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ALASKA PIPELINE COMPANY
____________________
NOTE AGREEMENT
____________________
Dated as of: May 14, 1992
$30,000,000 8.15% Series I Notes due July 1, 2001
$10,000,000 8.64% Series J Notes due July 1, 2004
$10,000,000 8.81% Series K Notes due July 1, 2009
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TABLE OF CONTENTS
Section Page
1. Sale and Purchase of Notes.............................................. 1
2. Closing................................................................. 1
3. Conditions to Closing................................................... 2
3.1. Inducement Agreement............................................ 2
3.2. Sale of Other Notes............................................. 2
3.3. Representations and Warranties Correct.......................... 2
3.4. Performance; No Default......................................... 3
3.5. Compliance Certificate.......................................... 3
3.6. Opinions of Counsel............................................. 3
3.7. Legal Investment................................................ 3
3.8. Proceedings and Documents....................................... 3
3.9. Private Placement Numbers....................................... 3
3.10. Amendment to 1985 Inducement Agreement.......................... 4
4. Use of Proceeds......................................................... 4
5. Representations and Warranties.......................................... 4
5.1. Organization, Standing, etc..................................... 5
5.2. Subsidiaries.................................................... 5
5.3. Qualification................................................... 5
5.4. Financial Statements............................................ 5
5.5. Changes, etc.................................................... 6
5.6. Tax Returns and Liabilities..................................... 6
5.7. Indebtedness for Money Borrowed................................. 7
5.8. Title to Properties; Liens...................................... 7
5.9. Litigation...................................................... 8
5.10. Compliance with Other Instruments............................... 8
5.11. Patents, Trademarks, etc.; Franchises........................... 9
5.12. Governmental Consent, etc. ..................................... 9
5.13. Holding Company Act............................................. 9
5.14. Gas Contracts................................................... 9
5.15. Coverage of Fixed Charges....................................... 10
5.16. Disclosure...................................................... 10
5.17. Issue of Notes is Legal and Authorized.......................... 11
5.18. ERISA........................................................... 11
5.19. No Defaults..................................................... 13
Section Page
5.20. Private Offering................................................ 13
5.21. Tax Sharing Agreement........................................... 13
6. Financial Statements and Information.................................... 14
7. Inspection of Properties and Books and Confidentiality.................. 18
7.1. ................................................................. 18
7.2. Confidentiality.................................................. 18
8. Prepayment of Notes..................................................... 19
8.1. Fixed Prepayments ............................................... 19
8.2. Optional Prepayment with Premium................................. 19
8.3. Prepayment in Full at Option of Noteholders
under Certain Circumstances.................................... 20
8.4. Allocation of Partial Prepayments................................ 20
8.5. Notice of Optional Prepayments.................................. 20
8.6. Maturity; Exchange or Notation, Surrender, etc. ................. 21
8.7. Purchase of Notes................................................ 21
9. General Covenants....................................................... 21
9.1. Accounting and Reserves.......................................... 21
9.2. Payment of Taxes and Claims; Tax Sharing Agreement............... 21
9.3. Corporate Existence, etc......................................... 22
9.4. Maintenance of Properties; Conduct of Business;
Company Certificate............................................. 22
9.5. Insurance........................................................ 23
10. Particular Covenants.................................................. 23
10.1. Limitation on Indebtedness...................................... 23
10.2. Restrictions on Investments, Loans, etc......................... 25
10.3. Restricted Investments, Restricted Stock Payments and
Restricted Subordinated Debts Payments........................ 26
10.4. Restrictions on Lease-Backs, Rental Obligations, etc. .......... 28
10.5. Restrictions on Liens, etc. .................................... 29
10.6. Issuance and Sale, etc., of Subsidiary Stock; Disposition of
Subsidiary Stock and Indebtedness............................. 33
10.7. Consolidation or Merger of Subsidiaries; Disposition of
Subsidiary Property as an Entirety............................ 34
Section Page
10.8. Consolidation or Merger of Company; Disposition of
