."
Distributions.............. The distributions payable on each Preferred
Security will be fixed at a rate per annum of
% of the stated liquidation amount of $25
per Preferred Security, will be cumulative, will
accrue from , 1997, the date of
issuance of the Preferred Securities, and will be
payable quarterly in arrears, on March 31, June
30, September 30 and December 31 of each year,
commencing , 1997. See "Description
of the Preferred Securities -- Distributions."
Option to Extend Interest
Payment Period........... The Company has the right, at any time, to defer
payments of interest on the Junior Subordinated
Debt Securities for a period not exceeding 20
consecutive quarters; provided, that no Extension
Period may extend beyond the maturity date of the
Junior Subordinated Debt Securities. As a
consequence of the Company's extension of the
interest payment period, quarterly distributions
on the Preferred Securities would be deferred
(though such distributions would continue to
accrue with interest thereon compounded
quarterly, since interest would continue to
accrue on the Junior Subordinated Debt
Securities) during any such extended interest
payment period. In the event that the Company
exercises its right to extend an interest payment
period, then (a) the Company shall not declare or
pay any dividend on, make any distributions with
respect to, or redeem, purchase, acquire or make
a liquidation payment with respect to, any of its
capital stock or make any guarantee payment with
respect thereto, and (b) the Company shall
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not make any payment of interest on or principal
of (or premium, if any, on), or repay, repurchase
or redeem, any debt securities issued by the
Company which rank pari passu with or junior to
the Junior Subordinated Debt Securities. The
foregoing, however, will not apply (i) to any
stock dividends paid by the Company where the
dividend stock is the same stock as that on which
the dividend is being paid or (ii) in certain
other limited events. Prior to the termination of
any Extension Period, the Company may further
extend such Extension Period, provided that such
Extension Period together with all such previous
and further extensions thereof may not exceed 20
consecutive quarters. Upon the termination of any
Extension Period and the payment of all amounts
then due, the Company may commence a new
Extension Period, subject to the foregoing
requirements. See "Description of the Junior
Subordinated Debt Securities -- Interest Income
and Option to Extend Interest Payment Period."
Should an Extension Period occur, Preferred
Security holders will continue to accrue income
for United States federal income tax purposes (in
the form of original issue discount) in respect
of their pro rata share of the Junior
Subordinated Debt Securities held by Williams
Delaware Capital. As a result, such holders will
be required to include such interest in gross
income for United States federal income tax
purposes in advance of the receipt of cash, and
such holders will not receive the cash from
Williams Delaware Capital related to such income
if such holders dispose of Preferred Securities
prior to the record date for payment of
distributions. See "United States Federal Income
Taxation -- Interest Income and Original Issue
Discount."
Mandatory Redemption....... Upon the repayment of the Junior Subordinated Debt
Securities, whether at maturity or upon earlier
redemption as provided in the Indenture, the
proceeds from such repayment will be applied by
the Institutional Trustee to redeem a like amount
of Trust Securities, upon the terms and
conditions described herein. See "Description of
the Preferred Securities -- Mandatory Redemption
of Trust Securities."
Optional Redemption........ The Company has the right to redeem the Junior
Subordinated Debt Securities (a) on or after
, 200 , in whole at any time or in
part from time to time, subject to the conditions
described in "Description of the Junior
Subordinated Debt Securities -- Optional
Redemption" or (b) at any time, in whole or in
part, in certain circumstances upon the
occurrence of a Tax Event (as defined herein) as
described under "Description of the Preferred
Securities -- Special Event Redemption or
Distribution,"in each case at a redemption price
equal to 100% of the principal amount of Junior
Subordinated Debt Securities being redeemed,
together with any accrued but unpaid interest, to
but not including the redemption date. See
"Description of the Junior Subordinated Debt
Securities -- Optional Redemption." If the
Company redeems any Junior Subordinated Debt
Securities, the proceeds from such redemption
will be applied by the Institutional Trustee to
redeem a like amount of Trust Securities.
Special Event
Distribution............... Subject to certain conditions and except in limited
circumstances, if at any time a Special Event (as
defined herein) shall occur and be continuing,
Williams Delaware Capital shall be dissolved with
the result that Junior Subordinated Debt
Securities with an aggregate
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principal amount equal to the aggregate stated
liquidation amount of, with an interest rate
identical to the distribution rate of, and with
accrued and unpaid interest thereon equal to
accrued and unpaid distributions on, the Trust
Securities outstanding at such time, would be
distributed to the holders of the Trust
Securities in liquidation of such holders'
interests in Williams Delaware Capital on a pro
rata basis within 90 days following the
occurrence of such Special Event. See
"Description of the Preferred
Securities -- Special Event Redemption or
Distribution."
Voting Rights.............. Generally, the holders of the Preferred Securities
will not have any voting rights. See "Description
of the Preferred Securities -- Voting Rights."
Subject to certain conditions, including that the
Institutional Trustee obtain the opinion of
counsel described under "Description of the
Preferred Securities -- Voting Rights" prior to
taking certain actions, the holders of a majority
in aggregate liquidation amount of the Preferred
Securities have the right to direct the time,
method and place of conducting any proceeding for
any remedy available to the Institutional
Trustee, or direct the exercise of any trust or
power conferred upon the Institutional Trustee
under the Declaration including the right to
direct the Institutional Trustee, as holder of
the Junior Subordinated Debt Securities, to (i)
exercise the remedies available under the
Indenture with respect to the Junior Subordinated
Debt Securities, (ii) waive any past Indenture
Event of Default that is waivable under the
Indenture (as defined herein), (iii) exercise any
right to rescind or annul a declaration that the
principal of all the Junior Subordinated Debt
Securities shall be due and payable, or (iv)
consent to any amendment, modification or
termination of the Indenture or the Junior
Subordinated Debt Securities where such consent
shall be required; provided, however, that where
a consent or action under the Indenture would
require the consent or act of a Super Majority
(as defined herein) of holders of the Junior
Subordinated Debt Securities affected thereby,
only the holders of at least such Super Majority
in aggregate liquidation amount of the Preferred
Securities may direct the Institutional Trustee
to give such consent or take such action. See
"Description of the Preferred Securities --
Voting Rights."
Use of Proceed............. The proceeds from the sale of the Preferred
Securities offered hereby will be used by
Williams Delaware Capital to purchase the Junior
Subordinated Debt Securities issued by the
Company. The Company expects to use such proceeds
for general corporate purposes. See "Use of
Proceeds."
Listing.................... The Company intends to apply for listing of the
Preferred Securities on the New York Stock
Exchange. Trading of the Preferred Securities on
the New York Stock Exchange is expected to
commence within a 30-day period after the initial
delivery of the Preferred Securities.
RISK FACTORS
Prospective investors should consider carefully, in addition to the other
information contained in this Prospectus Supplement and the accompanying
Prospectus, the matters set forth under the caption "Risk Factors" in this
Prospectus Supplement before purchasing the Preferred Securities offered hereby.
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RISK FACTORS
Prospective investors should consider carefully, in addition to the other
information contained in this Prospectus Supplement and the accompanying
Prospectus, the following risk factors before purchasing the Preferred
Securities offered hereby.
RANKING OF SUBORDINATE OBLIGATIONS UNDER THE JUNIOR SUBORDINATED DEBT SECURITIES
AND THE GUARANTEE
The obligations of the Company under the Junior Subordinated Debt
Securities are subordinate and junior in right of payment to all present and
future Senior Indebtedness of the Company. No payment of principal (including
redemption payments, if any), premium, if any, or interest on the Junior
Subordinated Debt Securities may be made if (i) any Senior Indebtedness of the
Company is not paid when due and any applicable grace period with respect to
such default has ended with such default not having been cured or waived or
ceasing to exist, or (ii) the maturity of any Senior Indebtedness of the Company
has been accelerated because of a default. The Company's obligations under the
Guarantee rank subordinate and junior in right of payment to all Senior
Indebtedness of the Company and pari passu with any guarantee now or hereafter
entered into by the Company in respect of any preferred or preference stock of
any affiliate of the Company. There are no terms in the Preferred Securities,
the Junior Subordinated Debt Securities or the Guarantee that limit the
Company's ability to incur additional indebtedness, including indebtedness that
ranks senior to the Junior Subordinated Debt Securities and the Guarantee. See
"Description of Guarantee -- Status of the Guarantee" and "Description of the
Junior Subordinated Debt Securities -- Subordination."
RIGHTS UNDER THE GUARANTEE
The Guarantee will be qualified as an indenture under the Trust Indenture
Act. The Chase Manhattan Bank will act as indenture trustee under the Guarantee
for the purposes of compliance with the provisions of the Trust Indenture Act.
The Guarantee Trustee will hold the Guarantee for the benefit of the holders of
the Preferred Securities.
The Guarantee guarantees to the holders of the Preferred Securities the
payment of (i) any accrued and unpaid distributions that are required to be paid
on the Preferred Securities, to the extent Williams Delaware Capital has funds
available therefor, (ii) the Redemption Price with respect to Preferred
Securities called for redemption by Williams Delaware Capital, to the extent
Williams Delaware Capital has funds available therefor, and (iii) upon a
voluntary or involuntary dissolution, winding-up or termination of Williams
Delaware Capital (other than in connection with the distribution of Junior
Subordinated Debt Securities to the holders of Preferred Securities or a
redemption of all the Preferred Securities), the lesser of (a) the aggregate of
the liquidation amount and all accrued and unpaid distributions on the Preferred
Securities to the date of the payment and (b) the amount of assets of Williams
Delaware Capital remaining available for distribution to holders of the
Preferred Securities in liquidation of Williams Delaware Capital. The holders of
a majority in liquidation amount of the Preferred Securities have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Guarantee Trustee or to direct the exercise of any trust or
power conferred upon the Guarantee Trustee under the Guarantee. If the Guarantee
Trustee fails to enforce the Guarantee, any holder of Preferred Securities may
directly institute a legal proceeding against the Company to enforce the
Guarantee Trustee's rights under the Guarantee without first instituting a legal
proceeding against Williams Delaware Capital, the Guarantee Trustee or any other
person or entity. A holder of Preferred Securities may also directly institute a
legal proceeding against the Company to enforce such holder's right to receive
payment under the Guarantee without first (i) directing the Guarantee Trustee to
enforce the terms of the Guarantee or (ii) instituting a legal proceeding
against Williams Delaware Capital or any other person or entity. If the Company
were to default on its obligation to pay amounts payable on the Junior
Subordinated Debt Securities, Williams Delaware Capital would lack available
funds for the payment of distributions or amounts payable on redemption of the
Preferred Securities or otherwise, and, in such event, holders of the Preferred
Securities would not be able to rely upon the Guarantee for payment of such
amounts. Instead, a holder of the Preferred Securities would rely on the
enforcement (1) by the Institutional Trustee of its rights as registered holder
of the Junior Subordinated Debt Securities against the Company pursuant to the
terms of the Junior Subordinated Debt Securities or (2) by such holder of
Preferred Securities of its right
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against the Company to enforce payments on the Junior Subordinated Debt
Securities. See "Description of Guarantees" and "Description of Junior
Subordinated Debt Securities" in the accompanying Prospectus. The Declaration
provides that each holder of Preferred Securities, by acceptance thereof, agrees
to the provisions of the Guarantee, including the subordination provisions
thereof, and the Indenture (as defined herein).
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF PREFERRED SECURITIES
If a Declaration Event of Default (as defined herein) occurs and is
continuing, then the holders of Preferred Securities would rely on the
enforcement by the Institutional Trustee of its rights as a holder of the Junior
Subordinated Debt Securities against the Company. In addition, the holders of a
majority in liquidation amount of the Preferred Securities will have the right
to direct the time, method, and place of conducting any proceeding for any
remedy available to the Institutional Trustee or to direct the exercise of any
trust or power conferred upon the Institutional Trustee under the Declaration,
including the right to direct the Institutional Trustee to exercise the remedies
available to it as a holder of the Junior Subordinated Debt Securities. If the
Institutional Trustee fails to enforce its rights under the Junior Subordinated
Debt Securities, any holder of Preferred Securities may directly institute a
legal proceeding against the Company to enforce the Institutional Trustee's
rights under the Junior Subordinated Debt Securities without first instituting
any legal proceeding against the Institutional Trustee or any other person or
entity. If a Declaration Event of Default has occurred and is continuing and
such event is attributable to the failure of the Company to pay interest or
principal on the Junior Subordinated Debt Securities on the date such interest
or principal is otherwise payable (or in the case of redemption, on the
redemption date), then a holder of Preferred Securities may also directly
institute a proceeding for enforcement of payment to such holder of the
principal of or interest on the Junior Subordinated Debt Securities having a
principal amount equal to the aggregate liquidation amount of the Preferred
Securities of such holder (a "Direct Action") on or after the respective due
date specified in the Junior Subordinated Debt Securities without first (i)
directing the Institutional Trustee to enforce the terms of the Junior
Subordinated Debt Securities or (ii) instituting a legal proceeding against the
Company to enforce the Institutional Trustee's rights under the Junior
Subordinated Debt Securities. In connection with such Direct Action, the Company
will be subrogated to the rights of such holder of Preferred Securities under
the Declaration to the extent of any payment made by the Company to such holder
of Preferred Securities in such Direct Action. Consequently, the Company will be
entitled to payment of amounts that a holder of Preferred Securities receives in
respect of an unpaid distribution that resulted in the bringing of a Direct
Action to the extent that such holder receives or has already received full
payment with respect to such unpaid distribution from Williams Delaware Capital.
The holders of Preferred Securities will not be able to exercise directly any
other remedy available to the holders of the Junior Subordinated Debt
Securities.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
The Company has the right under the Indenture to defer payments of interest
on the Junior Subordinated Debt Securities by extending the interest payment
period from time to time on the Junior Subordinated Debt Securities for an
Extension Period not exceeding 20 consecutive quarterly interest periods during
which no interest shall be due and payable, provided, that no Extension Period
may extend beyond the maturity of the Junior Subordinated Debt Securities. As a
consequence of such an extension, quarterly distributions on the Preferred
Securities would be deferred (but despite such deferral would continue to accrue
with interest thereon compounded quarterly) by Williams Delaware Capital during
any such extended interest payment period. In the event that the Company
exercises this right to defer interest payments, then (a) the Company shall not
declare or pay any dividend on, make any distributions with respect to, or
redeem, purchase, acquire or make a liquidation payment with respect to, any of
its capital stock or make any guarantee payment with respect thereto (other than
(i) repurchases, redemptions or other acquisitions of shares of capital stock of
the Company in connection with any employment contract, benefit plan or other
similar arrangement with or for the benefit of employees, officers, directors or
consultants, (ii) as a result of an exchange or conversion of any class or
series of the Company's capital stock for any other class or series of the
Company's capital stock, or (iii) the purchase of fractional interests in shares
of the Company's capital stock pursuant to the conversion or exchange provisions
of such capital stock or the security being converted or exchanged), and (b) the
Company shall not make any payment of interest on or principal of (or premium,
if any, on), or repay,
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repurchase or redeem, any debt securities issued by the Company which rank pari
passu with or junior to such Junior Subordinated Debt Securities. The foregoing,
however, will not apply to any stock dividends paid by the Company where the
dividend stock is the same stock as that on which the dividend is being paid.
Prior to the termination of any Extension Period, the Company may further extend
such Extension Period; provided, that such Extension Period, together with all
such previous and further extensions thereof, may not exceed 20 consecutive
quarterly interest periods; provided, further, that no Extension Period may
extend beyond the maturity of the Junior Subordinated Debt Securities. Upon the
termination of any Extension Period and the payment of all amounts then due, the
Company may commence a new Extension Period, subject to the above requirements.
See "Description of the Preferred Securities -- Distributions" and "Description
of the Junior Subordinated Debt Securities -- Option to Extend Interest Payment
Period."
The junior subordinated debt securities issued from time to time in
connection with the issuance of trust preferred securities by a Trust will
contain the same restrictive covenants described in the preceding paragraph. The
effect of such restrictive covenants will be to limit the rights of holders of
Preferred Securities to receive payments with respect thereto if there has been
a deferral of interest under any such junior subordinated debt securities.
Should the Company exercise its right to defer any payment of interest on
the Junior Subordinated Debt Securities by extending the interest payment
period, under recently issued Treasury regulations, each holder of Preferred
Securities will accrue income in the form of OID in respect of the deferred but
unpaid interest allocable to its Preferred Securities. As a result, during any
Extension Period, each such holder of Preferred Securities will recognize income
for United States federal income tax purposes in advance of the receipt of cash
and will not receive the cash from Williams Delaware Capital related to such
income if such holder disposes of its Preferred Securities prior to the record
date for the date on which distributions of such amounts are made. See "United
States Federal Income Taxation -- Interest Income and Original Issue Discount."
In such event, to the extent the selling price is less than the holder's
adjusted tax basis, such holder will recognize a capital loss. Subject to
certain limited exceptions, capital losses cannot be applied to offset ordinary
income for United States federal income tax purposes. The Company believes that
the likelihood of it exercising its right to defer payments of interest is
remote. However, should the Company exercise such right in the future, the
market price of the Preferred Securities is likely to be affected. A holder that
disposes of its Preferred Securities during an Extension Period, therefore,
might not receive the same return on its investment as a holder that continues
to hold its Preferred Securities. In addition, as a result of the existence of
the Company's right to defer interest payments, the market price of the
Preferred Securities (which represent an undivided beneficial interest in the
Junior Subordinated Debt Securities) may be more volatile than other similar
securities where the issuer does not have such rights to defer interest
payments.
SPECIAL EVENT REDEMPTION OR DISTRIBUTION
Upon the occurrence of a Special Event (as defined herein), Williams
Delaware Capital will be dissolved, except in the limited circumstance described
below, with the result that the Junior Subordinated Debt Securities will be
distributed to the holders of the Trust Securities in connection with the
liquidation of Williams Delaware Capital. In certain circumstances in connection
with a Tax Event, the Company has the right to redeem the Junior Subordinated
Debt Securities, in whole or in part, in lieu of a distribution of the Junior
Subordinated Debt Securities to holders of Trust Securities by Williams Delaware
Capital, in which event Williams Delaware Capital will redeem the Trust
Securities on a pro rata basis to the same extent as the Junior Subordinated
Debt Securities are redeemed by the Company. See "Description of the Preferred
Securities -- Special Event Redemption or Distribution."
Under current United States federal income tax law and assuming, as
expected, that Williams Delaware Capital is treated as a grantor trust, a
distribution of Junior Subordinated Debt Securities upon the dissolution of
Williams Delaware Capital would not be a taxable event to holders of the
Preferred Securities. Upon the occurrence of a Tax Event, however, a dissolution
of Williams Delaware Capital in which holders of the Preferred Securities
receive cash would be a taxable event to such holders. See "United States
Federal Income Taxation -- Distribution of Junior Subordinated Debt Securities
to Holders of Preferred Securities and -- Disposition of Preferred Securities."
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There can be no assurance as to the market prices for the Preferred
Securities or the Junior Subordinated Debt Securities that may be distributed in
exchange for Preferred Securities if a dissolution or liquidation of Williams
Delaware Capital were to occur. Accordingly, the Preferred Securities that an
investor may purchase, whether pursuant to the offer made hereby or in the
secondary market, or the Junior Subordinated Debt Securities that a holder of
Preferred Securities may receive on dissolution and liquidation of Williams
Delaware Capital, may trade at a discount to the price that the investor paid to
purchase the Preferred Securities offered hereby. Because holders of Preferred
Securities may receive Junior Subordinated Debt Securities upon the occurrence
of a Special Event, prospective purchasers of Preferred Securities are also
making an investment decision with regard to the Junior Subordinated Debt
Securities and should carefully review all the information regarding the Junior
Subordinated Debt Securities contained herein and in the accompanying
Prospectus. See "Description of the Preferred Securities -- Special Event
Redemption or Distribution" and "Description of the Junior Subordinated Debt
Securities -- General."
PROPOSED TAX LEGISLATION
On March 19, 1996, as a part of President Clinton's Fiscal 1997 Budget
Proposal, the Treasury Department proposed legislation (the "Proposed
Legislation") that, among other things, would (i) treat as equity for United
States federal income tax purposes certain debt instruments with a maximum term
of more than 20 years and (ii) disallow interest deductions on debt instruments
with a maturity of more than 40 years. The Proposed Legislation was proposed to
be effective for debt instruments issued on or after December 7, 1995.
On March 29, 1996, Senate Finance Committee Chairman William V. Roth, Jr.
and House Ways and Means Committee Chairman Bill Archer issued a joint statement
(the "Joint Statement") indicating their intent that the Proposed Legislation,
if adopted by either of the tax-writing committees of Congress, would have an
effective date that is no earlier than the date of "appropriate Congressional
action." The proposals were not adopted in the recently concluded session of
Congress. There can be no assurance, however, that final legislation similar to
the Bill or future legislative proposals, future regulations or official
administrative pronouncements or future judicial decisions will not affect the
ability of the Company to deduct interest on the Junior Subordinated Debt
Securities. Such a change could give rise to a Tax Event, which may permit the
company to cause a redemption of the Preferred Securities. See "Description of
the Preferred Securities -- Special Event Redemption or Distribution."
LIMITED VOTING RIGHTS
Holders of Preferred Securities will have limited voting rights and will
not be entitled to vote to appoint, remove or replace, or to increase or
decrease the number of, Williams Delaware Trustees, which voting rights are
vested exclusively in the holder of the Common Securities. See "Description of
the Preferred Securities -- Voting Rights."
TRADING PRICE
Should the Company exercise its option to defer any payment of interest on
the Junior Subordinated Debt Securities, the Preferred Securities may trade at a
price that does not fully reflect the value of accrued but unpaid interest with
respect to the underlying Junior Subordinated Debt Securities. In the event of
such a deferral, a holder of Preferred Securities who disposes of its Preferred
Securities between record dates for payments of distributions thereon will be
required to include in income as ordinary income accrued but unpaid interest on
the Junior Subordinated Debt Securities to the date of disposition, and to add
such amount to its adjusted tax basis in its pro rata share of the underlying
Junior Subordinated Debt Securities deemed disposed of. To the extent the
selling price is less than such holder's adjusted tax basis (which will include,
in the form of OID, all accrued but unpaid interest), such holder will recognize
a capital loss. Subject to certain limited exceptions, capital losses cannot be
applied to offset ordinary income for United States federal income tax purposes.
See "United States Federal Income Taxation -- Interest Income and Original Issue
Discount" and "-- Sales of Preferred Securities."
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USE OF PROCEEDS
All of the net proceeds from the sale of the Preferred Securities offered
hereby will be invested by Williams Delaware Capital in Junior Subordinated Debt
Securities of the Company. The Company will use the proceeds from the sale of
the Junior Subordinated Debt Securities to Williams Delaware Capital for general
corporate purposes.
RATIO OF EARNINGS TO FIXED CHARGES
NINE MONTHS
ENDED YEAR ENDED DECEMBER 31,
SEPTEMBER 30, ------------------------------------
1996 1995 1994 1993 1992 1991
------------- ---- ---- ----- ---- ----
Ratio of earnings to fixed charges............... 7.45 5.17 6.71 14.10 2.86 1.60
For the purpose of this ratio (i) earnings consist of income from
continuing operations before fixed charges and incomes taxes for the Company,
its majority-owned subsidiaries and its proportionate share of 50 percent-owned
companies, less undistributed earnings of less than 50 percent-owned companies;
and (ii) fixed charges consist of interest and debt expense on all indebtedness
(without reduction for interest capitalized), that portion of rental payments on
operating leases estimated to represent an interest factor, plus the pretax
effect of preferred stock dividends of subsidiaries.