Company; Disposition of Company Property as an Entirety....... 34
10.9. Disposition of Company and Subsidiaries' Property.............. 35
10.10. Gas Contracts.................................................. 36
10.11. Intercompany Notes, etc. ...................................... 36
10.12. Compliance with ERISA.......................................... 37
11. Remedies.............................................................. 38
11.1. Events of Default; Acceleration................................ 38
11.2. Notice of Default.............................................. 42
11.3. Suits for Enforcement, etc. ................................... 43
11.4. Remedies Cumulative............................................ 43
11.5. Remedies Not Waived............................................ 43
12. Registration Books; Transfer and Exchange of Notes..................... 43
13. Replacement of Notes................................................... 44
14. Definitions............................................................ 44
15. Expenses, etc. ........................................................ 59
16. Survival of Agreements, etc. .......................................... 60
17. Amendments and Waivers................................................. 60
18. Representations of the Purchasers ..................................... 61
18.1. Purchase of Notes............................................. 61
18.2. Source of Funds................................................ 61
19. Payments on Notes; Notice of Sale, etc................................. 62
20. Notices, etc........................................................... 63
21. Nonenforcement of Others .............................................. 63
22. Miscellaneous.......................................................... 63
Section
Schedule A - Information Relating to Purchasers
Exhibit A-1 - Form of Series I Notes
Exhibit A-2 - Form of Series J Notes
Exhibit A-3 - Form of Series K Notes
Exhibit B - Form of Inducement Agreement
Exhibit C-1 - Form of Opinion of Andrews & Kruth
Exhibit C-2 - Form of Opinion of Hughs, Thorsness, Gantz, Powell & Brundin
Exhibit C-3 - Form of Opinion of Debevoise & Plimpton
Exhibit C-4 - Form of Opinion of Vinson & Elkins
Exhibit D - Statement of Exceptions
Exhibit E - List of Agreements Relating to Short-Term Borrowing and Funded Debt
Exhibit F - Tax Sharing Agreement
Exhibit G - Inducement Agreement Amendment
ALASKA PIPELINE COMPANY
3000 Spenard Road
Anchorage, Alaska 99503
TO EACH OF THE PURCHASERS LISTED
IN THE ATTACHED SCHEDULE A
Dated as of : May 14, 1992
Dear Sirs:
ALASKA PIPELINE COMPANY (the "Company"), an Alaska corporation, agrees with
you as follows:
1. Sale and Purchase of Notes. The Company will duly authorize the issue
and sale of (a) $30,000,000 aggregate principal amount of the Company's 8.15%
Series I Notes de July 1, 2001 (the "Series I Notes"), (b) $10,000,000 aggregate
principal amount of the Company's 8.64% Series J Notes due July 1, 2004 (the
"Series J Notes"), and (c) $10,000,000 aggregate principal amount of the
Company's 8.81% Series K Notes due July 1, 2009 (the "Series K Notes"),
substantially in the forms of Exhibits A-1 through A-3, respectively, attached
hereto (such Notes, together with all Notes issued in exchange therefor or in
replacement thereof pursuant to Sections 12 and 13, being herein called the
"Notes"). The Company will issue and sell to you and, subject to the terms and
conditions of this Agreement, you will purchase from the Company, at the Closing
provided for in Section 2, Notes in the principal amounts specified opposite
your name in Schedule A attached hereto at the purchase price of 100% of the
principal amount thereof. Contemporaneously with entering into this Agreement,
the Company is entering into separate Note Agreements (the "Other Agreements")
identical with this Agreement with each of the other Purchasers named in
Schedule A (the "Other Purchasers"), providing for the sale to each Other
Purchaser, at such Closing, of Notes in the principal amount specified opposite
its name in Schedule A. As used herein, the term "Note" shall mean one of the
Notes; certain other capitalized terms used herein are defined in Section 14.
2. Closing. The closing of the sale and purchase of the Notes hereunder
(the "Closing") shall take place at the office of Debevoise & Plimpton, 875
Third Avenue, New York, New York 10022, at 11:00 a.m., New York time, on July 1,
1992. At the Closing the Company will deliver to you the Notes to be purchased
by you in the form a single Note (or such greater number of Notes as you may
request in denominations of not less than $1,000,000) for each Series of Notes
being purchased by you, dated the date of the Closing, payable to you or your
registered assigns, against delivery by you to the Company or its order of
immediately available funds in the amount of the purchase price therefor. If at
the Closing the Company shall fail to tender such Notes as provided herein, or
if at the Closing any of the conditions specified in Section 3 shall not have
been fulfilled to your satisfaction, you shall, at your election, be relieved of
all further obligations under this Agreement, without thereby waiving any other
rights you may have by reason of such failure or such failure or such
non-fulfillment.
3. Conditions to Closing. Your obligation to accept delivery of and pay for
the Notes to be purchased by you hereunder is subject to the fulfillment to your
satisfaction, prior to or at the Closing, of the following conditions:
3.1. Inducement Agreement. Seagull shall have executed and delivered to you
an Inducement Agreement substantially in the form of Exhibit B attached hereto
(the "Inducement Agreement"), whereby, in order to induce you to purchase the
Notes, Seagull shall make certain representations and warranties and agreements
with respect to Seagull and the Division; and such Inducement Agreement shall be
in full force and effect with no default by Seagull thereunder.
3.2. Sale of Other Notes. Contemporaneously with the Closing the Company
shall sell to each of the Other Purchasers the Notes to be purchased by it al
the Closing as specified in Schedule A.
3.3. Representatives and Warranties Correct. The representations and
warranties contained in Section 5, in Section 1 of the Inducement Agreement and
otherwise made in writing by or on behalf of the Company or Seagull in
connection with the transactions contemplated hereby shall be correct at and as
of the time of the Closing, except as affected by the sale of the Notes and
except to the extent that such representations and warranties expressly relate
to an earlier date.
3.4. Performance; No Default. All agreements and conditions contained
herein required to be performed or complied with prior to or at the Closing
shall have been duly performed or complied with and at the time of the Closing
no condition or event shall exist which constitutes an Event of Default or
which, after notice or lapse of time or both, would constitute an Event of
Default.
3.5. Compliance Certificate. You shall have received an Officer's
Certificate, dated the date of the Closing, certifying that the conditions
specified in Sections 3.2, 3.3 and 3.4 have been fulfilled.
3.6. Opinions of Counsel. You shall have received favorable opinions, dated
the date of the Closing and satisfactory in substance and form to you, (a) from
Andrews & Kurth, counsel for the Company and Seagull, substantially in the form
of Exhibit C-1 attached hereto, (b) from Hughs, Thorsness, Gantz, Powell &
Brundin, Alaska counsel for the Company, substantially in the form of Exhibit
C-2 attached hereto, and (c) from Debevoise & Plimpton, your special counsel,
substantially in the form of Exhibit C-3 attached hereto and (d) from Vinson &
Elkins, special counsel to the Company and Seagull, substantially in the form of
Exhibit C-4 attached hereto.
3.7. Legal Investment. At the time of the Closing your purchase of Notes
hereunder shall be permitted by the laws of each jurisdiction to which you may
be subject, without recourse to provisions (such as Section 1405 (a) (8) of the
New York Insurance Law) permitting limited investments by life insurance
companies without restriction as to the character of the particular investment.
3.8. Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated hereby and all documents and
instruments incident to such transactions shall be satisfactory in substance and
form to you and your special counsel, and your and your special counsel shall
have received all such counterpart originals or certified or other copies of
such documents as your or they may reasonably request.
3.9. Private Placement Numbers. The Company shall have obtained for each
series of Notes a Private Placement Number issued by Standard & Poor's CUSIP
Service Bureau (in cooperation with the Securities Valuation Office of the
National Association of Insurance Commissioners).
3.10. Amendment to 1985 Inducement Agreement. Seagull, the Company, The
Equitable Life Assurance Society of the United States, The Travelers Insurance
Company and The Travelers Life Insurance Company shall have entered into an
Amendment to Inducement Agreement substantially in the form of Exhibit G hereto.