ACCOUNTING TREATMENT
The financial statements of Williams Delaware Capital will be included in
the Company's consolidated financial statements with the Preferred Securities
shown as "Williams Delaware Capital -- Obligated Mandatorily Redeemable
Preferred Securities of Subsidiary Trusts holding solely Junior Subordinated
Debt Securities."
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CAPITALIZATION
The following table sets forth the capitalization of the Company at
September 30, 1996, and as adjusted to give effect to the issuance of the
Preferred Securities.
AT SEPTEMBER 30,
1996
(IN MILLIONS)
--------------------
AS
OUTSTANDING ADJUSTED
------ ---------
Notes payable........................................................ $ 10 $ 10
Long-term debt due within one year................................... 14 14
------ ---------
24 24
------ ---------
Long-term debt....................................................... 670 670
Williams Delaware Capital-Obligated Mandatorily Redeemable Preferred
Securities of Subsidiary Trusts holding solely Junior Subordinated
Debt Securities(1).................................................
Stockholders' equity
Common stock....................................................... -- --
Capital in excess of par value..................................... 1,662 1,662
Retained earnings.................................................. 608 608
Net unrealized gain on non-current marketable securities........... 78 78
------ ---------
Total stockholders' equity......................................... 2,348 2,348
------ ---------
Total capitalization................................................. $3,018 $
====== =========
- ---------------
(1) The sole asset of each trust will be junior subordinated deferrable interest
debentures of the Company. The sole asset of Williams Delaware Capital will
be $ aggregate principal amount of % junior subordinated
deferrable interest debentures of the Company due , 203 .
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DESCRIPTION OF THE PREFERRED SECURITIES
The Preferred Securities will be issued pursuant to the terms of the
Declaration. The Declaration will be qualified as an indenture under the Trust
Indenture Act. The Institutional Trustee, The Chase Manhattan Bank, will act as
indenture trustee under the Declaration for purposes of compliance with the
provisions of the Trust Indenture Act. The terms of the Preferred Securities
will include those stated in the Declaration and those made part of the
Declaration by the Trust Indenture Act. This description supplements the
description of the general terms and provisions of the Preferred Securities set
forth in the accompanying Prospectus under the caption "Description of Preferred
Securities." The following summary of the material terms and provisions of the
Preferred Securities does not purport to be complete and is subject to, and
qualified in its entirety by reference to, the Declaration (a copy of which is
filed as an exhibit to the Registration Statement of which this Prospectus
Supplement is a part), the Trust Act and the Trust Indenture Act.
GENERAL
The Declaration authorizes the Regular Trustees to issue on behalf of
Williams Delaware Capital the Trust Securities, which represent undivided
beneficial interests in the assets of Williams Delaware Capital. All of the
Common Securities will be owned, directly or indirectly, by the Company. The
Common Securities rank pari passu, and payments will be made thereon on a pro
rata basis, with the Preferred Securities, except that upon the occurrence and
during the continuance of a Declaration Event of Default, the rights of the
holders of the Common Securities to receive payment of periodic distributions
and payments upon liquidation, redemption and otherwise will be subordinated to
the rights of the holders of the Preferred Securities. The Declaration does not
permit the issuance by Williams Delaware Capital of any securities other than
the Trust Securities or the incurrence of any indebtedness by Williams Delaware
Capital. Pursuant to the Declaration, the Institutional Trustee will hold title
to the Junior Subordinated Debt Securities purchased by Williams Delaware
Capital for the benefit of the holders of the Trust Securities. The payment of
distributions out of money held by Williams Delaware Capital, and payments upon
redemption of the Preferred Securities or liquidation of Williams Delaware
Capital out of money held by Williams Delaware Capital, are guaranteed by the
Company to the extent described under "Description of Guarantee." The Guarantee
will be held by The Chase Manhattan Bank, the Guarantee Trustee, for the benefit
of the holders of the Preferred Securities. The Guarantee does not cover payment
of distributions when Williams Delaware Capital does not have sufficient
available funds to pay such distributions. In such event, the remedy of a holder
of Preferred Securities is to (i) vote to direct the Institutional Trustee to
enforce the Institutional Trustee's rights under the Junior Subordinated Debt
Securities or (ii) if the failure of Williams Delaware Capital to pay
distributions is attributable to the failure of the Company to pay interest or
principal on the Junior Subordinated Debt Securities, institute a proceeding
directly against the Company for enforcement of payment to such holder of the
principal or interest on the Junior Subordinated Debt Securities having a
principal amount equal to the aggregate liquidation amount of the Preferred
Securities of such holder on or after the respective due date specified in the
Junior Subordinated Debt Securities. See "-- Voting Rights."
DISTRIBUTIONS
Distributions on the Preferred Securities will be fixed at a rate per annum
of % of the stated liquidation amount of $25 per Preferred Security.
Distributions in arrears beyond the first date such distributions are payable
(or would be payable, if not for any Extension Period or default by the Company
on the Junior Subordinated Debt Securities) will bear interest thereon at the
rate per annum of % thereof compounded quarterly. The term "distribution" as
used herein includes any such interest payable unless otherwise stated. The
amount of distributions payable for any period will be computed on the basis of
a 360-day year of twelve 30-day months.
Distributions on the Preferred Securities will be cumulative, will accrue
from and including , and will be payable quarterly in arrears on
March 31, June 30, September 30 and December 31 of each year, commencing
. When, as and if available for payment, distributions will be
made by the Institutional Trustee, except as otherwise described below.
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The distribution rate and the distribution payment dates and other payment
dates for the Preferred Securities will correspond to the interest rate and
interest payment dates and other payment dates on the Junior Subordinated Debt
Securities.
The Company has the right under the Indenture to defer payments of interest
on the Junior Subordinated Debt Securities by extending the interest payment
period from time to time on the Junior Subordinated Debt Securities for an
Extension Period not exceeding 20 consecutive quarterly interest periods during
which no interest shall be due and payable, provided, that no Extension Period
may extend beyond the maturity of the Junior Subordinated Debt Securities. As a
consequence of the Company's extension of the interest payment period, quarterly
distributions on the Preferred Securities would be deferred (though such
distributions would continue to accrue with interest thereon compounded
quarterly, since interest would continue to accrue on the Junior Subordinated
Debt Securities) during any such extended interest payment period. In the event
that the Company exercises its right to extend the interest payment period, then
(a) the Company shall not declare or pay any dividend on, make any distributions
with respect to, or redeem, purchase, acquire or make a liquidation payment with
respect to, any of its capital stock or make any guarantee payment with respect
thereto (other than (i) repurchases, redemptions or other acquisitions of shares
of capital stock of the Company in connection with any employment contract,
benefit plan or other similar arrangement with or for the benefit of employees,
officers, directors or consultants, (ii) as a result of an exchange or
conversion of any class or series of the Company's capital stock for any other
class or series of the Company's capital stock, or (iii) the purchase of
fractional interests in shares of the Company's capital stock pursuant to the
conversion or exchange provisions of such capital stock or the security being
converted or exchanged), and (b) the Company shall not make any payment of
interest on or principal of (or premium, if any, on), or repay, repurchase or
redeem, any debt securities issued by the Company which rank pari passu with or
junior to the Junior Subordinated Debt Securities. The foregoing, however, will
not apply to any stock dividends paid by the Company where the dividend stock is
the same stock as that on which the dividend is being paid. Prior to the
termination of any Extension Period, the Company may further extend such
Extension Period; provided, that such Extension Period, together with all such
previous and further extensions thereof, may not exceed 20 consecutive quarterly
interest periods; provided further, that no Extension Period may extend beyond
the maturity of the Junior Subordinated Debt Securities. Upon the termination of
any Extension Period and the payment of all amounts then due, the Company may
commence a new Extension Period, subject to the above requirements. See
"Description of the Junior Subordinated Debt Securities -- Interest" and
"-- Option to Extend Interest Payment Period." The Regular Trustees shall give
the holders of the Preferred Securities notice of any Extension Period upon
their receipt of notice thereof from the Company. See "Description of the Junior
Subordinated Debt Securities -- Option To Extend Interest Payment Period." If
distributions are deferred, the deferred distributions and accrued interest
thereon shall be paid to holders of record of the Preferred Securities as they
appear on the books and records of Williams Delaware Capital on the record date
next following the termination of such deferral period.
Distributions on the Preferred Securities will be made on the dates payable
to the extent that Williams Delaware Capital has funds available for the payment
of such distributions in the Property Account. Williams Delaware Capital's funds
available for distribution to the holders of the Preferred Securities will be
limited to payments received from the Company on the Junior Subordinated Debt
Securities. See "Description of the Junior Subordinated Debt Securities." The
payment of distributions out of monies held by Williams Delaware Capital is
guaranteed by the Company to the extent set forth under "Description of
Guarantee."
Distributions on the Preferred Securities will be payable to the holders
thereof as they appear on the books and records of Williams Delaware Capital at
the close of business on the relevant record dates, which, as long as the
Preferred Securities remain in book-entry only form, will be one Business Day
prior to the relevant payment dates. Such distributions will be paid through the
Institutional Trustee who will hold amounts received in respect of the Junior
Subordinated Debt Securities in the Property Account for the benefit of the
holders of the Trust Securities. Subject to any applicable laws and regulations
and the provisions of the Declaration, each such payment will be made as
described under "-- Book-Entry Only Issuance -- The Depository Trust Company"
below. In the event that the Preferred Securities do not continue to remain in
book-entry only form, the relevant record dates shall conform to the rules of
any securities exchange on which
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the Preferred Securities are listed and, if none, the Regular Trustees shall
have the right to select relevant record dates, which shall be more than 14 days
but less than 60 days prior to the relevant payment dates. In the event that any
date on which distributions are to be made on the Preferred Securities is not a
Business Day, then payment of the distributions payable on such date will be
made on the next succeeding day which is a Business Day (and without any
interest or other payment in respect of any such delay), except that, if such
Business Day is in the next succeeding calendar year, such payment shall be made
on the immediately preceding Business Day, in each case with the same force and
effect as if made on such date. A "Business Day" shall mean any day other than
Saturday, Sunday or any other day on which banking institutions in New York City
(in the State of New York) are permitted or required by any applicable law to
close.
MANDATORY REDEMPTION OF TRUST SECURITIES
The Preferred Securities have no stated maturity date but will be redeemed
upon the maturity of the Junior Subordinated Debt Securities or to the extent
the Junior Subordinated Debt Securities are redeemed. The Junior Subordinated
Debt Securities will mature on , 203 , and may be redeemed, in whole
or in part, at any time on or after , 200 , or at any time, in whole
or in part, in certain circumstances upon the occurrence of a Tax Event (as
described under "Special Event Redemption or Distribution" below). See
"Description of the Junior Subordinated Debt Securities -- Optional Redemption."
Upon the maturity of the Junior Subordinated Debt Securities, the proceeds of
the repayment thereof shall simultaneously be applied to redeem all outstanding
Trust Securities at the Redemption Price. Upon the redemption of the Junior
Subordinated Debt Securities, whether in whole or in part (either at the option
of the Company or pursuant to a Tax Event), the proceeds from such redemption
shall simultaneously be applied to redeem Trust Securities having an aggregate
liquidation amount equal to the aggregate principal amount of the Junior
Subordinated Debt Securities so redeemed at the Redemption Price; provided, that
holders of Trust Securities shall be given not less than 30 nor more than 60
days' notice of such redemption. In the event that fewer than all of the
outstanding Preferred Securities are to be redeemed, the Preferred Securities to
be redeemed shall be selected by the Company pro rata, by lot, or by any other
method determined by the Williams Delaware Trustees to be equitable. See
"-- Book-Entry Only Issuance -- The Depository Trust Company" below.
SPECIAL EVENT REDEMPTION OR DISTRIBUTION
"Tax Event" means that the Regular Trustees shall have received an opinion
of a nationally recognized independent tax counsel experienced in such matters
(a "Dissolution Tax Opinion") to the effect that, as a result of (a) any
amendment to, or change (including any announced prospective change) in, the
laws (or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein or (b) any amendment to or
change in an interpretation or application of such laws or regulations by any
legislative body, court, governmental agency or regulatory authority (including
the enactment of any legislation and the publication of any judicial decision or
regulatory determination on or after the date of this Prospectus Supplement), in
either case after the date of this Prospectus Supplement, there is more than an
insubstantial risk that (i) Williams Delaware Capital would be subject to United
States federal income tax with respect to income accrued or received on the
Junior Subordinated Debt Securities, (ii) interest payable to Williams Delaware
Capital on the Junior Subordinated Debt Securities would not be deductible, in
whole or in part, by the Company for United States federal income tax purposes
or (iii) Williams Delaware Capital would be subject to more than a de minimis
amount of other taxes, duties or other governmental charges.
"Investment Company Event" means that the Regular Trustees shall have
received an opinion of a nationally recognized independent counsel experienced
in practicing under the 1940 Act (as defined herein) to the effect that, as a
result of the occurrence of a change in law or regulation or a written change in
interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority (a "Change in 1940 Act Law"),
there is more than an insubstantial risk that Williams Delaware Capital is or
will be considered an "investment company" which is required to be registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), which
Change in 1940 Act Law becomes effective on or after the date of this Prospectus
Supplement.
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If, at any time, a Tax Event or an Investment Company Event (each, as
defined above, a "Special Event") shall occur and be continuing, Williams
Delaware Capital shall, except in the limited circumstances described below, be
dissolved with the result that Junior Subordinated Debt Securities with an
aggregate principal amount equal to the aggregate stated liquidation amount of,
with an interest rate identical to the distribution rate of, and with accrued
and unpaid interest equal to accrued and unpaid distributions on, the Trust
Securities outstanding at such time would be distributed to the holders of the
Trust Securities in liquidation of such holders' interests in Williams Delaware
Capital on a pro rata basis within 90 days following the occurrence of such
Special Event; provided, however, that in the case of the occurrence of a Tax
Event, such dissolution and distribution shall be conditioned on the Regular
Trustees' receipt of an opinion of nationally recognized independent tax counsel
experienced in such matters (a "No Recognition Opinion"), which opinion may rely
on, among other things, published revenue rulings of the Internal Revenue
Service, to the effect that the holders of the Trust Securities will not
recognize any gain or loss for United States federal income tax purposes as a
result of such dissolution and distribution of Junior Subordinated Debt
Securities and, provided further, that, if at the time there is available to the
Company or Williams Delaware Capital the opportunity to eliminate, within such
90 day period, the Special Event by taking some ministerial action, such as
filing a form or making an election, or pursuing some other similar reasonable
measure, that will have no adverse effect on Williams Delaware Capital, the
Company or the holders of the Trust Securities, the Company or Williams Delaware
Capital will pursue such measure in lieu of dissolution. Furthermore, if in the
case of the occurrence of a Tax Event, (i) the Company has received an opinion
(a "Redemption Tax Opinion") of nationally recognized independent tax counsel
experienced in such matters that, as a result of such Tax Event, there is more
than an insubstantial risk that the Company would be precluded from deducting
the interest on the Junior Subordinated Debt Securities for United States
federal income tax purposes, even after the Junior Subordinated Debt Securities
were distributed to the holders of Trust Securities in liquidation of such
holders' interests in Williams Delaware Capital as described above, or (ii) the
Regular Trustees shall have been informed by such tax counsel that it cannot
deliver a No Recognition Opinion to the Regular Trustees, the Company shall have
the right, upon not less than 30 nor more than 60 days' notice, to redeem the
Junior Subordinated Debt Securities, in whole or in part, for cash within 90
days following the occurrence of such Tax Event, and, following such redemption,
Trust Securities with an aggregate liquidation amount equal to the aggregate
principal amount of the Junior Subordinated Debt Securities so redeemed shall be
redeemed by Williams Delaware Capital at the Redemption Price on a pro rata
basis; provided, however, that if at the time there is available to the Company
or Williams Delaware Capital the opportunity to eliminate, within such 90-day
period, the Tax Event by taking some ministerial action, such as filing a form
or making an election or pursuing some other similar reasonable measure that
will have no adverse effect on Williams Delaware Capital, the Company or the
holders of the Trust Securities, the Company or Williams Delaware Capital will
pursue such measure in lieu of redemption.
If the Junior Subordinated Debt Securities are distributed to the holders
of the Preferred Securities, the Company will use its best efforts to cause the
Junior Subordinated Debt Securities to be listed on the New York Stock Exchange
or on such other exchange as the Preferred Securities are then listed.
After the date for any distribution of Junior Subordinated Debt Securities
upon dissolution of Williams Delaware Capital, (i) the Preferred Securities will
no longer be deemed to be outstanding, (ii) the securities depositary or its
nominee, as the record holder of the Preferred Securities, will receive a
registered global certificate or certificates representing the Junior
Subordinated Debt Securities to be delivered upon such distribution, and (iii)
any certificates representing Preferred Securities not held by the Depositary or
its nominee will be deemed to represent Junior Subordinated Debt Securities
having an aggregate principal amount equal to the aggregate stated liquidation
amount of, with an interest rate identical to the distribution rate of, and with
accrued and unpaid interest equal to accrued and unpaid distributions on, such
Preferred Securities until such certificates are presented to the Company or its
agent for transfer or reissuance.
There can be no assurance as to the market prices for either the Preferred
Securities or the Junior Subordinated Debt Securities that may be distributed in
exchange for the Preferred Securities if a dissolution and liquidation of
Williams Delaware Capital were to occur. Accordingly, the Preferred Securities
that an investor may purchase, whether pursuant to the offer made hereby or in
the secondary market, or the Junior
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Subordinated Debt Securities that an investor may receive if a dissolution and
liquidation of Williams Delaware Capital were to occur, may trade at a discount
to the price that the investor paid to purchase the Preferred Securities offered
hereby.
REDEMPTION PROCEDURES
Williams Delaware Capital may not redeem fewer than all of the outstanding
Preferred Securities unless all accrued and unpaid distributions have been paid
on all Preferred Securities for all quarterly distribution periods terminating
on or prior to the date of redemption.
If Williams Delaware Capital gives a notice of redemption in respect of the
Preferred Securities (which notice will be irrevocable), then, by 12:00 noon,
New York City time, on the redemption date, and if the Company has paid to the
Institutional Trustee a sufficient amount of cash in connection with the related
redemption or maturity of the Junior Subordinated Debt Securities, the
Institutional Trustee will irrevocably deposit with the Depositary (as defined
in the accompanying Prospectus) funds sufficient to pay the applicable
Redemption Price and will give the Depositary irrevocable instructions and
authority to pay the Redemption Price to the holders of the Preferred
Securities. See "-- Book-Entry Only Issuance -- The Depository Trust Company."
If notice of redemption shall have been given and funds deposited as required,
then, immediately prior to the close of business on the date of such deposit,
distributions will cease to accrue and all rights of holders of Preferred
Securities so called for redemption will cease, except the right of the holders
of such Preferred Securities to receive the Redemption Price but without
interest on such Redemption Price. In the event that any date fixed for
redemption of Preferred Securities is not a Business Day, then payment of the
Redemption Price payable on such date will be made on the next succeeding day
that is a Business Day (without any interest or other payment in respect of any
such delay), except that, if such Business Day falls in the next calendar year,
such payment will be made on the immediately preceding Business Day. In the
event that payment of the Redemption Price in respect of Preferred Securities is
improperly withheld or refused and not paid either by Williams Delaware Capital,
or by the Company pursuant to the Guarantee, distributions on such Preferred
Securities will continue to accrue at the then applicable rate from the original
redemption date to the date of payment, in which case the actual payment date
will be considered the date fixed for redemption for purposes of calculating the
Redemption Price.
In the event that fewer than all of the outstanding Preferred Securities
are to be redeemed, the Preferred Securities will be redeemed in accordance with
the Depositary's standard procedures. See "-- Book-Entry Only Issuance -- The
Depository Trust Company."
Subject to the foregoing and applicable law (including, without limitation,
United States federal securities laws), the Company or its subsidiaries may at
any time, and from time to time, purchase outstanding Preferred Securities by
tender, in the open market or by private agreement.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
In the event of any voluntary or involuntary liquidation, dissolution,
winding-up or termination of Williams Delaware Capital (each a "Liquidation"),
the holders of the Preferred Securities will be entitled to receive out of the
assets of Williams Delaware Capital, after satisfaction of liabilities to
creditors, distributions in an amount equal to the aggregate of the stated
liquidation amount of $25 per Preferred Security plus accrued and unpaid
distributions thereon to the date of payment (the "Liquidation Distribution"),
unless, in connection with such Liquidation, Junior Subordinated Debt Securities
in an aggregate stated principal amount equal to the aggregate stated
liquidation amount of, with an interest rate identical to the distribution rate
of, and with accrued and unpaid interest equal to accrued and unpaid
distributions on, the Preferred Securities outstanding at such time have been
distributed on a pro rata basis to the holders of such Preferred Securities.
If, upon any such Liquidation, the Liquidation Distribution can be paid
only in part because Williams Delaware Capital has insufficient assets available
to pay in full the aggregate Liquidation Distribution, then the amounts payable
directly by Williams Delaware Capital on the Preferred Securities shall be paid
on a pro rata basis. The holders of the Common Securities will be entitled to
receive distributions upon any such
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Liquidation pro rata with the holders of the Preferred Securities, except that
if a Declaration Event of Default has occurred and is continuing the Preferred
Securities shall have a preference over the Common Securities with regard to
such distributions.
Pursuant to the Declaration, Williams Delaware Capital shall terminate (i)
on , 205 , the expiration of the term of the Trust, (ii) upon the
bankruptcy of the Company or the holder of the Common Securities, (iii) upon the
filing of a certificate of dissolution or its equivalent with respect to the
holder of the Common Securities or the Company, the filing of a certificate of
cancellation with respect to Williams Delaware Capital, or the revocation of the
charter of the holder of the Common Securities or the Company and the expiration
of 90 days after the date of revocation without a reinstatement thereof, (iv)
upon the distribution of Junior Subordinated Debt Securities upon the occurrence
of a Special Event, (v) upon the entry of a decree of a judicial dissolution of
the holder of the Common Securities, the Company or Williams Delaware Capital,
or (vi) upon the redemption of all the Trust Securities.
Under the terms of the Indenture, the Company has covenanted that, for so
long as the Preferred Securities remain outstanding, it will not voluntarily
dissolve, wind-up or terminate Williams Delaware Capital, except in connection
with a distribution of Junior Subordinated Debt Securities upon a Special Event
or in connection with certain mergers, consolidations or amalgamations permitted
by the Declaration.
DECLARATION EVENTS OF DEFAULT
An event of default under the Indenture (an "Indenture Event of Default")
constitutes an event of default under the Declaration with respect to the Trust
Securities (a "Declaration Event of Default"); provided, that pursuant to the
Declaration the holder of the Common Securities will be deemed to have waived
any Declaration Event of Default with respect to the Common Securities until all
Declaration Events of Default with respect to the Preferred Securities have been
cured, waived or otherwise eliminated. Until such Declaration Events of Default
with respect to the Preferred Securities have been so cured, waived, or
otherwise eliminated, the Institutional Trustee will be deemed to be acting
solely on behalf of the holders of the Preferred Securities and only the holders
of the Preferred Securities will have the right to direct the Institutional
Trustee with respect to certain matters under the Declaration, and therefore the
Indenture. In the event that any Declaration Event of Default with respect to
the Preferred Securities is waived by the holders of the Preferred Securities as
provided in the Declaration, the holders of Common Securities pursuant to the
Declaration have agreed that such waiver also constitutes a waiver of such
Declaration Event of Default with respect to the Common Securities for all
purposes under the Declaration without any further act, vote or consent of the
holders of Common Securities. See "--Voting Rights."