4. Use of Proceeds. The Company will apply the proceeds of the sale of the
Notes to repay approximately $47,000,000 of the Company's outstanding
indebtedness referred to in items 2 and 3 of Exhibit E hereto and the balance
for working capital purposes. The Company will not directly or indirectly (i)
use any of the proceeds of the Notes for the purpose of purchasing or carrying
any "margin stock" within the meaning of Regulation G of the Board of Governors
of the Federal Reserve System (12 C.F.R. 207, as amended), or otherwise take or
permit any action which would involve a violation of such Regulation G,
Regulation X (12 C.F.R. 224) or any other regulation of the Board of Governors
of the Federal Reserve System, or (ii) use any part of such proceeds for the
purpose of engaging in any transaction prohibited by, or in violation of (x) the
Foreign Assets Control Regulations, the Transactions Control Regulations, the
Cuban Assets Control Regulations, the Foreign Funds Control Regulations, the
Iranian Assets Control Regulations, the Nicaraguan Trade Control Regulations,
the South African Transactions Regulations, the Libyan Sanctions Regulations,
the Soviet Gold Coin Regulations, the Panamanian Transaction Regulations and the
Iraqi Sanctions Regulations or (v) of the United States Treasury Department (31
C.F.R., Subtitle B, Chapter V, as amended) or (z) Executive Orders 12722 or
12724 Blocking Iraqi Government Property and Prohibiting Transactions with Iraq
and Executive Order 12775 (56 Fed. Reg. 50641) Prohibiting Certain Transactions
with Respect to Haiti. No Indebtedness being reduced or retired out of the
proceeds of the Notes was incurred for the purpose of purchasing or carrying any
"margin stock" within the meaning of such Regulation G. The Company does not own
or have any present intention of acquiring any such margin stock.
5. Representations and Warranties. The Company represents and warrants
that:
5.1. Organization, Standing, etc. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Alaska and has all requisite corporate power and authority to own and operate
its properties, to carry on its business as now conducted, to enter into this
Agreement, to make the borrowings hereunder, to execute and deliver the Notes
and to carry out the terms hereof and thereof. All of the issued and outstanding
Common Stock of the Company is validly issued, fully paid and nonassessable and
is owned by Seagull, free and clear of any security interest, mortgage, pledge,
lien, charge or encumbrance or conditional sale or other title retention
agreement, except for the pledge by Seagull of all such Common Stock as security
for indebtedness of Seagull from time to time now outstanding under one or more
loan agreements or credit agreements existing on the date hereof.
5.2. Subsidiaries. The Company has no Subsidiaries.
5.3. Qualification. The Company is duly qualified or licensed and in good
standing as a foreign corporation duly authorized to do business in each
jurisdiction wherein the character of the properties owned or the nature of the
activities conducted by it makes such qualification or licensing necessary,
except for such failures to be so qualified or licensed and in good standing, if
any, which when taken together would not in the aggregate have a material
adverse effect on the condition, business or property of the Company .
5.4. Financial Statements. The Company has delivered to you financial
statements of the Company for the years ended December 31, 1987 to 1991,
inclusive, and of the Division for the years ended December 31, 1987 to 1991,
inclusive, including balance sheets of the Company (and consolidated and
consolidating balance sheets or combined and combining balance sheets of the
Company and the Division) as at such dates and statements of income and of
surplus of the Company (and consolidated and consolidating or combined and
combining statements of income and of surplus of the Company and the Division)
for the years then ended, all as certified by KPMG Peat Marwick, independent
certified public accountants. Such financial statements fairly present the
financial condition of the Company and the Division as at the respective dates
thereof and the results of the operations of the Company and the Division for
the respective periods covered thereby, were prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout such periods and reflect all known liabilities, contingent or
otherwise, as at such dates which are required by generally accepted accounting
principles to be reflected therein. The company had no Subsidiaries for the
period covered by such financial statements.
5.5. Changes, etc. Since December 31, 1991, there has been no change in the
condition of the Company or of the Division from that reflected in the combining
balance sheets of the Company as at such date referred to in Section 5.4, other
than changes in the ordinary course of business which have not been, either in
any case or in the aggregate, materially adverse, and, except as set forth in
Exhibit D attached hereto, since December 31, 1991, there has been no occurrence
or development which has had or in the opinion of the Company (a) will have a
materially adverse effect on the business or prospects of the Company or the
Division or on any of their respective properties or assets (individually or in
the aggregate material) or (b) constitutes or would result in a material adverse
change in the nature or the extent of the business of the Company or the
Division. During the period commencing on January 1, 1992 and ending on the date
hereof, the Company has not directly or indirectly made any Restricted
Investment or Restricted Stock Payment and has not made Restricted Subordinated
Debt Payments other that those resulting from the payment to Seagull during such
period of (i) dividends aggregating not more than $2,000,000 and (ii) management
fees aggregating not more than $200,000.