If the Institutional Trustee fails to enforce its rights under the Junior
Subordinated Debt Securities, any holder of Preferred Securities may directly
institute a legal proceeding against the Company to enforce the Institutional
Trustee's rights under the Junior Subordinated Debt Securities without first
instituting any legal proceeding against the Institutional Trustee or any other
person or entity. If a Declaration Event of Default has occurred and is
continuing and such event is attributable to the failure of the Company to pay
interest or principal on the Junior Subordinated Debt Securities on the date
such interest or principal is otherwise payable (or in the case of redemption,
the redemption date), then a holder of Preferred Securities may also directly
institute a proceeding for enforcement of payment to such holder of the
principal of or interest on the Junior Subordinated Debt Securities having a
principal amount equal to the aggregate liquidation amount of the Preferred
Securities of such holder on or after the respective due date specified in the
Junior Subordinated Debt Securities without first (i) directing the
Institutional Trustee to enforce the terms of the Junior Subordinated Debt
Securities or (ii) instituting a legal proceeding against the Company to enforce
the Institutional Trustee's rights under the Junior Subordinated Debt
Securities. In connection with such Direct Action, the Company will be
subrogated to the rights of such holder of Preferred Securities under the
Declaration to the extent of any payment made by the Company to such holder of
Preferred Securities in such Direct Action. Consequently, the Company will be
entitled to payment of amounts that a holder of Preferred Securities receives in
respect of an unpaid distribution that resulted in the bringing of a Direct
Action to the extent that such holder receives or has already received full
payment with respect to such unpaid distribution
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from Williams Delaware Capital. The holders of Preferred Securities will not be
able to exercise directly any other remedy available to the holders of the
Junior Subordinated Debt Securities.
Upon the occurrence of an Indenture Event of Default, the Institutional
Trustee as the sole holder of the Junior Subordinated Debt Securities will have
the right under the Indenture to declare the principal of and interest on the
Junior Subordinated Debt Securities to be immediately due and payable. The
Company and Williams Delaware Capital are each required to file annually with
the Institutional Trustee an officers' certificate as to its compliance with all
conditions and covenants under the Declaration.
VOTING RIGHTS
Except as described in this Prospectus Supplement and in the accompanying
Prospectus under "Description of Guarantees -- Modification of Guarantees;
Assignment," and except as provided under the Trust Act, the Trust Indenture Act
and as otherwise required by law and the Declaration, the holders of the
Preferred Securities will have no voting rights.
Subject to the requirement of the Institutional Trustee obtaining a tax
opinion in certain circumstances set forth in the last sentence of this
paragraph, the holders of a majority in aggregate liquidation amount of the
Preferred Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Institutional Trustee,
or direct the exercise of any trust or power conferred upon the Institutional
Trustee under the Declaration including the right to direct the Institutional
Trustee, as holder of the Junior Subordinated Debt Securities, to (i) direct the
time, method and place of conducting any proceeding for any remedy available to
the Indenture Trustee, or exercising any trust or power conferred on the
Indenture Trustee with respect to the Junior Subordinated Debt Securities, (ii)
waive any past Indenture Event of Default that is waivable under Section 5.13 of
the Indenture, (iii) exercise any right to rescind or annul a declaration that
the principal of all the Junior Subordinated Debt Securities shall be due and
payable, or (iv) consent to any amendment, modification or termination of the
Indenture or the Junior Subordinated Debt Securities where such consent shall be
required; provided, however, that, where a consent or action under the Indenture
would require the consent or act of holders of more than a majority in principal
amount of the Junior Subordinated Debt Securities (a "Super Majority") affected
hereby, only the holders of at least such Super Majority in aggregate
liquidation amount of the Preferred Securities may direct the Institutional
Trustee to give such consent or take such action. If the Institutional Trustee
fails to enforce its rights under the Junior Subordinated Debt Securities, any
record holder of Preferred Securities may directly institute a legal proceeding
against the Company to enforce the Institutional Trustee's rights under the
Junior Subordinated Debt Securities without first instituting any legal
proceeding against the Institutional Trustee or any other person or entity. The
Institutional Trustee shall notify all holders of the Preferred Securities of
any notice of default received from the Indenture Trustee with respect to the
Junior Subordinated Debt Securities. Such notice shall state that such Indenture
Event of Default also constitutes a Declaration Event of Default. Except with
respect to directing the time, method and place of conducting a proceeding for a
remedy available to the Institutional Trustee, the Institutional Trustee, as
holder of the Junior Subordinated Debentures, shall not take any of the actions
described in clauses (i), (ii), (iii) or (iv) above unless the Institutional
Trustee has obtained an opinion of a nationally recognized independent tax
counsel experienced in such matters to the effect that, as a result of such
action, Williams Delaware Capital will not fail to be classified as a grantor
trust for United States federal income tax purposes.
In the event the consent of the Institutional Trustee, as the holder of the
Junior Subordinated Debt Securities, is required under the Indenture with
respect to any amendment, modification or termination of the Indenture, the
Institutional Trustee shall request the written direction of the holders of the
Trust Securities with respect to such amendment, modification or termination and
shall vote with respect to such amendment, modification or termination as
directed by a majority in liquidation amount of the Trust Securities voting
together as a single class; provided, however, that where any amendment,
modification or termination under the Indenture would require the consent of a
Super Majority, the Institutional Trustee may only give such consent at the
direction of the holders of at least the proportion in aggregate liquidation
amount of the Trust Securities which the relevant Super Majority represents of
the aggregate principal amount of the Junior Subordinated Debt Securities
outstanding. The Institutional Trustee shall be under no obligation to take any
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such action in accordance with the directions of the holders of the Trust
Securities unless the Institutional Trustee has obtained an opinion of a
nationally recognized independent tax counsel experienced in such matters to the
effect that for United States federal income tax purposes Williams Delaware
Capital will not be classified as other than a grantor trust.
A waiver of an Indenture Event of Default by the Institutional Trustee at
the direction of the holders of the Preferred Securities will constitute a
waiver of the corresponding Declaration Event of Default.
Any required approval or direction of holders of Preferred Securities may
be given at a separate meeting of holders of Preferred Securities convened for
such purpose, at a meeting of all of the holders of Trust Securities or pursuant
to written consent. The Regular Trustees will cause a notice of any meeting at
which holders of Preferred Securities are entitled to vote, or of any matter
upon which action by written consent of such holders is to be taken, to be
mailed to each holder of record of Preferred Securities. Each such notice will
include a statement setting forth the following information: (i) the date of
such meeting or the date by which such action is to be taken; (ii) a description
of any resolution proposed for adoption at such meeting on which such holders
are entitled to vote or of such matter upon which written consent is sought; and
(iii) instructions for the delivery of proxies or consents. No vote or consent
of the holders of Preferred Securities will be required for Williams Delaware
Capital to redeem and cancel Preferred Securities or distribute Junior
Subordinated Debt Securities in accordance with the Declaration.
Notwithstanding that holders of Preferred Securities are entitled to vote
or consent under any of the circumstances described above, any of the Preferred
Securities that are owned at such time by the Company or any entity directly or
indirectly controlling or controlled by, or under direct or indirect common
control with, the Company, shall not be entitled to vote or consent and shall,
for purposes of such vote or consent, be treated as if such Preferred Securities
were not outstanding.
The procedures by which holders of Preferred Securities may exercise their
voting rights are described below. See "-- Book-Entry Only Issuance -- The
Depository Trust Company."
Holders of the Preferred Securities will have no rights to appoint or
remove the Williams Delaware Trustees, who may be appointed, removed or replaced
solely by the Company as the indirect or direct holder of all of the Common
Securities.
MODIFICATION OF THE DECLARATION
The Declaration may be modified and amended if approved by the Regular
Trustees (and in certain circumstances the Institutional Trustee and the
Delaware Trustee), provided, that, if any proposed amendment provides for, or
the Regular Trustees otherwise propose to effect, (i) any action that would
adversely affect the powers, preferences or special rights of the Trust
Securities, whether by way of amendment to the Declaration or otherwise or (ii)
the dissolution, winding-up or termination of Williams Delaware Capital other
than pursuant to the terms of the Declaration, then the holders of the Trust
Securities voting together as a single class will be entitled to vote on such
amendment or proposal and such amendment or proposal shall not be effective
except with the approval of holders of at least a majority in liquidation amount
of the Trust Securities affected thereby; provided, that, if any amendment or
proposal referred to in clause (i) above would adversely affect only the
Preferred Securities or the Common Securities, then only holders of the affected
class will be entitled to vote on such amendment or proposal and such amendment
or proposal shall not be effective except with the approval of holders of a
majority in liquidation amount of such class of Trust Securities.
Notwithstanding the foregoing, no amendment or modification may be made to
the Declaration if such amendment or modification would (i) cause Williams
Delaware Capital to be classified for United States federal income tax purposes
as other than a grantor trust, (ii) reduce or otherwise adversely affect the
powers of the Institutional Trustee or (iii) cause Williams Delaware Capital to
be deemed an "investment company" which is required to be registered under the
1940 Act.
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MERGERS, CONSOLIDATIONS OR AMALGAMATIONS
Williams Delaware Capital may not consolidate, amalgamate, merge with or
into, or be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety, to any corporation or other body except as
described below. Williams Delaware Capital may, with the consent of the Regular
Trustees and without the consent of the holders of the Trust Securities,
consolidate, amalgamate, merge with or into, or be replaced by a trust organized
as such under the laws of any State; provided, that (i) such successor entity
either (x) expressly assumes all of the obligations of Williams Delaware Capital
under the Trust Securities or (y) substitutes for the Preferred Securities other
securities having substantially the same terms as the Trust Securities (the
"Successor Securities"), so long as the Successor Securities rank the same as
the Trust Securities rank with respect to distributions and payments upon
liquidation, redemption and otherwise, (ii) the Company expressly acknowledges a
trustee of such successor entity possessing the same powers and duties as the
Institutional Trustee, in its capacity as the holder of the Junior Subordinated
Debt Securities, (iii) the Preferred Securities or any Successor Securities are
listed, or any Successor Securities will be listed upon notification of
issuance, on any national securities exchange or with another organization on
which the Preferred Securities are then listed or quoted, (iv) such merger,
consolidation, amalgamation or replacement does not cause the Preferred
Securities (including any Successor Securities) to be downgraded by any
nationally recognized statistical rating organization, (v) such merger,
consolidation, amalgamation or replacement does not adversely affect the rights,
preferences and privileges of the holders of the Trust Securities (including any
Successor Securities) in any material respect (other than with respect to any
dilution of the holders' interest in the new entity), (vi) such successor entity
has a purpose identical to that of Williams Delaware Capital, (vii) prior to
such merger, consolidation, amalgamation or replacement, Williams Delaware
Capital has received an opinion of a nationally recognized independent counsel
to Williams Delaware Capital experienced in such matters to the effect that, (A)
such merger, consolidation, amalgamation or replacement does not adversely
affect the rights, preferences and privileges of the holders of the Trust
Securities (including any Successor Securities) in any material respect (other
than with respect to any dilution of the holders' interest in the new entity),
and (B) following such merger, consolidation, amalgamation or replacement,
neither Williams Delaware Capital nor such successor entity will be required to
register as an "investment company" under the 1940 Act; and (viii) the Company
guarantees the obligations of such successor entity under the Successor
Securities at least to the extent provided by the Guarantee. Notwithstanding the
foregoing, Williams Delaware Capital shall not, except with the consent of
holders of 100% in liquidation amount of the Trust Securities, consolidate,
amalgamate, merge with or into, or be replaced by any other entity or permit any
other entity to consolidate, amalgamate, merge with or into, or replace it, if
in the opinion of a nationally recognized independent tax counsel experienced in
such matters, such consolidation, amalgamation, merger or replacement would
cause Williams Delaware Capital or the Successor Entity to be classified as
other than a grantor trust for United States federal income tax purposes. In
addition, so long as any Preferred Securities are outstanding and are not held
entirely by the Company, Williams Delaware Capital may not voluntarily
liquidate, dissolve, wind-up or terminate except as described above under
"-- Special Event Redemption Distribution."
BOOK-ENTRY ONLY ISSUANCE -- THE DEPOSITORY TRUST COMPANY
The Depository Trust Company ("DTC") will act as securities depositary for
the Preferred Securities. The Preferred Securities will be issued only as
fully-registered securities registered in the name of Cede & Co. (DTC's
nominee). One or more fully-registered global Preferred Securities certificates,
representing the total aggregate number of Preferred Securities, will be issued
and will be deposited with DTC.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of securities in definitive form. Such laws
may impair the ability to transfer beneficial interests in the global Preferred
Securities as represented by a global certificate.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934, as
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amended (the "Exchange Act"). DTC holds securities that its participants
("Participants") deposit with DTC. DTC also facilitates the settlement among
Participants of securities transactions, such as transfers and pledges, in
deposited securities through electronic computerized book-entry changes in
Participants' accounts, thereby eliminating the need for physical movement of
securities certificates. Direct Participants include securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations ("Direct Participants"). DTC is owned by a number of its Direct
Participants and by the New York Stock Exchange, the American Stock Exchange,
Inc., and the National Association of Securities Dealers, Inc. (the "NASD").
Access to the DTC system is also available to others, such as securities brokers
and dealers, banks and trust companies that clear transactions through or
maintain a direct or indirect custodial relationship with a Direct Participant
either directly or indirectly ("Indirect Participants"). The rules applicable to
DTC and its Participants are on file with the Securities and Exchange
Commission.
Purchases of Preferred Securities within the DTC system must be made by or
through Direct Participants, which will receive a credit for the Preferred
Securities on DTC's records. The ownership interest of each actual purchaser of
each Preferred Security ("Beneficial Owner") is in turn to be recorded on the
Direct and Indirect Participants' records. Beneficial Owners will not receive
written confirmation from DTC of their purchases, but Beneficial Owners are
expected to receive written confirmations providing details of the transactions,
as well as periodic statements of their holdings, from the Direct or Indirect
Participants through which the Beneficial Owners purchased Preferred Securities.
Transfers of ownership interests in the Preferred Securities are to be
accomplished by entries made on the books of Participants acting on behalf of
Beneficial Owners. Beneficial Owners will not receive certificates representing
their ownership interests in the Preferred Securities, except in the event that
use of the book-entry system for the Preferred Securities is discontinued.
To facilitate subsequent transfers, all the Preferred Securities deposited
by Participants with DTC are registered in the name of DTC's nominee, Cede & Co.
The deposit of Preferred Securities with DTC and their registration in the name
of Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of
the actual Beneficial Owners of the Preferred Securities. DTC's records reflect
only the identity of the Direct Participants to whose accounts such Preferred
Securities are credited, which may or may not be the Beneficial Owners. The
Participants will remain responsible for keeping account of their holdings on
behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements
that may be in effect from time to time.
Redemption notices shall be sent to Cede & Co. If less than all of the
Preferred Securities are being redeemed, DTC will reduce the amount of the
interest of affected Direct Participants in such Preferred Securities in
accordance with its procedures.
Although voting with respect to the Preferred Securities is limited, in
those cases where a vote is required, neither DTC nor Cede & Co. will itself
consent or vote with respect to Preferred Securities. Under its usual
procedures, DTC would mail an Omnibus Proxy to Williams Delaware Capital as soon
as possible after the record date. The Omnibus Proxy assigns Cede & Co.
consenting or voting rights to those Direct Participants to whose accounts the
Preferred Securities are credited on the record date (identified in a listing
attached to the Omnibus Proxy). The Company and Williams Delaware Capital
believe that the arrangements among DTC, Direct and Indirect Participants, and
Beneficial Owners will enable the Beneficial Owners to exercise rights
equivalent in substance to the rights that can be directly exercised by a holder
of a beneficial interest in Williams Delaware Capital.
Distribution payments on the Preferred Securities will be made to DTC.
DTC's practice is to credit Direct Participants' accounts on the relevant
payment date in accordance with their respective holdings shown on DTC's records
unless DTC has reason to believe that it will not receive payments on such
payment date. Payments by Participants to Beneficial Owners will be governed by
standing instructions and customary practices, as is the case with securities
held for the account of customers in bearer form or registered in "street name,"
and such payments will be the responsibility of such Participant and not of DTC,
Williams Delaware
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Capital or the Company, subject to any statutory or regulatory requirements to
the contrary that may be in effect from time to time. Payment of distributions
to DTC is the responsibility of Williams Delaware Capital, disbursement of such
payments to Direct Participants is the responsibility of DTC, and disbursement
of such payments to the Beneficial Owners is the responsibility of Direct and
Indirect Participants.
Except as provided herein, a Beneficial Owner in a global Preferred
Security certificate will not be entitled to receive physical delivery of
Preferred Securities. Accordingly, each Beneficial Owner must rely on the
procedures of DTC to exercise any rights under the Preferred Securities.
DTC may discontinue providing its services as securities depositary with
respect to the Preferred Securities at any time by giving reasonable notice to
Williams Delaware Capital. Under such circumstances, in the event that a
successor securities depositary is not obtained, Preferred Securities
certificates are required to be printed and delivered. Additionally, the Regular
Trustees (with the consent of the Company) may decide to discontinue use of the
system of book-entry transfers through DTC (or any successor depositary) with
respect to the Preferred Securities. In that event, certificates for the
Preferred Securities will be printed and delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Company and Williams Delaware Capital
believe to be reliable, but neither the Company nor Williams Delaware Capital
takes responsibility for the accuracy thereof.
INFORMATION CONCERNING THE INSTITUTIONAL TRUSTEE
The Institutional Trustee, prior to the occurrence of a default with
respect to the Trust Securities, undertakes to perform only such duties as are
specifically set forth in the Declaration and, after such a default, shall
exercise the same degree of care as a prudent individual would exercise in the
conduct of his or her own affairs. Subject to such provisions, the Institutional
Trustee is under no obligation to exercise any of the powers vested in it by the
Declaration at the request of any holder of Preferred Securities, unless offered
reasonable indemnity by such holder against the costs, expenses and liabilities
which might be incurred thereby. Notwithstanding the foregoing, the holders of
Preferred Securities will not be required to offer such indemnity in the event
such holders, by exercising their voting rights, direct the Institutional
Trustee to take any action following a Declaration Event of Default.
PAYING AGENT
In the event that the Preferred Securities do not remain in book-entry only
form, the following provisions will apply:
The Institutional Trustee will act as paying agent and may designate an
additional or substitute paying agent at any time.
Registration of transfers of Preferred Securities will be effected without
charge by or on behalf of Williams Delaware Capital, but upon payment (with the
giving of such indemnity as Williams Delaware Capital or the Company may
require) in respect of any tax or other government charges that may be imposed
in relation to it.
Williams Delaware Capital will not be required to register or cause to be
registered the transfer of Preferred Securities after such Preferred Securities
have been called for redemption.
GOVERNING LAW
The Declaration and the Preferred Securities will be governed by, and
construed in accordance with, the internal laws of the State of Delaware.
MISCELLANEOUS
The Regular Trustees are authorized and directed to operate Williams
Delaware Capital in such a way so that Williams Delaware Capital will not be
required to register as an "investment company" under the 1940
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Act or be characterized as other than a grantor trust for United States federal
income tax purposes. The Company is authorized and directed to conduct its
affairs so that the Junior Subordinated Debt Securities will be treated as
indebtedness of the Company for United States federal income tax purposes. In
this connection, the Company and the Regular Trustees are authorized to take any
action, not inconsistent with applicable law, the certificate of trust of
Williams Delaware Capital or the certificate of incorporation of the Company,
that each of the Company and the Regular Trustees determine in their discretion
to be necessary or desirable to achieve such end, as long as such action does
not adversely affect the interests of the holders of the Preferred Securities or
vary the terms thereof.
Holders of the Preferred Securities have no preemptive rights.
DESCRIPTION OF THE JUNIOR SUBORDINATED DEBT SECURITIES
Set forth below is a description of the specific terms of the Junior
Subordinated Debt Securities in which Williams Delaware Capital will invest the
proceeds from the issuance and sale of the Trust Securities. This description
supplements the description of the general terms and provisions of the Junior
Subordinated Debt Securities set forth in the accompanying Prospectus under the
caption "Description of Junior Subordinated Debt Securities." The following
description does not purport to be complete and is subject to, and is qualified
in its entirety by reference to, the description of the Junior Subordinated Debt
Securities in the accompanying Prospectus; the Indenture, dated as of
, 1997 (the "Indenture"), between the Company and The Chase
Manhattan Bank, as Trustee (the "Indenture Trustee"), the form of which is filed
as an exhibit to the Registration Statement of which this Prospectus Supplement
and the accompanying Prospectus form a part; and the Trust Indenture Act.
Certain capitalized terms used herein are defined in the Indenture.
Under certain circumstances involving the dissolution of Williams Delaware
Capital following the occurrence of a Special Event, Junior Subordinated Debt
Securities may be distributed to the holders of the Trust Securities in
liquidation of Williams Delaware Capital. See "Description of the Preferred
Securities -- Special Event Redemption or Distribution."
If the Junior Subordinated Debt Securities are distributed to the holders
of the Preferred Securities, the Company will use its best efforts to have the
Junior Subordinated Debt Securities listed on the New York Stock Exchange or on
such other national securities exchange or similar organization on which the
Preferred Securities are then listed or quoted.
GENERAL
The Junior Subordinated Debt Securities will be issued as unsecured debt
under the Indenture. The Junior Subordinated Debt Securities will be limited in
aggregate principal amount to approximately $ , such amount being the
sum of the aggregate stated liquidation amount of the Preferred Securities and
the capital contributed by the Company to Williams Delaware Capital in exchange
for the Common Securities (the "Williams Delaware Payment").
The Junior Subordinated Debt Securities are not subject to a sinking fund
provision. The entire principal amount of the Junior Subordinated Debt
Securities will mature and become due and payable, together with any accrued and
unpaid interest thereon including Compound Interest (as defined herein) and
Additional Interest (as defined herein), if any, on , 203 .
If Junior Subordinated Debt Securities are distributed to holders of
Preferred Securities in liquidation of such holders' interests in Williams
Delaware Capital, such Junior Subordinated Debt Securities will initially be
issued in the form of one or more Global Securities (as defined under
"Book-Entry and Settlement" below). As described herein, under certain limited
circumstances, Junior Subordinated Debt Securities may be issued in certificated
form in exchange for a Global Security. See "Book-Entry and Settlement" below.
In the event that Junior Subordinated Debt Securities are issued in certificated
form, such Junior Subordinated Debt Securities will be in denominations of $25
and integral multiples thereof and may be transferred or exchanged at the
offices described below. Payments on Junior Subordinated Debt Securities issued
as a Global Security will be made to DTC, to a successor depositary or, in the
event that no depositary is used, to a Paying
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Agent for the Junior Subordinated Debt Securities. In the event Junior
Subordinated Debt Securities are issued in certificated form, principal and
interest will be payable, the transfer of the Junior Subordinated Debt
Securities will be registrable and Junior Subordinated Debt Securities will be
exchangeable for Junior Subordinated Debt Securities of other denominations of a
like aggregate principal amount at the corporate trust office of the Indenture
Trustee in New York, New York; provided, that payment of interest may be made at
the option of the Company by check mailed to the address of the persons entitled
thereto.
The Company does not intend to issue and sell the Junior Subordinated Debt
Securities to any purchasers other than Williams Delaware Capital.
There are no covenants or provisions in the Indenture that would afford the
holders of the Junior Subordinated Debt Securities protection in the event of a
highly leveraged transaction, reorganization, restructuring, merger or similar
transaction involving the Company that may adversely affect such holders.