5.6. Tax Returns and Liabilities. The Company has filed (or obtained
extensions with respect to the filing of) all tax returns and reports required
to be filed by it and has paid all taxes, assessments and other governmental
charges imposed upon it or any of its properties, assets, income or franchises,
other than those currently payable without penalty or interest and those, not
substantial in amount, being contested as permitted by Section 9.2. Since June
17, 1985, the Company has been a member of the affiliated group, within the
meaning of Section 1504 of the Code, of which Seagull is the common parent and,
as such, joined in the filing of the consolidated Federal income tax returns of
such affiliated group for the periods ending on or after such date. The charges,
accruals and reserves on the books of the Company in respect of Federal, state
and other income taxes for all fiscal periods are adequate in the opinion of the
Company, and the Company does not know of any actual or proposed assessment for
additional Federal, state or other income taxes for any fiscal period.
5.7. Indebtedness for Money Borrowed. Exhibit E correctly describes all
secured and unsecured Short Term Borrowing and Funded Debt of the Company
outstanding, or for which the Company has commitments, on the date of this
Agreement. The Company is not in default in respect of any such Short-Term
Borrowing or Funded Debt or in respect of any instrument or agreement relating
thereto and no instrument or agreement applicable to or binding on the Company
contains any restrictions on the incurrence of additional Funded Debt by the
Company, except the agreements relating to Short-Term Borrowing or Funded Debt
referred to in items 2, 3 and 4 of Exhibit E, complete and correct copies of
which have been delivered to your special counsel.
5.8. Title to Properties; Liens. The Company has good and marketable title
in fee simple absolute to all its real property on which compressor stations are
located and good and marketable title to all of its other real property and to
all of its personal property (except for property and to all of its personal
property (except for property consisting of rights-of-way, licenses, permits and
franchises, as to which the Company has satisfactory title for the purpose of
constructing, operating and maintaining all property located or proposed to be
located on the real property covered thereby), in each case subject to no
mortgage, pledge, lien, security interest, lease, charge or encumbrance other
than those of the character permitted by Section 10.5. None of the properties or
assets the value of which is reflected in the combining balance sheets of the
Company and the Division as at December 31, 1991, referred to in Section 5.4, is
held by the Company or the Division as lessee under or subject to any lease
(except as disclosed in such balance sheets or the notes thereto) or as
conditional vendee under any conditional sale or other title retention
agreement. The Company enjoys peaceful and undisturbed possession under all
leases under which it operates, and all such leases are valid and subsisting,
with no material default on the part of the Company existing thereunder. No
financing statement under the Uniform Commercial Code which names the Company as
debtor has been filed in any state or other jurisdiction and the Company has not
signed any such financing statement or any security agreement authorizing any
secured party thereunder to file any such financing statement, in each case,
except financing statements relating to the liens, security interests and other
encumbrances permitted by Section 10.5.
5.9. Litigation. There is no litigation, proceeding or investigation
pending or, to the best of the Company's knowledge, threatened against or
affecting the Company or any Affiliate of the Company which questions the
validity of any of this Agreement or the Notes or any action taken or to be
taken pursuant hereto. Except as set forth in the notes to the financial
statements of the Company and the Division for the period ended December 31,
1991, referred to in Section 5.4, and except as set forth in Exhibit D attached
hereto, there is no litigation, proceeding or investigation pending or, to the
best of the Company's knowledge, threatened against or affecting the Company
which involves the condemnation, purchase or other acquisition by any government
authority of any property (individually or in the aggregate material) of the
Company or which might result in any material adverse change in the condition,
business or prospects of the Company or in any of its properties or assets
(individually or in the aggregate material). The Company is not subject to or a
party to any order of any court or governmental body arising out of any action,
suit or proceeding under any statute or other law with respect to antitrust,
monopoly, restraint of trade, unfair competition or similar matters.