SUBORDINATION
The Indenture provides that the Junior Subordinated Debt Securities are
subordinated and junior in right of payment to all Senior Indebtedness of the
Company. No payment of principal (including redemption payments), premium, if
any, or interest on the Junior Subordinated Debt Securities may be made if (i)
any Senior Indebtedness of the Company has not been paid when due and any
applicable grace period with respect to such default has ended and such default
has not been cured or waived or ceased to exist, or (ii) the maturity of any
Senior Indebtedness of the Company has been accelerated because of a default.
Upon any distribution of assets of the Company to creditors upon any
dissolution, winding-up, liquidation or reorganization, whether voluntary or
involuntary, or in bankruptcy, insolvency, receivership or other proceedings,
all principal, premium, if any, and interest due or to become due on all Senior
Indebtedness of the Company must be paid in full before the holders of Junior
Subordinated Debt Securities are entitled to receive or retain any payment. Upon
satisfaction of all claims related to all Senior Indebtedness of the Company
then outstanding, the rights of the holders of the Junior Subordinated Debt
Securities will be subrogated to the rights of the holders of Senior
Indebtedness of the Company to receive payments or distributions applicable to
Senior Indebtedness until all amounts owing on the Junior Subordinated Debt
Securities are paid in full.
The term "Senior Indebtedness" means, with respect to the Company, (i) the
principal, premium, if any, and interest in respect of (A) indebtedness of such
obligor for money borrowed and (B) indebtedness evidenced by securities, notes,
debentures, bonds or other similar instruments issued by such obligor, (ii) all
capital lease obligations of such obligor, (iii) all obligations of such obligor
issued or assumed as the deferred purchase price of property, all conditional
sale obligations of such obligor and all obligations of such obligor under any
conditional sale or title retention agreement (but excluding trade accounts
payable arising in the ordinary course of business), (iv) all obligations,
contingent or otherwise, of such obligor in respect of any letters of credit,
banker's acceptance, security purchase facilities or similar credit
transactions, (v) all obligations in respect of interest rate swap, cap or other
agreements, interest rate future or option contracts, currency swap agreements,
currency future or option contracts and other similar agreements, (vi) all
obligations of the type referred to in clauses (i) through (v) above of other
persons for the payment of which such obligor is responsible or liable as
obligor, guarantor or otherwise and (vii) all obligations of the type referred
to in clauses (i) through (vi) above of other persons secured by any lien on any
property or asset of such obligor (whether or not such obligation is assumed by
such obligor), except for (1) any such indebtedness that is by its terms
subordinated to or pari passu with the Junior Subordinated Debt Securities and
(2) any indebtedness between or among such obligor or its affiliates, including
all other debt securities and guarantees in respect of those debt securities,
issued to (a) any other Williams Delaware Trust or a trustee of such trust and
(b) any other trust, or a trustee of such trust, partnership or other entity
affiliated with the Company that is a financing vehicle of the Company (a
"financing entity") in connection with the issuance by such financing entity of
preferred securities or other securities that rank pari passu with, or junior
to, the Preferred Securities. Such Senior Indebtedness shall continue to be
Senior Indebtedness and be entitled to the benefits of the subordination
provisions irrespective of any amendment, modification or waiver of any term of
such Senior Indebtedness.
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The Indenture does not limit the aggregate amount of Senior Indebtedness
that may be issued by the Company.
OPTIONAL REDEMPTION
The Company shall have the right to redeem the Junior Subordinated Debt
Securities, in whole or in part, from time to time, on or after ,
200 , or at any time in certain circumstances upon the occurrence of a Tax
Event as described under "Description of the Preferred Securities -- Special
Event Redemption or Distribution," upon not less than 30 nor more than 60 days'
notice, at a redemption price equal to 100% of the principal amount to be
redeemed plus any accrued and unpaid interest, including Additional Interest (as
defined herein), if any, to the redemption date. If a partial redemption of the
Preferred Securities resulting from a partial redemption of the Junior
Subordinated Debt Securities would result in the delisting of the Preferred
Securities, the Company may only redeem the Junior Subordinated Debt Securities
in whole.
PROPOSED TAX LEGISLATION
On March 19, 1996, as a part of President Clinton's Fiscal 1997 Budget
Proposal, the Treasury Department proposed legislation (the "Proposed
Legislation") that, among other things, would (i) treat as equity for United
States federal income tax purposes certain debt instruments with a maximum term
of more than 20 years and (ii) disallow interest deductions on debt instruments
with a maturity of more than 40 years. The Proposed Legislation was proposed to
be effective for debt instruments issued on or after December 7, 1995.
On March 29, 1996, Senate Finance Committee Chairman William V. Roth, Jr.,
and House Ways and Means Committee Chairman Bill Archer issued a joint statement
(the "Joint Statement") indicating their intent that the Proposed Legislation,
if adopted by either of the tax-writing committees of Congress, would have an
effective date that is no earlier than the date of "appropriate Congressional
action." The proposals were not adopted in the recently concluded session of
Congress. There can be no assurance, however, that final legislation similar to
the Bill or future legislative proposals, future regulations or official
administrative pronouncements or future judicial decisions will not affect the
ability of the Company to deduct interest on the Junior Subordinated Debt
Securities. Such a change could give rise to a Tax event, which may permit the
Company to cause a redemption of the Preferred Securities. See "Description of
the Preferred Securities -- Special Event Redemption or Distribution."
INTEREST
Each Junior Subordinated Debt Security shall bear interest at the rate
of % per annum, from and including the original date of issuance, payable
quarterly in arrears on March 31, June 30, September 30 and December 31 of each
year (each an "Interest Payment Date"), commencing , 1997 person in
whose name such Junior Subordinated Debt Security is registered, subject to
certain exceptions, at the close of business on the Business Day next preceding
such Interest Payment Date. In the event the Junior Subordinated Debt Securities
shall not continue to remain in book-entry only form, the Company shall have the
right to select record dates, which shall be more than 14 days but less than 60
days prior to the Interest Payment Date.
The amount of interest payable for any period will be computed on the basis
of a 360-day year of twelve 30-day months. The amount of interest payable for
any period shorter than a full quarterly period for which interest is computed
will be computed on the basis of the actual number of days elapsed per 30-day
month. In the event that any date on which interest is payable on the Junior
Subordinated Debt Securities is not a Business Day, then payment of the interest
payable on such date will be made on the next succeeding day that is a Business
Day (and without any interest or other payment in respect of any such delay),
except that, if such Business Day is in the next succeeding calendar year, then
such payment shall be made on the immediately preceding Business Day, in each
case with the same force and effect as if made on such date.
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OPTION TO EXTEND INTEREST PAYMENT PERIOD
The Company shall have the right at any time, and from time to time, during
the term of the Junior Subordinated Debt Securities, to defer payments of
interest by extending the interest payment period for a period not exceeding 20
consecutive quarters, provided, that no Extension Period may extend beyond the
maturity of the Junior Subordinated Debt Securities, at the end of which
Extension Period, the Company shall pay all interest then accrued and unpaid
(including any Additional Interest) together with interest thereon compounded
quarterly at the rate specified for the Junior Subordinated Debt Securities to
the extent permitted by applicable law ("Compound Interest"); provided further,
that during any such Extension Period, (a) the Company shall not declare or pay
any dividend on, make any distributions with respect to, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of its capital stock
or make any guarantee payment with respect thereto (other than (i) repurchases,
redemptions or other acquisitions of shares of capital stock of the Company in
connection with any employment contract, benefit plan or other similar
arrangement with or for the benefit of employees, officers, directors or
consultants, (ii) as a result of an exchange or conversion of any class or
series of the Company's capital stock for any other class or series of the
Company's capital stock, or (iii) the purchase of fractional interests in shares
of the Company's capital stock pursuant to the conversion or exchange provisions
of such capital stock or the security being converted or exchanged), and (b) the
Company shall not make any payment of interest on or principal of (or premium,
if any, on), or repay, repurchase or redeem, any debt securities issued by the
Company which rank pari passu with or junior to the Junior Subordinated Debt
Securities. The foregoing, however, will not apply to any stock dividends paid
by the Company where the dividend stock is the same stock as that on which the
dividend is being paid. Prior to the termination of any Extension Period, the
Company may further defer payments of interest by extending such Extension
Period; provided, however, that such Extension Period, including all such
previous and further extensions, may not exceed 20 consecutive quarterly
interest periods (including the quarterly interest period in which notice of
such Extension Period (as described below) is given); provided further, that no
Extension Period may extend beyond the maturity of the Junior Subordinated Debt
Securities. Upon the termination of any Extension Period and the payment of all
amounts then due, the Company may commence a new Extension Period, subject to
the terms set forth in this section. No interest during an Extension Period,
except at the end thereof, shall be due and payable. The Company has no present
intention of exercising its right to defer payments of interest by extending the
interest payment period on the Junior Subordinated Debt Securities. If the
Institutional Trustee shall be the sole holder of the Junior Subordinated Debt
Securities, the Company shall give the Regular Trustees and the Institutional
Trustee notice of its selection of such Extension Period one Business Day prior
to the earlier of (i) the date distributions on the Preferred Securities would
be payable, if not for such Extension Period, or (ii) the date the Regular
Trustees are required to give notice to the New York Stock Exchange (or other
applicable self-regulatory organization) or to holders of the Preferred
Securities of the record date or the date such distribution would be payable, if
not for such Extension Period, but in any event one Business Day prior to such
record date. The Regular Trustees shall give notice of the Company's selection
of such Extension Period to the holders of the Preferred Securities. If the
Institutional Trustee shall not be the sole holder of the Junior Subordinated
Debt Securities, the Company shall give the holders of the Junior Subordinated
Debt Securities notice of its selection of such Extension Period ten Business
Days prior to the earlier of (i) the next succeeding Interest Payment Date or
(ii) the date upon which the Company is required to give notice to the New York
Stock Exchange (or other applicable self-regulatory organization) or to holders
of the Junior Subordinated Debt Securities of the record or payment date of such
related interest payment.
ADDITIONAL INTEREST
If at any time Williams Delaware Capital shall be required to pay any
taxes, duties, assessments or governmental charges of whatever nature (other
than withholding taxes) imposed by the United States, or any other taxing
authority, then, in any such case, the Company will pay as additional interest
("Additional Interest") on the Junior Subordinated Debt Securities such
additional amounts as shall be required so that the net amounts received and
retained by Williams Delaware Capital after paying any such taxes, duties,
assessments or other governmental charges will be not less than the amounts
Williams Delaware Capital would have received had no such taxes, duties,
assessments or other governmental charges been imposed.
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INDENTURE EVENTS OF DEFAULT
If any Indenture Event of Default shall occur and be continuing, the
Institutional Trustee, as the holder of the Junior Subordinated Debt Securities,
will have the right to declare the principal of and the interest on the Junior
Subordinated Debt Securities (including any Compound Interest and Additional
Interest, if any) and any other amounts payable under the Indenture to be
forthwith due and payable and to enforce its other rights as a creditor with
respect to the Junior Subordinated Debt Securities. See "Description of Junior
Subordinated Debt Securities -- Events of Default" in the accompanying
Prospectus for a description of the Indenture Events of Default. An Indenture
Event of Default also constitutes a Declaration Event of Default. The holders of
Preferred Securities in certain circumstances have the right to direct the
Institutional Trustee to exercise its rights as the holder of the Junior
Subordinated Debt Securities. See "Description of the Preferred
Securities -- Declaration Events of Default" and "-- Voting Rights."
Notwithstanding the foregoing, if a Declaration Event of Default has
occurred and is continuing and such event is attributable to the failure of the
Company to pay interest or principal on the Junior Subordinated Debt Securities
on the date such interest or principal is otherwise payable, the Company
acknowledges that, in such event, a holder of Preferred Securities may institute
a Direct Action for payment on or after the respective due date specified in the
Junior Subordinated Debt Securities. The Company may not amend the Indenture to
remove the foregoing right to bring a Direct Action without the prior written
consent of all of the holders of Preferred Securities of Williams Delaware
Capital. Notwithstanding any payment made to such holder of Preferred Securities
by the Company in connection with a Direct Action, the Company shall remain
obligated to pay the principal of or interest on the Junior Subordinated Debt
Securities held by Williams Delaware Capital or the Institutional Trustee of
Williams Delaware Capital, and the Company shall be subrogated to the rights of
the holder of such Preferred Securities with respect to payments on the
Preferred Securities to the extent of any payments made by the Company to such
holder in any Direct Action. The holders of Preferred Securities will not be
able to exercise directly any other remedy available to the holders of the
Junior Subordinated Debt Securities.
BOOK-ENTRY AND SETTLEMENT
If distributed to holders of Preferred Securities in connection with the
involuntary or voluntary dissolution, winding-up or liquidation of Williams
Delaware Capital as a result of the occurrence of a Special Event, the Junior
Subordinated Debt Securities will be issued in the form of one or more global
certificates (each a "Global Security") registered in the name of the depositary
or its nominee. Except under the limited circumstances described below, Junior
Subordinated Debt Securities represented by a Global Security will not be
exchangeable for, and will not otherwise be issuable as, Junior Subordinated
Debt Securities in definitive form. The Global Securities described above may
not be transferred except by the depositary to a nominee of the depositary or by
a nominee of the depositary to the depositary or another nominee of the
depositary or to a successor depositary or its nominee.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
laws may impair the ability to transfer beneficial interests in such a Global
Security.
Except as provided below, owners of beneficial interests in such a Global
Security will not be entitled to receive physical delivery of Junior
Subordinated Debt Securities in definitive form and will not be considered the
Holders (as defined in the Indenture) thereof for any purpose under the
Indenture, and no Global Security representing Junior Subordinated Debt
Securities shall be exchangeable, except for another Global Security of like
denomination and tenor to be registered in the name of the depositary or its
nominee or to a successor depositary or its nominee. Accordingly, each
Beneficial Owner must rely on the procedures of the depositary or if such person
is not a Participant, on the procedures of the Participant through which such
person owns its interest to exercise any rights of a holder under the Indenture.
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THE DEPOSITARY
If Junior Subordinated Debt Securities are distributed to holders of
Preferred Securities in liquidation of such holders' interests in Williams
Delaware Capital, DTC will act as securities depositary for the Junior
Subordinated Debt Securities. For a description of DTC and the specific terms of
the depositary arrangements, see "Description of the Preferred
Securities -- Book-Entry Only Issuance -- The Depository Trust Company." As of
the date of this Prospectus Supplement, the description therein of DTC's
book-entry system and DTC's practices as they relate to purchases, transfers,
notices and payments with respect to the Preferred Securities apply in all
material respects to any debt obligations represented by one or more Global
Securities held by DTC. The Company may appoint a successor to DTC or any
successor depositary in the event DTC or such successor depositary is unable or
unwilling to continue as a depositary for the Global Securities.
None of the Company, Williams Delaware Capital, the Indenture Trustee, any
paying agent and any other agent of the Company or the Indenture Trustee will
have any responsibility or liability for any aspect of the records relating to
or payments made on account of beneficial ownership interests in a Global
Security for such Junior Subordinated Debt Securities or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.
DISCONTINUANCE OF THE DEPOSITARY'S SERVICES
A Global Security shall be exchangeable for Junior Subordinated Debt
Securities registered in the names of persons other than the depositary or its
nominee only if (i) the depositary notifies the Company that it is unwilling or
unable to continue as a depositary for such Global Security and no successor
depositary shall have been appointed, (ii) the depositary, at any time, ceases
to be a clearing agency registered under the Exchange Act at which time the
depositary is required to be so registered to act as such depositary and no
successor depositary shall have been appointed, (iii) the Company, in its sole
discretion, determines that such Global Security shall be so exchangeable or
(iv) there shall have occurred an Indenture Event of Default with respect to
such Junior Subordinated Debt Securities. Any Global Security that is
exchangeable pursuant to the preceding sentence shall be exchangeable for Junior
Subordinated Debt Securities registered in such names as the depositary shall
direct. It is expected that such instructions will be based upon directions
received by the depositary from its Participants with respect to ownership of
beneficial interests in such Global Security.
MISCELLANEOUS
The Indenture will provide that the Company will pay all fees and expenses
related to (i) the offering of the Trust Securities and the Junior Subordinated
Debt Securities, (ii) the organization, maintenance and dissolution of Williams
Delaware Capital, (iii) the retention of the Williams Delaware Trustees and (iv)
the enforcement by the Institutional Trustee of the rights of the holders of the
Preferred Securities.
DESCRIPTION OF GUARANTEE
Set forth below is a summary of information concerning the Guarantee that
will be executed and delivered by the Company for the benefit of the holders of
Preferred Securities. The Guarantee will be qualified as an indenture under the
Trust Indenture Act. The Chase Manhattan Bank will act as indenture trustee
under the Guarantee (the "Guarantee Trustee"). The terms of the Guarantee will
be those set forth in the Guarantee and those made part of the Guarantee by the
Trust Indenture Act. This description supplements the description of the general
terms and provisions of the Guarantee set forth in the accompanying Prospectus
under the caption "Description of Guarantees." The summary does not purport to
be complete and is subject in all respects to the provisions of, and is
qualified in its entirety by reference to, the form of Guarantee, which is filed
as an exhibit to the Registration Statement of which this Prospectus Supplement
forms a part, and the Trust Indenture Act. The Guarantee will be held by the
Guarantee Trustee for the benefit of the holders of the Preferred Securities.
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GENERAL
Pursuant to and to the extent set forth in the Guarantee, the Company will
irrevocably and unconditionally agree to pay in full to the holders of the
Preferred Securities (except to the extent paid by Williams Delaware Capital),
as and when due, regardless of any defense, right of set-off or counterclaim
which Williams Delaware Capital may have or assert, the following payments (the
"Guarantee Payments"), without duplication: (i) any accrued and unpaid
distributions that are required to be paid on the Preferred Securities, to the
extent Williams Delaware Capital has funds available therefor, and (ii) the
redemption price of $25 per Preferred Security, plus all accrued and unpaid
distributions (the "Redemption Price"), to the extent Williams Delaware Capital
has funds available therefor, with respect to any Preferred Securities called
for redemption by Williams Delaware Capital, and (iii) upon a voluntary or
involuntary dissolution, winding-up or termination of Williams Delaware Capital
(other than in connection with the distribution of Junior Subordinated Debt
Securities to the holders of Preferred Securities or the redemption of all of
the Preferred Securities) the lesser of (a) the aggregate of the liquidation
amount and all accrued and unpaid distributions on the Preferred Securities to
the date of payment or (b) the amount of assets of Williams Delaware Capital
remaining for distribution to holders of the Preferred Securities in liquidation
of Williams Delaware Capital. The Company's obligation to make a Guarantee
Payment may be satisfied by direct payment of the required amounts by the
Company to the holders of Preferred Securities or by causing Williams Delaware
Capital to pay such amounts to such holders.
The Guarantee will be a guarantee on a subordinated basis with respect to
the Preferred Securities from the time of issuance of the Preferred Securities
but will not apply to any payment of distributions or Redemption Price, or to
payments upon the dissolution, winding-up or termination of Williams Delaware
Capital, except to the extent Williams Delaware Capital shall have funds
available therefor. If the Company does not make interest payments on the Junior
Subordinated Debt Securities, Williams Delaware Capital will not pay
distributions on the Preferred Securities and will not have funds available
therefor. See "Description of Junior Subordinated Debt Securities." The
Guarantee, when taken together with the Company's obligations under the Junior
Subordinated Debt Securities, the Indenture and the Declaration, including its
obligations to pay costs, expenses, debts and liabilities of Williams Delaware
Capital (other than with respect to Trust Securities), will provide a full and
unconditional guarantee on a subordinated basis by the Company of payments due
on the Preferred Securities.
CERTAIN COVENANTS OF THE COMPANY
In the Guarantee, the Company will covenant that, so long as any Preferred
Securities remain outstanding, if there shall have occurred any event that would
constitute an Event of Default under such Guarantee or the Declaration, then (a)
the Company shall not declare or pay any dividend on, make any distributions
with respect to, or redeem, purchase, acquire or make a liquidation payment with
respect to, any of its capital stock or make any guarantee payment with respect
thereto (other than (i) repurchases, redemptions or other acquisitions of shares
of capital stock of the Company in connection with any employment contract,
benefit plan or other similar arrangement with or for the benefit of employees,
officers, directors or consultants, (ii) as a result of an exchange or
conversion of any class or series of the Company's capital stock for any other
class or series of the Company's capital stock, or (iii) the purchase of
fractional interests in shares of the Company's capital stock pursuant to the
conversion or exchange provisions of such capital stock or the security being
converted or exchanged) and (b) the Company shall not make any payment of
interest on, or principal of (or premium, if any, on), or repay, repurchase or
redeem, any debt securities issued by the Company which rank pari passu with or
junior to the Junior Subordinated Debt Securities. The Guarantee, however, will
except from the foregoing any stock dividends paid by the Company where the
dividend stock is the same stock as that on which the dividend is being paid.
MODIFICATION OF THE GUARANTEE; ASSIGNMENT
Except with respect to any changes that do not adversely affect the rights
of holders of Preferred Securities (in which case no vote will be required), the
Guarantee may be amended only with the prior approval of the holders of not less
than a majority in aggregate liquidation amount of the outstanding Preferred
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Securities. All guarantees and agreements contained in the Guarantee shall bind
the successors, assignees, receivers, trustees and representatives of the
Company and shall inure to the benefit of the holders of the Preferred
Securities then outstanding.
EVENTS OF DEFAULT
An Event of Default under the Guarantee will occur upon the failure of the
Company to perform any of its payment or other obligations thereunder. The
holders of a majority in aggregate liquidation amount of the Preferred
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Guarantee Trustee in respect of the
Guarantee or to direct the exercise of any trust or power conferred upon the
Guarantee Trustee under the Guarantee. If the Guarantee Trustee fails to enforce
the Guarantee Trustee's rights under the Guarantee, any holder of related
Preferred Securities may directly institute a legal proceeding against the
Company to enforce the Guarantee Trustee's rights under the Guarantee without
first instituting a legal proceeding against Williams Delaware Capital, the
Guarantee Trustee or any other person or entity. A holder of Preferred
Securities may also directly institute a legal proceeding against the Company to
enforce such holder's right to receive payment under the Guarantee without first
(i) directing the Guarantee Trustee to enforce the terms of the Guarantee or
(ii) instituting a legal proceeding against Williams Delaware Capital or any
other person or entity.
The Company will be required to provide annually to the Guarantee Trustee a
statement as to the performance by the Company of certain of its obligations
under the Guarantee and as to any default in such performance.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, prior to the occurrence of a default with respect to
the Guarantee, undertakes to perform only such duties as are specifically set
forth in the Guarantee and, after default with respect to the Guarantee, shall
exercise the same degree of care as a prudent individual would exercise in the
conduct of his or her own affairs. Subject to such provision, the Guarantee
Trustee is under no obligation to exercise any of the powers vested in it by the
Guarantee at the request of any holder of Preferred Securities unless it is
offered reasonable indemnity against the costs, expenses and liabilities that
might be incurred thereby.
TERMINATION OF THE GUARANTEE
The Guarantee will terminate as to the Preferred Securities upon full
payment of the Redemption Price of all Preferred Securities, upon distribution
of the Junior Subordinated Debt Securities to the holders of the Preferred
Securities or upon full payment of the amounts payable in accordance with the
Declaration upon liquidation of Williams Delaware Capital. The Guarantee will
continue to be effective or will be reinstated, as the case may be, if at any
time any holder of Preferred Securities must restore payment of any sums paid
under the Preferred Securities or the Guarantee.
STATUS OF THE GUARANTEE
The Guarantee will constitute an unsecured obligation of the Company and
will rank subordinate and junior in right of payment to all Senior Indebtedness
of the Company and pari passu with any guarantee now or hereafter entered into
by the Company in respect of any preferred or preference stock of any affiliate
of the Company. The terms of the Preferred Securities provide that each holder
of Preferred Securities by acceptance thereof agrees to the subordination
provisions and other terms of the Guarantee.
The Guarantee will constitute a guarantee of payment and not of collection
(that is, the guaranteed party may institute a legal proceeding directly against
the guarantor to enforce its rights under the Guarantee without instituting a
legal proceeding against any other person or entity).
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GOVERNING LAW
The Guarantee will be governed by, and construed in accordance with, the
internal laws of the State of New York.
EFFECT OF OBLIGATIONS UNDER THE
JUNIOR SUBORDINATED DEBT SECURITIES AND THE GUARANTEE
As set forth in the Declaration, the sole purpose of Williams Delaware
Capital is to issue the Trust Securities evidencing undivided beneficial
interests in the assets of Williams Delaware Capital, and to invest the proceeds
from such issuance and sale in the Junior Subordinated Debt Securities.
As long as payments of interest and other payments are made when due on the
Junior Subordinated Debt Securities, such payments will be sufficient to cover
distributions and payments due on the Trust Securities because of the following
factors: (i) the aggregate principal amount of Junior Subordinated Debt
Securities will be equal to the sum of the aggregate stated liquidation amount
of the Trust Securities; (ii) the interest rate and the interest and other
payment dates on the Junior Subordinated Debt Securities will match the
distribution rate and distribution and other payment dates for the Preferred
Securities; (iii) pursuant to the Indenture, the Company shall pay, and Williams
Delaware Capital shall not be obligated to pay, directly or indirectly, all
costs, expenses, debt and obligations of Williams Delaware Capital other than
with respect to the Trust Securities; and (iv) the Declaration further provides
that the Williams Delaware Trustees shall not cause or permit Williams Delaware
Capital to, among other things, engage in any activity that is not consistent
with the purposes of Williams Delaware Capital.
Payments of distributions (to the extent funds therefor are available) and
other payments due on the Preferred Securities (to the extent funds therefor are
available) are guaranteed by the Company as and to the extent set forth under
"Description of Guarantees" in the accompanying Prospectus. If the Company does
not make interest payments on the Junior Subordinated Debt Securities purchased
by Williams Delaware Capital, it is expected that Williams Delaware Capital will
not have sufficient funds to pay distributions on the Preferred Securities. The
Guarantee is a guarantee on a subordinated basis with respect to the Preferred
Securities from the time of its issuance but does not apply to any payment of
distributions unless and until Williams Delaware Capital has sufficient funds
for the payment of such distributions.
The Guarantee covers the payment of distributions and other payments on the
Preferred Securities only if and to the extent that the Company has made a
payment of interest or principal or other payments on the Junior Subordinated
Debt Securities held by Williams Delaware Capital as its sole asset. The
Guarantee, when taken together with the Company's obligations under the Junior
Subordinated Debt Securities and the Indenture and its obligations under the
Declaration, including its obligations to pay costs, expenses, debts and
liabilities of Williams Delaware Capital (other than with respect to the Trust
Securities), will provide a full and unconditional guarantee of distributions,
redemption payments and liquidation payments on the Preferred Securities.
If the Company fails to make interest or other payments on the Junior
Subordinated Debt Securities when due (taking account of any Extension Period),
the Declaration provides a mechanism whereby the holders of the Preferred
Securities, using the procedures described in "Description of the Preferred
Securities -- Book Entry Only Issuance -- The Depository Trust Company" and
"-- Voting Rights," may direct the Institutional Trustee to enforce its rights
under the Junior Subordinated Debt Securities. If the Institutional Trustee
fails to enforce its rights under the Junior Subordinated Debt Securities, any
holder of Preferred Securities may directly institute a legal proceeding against
the Company to enforce the Institutional Trustee's rights under the Junior
Subordinated Debt Securities without first instituting any legal proceeding
against the Institutional Trustee or any other person or entity. If a
Declaration Event of Default has occurred and is continuing and such event is
attributable to the failure of the Company to pay interest or principal on the
Junior Subordinated Debt Securities on the date such interest or principal is
otherwise payable (or in the case of redemption, on the redemption date), then a
holder of Preferred Securities may also institute a Direct Action for payment on
or after the respective due date specified in the Junior Subordinated Debt
Securities
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without first (i) directing the Institutional Trustee to enforce the terms of
the Junior Subordinated Debt Securities or (ii) instituting a legal proceeding
against the Company to enforce the Institutional Trustee's rights under the
Junior Subordinated Debt Securities. In connection with such Direct Action, the
Company will be subrogated to the rights of such holder of Preferred Securities
under the Declaration to the extent of any payment made by the Company to such
holder of Preferred Securities in such Direct Action. Consequently, the Company
will be entitled to payment of amounts that a holder of Preferred Securities
receives in respect of an unpaid distribution that resulted in the bringing of a
Direct Action to the extent that such holder receives or has already received
full payment with respect to such unpaid distribution from Williams Delaware
Capital. The Company, under the Guarantee, acknowledges that the Guarantee
Trustee shall enforce the Guarantee on behalf of the holders of the Preferred
Securities. If the Company fails to make payments under the Guarantee, the
Guarantee provides a mechanism whereby the holders of the Preferred Securities
may direct the Guarantee Trustee to enforce its rights thereunder. If the
Guarantee Trustee fails to enforce the Guarantee, any holder of Preferred
Securities may directly institute a legal proceeding against the Company to
enforce the Guarantee Trustee's rights under the Guarantee without first
instituting a legal proceeding against Williams Delaware Capital, the Guarantee
Trustee, or any other person or entity. A holder of Preferred Securities may
also directly institute a legal proceeding against the Company to enforce such
holder's right to receive payment under the Guarantee without first (i)
directing the Guarantee Trustee to enforce the terms of the Guarantee or (ii)
instituting a legal proceeding against Williams Delaware Capital or any other
person or entity.
The Company and Williams Delaware Capital believe that the above mechanisms
and obligations, taken together, are equivalent to a full and unconditional
guarantee by the Company of payments due on the Preferred Securities. See
"Description of Guarantee -- General."
UNITED STATES FEDERAL INCOME TAXATION
In the opinion of the Davis Polk & Wardwell, tax counsel to the Company and
Williams Delaware Capital, the following are the material United States federal
income tax consequences of the ownership and disposition of Preferred
Securities. Unless otherwise stated, this summary deals only with Preferred
Securities held as capital assets by holders who acquire the Preferred
Securities upon original issuance at the initial public offering price set forth
on the cover of this Prospectus Supplement ("Initial Holders"). It does not deal
with special classes of holders such as banks, thrifts, real estate investment
trusts, regulated investment companies, insurance companies, dealers in
securities or currencies, tax-exempt investors, persons that have a functional
currency other than the U.S. Dollar or persons that will hold the Preferred
Securities as a position in a "straddle," as part of a "synthetic security" or
"hedge," as part of a "conversion transaction" or other integrated investment,
or as other than a capital asset. This summary is based on the Internal Revenue
Code of 1986, as amended (the "Code"), Treasury Regulations thereunder and
administrative and judicial interpretations thereof as of the date hereof, all
of which are subject to change (possibly on a retroactive basis).
INVESTORS ARE ADVISED TO CONSULT THEIR TAX ADVISORS AS TO THE UNITED STATES
FEDERAL INCOME TAX CONSEQUENCES OF THE OWNERSHIP AND DISPOSITION OF PREFERRED
SECURITIES IN LIGHT OF THEIR PARTICULAR CIRCUMSTANCES, AS WELL AS THE EFFECT OF
ANY STATE, LOCAL OR OTHER TAX LAWS.
CLASSIFICATION OF WILLIAMS DELAWARE CAPITAL
In connection with the issuance of the Preferred Securities, Davis Polk &
Wardwell, tax counsel to the Company and Williams Delaware Capital, will render
its opinion generally to the effect that, under then current law and assuming
full compliance with the terms of the Declaration and the Indenture, and based
on certain facts and assumptions contained in such opinion, Williams Delaware
Capital will be classified for United States federal income tax purposes as a
grantor trust and not as an association taxable as a corporation. Accordingly,
each holder of Preferred Securities (a "Securityholder") will be considered the
owner of a pro rata portion of the Junior Subordinated Debt Securities held by
Williams Delaware Capital. Accordingly, each
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Securityholder will be required to include in gross income his pro rata share of
income accrued on the Junior Subordinated Debt Securities.
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
Under recently issued Treasury regulations applicable to debt instruments
issued on or after August 13, 1996 (the "Regulations"), a "remote" contingency
that stated interest will not be timely paid will be ignored in determining
whether a debt instrument is issued with original issue discount ("OID"). The
Company believes that the likelihood of its exercising its option to defer
payments is remote. Based on the foregoing, the Company believes that the Junior
Subordinated Debt Securities will not be considered to be issued with OID at the
time of their original issuance and, accordingly, a holder of the Preferred
Securities should include in gross income such holder's allocable share of
interest on the Junior Subordinated Debt Securities in accordance with such
holder's method of tax accounting.
Under the Regulations, however, if the Company exercises its right to defer
payments of interest, the Junior Subordinated Debt Securities will become OID
instruments, and all Securityholders (including those Securityholders that
otherwise report income based on the cash method of accounting) will be required
to accrue interest on a daily basis during the extended interest period even
though the Company will not pay the interest in cash until the end of the
extended interest period. A Securityholder who disposes of the Preferred
Securities during an extended interest period may suffer a loss because the
market value of the Preferred Securities will likely fall if the Company
exercises its option to defer payments of interest on the Junior Subordinated
Debt Securities. Furthermore, the market value of the Preferred Securities may
not reflect the accumulated distributions that will be paid at the end of the
extended interest period, and a Securityholder who sells the Preferred
Securities during the extended interest period will not receive from the Company
any cash related to the interest income the Securityholder accrued and included
in its taxable income under the OID rules (because that cash will be paid to the
holder of record at the end of the extended interest period).
If the Junior Subordinated Debt Securities become OID instruments (i.e., if
the Company ever exercises its right to defer payments of interest), the Debt
Securities will be taxed as OID instruments for as long as they remain
outstanding. Thus, even after the end of the extended interest period, all
Securityholders will be required to continue accruing interest on the Junior
Subordinated Debt Securities on a daily basis, regardless of their method of
accounting. Under the OID rules, a Securityholder would accrue an amount of
interest income each year that approximates the stated interest payments called
for under the terms of the Junior Subordinated Debt Securities, and actual cash
payments of interest on the Junior Subordinated Debt Securities would not be
reported separately as taxable income.
The Regulations have not yet been addressed in any rulings or other
interpretations by the Internal Revenue Service (the "IRS"), and it is possible
that the IRS could take a position contrary to tax counsel's interpretation.
Because income on the Preferred Securities will constitute interest or OID,
corporate holders of the Preferred Securities will not be entitled to a
dividends-received deduction with respect to any income recognized with respect
to the Preferred Securities.
DISTRIBUTION OF JUNIOR SUBORDINATED DEBT SECURITIES TO HOLDERS OF PREFERRED
SECURITIES
Under current law, a distribution by Williams Delaware Capital of the
Junior Subordinated Debt Securities as described under the caption "Description
of the Preferred Securities -- Special Event Redemption or Distribution", will
be non-taxable and will result in each Securityholder receiving directly his pro
rata share of the Junior Subordinated Debt Securities previously held indirectly
through Williams Delaware Capital, with a holding period and tax basis equal to
the holding period and adjusted tax basis such Securityholder was considered to
have had in his pro rata share of the underlying Junior Subordinated Debt
Securities prior to such distribution.
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DISPOSITION OF THE PREFERRED SECURITIES
Upon a sale, exchange or other disposition of the Preferred Securities
(including a distribution of cash in redemption of a Securityholder's Preferred
Securities upon redemption or repayment of the underlying Junior Subordinated
Debt Securities, but excluding the distribution of Junior Subordinated Debt
Securities), a Securityholder will be considered to have disposed of all or part
of his pro rata share of the Junior Subordinated Debt Securities, and will
recognize gain or loss equal to the difference between the amount realized
(which, for this purpose, will exclude amounts attributable to accrued interest
not previously included in income) and the Securityholder's adjusted tax basis
in his pro rata share of the underlying Junior Subordinated Debt Securities of
which he is deemed to have disposed. Such gain or loss will generally be long-
term capital gain or loss if the Preferred Securities have been held for more
than one year. Amounts attributable to accrued interest with respect to a
Securityholder's pro rata share of the Junior Subordinated Debt Securities not
previously included in income will be taxable as ordinary income.
PROPOSED TAX LEGISLATION
On March 19, 1996, as a part of President Clinton's Fiscal 1997 Budget
Proposal, the Treasury Department proposed legislation (the "Proposed
Legislation") that, among other things, would (i) treat as equity for United
States federal income tax purposes certain debt instruments with a maximum term
of more than 20 years and (ii) disallow interest deductions on debt instruments
with a maturity of more than 40 years. The Proposed Legislation was proposed to
be effective for debt instruments issued on or after December 7, 1995.
On March 29, 1996, Senate Finance Committee Chairman William V. Roth, Jr.
and House Ways and Means Committee Chairman Bill Archer issued a joint statement
(the "Joint Statement") indicating their intent that the Proposed Legislation,
if adopted by either of the tax-writing committees of Congress, would have an
effective date that is no earlier than the date of "appropriate Congressional
action." The proposals were not adopted in the recently concluded session of
Congress. There can be no assurance, however, that final legislation similar to
the Bill or future legislative proposals, future regulations or official
administrative pronouncements or future judicial decisions will not affect the
ability of the Company to deduct interest on the Junior Subordinated Debt
Securities. Such a change could give rise to a Tax Event, which may permit the
Company to cause a redemption of the Preferred Securities. See "Description of
the Preferred Securities -- Special Event Redemption or Distribution."
UNITED STATES ALIEN HOLDERS
For purposes of this discussion, a "United States Alien Holder" is any
corporation, individual, partnership, estate or trust that is as to the United
States, a foreign corporation, a non-resident alien individual, a foreign
partnership or a non-resident fiduciary of a foreign estate or trust. This
discussion assumes that income with respect to the Preferred Securities is not
effectively connected with any trade or business in the United States in which
the United States Alien Holder is engaged.
Under present United States federal income tax law:
(i) payments by Williams Delaware Capital or any of its paying agents
to any holder of a Preferred Security who or which is a United States Alien
Holder will not be subject to United States federal withholding tax,
provided that (a) the beneficial owner of the Preferred Security does not
actually or constructively own 10% or more of the total combined voting
power of all classes of stock of the Company entitled to vote, (b) the
beneficial owner of the Preferred Security is not a controlled foreign
corporation that is related to the Company through stock ownership, and (c)
either (A) the beneficial owner of the Preferred Security certifies to
Williams Delaware Capital or its agent, under penalties of perjury, that it
is not a United States holder and provides its name and address or (B) a
securities clearing organization, bank or other financial institution that
holds customer's securities in the ordinary course of its trade or business
(a "Financial Institution"), and holds the Preferred Security in such
capacity certifies to Williams Delaware Capital or its agent, under
penalties of perjury, that such statement has been received
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from the beneficial owner by it or by a Financial Institution holding such
security for the beneficial owner and furnishes Williams Delaware Capital
or its agent with a copy thereof; and
(ii) A United States Alien Holder of a Preferred Security generally
will not be subject to United States federal withholding tax on any gain
realized upon the sale or other disposition of a Preferred Security.
INFORMATION REPORTING TO HOLDERS
Williams Delaware Capital will report the interest and original issue
discount (if any) that accrued during the year with respect to the Junior
Subordinated Debt Securities, and any gross proceeds received by Williams
Delaware Capital from the retirement or redemption of the Junior Subordinated
Debt Securities, annually to the holders of record of the Preferred Securities
and the IRS. Williams Delaware Capital currently intends to deliver such reports
to holders of record prior to January 31 following each calendar year. It is
anticipated that persons who hold Preferred Securities as nominees for
beneficial holders will report the required tax information to beneficial
holders on Forms 1099.
BACKUP WITHHOLDING
Payments made on, and proceeds from the sale of, the Preferred Securities
may be subject to a "backup" withholding tax of 31% unless the holder complies
with certain identification requirements. Any withheld amounts will generally be
allowed as a credit against the holder's United States federal income tax,
provided the required information is timely filed with the IRS.
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UNDERWRITING
Under the terms and subject to the conditions of the Underwriting Agreement
dated , 1997 (the "Underwriting Agreement"), each Underwriter named
below (the "Underwriters") has severally agreed to purchase from Williams
Delaware Capital, and Williams Delaware Capital has agreed to sell to such
Underwriter, the number of Preferred Securities set forth opposite the name of
such Underwriter below.
NUMBER OF
PREFERRED
UNDERWRITERS SECURITIES
----------------------------------------------------------------------- ------------
------------
Total........................................................
===========
The Underwriters are obligated to take and pay for the total number of
Preferred Securities offered hereby if any such Preferred Securities are
purchased. In the event of default by any Underwriter, the Underwriting
Agreement provides that, in certain circumstances, purchase commitments of the
non-defaulting Underwriters may be increased or the Underwriting Agreement may
be terminated.
The Underwriting Agreement provides that Williams Delaware Capital and the
Company will indemnify the several Underwriters against certain liabilities,
including liabilities under the Securities Act of 1933, as amended, and to make
certain contributions in respect thereof.
Williams Delaware Capital and the Company have agreed, during the period
beginning on the date of the Underwriting Agreement and continuing to and
including the date that is 60 days after the closing date for the purchase of
the Preferred Securities, not to offer, sell, contract to sell or otherwise
dispose of any preferred securities, any preferred stock or any other securities
(including any backup undertakings of such preferred stock or other securities)
of the Company or of Williams Delaware Capital, in each case that are
substantially similar to the Preferred Securities, or any securities convertible
into or exchangeable for the Preferred Securities or such substantially similar
securities of either Williams Delaware Capital or the Company, except preferred
securities offered pursuant to the accompanying Prospectus, without the prior
written consent of .
In view of the fact that the proceeds of the sale of the Preferred
Securities will ultimately be used to purchase the Junior Subordinated Debt
Securities of the Company, the Underwriting Agreement provides that the Company
will pay as compensation to the Underwriters $ per Preferred Security
for the accounts of the several Underwriters.
The Underwriters propose to offer the Preferred Securities, in part,
directly to the public at the initial public offering price set forth on the
cover page of this Prospectus Supplement, and to certain dealers at a price that
represents a concession not in excess of $ . The Underwriters may
allow, and such dealers may reallow, a concession not in excess of $
per Preferred Security to certain brokers and dealers. After the Preferred
Securities are released for sale to the public, the offering price and other
selling terms may from time to time be varied by the Representatives.
The Company intends to apply for listing of the Preferred Securities on the
New York Stock Exchange. Trading of the Preferred Securities on the New York
Stock Exchange is expected to commence within a 30-day period after the date of
this Prospectus Supplement.
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LEGAL MATTERS
The validity of the Preferred Securities, the Junior Subordinated Debt
Securities, the Guarantee and certain matters relating thereto will be passed
upon by William G. Von Glahn, Esq., Senior Vice President and General Counsel of
Williams. Certain matters of Delaware law will be passed upon for the Company
and Williams Delaware Capital by Morris, James, Hitchens & Williams, Wilmington,
Delaware. Certain United States federal income tax matters will be passed upon
for the Company and Williams Delaware Capital by Davis Polk & Wardwell, New
York, New York. Certain legal matters will be passed upon for the Underwriters
by Davis Polk & Wardwell, New York, New York.
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PROSPECTUS
WILLIAMS HOLDINGS OF DELAWARE, INC.
JUNIOR SUBORDINATED DEBT SECURITIES
------------------------
WILLIAMS DELAWARE CAPITAL I
WILLIAMS DELAWARE CAPITAL II
TRUST PREFERRED SECURITIES
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY
WILLIAMS HOLDINGS OF DELAWARE, INC.
------------------------
Williams Holdings of Delaware, Inc., a Delaware corporation (the
"Company"), may offer, from time to time, its unsecured junior subordinated debt
securities (the "Junior Subordinated Debt Securities"), consisting of
debentures, notes or other evidences of indebtedness, in one or more series and
in amounts, at prices and on terms to be determined at or prior to the time of
any such offering. The Company's obligations under the Junior Subordinated Debt
Securities will be subordinate and junior in right of payment to certain other
indebtedness of the Company as described herein or as may be described in an
accompanying Prospectus Supplement (the "Prospectus Supplement").
Williams Delaware Capital I and Williams Delaware Capital II (each, a
"Williams Delaware Trust" and, together, the "Williams Delaware Trusts"), each a
statutory business trust formed under the laws of the State of Delaware, may
offer, from time to time, trust preferred securities, representing undivided
beneficial interests in the assets of the respective Williams Delaware Trust
("Preferred Securities") with the payment of periodic cash distributions
("distributions") and payments on liquidation, redemption or otherwise of such
Preferred Securities guaranteed (each, a "Guarantee") on a subordinated basis by
the Company to the extent described herein. See "Description of Guarantees." The
Company's obligations under the Guarantees will rank subordinate and junior in
right of payment to all Senior Indebtedness of the Company and pari passu with
any guarantee now or hereafter entered into by the Company in respect of any
preferred or preference stock of any affiliate of the Company. See "Description
of Guarantees -- Status of Guarantees." Junior Subordinated Debt Securities may
be issued and sold from time to time in one or more series by the Company to a
Williams Delaware Trust, or a trustee of such trust, in connection with the
investment of the proceeds from the offering of Preferred Securities and Common
Securities (as defined herein) of such Williams Delaware Trust, but the Company
does not intend to issue and sell the Junior Subordinated Debt Securities
directly to other purchasers, including the general public. The Junior
Subordinated Debt Securities purchased by a Williams Delaware Trust may be
subsequently distributed pro rata to holders of Preferred Securities and Common
Securities in connection with the dissolution of such Williams Delaware Trust
upon the occurrence of certain events as may be described in an accompanying
Prospectus Supplement. The Guarantee, when taken together with the Company's
obligations under the Junior Subordinated Debt Securities, the Indenture and the
Declaration, including its obligations to pay costs, expenses, debts and
liabilities of such Williams Delaware Trust (other than with respect to the
Preferred Securities and the Common Securities), will provide a full and
unconditional guarantee on a subordinated basis by the Company of payments due
on Preferred Securities.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALES OF SECURITIES UNLESS
ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
------------------------
, 1997
42
Specific terms of the Junior Subordinated Debt Securities of any series or
the Preferred Securities of any Williams Delaware Trust in respect of which this
Prospectus is being delivered (the "Offered Securities") will be set forth in a
Prospectus Supplement with respect to such Offered Securities, which will
describe, without limitation and where applicable, the following: (i) in the
case of Junior Subordinated Debt Securities, the specific designation, aggregate
principal amount, denomination, maturity, premium, if any, redemption or sinking
fund provisions, if any, interest rate (which may be fixed or variable), if any,
the time and method of calculating interest payments, if any, dates on which
premium, if any, and interest, if any, will be payable, the right of the
Company, if any, to defer payment of interest on the Junior Subordinated Debt
Securities and the maximum length of such deferral period, the initial public
offering price, subordination terms, and any listing on a securities exchange
and other specific terms of the offering of Junior Subordinated Debt Securities,
and (ii) in the case of Preferred Securities, the designation, number of
securities, liquidation preference per security, initial public offering price,
any listing on a securities exchange, distribution rate (or method of
calculation thereof), dates on which distributions shall be payable and dates
from which distributions shall accrue, any voting rights, any redemption or
sinking fund provisions, any other rights, preferences, privileges, limitations
or restrictions relating to the Preferred Securities and the terms upon which
the proceeds of the sale of the Preferred Securities shall be used to purchase a
specific series of Junior Subordinated Debt Securities. If so specified in the
applicable Prospectus Supplement, Offered Securities may be issued in whole or
in part in the form of one or more temporary or permanent global securities.