5.10. Compliance with Other Instruments. The Company is not in violation of
any term of its charter or by-laws, and neither the Company nor the Division is
in violation of any material term of any agreement, instrument, judgment,
decree, order, statute, rule, governmental regulation, franchise, certificate,
permit or the like applicable to it, and the execution, delivery and performance
of this Agreement and the Notes will not result in any such violation or be in
conflict with or constitute a default under any such term, or result in the
creation of any mortgage, lien, charge or encumbrance upon any of the properties
or assets of the Company pursuant to any such term. Except as set forth in the
notes to the financial statements of the Company and the Division for the period
ended December 31, 1991, referred to in Section 5.4, there is no such term which
materially adversely affects the business, operations, affairs or condition of
the Company or any of its properties or assets (individually or in the aggregate
material).
5.11. Patents, Trademarks, etc.; Franchises. The Company owns or possesses
all the permits, patents, trademarks, service marks, trade names, copyrights and
licenses, and rights with respect to the foregoing, necessary for the conduct of
its business as now conducted, without any known conflict with the rights of
others. The Company has received a Certificate of Public Convenience and
Necessity from the PUC (the "Company Certificate"), the Division has received a
Certificate of Public Convenience and Necessity from the PUC (the "Division
Certificate"), and each of the Company and the Division has received all
material permits, licenses, franchises and other authorizations from
governmental or public bodies or authorities which are necessary for the conduct
of their business as now conducted and proposed to be conducted other than those
which are expected to be obtained without difficulty in due course. Such
Certificates of Public Convenience and Necessity have been duly and effectively
granted, are valid and enforceable in accordance with their terms and are in
full force and effect, and the Company and the Division have performed and
complied with in all material respects all terms thereof and of all orders of
the PUC relating thereto required to be performed and complied with by them and
neither the Company nor the Division is in default in any material respect under
any such term.
5.12. Governmental Consent, etc. The Company is not required to obtain any
consent, approval or authorization of, or to make any registration, declaration
or filing with, any governmental or public body or authority as a condition
precedent to the valid execution, delivery and performance of this Agreement or
the Notes.
5.13. Holding Company Act. The Company is not a "holding company", as such
term is defined in the Public Utility Holding Company Act of 1935, as amended
("PUHCA"), nor is the Company otherwise subject to regulation under PUHCA,
except as to Section 9 (a) (2) thereof. The Company is not in violation of the
provisions, rules, regulations or orders of or under PUHCA and none of the
transactions contemplated by this Agreement (including, without limitation, the
issuance and sale of Notes to you) shall cause or constitute a violation on the
part of the Company of any of the provisions, rules, regulations or orders of or
under PUHCA. PUHCA does not in any manner impair the legality, validity or
enforceability of the Notes. Reference is made to Section 1.10 of the Inducement
Agreement for a description of certain applications filed by Seagull with the
Securities and Exchange Commission under Section 2(a) (8) of PUHCA.
5.14. Gas Contracts. The Company has delivered to you and your special
counsel complete and correct copies of the Gas Purchase Contracts, the Gas Sale
Contract and any other agreements relating to the purchase and sale of natural
gas to which the Company is a party. The Gas Purchase Contract, the Gas Sale
Contract and any other such agreement are each valid and enforceable in
accordance with their respective terms and are in full force and effect, and no
material default on the part of any party thereto exists thereunder.
5.15. Coverage of Fixed Charges. The Company's net earnings available for
fixed charges for the period of its last five fiscal years have averaged per
year not less than one and one-half times its average annual fixed charges
applicable to such period, and during at least one of its last two fiscal years
the Company's net earnings available for fixed charges have been not less than
one and one-half times its fixed charges for such fiscal year, in each case on
an unconsolidated basis. As used in this Section 5.15, the terms "net earnings
available for fixed charges" and "fixed charges" have the respective meanings
specified in Section 1404 of the New York Insurance Law.
5.16. Disclosure. Neither this Agreement not any other document,
certificate or statement furnished to you by or on behalf of the Company in
connection with the transactions contemplated hereby contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained herein and therein not misleading in
light of the circumstances under which they were made. There is no fact (other
than matters of a general economic nature) known to the Company which materially
adversely affects or in the future may (so far as the Company can now reasonable
foresee) materially adversely affect the business, operations, affairs or
condition
of the Company, the Division or any of their respective properties or assets
(individually or in the aggregate material) which has not been set forth in this
Agreement or in the other documents, certificates or statements furnished to you
by or on behalf of the Company prior to the date hereof in connection with the
transactions contemplated hereby.
5.17. Issue of Notes is Legal and Authorized. The Company has full power
and legal right to execute, deliver and perform this Agreement and the Notes and
has taken all corporate action necessary thereto. This Agreement constitutes,
and the Notes, when executed and delivered by the Company, will constitute,
legal, valid and binding obligations of the Company enforceable against the
Company in accordance with their respective terms, except as the enforcement
thereof may be limited by applicable bankruptcy, insolvency or similar laws
affecting the enforcement of rights of creditors generally and except to the
extent that enforcement of rights and remedies set forth therein may be limited
by judicial discretion regarding the enforcement of, or by applicable laws
affecting, remedies (whether considered in a court of law or a proceeding in
equity).
5.18. ERISA. (a) The Company has not engaged in any transaction in
connection with which the Company could be subjected to either a civil penalty
assessed pursuant to Section 502 (i) of ERISA or a tax imposed by Section 4975
of the Code which, in either case, would be materially adverse to the Company.
(b) No Plan subject to Title IV of ERISA or any trust created under
any such Plan has been terminated within the past 10 years. No liability to
the Pension Benefit Guaranty Corporation has been or is expected by the
Company to be incurred with respect to any Plan by the Company or any
Related Person which is or would be materially adverse to the Company.
There has been no reportable event (within the meaning of Section 4043 (b)
of ERISA) or any other event or condition with respect to any Plan which
presents a risk of termination of any such Plan by the Pension Benefit
Guaranty Corporation under circumstances which in any case could result in
liability which would be materially adverse to the Company. The
representation in the preceding sentence is made to the best of the
Company's knowledge to the extent it relates to Multi-employer Plans.
(c) Full timely payment has been made of (i) all amounts which the
company is required under applicable law, the terms of each Plan and the
terms of any applicable collective bargaining agreement to have paid as
contributions to such Plan and (ii) all amounts required to have been paid
by each Related Person to each Plan pursuant to section 412 of the Code or
section 302 of ERISA to the extent such amounts, individually or in the
aggregate, are material or could result in the imposition of a lien under
Section 412 (n) of the Code if not paid; no accumulated funding deficiency
(as defined in Section 302 of ERISA and Section 412 of the Code), whether
or not waived, exists with respect to any Plan maintained by the Company;
and no accumulated funding deficiency (as so defined) that could result in
the imposition of an excise tax on the Company exists with respect to any
Plan maintained by and Related Person.
(d) The present value of all benefit liabilities under all Plans
subject to Title IV of ERISA, determined as of the beginning of each such
Plan's most recently ended plan year on the basis of actuarial assumptions,
each of which is reasonable, did not exceed the current value of the assets
of such Plans allocable to such benefit liabilities by more than $500,000
and nothing has occurred since such date that could reasonably be expected
to cause such benefit liabilities to exceed such assets by more than
$500,000. The terms "present value," "current value" and "benefit
liabilities" have the meanings specified in sections 3 and 4001 of ERISA,
respectively.
(e) The Company is not presently obligated, nor has it at any time
within the last six years been obligated, to contribute to any
Multiemployer Plan.
(f) The execution and delivery of this Agreement and the Other
Agreements and the issuance and sale of the Notes hereunder and thereunder
will not involve any transaction which is subject to the prohibitions of
Section 406 of ERISA or in connection with which a tax could be imposed
pursuant to Section 4975 of the Code. The representation by the Company in
the preceding sentence is made in reliance upon and subject to the accuracy
of your representation in Section 18.2 of this Agreement and the respective
representations of the Other Purchasers in Section 18.2 of the Other
Agreements as to the source of the funds used to pay the purchase price of
the Notes purchased by you and the Other Purchasers. The Company is not a
party in interest with respect to any employee benefit plan whose name has
been disclosed to the Company pursuant to Section 18.2 and securities of
the Company are not employer securities with respect to any such plan.
As used in this Section 5.18 (f), the terms "employee benefit plan" and
"party in interest" have the respective meanings specified in Section 3 of ERISA
and the term "employer securities" has the meaning specified in Section 407 (d)
(1) of ERISA.