If as set forth in the applicable Prospectus Supplement, the Company has
the right to defer payments of interest on a series of Junior Subordinated Debt
Securities by extending the interest payment period of such series of Junior
Subordinated Debt Securities (each, an "Extension Period"), distributions on the
corresponding series of Preferred Securities will also be deferred.
The Offered Securities may be offered in amounts, at prices and on terms to
be determined at the time of offering; provided, however, that the aggregate
initial public offering price of all Offered Securities shall not exceed $300
million. Any Prospectus Supplement relating to any series of Offered Securities
will contain information concerning certain United States federal income tax
considerations, if applicable, to the Offered Securities.
The Company or any of the Williams Delaware Trusts may sell the Offered
Securities directly, through agents designated from time to time or through
underwriters or dealers. See "Plan of Distribution." If any agents of the
Company, any of the Williams Delaware Trusts or any underwriters or dealers are
involved in the sale of the Offered Securities, the names of such agents,
underwriters or dealers and any applicable commissions and discounts will be set
forth in any related Prospectus Supplement.
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS OR ANY ACCOMPANYING PROSPECTUS
SUPPLEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY OF THE WILLIAMS
DELAWARE TRUSTS, OR ANY UNDERWRITER, AGENT OR DEALER. NEITHER THE DELIVERY OF
THIS PROSPECTUS AND ANY PROSPECTUS SUPPLEMENT NOR ANY SALE MADE THEREUNDER
SHALL, UNDER ANY CIRCUMSTANCE, CREATE AN IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY OR ANY OF THE WILLIAMS DELAWARE TRUSTS
SINCE THE DATE HEREOF OR THEREOF. THIS PROSPECTUS AND ANY RELATED PROSPECTUS
SUPPLEMENT DO NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION.
------------------------
IN CONNECTION WITH THE OFFERING OF CERTAIN OF THE OFFERED SECURITIES, THE
UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN
THE MARKET PRICES OF SUCH OFFERED SECURITIES OR OTHER SECURI-
2
43
TIES OF THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE
OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission"). Such reports and other information can be
inspected and copied at the public reference facilities maintained by the
Commission at: Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549;
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511; and Seven World Trade Center, New York, New York 10048. Copies of
such material can also be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. The Commission also maintains a site on the World Wide Web, the address
of which is http://www.sec.gov, that contains reports, proxy and information
statements and other information regarding issuers, such as the Company, that
file electronically with the Commission.
The Company and the Williams Delaware Trusts have filed with the Commission
a Registration Statement on Form S-3 (the "Registration Statement," which term
shall include all amendments, exhibits, annexes and schedules thereto) pursuant
to the Securities Act of 1933, as amended (the "Act"), with respect to the
Offered Securities. This Prospectus does not contain all the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. For further
information with respect to the Company, the Williams Delaware Trusts and the
Offered Securities, reference is made to the Registration Statement and exhibits
thereto. Statements contained in this Prospectus as to the contents of any
contract or other document are not necessarily complete, and in each instance
reference is made to the copy of such contract or document filed as an exhibit
to the Company's Registration Statement, each such statement being qualified in
all respects by such reference.
No separate financial statements of the Williams Delaware Trusts have been
included or incorporated by reference herein. The Company does not consider that
such financial statements would be material to holders of the Preferred
Securities because (i) all of the voting securities of the Williams Delaware
Trusts will be owned, directly or indirectly, by the Company, a reporting
company under the Exchange Act, (ii) the Williams Delaware Trusts have no
independent operations but exist for the sole purpose of issuing securities
representing undivided beneficial interests in their respective assets and
investing the proceeds thereof in Junior Subordinated Debt Securities issued by
the Company, and (iii) the obligations of the Williams Delaware Trusts under the
Preferred Securities are fully and unconditionally guaranteed by the Company to
the extent that the respective Williams Delaware Trust has funds available to
meet such obligations. See "Description of Junior Subordinated Debt Securities"
and "Description of Guarantees."
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company incorporates by reference the following documents heretofore
filed with the Commission pursuant to the Exchange Act:
1. Annual Report on Form 10-K, as amended, of the Company for the
fiscal year ended December 31, 1995; and
2. Quarterly Reports on Form 10-Q of the Company for the quarters
ended March 31, 1996, June 30, 1996 and September 30, 1996.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the later of (i) the termination of the offering of Offered Securities hereby
and (ii) the date on which the Underwriters cease offering and selling Offered
Securities pursuant to this Prospectus shall be deemed to be incorporated by
reference in this Prospectus and to be a part hereof from the date of filing of
such documents.
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Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed to constitute a part of
this Prospectus except as so modified or superseded.
The Company will provide without charge to each person to whom this
Prospectus is delivered, on the written or oral request of any such person, a
copy of any or all of the documents incorporated by reference in the
Registration Statement of which this Prospectus forms a part other than exhibits
to such documents unless such exhibits are specifically incorporated by
reference into such documents. Requests should be directed to Williams Holdings
of Delaware, Inc., One Williams Center, Tulsa, Oklahoma 74172; Attention:
Corporate Secretary, (918) 588-2000.
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THE COMPANY
The Company is a wholly-owned subsidiary of The Williams Companies, Inc.
("Williams"). The Company through subsidiaries, is engaged in natural gas
gathering, processing and production, the transportation of crude oil and
petroleum products, natural gas trading activities, natural gas liquids
marketing and provides a variety of other products and services to the energy
industry. The Company's telecommunications subsidiaries offer data, voice and
video-related products and services and customer premise equipment nationwide.
The Company also has certain other equity investments.
Substantially all of the Company's operations are conducted through
subsidiaries. Williams performs management, legal, financial, tax, consultative,
administrative and other services for the Company and its subsidiaries. The
Company's principal sources of cash are from external financings, dividends and
advances from its subsidiaries, advances from Williams, investments and interest
payments from subsidiaries and Williams on cash advances. The amount of
dividends available to the Company from subsidiaries largely depends on each
subsidiary's earnings and capital requirements. Terms of one subsidiary's
borrowing arrangements limit the transfer of funds to the Company.
The Company was incorporated under the laws of the State of Delaware in
July 1994. The principal executive offices are located at One Williams Center,
Tulsa Oklahoma 74172 (telephone (918) 588-2000).
WILLIAMS DELAWARE TRUSTS
Each of the Williams Delaware Trusts is a statutory business trust formed
under Delaware law pursuant to (i) a declaration of trust executed by the
Company, as sponsor for such trust (the "Sponsor"), and the trustees of such
trust dated as of January 31, 1997 and (ii) the filing of a certificate of trust
with the Secretary of State of the State of Delaware on January 31, 1997. Each
such declaration will be amended and restated in its entirety (as so amended and
restated, each a "Declaration"), and is substantially in the form filed as an
exhibit to the Registration Statement of which this Prospectus forms a part.
Each of the Williams Delaware Trusts exists for the exclusive purposes of (i)
issuing the Preferred Securities and common securities representing undivided
beneficial interests in the assets of the Trust (the "Common Securities" and,
together with the Preferred Securities, the "Trust Securities"), (ii) investing
the gross proceeds from the sale of the Trust Securities in the Junior
Subordinated Debt Securities and (iii) engaging in only those other activities
necessary or incidental thereto. All of the Common Securities will be directly
or indirectly owned by the Company. The Common Securities will rank pari passu,
and payments will be made thereon pro rata, with the Preferred Securities,
except that, upon an event of default under the Declaration, the rights of the
holders of the Common Securities to payment in respect of distributions and
payments upon liquidation, redemption and otherwise will be subordinated to the
rights of the holders of the Preferred Securities. The Company will directly or
indirectly acquire Common Securities in an aggregate liquidation amount equal to
3% or more of the total capital of each Williams Delaware Trust.
Each Williams Delaware Trust has a term of approximately 55 years but may
terminate earlier, as provided in each Declaration. Each Williams Delaware
Trust's business and affairs will be conducted by the trustees of each
applicable Trust (the "Williams Delaware Trustees") appointed by the Company as
the direct or indirect holder of all the Common Securities. The holder of the
Common Securities will be entitled to appoint, remove or replace any of, or
increase or reduce the number of, the Williams Delaware Trustees of the Williams
Delaware Trusts. The duties and obligations of the Williams Delaware Trustees
shall be governed by the Declaration of such Williams Delaware Trust. Each
Williams Delaware Trust will have two Williams Delaware Trustees (the "Regular
Trustees") who are employees or officers of or who are affiliated with the
Company. One Williams Delaware Trustee of each Williams Delaware Trust will be a
financial institution that is not affiliated with the Company and that has a
specified minimum amount of aggregate capital, surplus, and undivided profits of
not less than $50,000,000, which shall act as property trustee and as indenture
trustee for the purposes of compliance with the provisions of Trust Indenture
Act of 1939, as amended (the "Trust Indenture Act"), pursuant to the terms set
forth in a Prospectus Supplement (the "Institutional Trustee"). In addition,
unless the Institutional Trustee maintains a principal place of business in the
State of Delaware and otherwise meets the requirements of applicable law, one
Williams Delaware
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Trustee of each Williams Delaware Trust will have a principal place of business
or reside in the State of Delaware (the "Delaware Trustee"). The Company will
pay all fees and expenses related to the Williams Delaware Trusts and the
offering of the Trust Securities.
The office of the Delaware Trustee for each of the Williams Delaware Trusts
is Chase Manhattan Bank Delaware, 1201 Market Street, Wilmington, Delaware
19801. The address for each Williams Delaware Trust is c/o the Company, the
Sponsor of the Williams Delaware Trusts, at the Company's corporate headquarters
located at One Williams Center, Tulsa, Oklahoma 74172 (telephone (918)
588-2000).
USE OF PROCEEDS
All of the net proceeds from the sale of any Preferred Securities offered
hereby will be invested by the Williams Delaware Trust in Junior Subordinated
Debt Securities. The Company will use the proceeds from the sale of the Junior
Subordinated Debt Securities to the Williams Delaware Trusts for general
corporate purposes.
RATIO OF EARNINGS TO FIXED CHARGES
NINE MONTHS
ENDED YEAR ENDED DECEMBER 31,
SEPTEMBER 30, -----------------------------------------
1996 1995 1994 1993 1992 1991
------------- ----- ----- ----- ----- -----
Ratio of earnings to fixed charges............ 7.45 5.17 6.71 14.10 2.86 1.60
- ---------------
For the purpose of this ratio (i) earnings consist of income from
continuing operations before fixed charges and incomes taxes for the Company,
its majority-owned subsidiaries and its proportionate share of 50 percent-owned
companies, less undistributed earnings of less than 50 percent-owned companies;
and (ii) fixed charges consist of interest and debt expense on all indebtedness
(without reduction for interest capitalized), that portion of rental payments on
operating leases estimated to represent an interest factor, plus the pretax
effect of preferred stock dividends of subsidiaries.
DESCRIPTION OF JUNIOR SUBORDINATED DEBT SECURITIES
The following description sets forth certain general terms and provisions
of the Junior Subordinated Debt Securities to which any Prospectus Supplement
may relate. The particular terms of the Junior Subordinated Debt Securities
offered by any Prospectus Supplement and the extent, if any, to which such
general provisions may apply to the Junior Subordinated Debt Securities so
offered will be described in the Prospectus Supplement relating to such Junior
Subordinated Debt Securities.
The Junior Subordinated Debt Securities may be issued, from time to time,
in one or more series, under an Indenture, dated as of , 1997 (the
"Indenture"), between the Company and The Chase Manhattan Bank, as trustee (the
"Indenture Trustee"), the form of which is filed as an exhibit to the
Registration Statement of which this Prospectus forms a part.
The following summary of certain provisions of the Junior Subordinated Debt
Securities and the Indenture does not purport to be complete and is subject to,
and is qualified in its entirety by express reference to, all of the provisions
of the Indenture, including the definitions therein of certain terms. All
article and section references appearing herein are to articles and sections of
the Indenture, unless otherwise indicated, and capitalized terms which are not
otherwise defined in this Prospectus shall have the meanings specified in the
Indenture.
General. The Junior Subordinated Debt Securities will be direct, unsecured
obligations of the Company. The Indenture does not limit the amount of Junior
Subordinated Debt Securities which may be issued thereunder, and provides that
Junior Subordinated Debt Securities may be issued thereunder in series up to
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the aggregate principal amount which may be authorized from time to time by the
Board of Directors of the Company. (Section 3.1)
Reference is made to the Prospectus Supplement which accompanies this
Prospectus for the following terms and other information with respect to the
Junior Subordinated Debt Securities being offered thereby: (i) the designation,
priority, aggregate principal amount and authorized denominations; (ii) the
percentage of their principal amount at which such Junior Subordinated Debt
Securities will be issued; (iii) the date on which such Junior Subordinated Debt
Securities will mature; (iv) the rate per annum at which such Junior
Subordinated Debt Securities will bear interest or the method of determination
of such rate; (v) the dates on which such interest will be payable; (vi) the
rights, if any, to defer payments of interest on the Junior Subordinated Debt
Securities by extending the interest payment period, and the maximum duration of
such extensions; (vii) the place or places where payments on such Junior
Subordinated Debt Securities shall be made; (viii) any redemption terms or
sinking fund provisions; (ix) the terms of subordination of Junior Subordinated
Debt Securities; (x) whether Junior Subordinated Debt Securities issued in fully
registered form will be represented by either a global security delivered to a
depositary and recorded in a book-entry system maintained by such depositary or
by a certificate delivered to the Holder; (xi) the restrictions, if any,
applicable to the exchange of Junior Subordinated Debt Securities of a series of
one form for another of such series and to the offer, sale and delivery of the
Junior Subordinated Debt Securities; (xii) whether and under what circumstances
the Company will pay additional amounts in the event of certain developments
with respect to United States withholding tax or information reporting laws; or
(xiii) other specific terms.
Unless otherwise specified in the applicable Prospectus Supplement, Junior
Subordinated Debt Securities will be issued in fully registered form without
coupons, will be exchangeable for other Junior Subordinated Debt Securities of
the same series, registered in the same name, for a like aggregate principal
amount in authorized denominations, and will be transferable at any time or from
time to time at the Corporate Trust Office of the Indenture Trustee or at any
other office or agency of the Company maintained for that purpose. No charge
will be made to the Holder for any such exchange or transfer except for any tax
or governmental charge incidental thereto.
Unless otherwise described in the Prospectus Supplement accompanying this
Prospectus, there are no covenants or provisions contained in the Indenture
which afford the Holders of the Junior Subordinated Debt Securities protection
in the event of a highly leveraged transaction involving the Company.
Consolidation, Merger and Sale of Assets. The Indenture provides that the
Company will not consolidate with or merge into any other corporation or convey,
transfer or lease its assets substantially as an entirety unless (a) the
successor is a corporation organized in the United States and expressly assumes
the due and punctual payment of the principal of (and premium, if any) and
interest on all Junior Subordinated Debt Securities issued thereunder and the
performance of every other covenant of the Indenture on the part of the Company
and (b) immediately thereafter no Event of Default and no event which, after
notice or lapse of time, or both, would become an Event of Default, shall have
happened and be continuing. Upon any such consolidation, merger, conveyance or
transfer, the successor corporation shall succeed to and be substituted for the
Company under the Indenture and thereafter, except in the case of a lease, the
predecessor corporation shall be relieved of all obligations and covenants under
the Indenture and the Junior Subordinated Debt Securities. (Article Eight)
Events of Default. The Indenture provides that the following are Events of
Default thereunder with respect to any series of the Junior Subordinated Debt
Securities: (a) default in the payment of the principal of (or premium, if any,
on) any Junior Subordinated Debt Security of such series at its maturity; (b)
default in making a sinking fund payment, if any, when and as the same shall be
due and payable by the terms of the Junior Subordinated Debt Securities of such
series; (c) default for 30 days in the payment of any installment of interest on
any Junior Subordinated Debt Security of such series; (d) default for 90 days
after written notice in the performance of any other covenant in respect of the
Junior Subordinated Debt Securities of such series contained in the Indenture;
(e) certain events of bankruptcy, insolvency or reorganization, or court
appointment of a receiver, liquidator or trustee of the Company; (f) any other
Event of Default provided in the applicable resolution of the Board of Directors
or supplemental indenture under which the Junior Subordi-
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nated Debt Securities are issued; and (g) in the event Junior Subordinated Debt
Securities of a series are issued and sold to a Williams Delaware Trust or a
trustee of such trust in connection with the issuance of Trust Securities by
such Williams Delaware Trust, such Williams Delaware Trust shall have
voluntarily or involuntarily dissolved, wound-up its business or otherwise
terminated its existence, except in connection with (i) the distribution of
Junior Subordinated Debt Securities to holders of Trust Securities in
liquidation or redemption of their interests in such Williams Delaware Trust
upon a Special Event, (ii) the redemption of all of the outstanding Trust
Securities of such Williams Delaware Trust or (iii) certain mergers,
consolidations or amalgamations, each as permitted by the Declaration of such
Williams Delaware Trust. (Section 5.1) The Indenture Trustee may withhold notice
to the Holders of the Junior Subordinated Debt Securities of any default with
respect thereto (except in the payment of principal, premium or interest) if it
considers such withholding to be in the interests of such Holders. (Section 6.2)
If an Event of Default with respect to the Junior Subordinated Debt
Securities shall have occurred and be continuing, the Indenture Trustee or the
Holders of 25% in aggregate principal amount of the Junior Subordinated Debt
Securities may declare the principal of all the Junior Subordinated Debt
Securities to be due and payable immediately. (Section 5.2)
The Indenture contains a provision entitling the Indenture Trustee to be
indemnified by the Holders before proceeding to exercise any right or power
under the Indenture at the request of any of the Holders. (Section 6.3). The
Indenture provides that the Holders of a majority in principal amount of the
outstanding Junior Subordinated Debt Securities may direct the time, method and
place of conducting any proceeding for any remedy available to the Indenture
Trustee, or exercising any trust or power conferred upon the Indenture Trustee,
with respect to the Junior Subordinated Debt Securities. (Section 5.12) The
right of a Holder to institute a proceeding with respect to the Indenture is
subject to certain conditions precedent including notice and indemnity to the
Indenture Trustee, but the Holder has an absolute right to receipt of principal,
premium, if any, and interest on the Junior Subordinated Debt Securities at the
Stated Maturity (or, in the case of redemption, on the Redemption Date) or to
institute suit for the enforcement thereof. (Sections 5.7 and 5.8)
The Holders of not less than a majority in principal amount of the
Outstanding Junior Subordinated Debt Securities may on behalf of the Holders of
all the Junior Subordinated Debt Securities waive any past defaults except (a) a
default in payment of the principal of (or premium, if any) or interest on any
Junior Subordinated Debt Security and (b) a default in respect of a covenant or
provision of the Indenture which cannot be amended or modified without the
consent of the Holder of each affected Junior Subordinated Debt Security;
provided, however, that if the Junior Subordinated Debt Securities are held by a
Williams Delaware Trust or a trustee of such trust, such waiver or modification
to such waiver shall not be effective until the holders of a majority in
liquidation preference of Trust Securities of the applicable Williams Delaware
Trust shall have consented to such waiver or modification to such waiver;
provided further, that if the consent of the Holder of each outstanding Junior
Subordinated Debt Security is required, such waiver shall not be effective until
each holder of the Trust Securities of the applicable Williams Delaware Trust
shall have consented to such waiver. (Section 5.13). The Indenture requires the
Company to furnish to the Indenture Trustee an annual statement as to defaults,
if any, by the Company under the Indenture. (Section 10.4)
Modifications and Amendments. Modifications and amendments to the Indenture
may be made by the Company and the Indenture Trustee with the consent of the
Holders of a majority in principal amount of the Junior Subordinated Debt
Securities at the time outstanding of each series which is affected thereby,
provided, that no such modification or amendment may, without the consent of the
Holder of each Junior Subordinated Debt Security affected thereby: (i) modify
the terms of payment of principal, premium, if any, or interest or modify the
subordination provisions in a manner adverse to the holders; or (ii) reduce the
percentage of Holders of Junior Subordinated Debt Securities necessary to modify
or amend the Indenture or waive compliance by the Company with any covenant or
past default or (iii) remove or impair the rights of any holder to bring a
Direct Action under certain circumstances, provided, further, that if the Junior
Subordinated Debt Securities of such series are held by a Williams Delaware
Trust or a trustee of such trust, such supplemental indenture shall not be
effective until the holders of a majority in liquidation preference of Trust
Securities of the applicable Williams Delaware Trust shall have consented to
such supplemental indenture; provided further, that if the consent of the Holder
of each outstanding Junior Subordinated Debt
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49
Security is required, such supplemental indenture shall not be effective until
each holder of the Trust Securities of the applicable Williams Delaware Trust
shall have consented to such supplemental indenture. (Section 9.2)
Discharge and Defeasance. The Company may discharge all of its obligation
(except those set forth below) to holders of any series of Junior Subordinated
Debt Securities issued under the Indenture, which Junior Subordinated Debt
Securities have not already been delivered to the Indenture Trustee for
cancellation and which either have become due and payable or are by their terms
due and payable within one year (or are to be called for redemption within one
year) by depositing with the Indenture Trustee an amount certified to be
sufficient to pay when due the principal of and premium, if any, and interest on
all outstanding Junior Subordinated Debt Securities of such series and to make
any mandatory sinking fund payments thereon when due. (Section 4.1)
Unless otherwise specified in the applicable Prospectus Supplement with
respect to the Junior Subordinated Debt Securities of a series, the Company, at
its option, (i) will be discharged from any and all obligations in respect of
the Junior Subordinated Debt Securities of such series (except for certain
obligations to pay all expenses of the applicable Williams Delaware Trust, to
register the transfer or exchange of Junior Subordinated Debt Securities of such
series, to replace mutilated, defaced, destroyed, lost or stolen Junior
Subordinated Debt Securities of such series, and to maintain Paying Agents and
hold monies for payment in trust), or (ii) need not comply with certain
covenants specified in the applicable Prospectus Supplement with respect to the
Junior Subordinated Debt Securities of that series, and the occurrence of an
event described in clause (d) under "Events of Default" above with respect to
any defeased covenant and clause (f) of the "Events of Default" above shall no
longer be an Event of Default if, in either case, the Company deposits with the
Indenture Trustee, in trust, money or U.S. Government Obligations that through
the payment of interest thereon and principal thereof in accordance with their
terms will provide money in an amount sufficient to pay all the principal of
(and premium, if any) and any interest on the Junior Subordinated Debt
Securities of such series on the dates such payments are due (which may include
one or more redemption dates designated by the Company) in accordance with the
terms of such Junior Subordinated Debt Securities. Such a trust may only be
established, if, among other things, the Company shall have delivered an Opinion
of Counsel, which, in the case of a discharge pursuant to clause (i), must be
based upon a ruling or administrative pronouncement of the Internal Revenue
Service, to the effect that the Holders of the Junior Subordinated Debt
Securities will not recognize gain or loss for federal income tax purposes as a
result of such deposit or defeasance and will be subject to federal income tax
in the same manner as if such defeasance had not occurred. (Sections 4.2, 4.3
and 4.4) In the event the Company omits to comply with its remaining obligations
under the Indenture after a defeasance of the Indenture with respect to the
Junior Subordinated Debt Securities of any series as described under clause (ii)
above and the Junior Subordinated Debt Securities of such series are declared
due and payable because of the occurrence of any undefeased Event of Default,
the amount of money and U.S. Government Obligations on deposit with the
Indenture Trustee may be insufficient to pay amounts due on the Junior
Subordinated Debt Securities of such series at the time of the acceleration
resulting from such Event of Default. However, the Company will remain liable in
respect of such payments.
Concerning the Indenture Trustee. The Indenture Trustee participates in the
Company's principal bank agreement (the borrowings under which constitute Senior
Indebtedness). The Company and certain of its subsidiaries also maintain bank
accounts, borrow money and have other customary commercial banking or investment
banking relationships with the Indenture Trustee in the ordinary course of
business.
Global Securities. The Indenture provides that the registered Junior
Subordinated Debt Securities of a series may be issued in the form of one or
more fully registered Global Securities (a "Registered Global Security") that
will be deposited with a depositary (a "Depositary") or with a nominee for a
Depositary identified in the Prospectus Supplement relating to such series and
registered in the name of the Depositary or a nominee thereof. (Section 3.1) In
such case, one or more Registered Global Securities will be issued in a
denomination or aggregate denominations equal to the portion of the aggregate
principal amount of outstanding registered Junior Subordinated Debt Securities
to be represented by such Registered Global Security or Securities. Unless and
until it is exchanged in whole for Junior Subordinated Debt Securities in
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definitive registered form, a Registered Global Security may not be transferred
except as a whole by the Depositary for such Registered Global Security to a
nominee of such Depositary or by a nominee of such Depositary to such Depositary
or another nominee of such Depositary or by such Depositary or any such nominee
to a successor of such Depositary or a nominee of such successor. The Depositary
currently accepts only debt securities that are payable in U.S. dollars. The
specific terms of the depositary arrangement with respect to any portion of a
series of Junior Subordinated Debt Securities to be represented by a Registered
Global Security will be described in the Prospectus Supplement relating to such
series.
Ownership of beneficial interests in a Registered Global Security will be
limited to persons that have accounts with the Depositary for such Registered
Global Security ("participants") or persons that may hold interests through
participants. Upon the issuance of a Registered Global Security, the Depositary
for such Registered Global Security will credit, on its book-entry registration
and transfer system, the participants' accounts with the respective principal
amounts of the Debt Securities represented by such Registered Global Security
beneficially owned by such participants. The accounts to be credited shall be
designated by any dealers, underwriters or agents participating in the
distribution of such Junior Subordinated Debt Securities. Ownership of
beneficial interests in such Registered Global Security will be shown on, and
the transfer of such ownership interests will be effected only through, records
maintained by the Depositary for such Registered Global Security (with respect
to interests of participants) and on the records of participants (with respect
to interests of persons holding through participants). The laws of some states
may require that certain purchasers of securities take physical delivery of such
securities in definitive form. Such limits and such laws may impair the ability
to own, transfer or pledge beneficial interests in Registered Global Securities.
So long as the Depositary for a Registered Global Security, or its nominee,
is the registered owner of such Registered Global Security, such Depositary or
such nominee, as the case may be, will be considered the sole owner or holder of
the Junior Subordinated Debt Securities represented by such Registered Global
Security for all purposes under the Indenture. Except as set forth below, owners
of beneficial interests in a Registered Global Security will not be entitled to
have the Junior Subordinated Debt Securities represented by such Registered
Global Security registered in their names, will not receive or be entitled to
receive physical delivery of such Junior Subordinated Debt Securities in
definitive form and will not be considered the owners or holders thereof under
the Indenture. Accordingly, each person owning a beneficial interest in a
Registered Global Security must rely on the procedures of the Depositary for
such Registered Global Security and, if such person is not a participant, on the
procedures of the participant through which such person owns its interest, to
exercise any rights of a holder under the Indenture. The Company understands
that under existing industry practices, if the Company requests any action of
holders or if an owner of a beneficial interest in a Registered Global Security
desires to give or take any action which a holder is entitled to give or take
under the Indenture, the Depositary for such Registered Global Security would
authorize the participants holding the relevant beneficial interests to give or
take such action, and such participants would authorize beneficial owners owning
through such participants to give or take such action or would otherwise act
upon the instructions of beneficial owners holding through them.
Principal, premium, if any, and interest payments on Junior Subordinated
Debt Securities represented by a Registered Global Security registered in the
name of a Depositary or its nominee will be made to such Depositary or its
nominee, as the case may be, as the registered owner of such Registered Global
Security. None of the Company, the Indenture Trustee or any other agent of the
Company or agent of the Indenture Trustee will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of beneficial ownership interests in such Registered Global Security or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
The Company expects that the Depositary for any Junior Subordinated Debt
Securities represented by a Registered Global Security, upon receipt of any
payment of principal, premium or interest in respect of such Registered Global
Security, will immediately credit participants' accounts with payments in
amounts proportionate to their respective beneficial interests in such
Registered Global Security as shown on the records of such Depositary. The
Company also expects that payments by participants to owners of beneficial
interests in such Registered Global Security held through such participants will
be governed by standing
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51
customer instructions and customary practices, as is now the case with the
securities held for the accounts of customers in bearer form or registered in
"street name," and will be the responsibility of such participants.
If the Depositary for any Junior Subordinated Debt Securities represented
by a Registered Global Security is at any time unwilling or unable to continue
as Depositary or ceases to be a clearing agency registered under the Exchange
Act, and a successor Depositary registered as a clearing agency under the
Exchange Act is not appointed by the Company within 90 days, the Company will
issue such Junior Subordinated Debt Securities in definitive form in exchange
for such Registered Global Security. In addition, the Company may at any time
and in its sole discretion determine not to have any of the Junior Subordinated
Debt Securities of a series represented by one or more Registered Global
Securities and, in such event, will issue Junior Subordinated Debt Securities of
such series in definitive form in exchange for all of the Registered Global
Security or Securities representing such Junior Subordinated Debt Securities.
Any Junior Subordinated Debt Securities issued in definitive form in exchange
for a Registered Global Security will be registered in such name or names as the
Depositary shall instruct the relevant Trustee. It is expected that such
instructions will be based upon directions received by the Depositary from
participants with respect to ownership of beneficial interests in such
Registered Global Security.
The Junior Subordinated Debt Securities of a series may also be issued in
the form of one or more bearer global Securities (a "Bearer Global Security")
that will be deposited with a common depositary for Euro-clear and Cedel Bank,
societe anonyme, or with a nominee for such depositary identified in the
Prospectus Supplement relating to such series. The specific terms and
procedures, including the specific terms of the depositary arrangement, with
respect to any portion of a series of Junior Subordinated Debt Securities to be
represented by a Bearer Global Security will be described in the Prospectus
Supplement relating to such series.
Ranking of Junior Subordinated Debt Securities. The Junior Subordinated
Debt Securities will be subordinated and junior in right of payment to certain
indebtedness of the Company to the extent set forth in the Prospectus Supplement
that will accompany this Prospectus.
Certain Provisions Applicable to Williams Delaware Trusts. In the event
Junior Subordinated Debt Securities of a series are issued and sold to a
Williams Delaware Trust or a trustee of such trust in connection with the
issuance of Trust Securities by such Williams Delaware Trust, such Junior
Subordinated Debt Securities subsequently may be distributed pro rata to the
holders of such Trust Securities in connection with the dissolution of such
Williams Delaware Trust upon the occurrence of certain events described in the
Prospectus Supplement relating to such Trust Securities. Only one series of
Junior Subordinated Debt Securities will be issued to a Williams Delaware Trust,
or a trustee of such trust, in connection with the issuance of Trust Securities
by such Williams Delaware Trust. If Junior Subordinated Debt Securities are
issued to a Williams Delaware Trust or a trustee of such trust in connection
with the issuance of Trust Securities by such Williams Delaware Trust and (i)
there shall have occurred and be continuing an Event of Default, (ii) the
Company shall be in default with respect to its payment of any obligations under
the related Guarantee, or (iii) the Company shall have given notice of its
election to defer payments of interest on such Junior Subordinated Debt
Securities by extending the interest payment period as provided in the Indenture
and such period, or any extension thereof, shall be continuing, then (a) the
Company shall not declare or pay any dividend on, make any distributions with
respect to, or redeem, purchase, acquire or make a liquidation payment with
respect to, any of its capital stock or make any guarantee payment with respect
thereto (other than (i) repurchases, redemptions or other acquisitions of shares
of capital stock of the Company in connection with any employment contract,
benefit plan or other similar arrangement with or for the benefit of employees,
officers, directors or consultants, (ii) as a result of an exchange or
conversion of any class or series of the Company's capital stock for any other
class or series of the Company's capital stock, or (iii) the purchase of
fractional interests in shares of the Company's capital stock pursuant to the
conversion or exchange provisions of such capital stock or the security being
converted or exchanged), and (b) the Company shall not make any payment of
interest on or principal of (or premium, if any, on), or repay, repurchase or
redeem any debt securities issued by the Company which rank pari passu with or
junior to such Junior Subordinated Debt Securities. The foregoing, however, will
not apply to any stock dividends paid by the Company where the dividend stock is
the same stock as that on which the dividend is being paid.
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In the event Junior Subordinated Debt Securities are issued to a Williams
Delaware Trust or a trustee of such trust in connection with the issuance of
Trust Securities of such Williams Delaware Trust, for so long as such Trust
Securities remain outstanding, the Company will covenant (i) to directly or
indirectly maintain 100% ownership of the Common Securities of such Williams
Delaware Trust; provided, however, that any permitted successor of the Company
under the Indenture may succeed to the Company's ownership of such Common
Securities, (ii) to not voluntarily dissolve, wind-up or terminate such Williams
Delaware Trust, except in connection with a distribution of Junior Subordinated
Debt Securities upon a Special Event and in connection with certain mergers,
consolidations or amalgamations permitted by the Declaration of the applicable
Williams Delaware Trust, (iii) to timely perform its duties as Sponsor of the
applicable Williams Delaware Trust and (iv) to use its reasonable efforts to
cause such Williams Delaware Trust (a) to remain a statutory business trust,
except in connection with the distribution of Junior Subordinated Debt
Securities to the holders of Trust Securities in liquidation of such Williams
Delaware Trust, the redemption of all of the Trust Securities of such Williams
Delaware Trust, or certain mergers, consolidations or amalgamations, each as
permitted by the Declaration of such Williams Delaware Trust, and (b) to
otherwise continue to be classified as a grantor trust for United States federal
income tax purposes. (Section 10.5)
DESCRIPTION OF PREFERRED SECURITIES
The following description sets forth certain general terms and provisions
of the Preferred Securities to which any Prospectus Supplement may relate. The
particular terms of the Preferred Securities offered by any Prospectus
Supplement and the extent, if any, to which such general provisions may apply to
the Preferred Securities so offered will be described in the Prospectus
Supplement relating to such Preferred Securities. The description does not
purport to be complete and is subject in all respects to the provisions of, and
is qualified in its entirety by reference to, the forms of Declarations, which
are filed as exhibits to the Registration Statement of which this Prospectus
forms a part.
Each Williams Delaware Trust may issue, from time to time, only one series
of Preferred Securities having terms described in the Prospectus Supplement
relating thereto. The Declaration of each Williams Delaware Trust authorizes the
Regular Trustees of such Williams Delaware Trust to issue on behalf of such
Williams Delaware Trust one series of Preferred Securities. Each Declaration
will be qualified as an indenture under the Trust Indenture Act. The Preferred
Securities will have such terms, including distributions, redemption, voting,
liquidation rights and such other preferred, deferred or other special rights or
such restrictions as shall be set forth in the Declaration of the Williams
Delaware Trust issuing such Preferred Securities or made part of such
Declaration by the Trust Indenture Act. Reference is made to any Prospectus
Supplement relating to the Preferred Securities of a Williams Delaware Trust for
specific terms, including (i) the distinctive designation of such Preferred
Securities, (ii) the number of Preferred Securities issued by such Williams
Delaware Trust, (iii) the annual distribution rate (or method of determining
such rate) for Preferred Securities issued by such Williams Delaware Trust and
the date or dates upon which such distributions shall be payable, (iv) whether
distributions on Preferred Securities issued by such Williams Delaware Trust
shall be cumulative, and, in the case of Preferred Securities having such
cumulative distribution rights, the date or dates or method of determining the
date or dates from which distributions on Preferred Securities issued by such
Williams Delaware Trust shall be cumulative, (v) the amount or amounts which
shall be paid out of the assets of such Williams Delaware Trust to the Holders
of Preferred Securities of such Williams Delaware Trust upon voluntary or
involuntary dissolution, winding-up or termination of such Williams Delaware
Trust, (vi) the obligation, if any, of such Williams Delaware Trust to purchase
or redeem Preferred Securities issued by such Williams Delaware Trust and the
price or prices at which, the period or periods within which and the terms and
conditions upon which Preferred Securities issued by such Williams Delaware
Trust shall be purchased or redeemed, in whole or in part, pursuant to such
obligation, (vii) the voting rights, if any, of Preferred Securities issued by
such Williams Delaware Trust in addition to those required by law, including the
number of votes per Preferred Security and any requirement for the approval by
the holders of Preferred Securities, or of Preferred Securities issued by one or
more Williams Delaware Trusts, or of both, as a condition to specified action or
amendments to the Declaration of such Williams Delaware Trust, and (viii) any
other relevant rights, preferences, privileges, limitations or restrictions of
Preferred
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Securities issued by such Williams Delaware Trust consistent with the
Declaration of such Williams Delaware Trust or with applicable law. All
Preferred Securities offered hereby will be guaranteed by the Company to the
extent set forth below under "Description of Guarantees." Certain United States
federal income tax considerations applicable to any offering of Preferred
Securities will be described in the Prospectus Supplement relating thereto.
In connection with the issuance of Preferred Securities, each Williams
Delaware Trust will issue one series of Common Securities. The Declaration of
each Williams Delaware Trust authorizes the Regular Trustees of such trust to
issue on behalf of such Williams Delaware Trust one series of Common Securities
having such terms including distributions, redemption, voting, liquidation
rights or such restrictions as shall be set forth therein. The terms of the
Common Securities issued by such Williams Delaware Trust will be substantially
identical to the terms of the Preferred Securities issued by such Williams
Delaware Trust and the Common Securities will rank pari passu, and payments will
be made thereon pro rata with such Preferred Securities except that, upon an
Event of Default under the Declaration of such Williams Delaware Trust, the
rights of the holders of such Common Securities to payment in respect of
distributions and payments upon liquidation, redemption and otherwise will be
subordinated to the rights of the holders of such Preferred Securities. Except
in certain limited circumstances, the Common Securities of a Williams Delaware
Trust will also carry the right to vote and to appoint, remove or replace any of
the Williams Delaware Trustees of such Williams Delaware Trust. All of the
Common Securities of a Williams Delaware Trust will be directly or indirectly
owned by the Company.
If an Event of Default with respect to a Declaration of any Williams
Delaware Trust occurs and is continuing, then the holders of Preferred
Securities of such Williams Delaware Trust would rely on the enforcement by the
Institutional Trustee of its rights as a holder of the Junior Subordinated Debt
Securities against the Company. In addition, the holders of a majority in
liquidation amount of such Preferred Securities will have the right to direct
the time, method, and place of conducting any proceeding for any remedy
available to the Institutional Trustee or to direct the exercise of any trust or
power conferred upon the Institutional Trustee under such Declaration, including
the right to direct the Institutional Trustee to exercise the remedies available
to it as a holder of the Junior Subordinated Debt Securities. If the
Institutional Trustee fails to enforce its rights under the Junior Subordinated
Debt Securities, any holder of such Preferred Securities may directly institute
a legal proceeding against the Company to enforce the Institutional Trustee's
rights under the Junior Subordinated Debt Securities without first instituting
any legal proceeding against the Institutional Trustee or any other person or
entity. If an Event of Default with respect to the Declaration of any Williams
Delaware Trust has occurred and is continuing and such event is attributable to
the failure of the Company to pay interest or principal on the Junior
Subordinated Debt Securities on the date such interest or principal is otherwise
payable (or in the case of redemption, on the redemption date), then a holder of
Preferred Securities of such Williams Delaware Trust may also directly institute
a proceeding for enforcement of payment to such holder of the principal of or
interest on the Junior Subordinated Debt Securities having a principal amount
equal to the aggregate liquidation amount of such Preferred Securities of such
holder (a "Direct Action") on or after the respective due date specified in the
Junior Subordinated Debt Securities without first (i) directing the
Institutional Trustee to enforce the terms of the Junior Subordinated Debt
Securities or (ii) instituting a legal proceeding against the Company to enforce
the Institutional Trustee's Rights under the Junior Subordinated Debt
Securities. In connection with such Direct Action, the Company will be
subrogated to the rights of such holder of such Preferred Securities under such
Declaration to the extent of any payment made by the Company to such holder of
such Preferred Securities in such Direct Action. Consequently, the Company will
be entitled to payment of amounts that a holder of Preferred Securities receives
in respect of an unpaid distribution that resulted in the bringing of a Direct
Action to the extent that such holder receives or has already received full
payment with respect to such unpaid distribution from a Williams Delaware Trust.
The holders of Preferred Securities of a Williams Delaware Trust will not be
able to exercise directly any other remedy available to the holders of the
Junior Subordinated Debt Securities.
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DESCRIPTION OF GUARANTEES
Set forth below is a summary of information concerning the Guarantees that
will be executed and delivered by the Company for the benefit of the holders,
from time to time, of Preferred Securities. Each Guarantee will be qualified as
an indenture under the Trust Indenture Act. The Chase Manhattan Bank will act as
indenture trustee under each Guarantee (the "Guarantee Trustee"). The terms of
each Guarantee will be those set forth in such Guarantee and those made part of
such Guarantee by the Trust Indenture Act. The summary does not purport to be
complete and is subject in all respects to the provisions of, and is qualified
in its entirety by reference to, the form of Guarantee, which is filed as an
exhibit to the Registration Statement of which this Prospectus forms a part, and
the Trust Indenture Act. Each Guarantee will be held by the Guarantee Trustee
for the benefit of the holders of the Preferred Securities of a Williams
Delaware Trust.
GENERAL
Pursuant to and to the extent set forth in each Guarantee, the Company will
irrevocably and unconditionally agree to pay in full to the holders of the
Preferred Securities issued by a Williams Delaware Trust (except to the extent
paid by such Williams Delaware Trust), as and when due, regardless of any
defense, right of set-off or counterclaim which such Williams Delaware Trust may
have or assert, the following payments (the "Guarantee Payments"), without
duplication: (i) any accrued and unpaid distributions that are required to be
paid on such Preferred Securities, to the extent such Williams Delaware Trust
has funds available therefor, and (ii) the redemption price of $25 per Preferred
Security, plus all accrued and unpaid distributions (the "Redemption Price"), to
the extent such Williams Delaware Trust has funds available therefor, with
respect to any Preferred Securities called for redemption by such Williams
Delaware Trust, and (iii) upon a voluntary or involuntary dissolution,
winding-up or termination of such Williams Delaware Trust (other than in
connection with the distribution of Junior Subordinated Debt Securities to the
holders of Preferred Securities or the redemption of all of the Preferred
Securities) the lesser of (a) the aggregate of the liquidation amount and all
accrued and unpaid distributions on such Preferred Securities to the date of
payment or (b) the amount of assets of such Williams Delaware Trust remaining
for distribution to holders of such Preferred Securities in liquidation of such
Williams Delaware Trust. The Company's obligation to make a Guarantee Payment
may be satisfied by direct payment of the required amounts by the Company to the
holders of Preferred Securities or by causing such Williams Delaware Trust to
pay such amounts to such holders.
Each Guarantee will be a guarantee on a subordinated basis with respect to
the Preferred Securities issued by a Williams Delaware Trust from the time of
issuance of such Preferred Securities but will not apply to any payment of
distributions or Redemption Price, or to payments upon the dissolution,
winding-up or termination of such Williams Delaware Trust, except to the extent
such Williams Delaware Trust shall have funds available therefor. If the Company
does not make interest payments on the Junior Subordinated Debt Securities
purchased by a Williams Delaware Trust, such Williams Delaware Trust will not
pay distributions on the Preferred Securities issued by such Williams Delaware
Trust and will not have funds available therefor. See "Description of Junior
Subordinated Debt Securities." The Guarantee, when taken together with the
Company's obligations under the Junior Subordinated Debt Securities, the
Indenture and the Declaration of any Williams Delaware Trust, including its
obligations to pay costs, expenses, debts and liabilities of such Williams
Delaware Trust (other than with respect to Trust Securities) will provide a full
and unconditional guarantee on a subordinated basis by the Company of payments
due on the Preferred Securities issued by such Williams Delaware Trust.
CERTAIN COVENANTS OF THE COMPANY
In each Guarantee, the Company will covenant that, so long as any Preferred
Securities issued by a Williams Delaware Trust remain outstanding, if there
shall have occurred any event that would constitute an Event of Default under
such Guarantee or the Declaration of such Williams Delaware Trust, then (a) the
Company shall not declare or pay any dividend on, make any distributions with
respect to, or redeem, purchase, acquire or make a liquidation payment with
respect to, any of its capital stock or make any guarantee payment with respect
thereto (other than (i) repurchases, redemptions or other acquisitions of
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55
shares of capital stock of the Company in connection with any employment
contract, benefit plan or other similar arrangement with or for the benefit of
employees, officers, directors or consultants, (ii) as a result of an exchange
or conversion of any class or series of the Company's capital stock for any
other class or series of the Company's capital stock, or (iii) the purchase of
fractional interests in shares of the Company's capital stock pursuant to the
conversion or exchange provisions of such capital stock or the security being
converted or exchanged) and (b) the Company shall not make any payment of
interest on, or principal of (or premium, if any, on), or repay, repurchase or
redeem, any debt securities issued by the Company which rank pari passu with or
junior to such Junior Subordinated Debt Securities. Each Guarantee, however,
will except from the foregoing any stock dividends paid by the Company where the
dividend stock is the same stock as that on which the dividend is being paid.
MODIFICATION OF THE GUARANTEES; ASSIGNMENT
Except with respect to any changes that do not adversely affect the rights
of holders of Preferred Securities to which a Guarantee relates (in which case
no vote will be required), each Guarantee may be amended only with the prior
approval of the holders of not less than a majority in aggregate liquidation
amount of the outstanding related Preferred Securities issued by a Williams
Delaware Trust. The manner of obtaining any such approval of holders of such
Preferred Securities will be set forth in an accompanying Prospectus Supplement.
All guarantees and agreements contained in a Guarantee shall bind the
successors, assignees, receivers, trustees and representatives of the Company
and shall inure to the benefit of the holders of the related Preferred
Securities of a Williams Delaware Trust then outstanding.
EVENTS OF DEFAULT
An Event of Default under a Guarantee will occur upon the failure of the
Company to perform any of its payment or other obligations thereunder. The
holders of a majority in aggregate liquidation amount of the Preferred
Securities to which a Guarantee relates have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Guarantee Trustee in respect of the Guarantee or to direct the exercise of any
trust or power conferred upon the Guarantee Trustee under the Guarantee. If the
Guarantee Trustee fails to enforce the Guarantee Trustee's rights under a
Guarantee, any holder of related Preferred Securities may directly institute a
legal proceeding against the Company to enforce the Guarantee Trustee's rights
under such Guarantee without first instituting a legal proceeding against the
Williams Delaware Trust that issued such Preferred Securities, the Guarantee
Trustee or any other person or entity. A holder of Preferred Securities may also
directly institute a legal proceeding against the Company to enforce such
holder's right to receive payment under such Guarantee without first (i)
directing the Guarantee Trustee to enforce the terms of the Guarantee or (ii)
instituting a legal proceeding against the Williams Delaware Trust that issued
such Preferred Securities or any other person or entity.
The Company will be required to provide annually to the Guarantee Trustee a
statement as to the performance by the Company of certain of its obligations
under each of the Guarantees and as to any default in such performance.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, prior to the occurrence of a default with respect to
a Guarantee, undertakes to perform only such duties as are specifically set
forth in the Guarantee and, after default with respect to a Guarantee, shall
exercise the same degree of care as a prudent individual would exercise in the
conduct of his or her own affairs. Subject to such provision, the Guarantee
Trustee is under no obligation to exercise any of the powers vested in it by a
Guarantee at the request of any holder of Preferred Securities to which such
Guarantee relates unless it is offered reasonable indemnity against the costs,
expenses and liabilities that might be incurred thereby.
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TERMINATION OF THE GUARANTEES
Each Guarantee will terminate as to the Preferred Securities issued by a
Williams Delaware Trust upon full payment of the Redemption Price of all
Preferred Securities of such Williams Delaware Trust, upon distribution of the
Junior Subordinated Debt Securities held by such Williams Delaware Trust to the
holders of the Preferred Securities of such Williams Delaware Trust or upon full
payment of the amounts payable in accordance with the Declaration of such
Williams Delaware Trust upon liquidation of such Williams Delaware Trust. Each
Guarantee will continue to be effective or will be reinstated, as the case may
be, if at any time any holder of related Preferred Securities issued by a
Williams Delaware Trust must restore payment of any sums paid under such
Preferred Securities or such Guarantee.
STATUS OF THE GUARANTEES
Each Guarantee will constitute an unsecured obligation of the Company and
will rank subordinate and junior in right of payment to all Senior Indebtedness
of the Company and pari passu with any guarantee now or hereafter entered into
by the Company in respect of any preferred or preference stock of any affiliate
of the Company. The terms of the Preferred Securities provide that each holder
of Preferred Securities issued by a Williams Delaware Trust by acceptance
thereof agrees to the subordination provisions and other terms of the applicable
Guarantee.
Each Guarantee will constitute a guarantee of payment and not of collection
(that is, the guaranteed party may institute a legal proceeding directly against
the guarantor to enforce its rights under a Guarantee without instituting a
legal proceeding against any other person or entity).
GOVERNING LAW
The Guarantees will be governed by, and construed in accordance with, the
internal laws of the State of New York.
PLAN OF DISTRIBUTION
Any Williams Delaware Trust may sell Preferred Securities in one or more of
the following ways from time to time: (i) to or through underwriters or dealers,
(ii) directly to purchasers, or (iii) through agents. The Prospectus Supplement
with respect to any Offered Securities will set forth (i) the terms of the
offering of the Offered Securities, including the name or names of any
underwriters, dealers or agents, (ii) the purchase price of the Offered
Securities and the proceeds to the Company or a Williams Delaware Trust as the
case may be, from such sale, (iii) any underwriting discounts and commissions or
agency fees and other items constituting underwriters' or agents' compensation,
(iv) any initial public offering prices, (v) any discounts or concessions
allowed or reallowed or paid to dealers and (vi) any securities exchange on
which such Offered Securities may be listed. Any initial public offering price,
discounts or concessions allowed or reallowed or paid to dealers may be changed
from time to time.
If underwriters are used in the sale, the Offered Securities will be
acquired by the underwriters for their own account and may be resold from time
to time in one or more transactions, including negotiated transactions, at a
fixed public offering price or at varying prices determined at the time of sale.
The Offered Securities may be offered to the public either through underwriting
syndicates represented by one or more managing underwriters or directly by one
or more firms acting as underwriters. The underwriter or underwriters with
respect to a particular underwritten offering of Offered Securities will be
named in the Prospectus Supplement relating to such offering and, if an
underwriting syndicate is used, the managing underwriter or underwriters will be
set forth on the cover of such Prospectus Supplement. Unless otherwise set forth
in the Prospectus Supplement relating thereto, the obligations of the
underwriters to purchase the Offered Securities will be subject to certain
conditions precedent, and the underwriters will be obligated to purchase all the
Offered Securities if any are purchased.
If dealers are utilized in the sale of Offered Securities, the Company or
the applicable Williams Delaware Trust will sell such Offered Securities to the
dealers as principals. The dealers may then resell such Offered
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Securities to the public at varying prices to be determined by such dealers at
the time of resale. The names of the dealers and the terms of the transaction
will be set forth in the Prospectus Supplement relating thereto.
Any series of Preferred Securities may be sold from time to time either
directly by a Williams Delaware Trust or by its designated agents. Any agent
involved in the offer or sale of the Offered Securities in respect to which this
Prospectus is delivered will be named, and any commissions payable by the
Company or the applicable Williams Delaware Trust to such agent will be set
forth in the Prospectus Supplement relating thereto. Unless otherwise indicated
in the Prospectus Supplement, any such agent will be acting on a best efforts
basis for the period of its appointment.
The Preferred Securities may be sold directly by a Williams Delaware Trust
to institutional investors or others who may be deemed to be underwriters within
the meaning of the Securities Act with respect to any resale thereof. The terms
of any such sales will be described in the Prospectus Supplement relating
thereto.
If so indicated in the Prospectus Supplement, the Company or the applicable
Williams Delaware Trust will authorize agents, underwriters or dealers to
solicit offers from certain types of institutions to purchase Offered Securities
from the Company or such Williams Delaware Trust at the public offering price
set forth in the Prospectus Supplement pursuant to delayed delivery contracts
(the "Contracts") providing for payment and delivery on a specified date or
dates in the future. Such Contracts will not be subject to any conditions except
(a) the purchase by an institution of the Offered Securities covered by its
Contracts shall not at the time of delivery be prohibited under the laws of any
jurisdiction in the United States to which such institution is subject and (b)
if the Offered Securities are being sold to underwriters, the Company shall have
sold to such underwriters the total principal amount of the Offered Securities
less the principal amount thereof covered by the Contracts. The Prospectus
Supplement will set forth the commission payable for solicitation of such
Contracts.
Agents, dealers and underwriters may be entitled, under agreements with the
Company or a Williams Delaware Trust, to indemnification by the Company or the
applicable Williams Delaware Trust against certain civil liabilities, including
liabilities under the Securities Act, or to contribution with respect to
payments that such agents, dealers or underwriters may be required to make in
respect thereof. Agents, dealers and underwriters may be customers of, engage in
transactions with, or perform services for the Company or a Williams Delaware
Trust in the ordinary course of business.
Each series of Offered Securities will be a new issue of securities and
will have no established trading market. Any underwriters to whom Offered
Securities are sold for public offering and sale may make a market in such
Offered Securities, but such underwriters will not be obligated to do so and may
discontinue any market making at any time without notice. The Offered Securities
may or may not be listed on a national securities exchange. No assurance can be
given that there will be a market for the Offered Securities.
LEGAL MATTERS
The validity of the Preferred Securities, the Junior Subordinated Debt
Securities, the Guarantees and certain matters relating thereto will be passed
upon by William G. Von Glahn, Esq., Senior Vice President and General Counsel of
Williams. Certain matters of Delaware law will be passed upon for the Company
and Williams Delaware Capital by Morris, James, Hitchens & Williams, Wilmington,
Delaware. Certain United States federal income tax matters will be passed upon
for the Company and the Williams Delaware Trusts by Davis Polk & Wardwell, New
York, New York. Certain legal matters will be passed upon for the Underwriters
by Davis Polk & Wardwell, New York, New York.
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EXPERTS
The consolidated financial statements and schedule of the Company appearing
in the Company's Annual Report on Form 10-K for the year ended December 31,
1995, have been audited by Ernst & Young LLP, independent auditors, as set forth
in their report included therein and incorporated herein by reference. The
financial statements and schedule referred to above are incorporated herein by
reference in reliance upon such report given upon the authority of said firm as
experts in auditing and accounting.
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NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING
PROSPECTUS, IN CONNECTION WITH THE OFFER CONTAINED IN THIS PROSPECTUS SUPPLEMENT
AND THE ACCOMPANYING PROSPECTUS, AND, IF GIVEN OR MADE, ANY SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY WILLIAMS
HOLDINGS OF DELAWARE, INC., WILLIAMS DELAWARE CAPITAL I OR ANY UNDERWRITER,
DEALER OR AGENT. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS DO
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL
TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS
SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF WILLIAMS HOLDINGS OF DELAWARE, INC. OR WILLIAMS DELAWARE CAPITAL
I SINCE THE DATE HEREOF.
------------------
TABLE OF CONTENTS
PAGE
----
Summary............................... S-4
Risk Factors.......................... S-8
Use of Proceeds....................... S-12
Ratio of Earnings to Combined Fixed
Charges and Preferred Stock
Dividends........................... S-12
Accounting Treatment.................. S-12
Capitalization........................ S-13
Description of the Preferred
Securities.......................... S-14
Description of the Junior Subordinated
Debt Securities..................... S-25
Description of Guarantee.............. S-30
Effect of Obligations Under the Junior
Subordinated Debt Securities and the
Guarantee........................... S-33
United States Federal Income
Taxation............................ S-34
Underwriting.......................... S-38
Legal Matters......................... S-39
PROSPECTUS
Available Information................. 3
Incorporation of Certain Documents by
Reference........................... 3
The Company........................... 5
Williams Delaware Trusts.............. 5
Use of Proceeds....................... 6
Ratio of Earnings to Combined Fixed
Charges and Preferred Stock
Dividends........................... 6
Description of Junior Subordinated
Debt Securities..................... 6
Description of Preferred Securities... 12
Description of Guarantees............. 14
Plan of Distribution.................. 16
Legal Matters......................... 17
Experts............................... 18
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TRUST PREFERRED SECURITIES
WILLIAMS DELAWARE CAPITAL I
% TRUST PREFERRED SECURITIES
GUARANTEED TO THE EXTENT SET
FORTH HEREIN BY
WILLIAMS HOLDINGS OF DELAWARE, INC.
-------------------------------------------
PROSPECTUS SUPPLEMENT
-------------------------------------------
, 1997
(INCLUDING PROSPECTUS
DATED ,1997)
------------------------------------------------------
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60
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the various expenses payable by the Company
in connection with the Securities being registered hereby. All of the fees set
forth below are estimates except for the SEC registration fee, the NASD fee and
the NYSE listing fee.
Securities and Exchange Commission Filing Fee........................... $ 60,607
NASD Filing Fee.........................................................
Rating Agency Fees......................................................
Blue Sky Fees and Expenses..............................................
Trustees' Fees and Expenses.............................................
Printing Fees and Expenses..............................................
Accounting Fees and Expenses............................................
New York Stock Exchange Listing Fee.....................................
Legal Fees and Expenses.................................................
Miscellaneous...........................................................
-----------
Total......................................................... $
==========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company, a Delaware corporation, is empowered by Section 145 of the
General Corporation Law of the State of Delaware, subject to the procedures and
limitations stated therein, to indemnify any person against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by them in connection with any threatened, pending or
completed action, suit or proceeding in which such person is made party by
reason of their being or having been a director, officer, employee or agent of
the Company. The statute provides that indemnification pursuant to its
provisions is not exclusive of other rights of indemnification to which a person
may be entitled under any by-law, agreement, vote of stockholders or
disinterested directors or otherwise. The By-laws of the Company provide for
indemnification by the Company of its directors and officers to the fullest
extent permitted by the General Corporation Law of the State of Delaware. In
addition, the Company has entered into indemnity agreements with its directors
and certain officers providing for, among other things, the indemnification of
and the advancing of expenses to such individuals to the fullest extent
permitted by law, and to the extent insurance is maintained, for the continued
coverage of such individuals.
Policies of insurance are maintained by the Company under which the
directors and officers of the Company are insured, within the limits and subject
to the limitations of the policies, against certain expenses in connection with
the defense of such actions, suits or proceedings, and certain liabilities which
might be imposed as a result of such actions, suits or proceedings, to which
they are parties by reason of being or having been such directors or officers.
The Declaration of each Williams Delaware Trust provides that no
Institutional Trustee or any of its affiliates, Delaware Trustee or any of its
affiliates, or officer, director, shareholder, member, partner, employee,
representative custodian, nominee or agent of the Institutional Trustee or the
Delaware Trustee (each a "Fiduciary Indemnified Person"), and no Regular
Trustee, affiliate of any Regular Trustee, or any officer, director,
shareholder, member, partner, employee, representative or agent of any Regular
Trustee, or any employee or agent of such Williams Delaware Trust or its
affiliates (each a "Company Indemnified Person") shall be liable, responsible or
accountable in damages or otherwise to such Williams Delaware Trust, any
Affiliate of such Williams Delaware Trust or any holder of securities issued by
such Williams Delaware Trust, or to any officer, director, shareholder, partner,
member, representative, employee or agent of such Williams Delaware Trust or its
Affiliates for any loss, damage or claim incurred by reason of any act or
omission performed or omitted by such Fiduciary Indemnified Person or Company
Indemnified Person in good faith on behalf of such Williams Delaware Trust and
in a manner such Fiduciary Indemnified Person or Company Indemnified Person
reasonably believed to be within the scope of the authority conferred on such
Fiduciary Indemnified Person or Company Indemnified Person by such Declaration
or by law, except that a Fiduciary
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Indemnified Person or a Company Indemnified Person shall be liable for any loss,
damage or claim incurred by reason of such Fiduciary Indemnified Person's or
Company Indemnified Person's gross negligence (or in the case of a Fiduciary
Indemnified Person, negligence) or willful misconduct with respect to such acts
or omissions. The Declaration of each Williams Delaware Trust also provides
that, to the full extent permitted by law, the Company shall indemnify any
Company Indemnified Person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of such Williams Delaware Trust) by reason of the fact that
he is or was a Company Indemnified Person against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Williams Delaware Trust, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. The Declaration of each Williams Delaware Trust also provides that
to the full extent permitted by law, the Company shall indemnify any Company
Indemnified Person who was or is a party or is threatened to be made a party to
any threatened, pending or completed action or suit by or in the right of such
Williams Delaware Trust to procure a judgment in its favor by reason of the fact
that he is or was a Company Indemnified Person against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection with the
defense or settlement of such action or suit if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the Williams Delaware Trust and except that no indemnification shall be made in
respect of any claim, issue or matter as to which such Company Indemnified
Person shall have been adjudged to be liable to the Williams Delaware Trust
unless and only to the extent that the Court of Chancery of Delaware or the
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnity for such
expenses which such Court of Chancery or such other court shall deem proper. The
Declaration of each Williams Delaware Trust further provides that expenses
(including attorneys' fees) incurred by a Company Indemnified Person in
defending a civil, criminal, administrative or investigative action, suit or
proceeding referred to in the immediately preceding two sentences shall be paid
by the Company in advance of the final disposition of such action, suit or
preceding upon receipt of an undertaking by or on behalf of such Company
Indemnified Person to repay such amount if it shall ultimately be determined
that he is not entitled to be indemnified by the Company as authorized in the
Declaration. The directors and officers of the Company and the Regular Trustees
are covered by insurance policies indemnifying them against certain liabilities,
including certain liabilities arising under the Securities Act, which might be
incurred by them in such capacities and against which they cannot be indemnified
by the Company or the Williams Delaware Trusts. Any agents, dealers or
underwriters who execute any of the agreements filed as Exhibit 1.1 to this
Registration Statement will agree to indemnify the Company's directors and their
officers and the Williams Delaware Trustees who signed the Registration
Statement against certain liabilities that may arise under the Securities Act
with respect to information furnished to the Company or any of the Williams
Delaware Trusts by or on behalf of any such indemnifying party.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENTS.
(a) Exhibits
Unless otherwise noted, exhibits will be filed by Amendment.
1.1 -- Form of Underwriting Agreement
4.1 -- Certificate of Trust of Williams Delaware Capital I
4.2 -- Certificate of Trust of Williams Delaware Capital II
4.3 -- Form of Amended and Restated Declaration of Trust for Williams
Delaware Capital I
4.4 -- Form of Amended and Restated Declaration of Trust for Williams
Delaware Capital II
4.5 -- Form of Indenture between Williams Holdings of Delaware, Inc. and The
Chase Manhattan Bank, as Trustee
4.6 -- Form of Preferred Security (included in Exhibit 4.3)
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4.7 -- Form of Common Security (included in Exhibit 4.3)
4.8 -- Form of Guarantee with respect to the Preferred Securities of
Williams Delaware Capital I
4.9 -- Form of Guarantee with respect to the Preferred Securities of
Williams Delaware Capital II
4.10 -- Form of Junior Subordinated Debt Securities (included in Exhibit 4.5)
5.1 -- Opinion of Morris, James, Hitchens & Williams
8.1 -- Opinion of Davis Polk & Wardwell
12.1 -- Computation of Ratio of Earnings to Combined Fixed Charges and
Preferred Stock Dividends of Williams Holdings of Delaware, Inc.
23.1* -- Consent of Ernst & Young LLP, Independent Certified Public
Accountants
23.2 -- Consent of Morris, James, Hitchens & Williams (included in Exhibit
5.1)
23.3 -- Consent of Davis Polk & Wardwell (included in Exhibit 8.1)
24.1* -- Powers of Attorney of certain directors
25.1 -- Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Chase Manhattan Bank, as Trustee under the Indenture
25.2 -- Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Chase Manhattan Bank, as Trustee under the
Declaration of Trust of Williams Delaware Capital I
25.3 -- Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Chase Manhattan Bank, as Trustee under the
Declaration of Trust of Williams Delaware Capital II
25.4 -- Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Chase Manhattan Bank, as Guarantee Trustee under the
Preferred Securities Guarantee of Williams Holdings of Delaware, Inc.
for the benefit of the holders of Preferred Securities of Williams
Delaware Capital I
25.5 -- Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Chase Manhattan Bank, as Guarantee Trustee under the
Preferred Securities Guarantee of Williams Holdings of Delaware, Inc.
for the benefit of holders of Preferred Securities of Williams
Delaware Capital II
- ---------------
* Filed herewith.
ITEM 17. UNDERTAKING.
The undersigned Registrants hereby undertake:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement;
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) that, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement;
(iii) to include any material information with respect to the Plan
of Distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement; provided, however, that the undertakings set forth in
paragraphs (i) and (ii) above do not apply if the information required
to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by Williams Holdings of Delaware,
Inc. pursuant to Section 13 or Section 15(d) of the Exchange Act of
1934, as amended (the "Exchange Act") that are incorporated by reference
in this Registration Statement.
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(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new Registration Statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned Registrants hereby undertake that, for purposes of
determining any liability under the Securities Act, each filing of Williams
Holdings of Delaware Inc.'s Annual Report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")
(and where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference
in the Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrants pursuant to the provisions referred to in Item 15 (other than the
insurance policies referred to therein), or otherwise, the Registrants have been
advised that, in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrants of expenses
incurred or paid by a director, officer or controlling person of the Registrants
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrants will, unless in the opinion of their counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
The undersigned Registrants hereby undertake that:
(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of a
registration statement in reliance upon Rule 430A and contained in the form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of the
registration statement as of the time it was declared effective.
(2) For the purposes of determining any liability under the Securities
Act each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Williams
Holdings of Delaware, Inc. hereby certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form S-3 and has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Tulsa, State of Oklahoma,
on the 31st day of January, 1997.
WILLIAMS HOLDINGS OF DELAWARE, INC.
By /s/ JACK D. MCCARTHY
------------------------------------
Name: Jack D. McCarthy
Title: Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on the 31st day of January, 1997.
SIGNATURE TITLE
- --------------------------------------------- ---------------------------------------------
* Chairman of the Board, President, Chief
- --------------------------------------------- Executive Officer (Principal Executive
Keith E. Bailey Officer) and Director
* Senior Vice President (Principal Financial
- --------------------------------------------- Officer) and Director
Jack D. McCarthy
* Controller (Principal Accounting Officer)
- ---------------------------------------------
Gary R. Belitz
* Director
- ---------------------------------------------
John C. Bumgarner, Jr.
* Director
- ---------------------------------------------
Stephen L. Cropper
* Director
- ---------------------------------------------
Henry C. Hirsch
* Director
- ---------------------------------------------
Howard E. Janzen
*By: /s/ SHAWNA L. BARNARD
- ---------------------------------------------
Shawna L. Barnard
Attorney-in-fact
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Williams
Delaware Capital I and Williams Delaware Capital II each hereby certifies that
it has reasonable grounds to believe that it meets all of the requirements for
filing on Form S-3 and has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Tulsa, State of Oklahoma, on the 31st day of January, 1997.
WILLIAMS DELAWARE CAPITAL I
By: /s/ JACK D. MCCARTHY
----------------------------------
Jack D. McCarthy, as Trustee
By: /s/ JAMES G. IVEY
----------------------------------
James G. Ivey, as Trustee
WILLIAMS DELAWARE CAPITAL II
By: /s/ JACK D. MCCARTHY
----------------------------------
Jack D. McCarthy, as Trustee
By: /s/ JAMES G. IVEY
----------------------------------
James G. Ivey, as Trustee
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EXHIBIT INDEX
Unless otherwise noted, exhibits will be filed by Amendment.
1.1 -- Form of Underwriting Agreement
4.1 -- Certificate of Trust of Williams Delaware Capital I
4.2 -- Certificate of Trust of Williams Delaware Capital II
4.3 -- Form of Amended and Restated Declaration of Trust for Williams
Delaware Capital I
4.4 -- Form of Amended and Restated Declaration of Trust for Williams
Delaware Capital II
4.5 -- Form of Indenture between Williams Holdings of Delaware, Inc. and The
Chase Manhattan Bank, as Trustee
4.6 -- Form of Preferred Security (included in Exhibit 4.3)
4.7 -- Form of Common Security (included in Exhibit 4.3)
4.8 -- Form of Guarantee with respect to the Preferred Securities of
Williams Delaware Capital I
4.9 -- Form of Guarantee with respect to the Preferred Securities of
Williams Delaware Capital II
4.10 -- Form of Junior Subordinated Debt Securities (included in Exhibit 4.5)
5.1 -- Opinion of Morris, James, Hitchens & Williams
8.1 -- Opinion of Davis Polk & Wardwell
12.1 -- Computation of Ratio of Earnings to Combined Fixed Charges and
Preferred Stock Dividends of Williams Holdings of Delaware, Inc.
23.1* -- Consent of Ernst & Young LLP, Independent Certified Public
Accountants
23.2 -- Consent of Morris, James, Hitchens & Williams (included in Exhibit
5.1)
23.3 -- Consent of Davis Polk & Wardwell (included in Exhibit 8.1)
24.1* -- Powers of Attorney of certain directors
25.1 -- Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Chase Manhattan Bank, as Trustee under the Indenture
25.2 -- Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Chase Manhattan Bank, as Trustee under the
Declaration of Trust of Williams Delaware Capital I
25.3 -- Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Chase Manhattan Bank, as Trustee under the
Declaration of Trust of Williams Delaware Capital II
25.4 -- Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Chase Manhattan Bank, as Guarantee Trustee under the
Preferred Securities Guarantee of Williams Holdings of Delaware, Inc.
for the benefit of the holders of Preferred Securities of Williams
Delaware Capital I
25.5 -- Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Chase Manhattan Bank, as Guarantee Trustee under the
Preferred Securities Guarantee of Williams Holdings of Delaware, Inc.
for the benefit of holders of Preferred Securities of Williams
Delaware Capital II
- ---------------
* Filed herewith.