5.19. No Defaults. No event has occurred and no condition exists which
constitutes a Default or Event of Default under this Agreement. No event has
occurred and no condition exists which constitutes, or which with the passage of
time or the giving of notice or both would constitute, an event of default under
any agreement relating to any Indebtedness of the Company for money borrowed, or
a material default in the performance of any covenant or condition under any
other mortgage, indenture, contract or other instrument or under any order of
any court, governmental authority, arbitration board or tribunal, applicable to
the Company or any of its property.
5.20. Private Offering. Neither the Company nor any Person authorized or
employed by the Company as agent, broker, dealer or otherwise has offered any of
the Notes of any similar security of the Company for sale to, or solicited
offers to buy any thereof from, or otherwise approached or negotiated with
respect thereto with anyone other than you and the Other Purchasers. The Company
agrees that neither the Company nor anyone acting on its behalf will offer the
Notes or any part thereof or any similar securities for issue or sale to, or
solicit any offer to acquire any of the same from, anyone so as to bring the
issuance and sale of the Notes within the provisions of Section 5 of the
Securities Act of 1933, as amended (the "Securities Act").
5.21. Tax Sharing Agreement. A complete and correct copy of the Tax Sharing
Agreement is attached as Exhibit F hereto. The Tax Sharing Agreement is valid
and enforceable in accordance with its term and is in full force and effect.
6. Financial Statements and Information. The Company will deliver (in
duplicate) to you, so long as you are committed to purchase Notes hereunder or
shall hold any Notes, and to each other holder of 10% or more in principal
amount of the Notes at the time outstanding:
(a) as soon as available and in any event within 60 days after the end
of the first, second and third quarterly accounting periods in each fiscal
year of the Company, combined and combining balance sheets of the Company,
its Subsidiaries and the Division as at the end of such period and the
related combined and combining statements of income and surplus and of cash
flows of the Company, its Subsidiaries and the Division for such period,
for the periods from the beginning of the current fiscal year to the end of
such quarterly period, and for the 12-month period ended with such
quarterly period, setting forth in each case, in comparative form the
figures for the corresponding periods of the previous fiscal year, all in
reasonable detail and certified, subject to changes resulting form year-end
audit adjustments, by a principal financial officer of the Company;
(b) as soon as available and in any event within 100 days after the
end of each fiscal year of the Company, combined and combining balance
sheets of the Company, its Subsidiaries and the Division (and, in case the
Company shall have any Subsidiaries which are not Wholly-Owned Domestic
Subsidiaries, a combined balance sheet of the Company, its Wholly-Owned
Domestic Subsidiaries and the Division) as at the end of such fiscal year
and the related combined and combining statements of income and surplus and
of changes in financial position of the Company, its Subsidiaries and the
Division (and, in case the Company shall have any Subsidiaries which are
not Wholly-Owned Domestic Subsidiaries, combined statements of income and
surplus and of cash flows of the Company, its Wholly-Owned Domestic
Subsidiaries and the Division) for such fiscal year, setting forth in each
case, in comparative form the figures for the precious fiscal year, all in
reasonable detail and accompanied by the report and opinion thereon of
independent public accountants of recognized national standing selected by
the Company and reasonably satisfactory to you, if you shall then be
committed to purchase Notes hereunder or shall hold any Notes;
(c) together with each delivery of financial statements pursuant to
subdivisions (a) and (b) above, an Officer's Certificate of the Company (x)
stating that the signer has reviewed the relevant terms of this Agreement
and of the Notes and have made, or caused to be made under their
supervision, a review of the transactions and condition of the Company and
its Subsidiaries during the period in question, and that such review has
not disclosed the existence during such period and that the signer does not
have knowledge of the existence as of the date of such Officer's
Certificate of the Company of any condition or event which constitutes a
Default or an Event of Default or, if any such Default or Event of Default
existed or exists, specifying the nature and period of existence thereof
and what action the Company has taken or is taking or proposes to take with
respect thereto, and (y) specifying the amount of all Restricted
Investments, Restricted Stock Payments and Restricted Subordinated Debt
Payments made during such period and the amount available
as at the end of such period for Restricted Investments, Restricted Stock
Payments and Restricted Subordinated Debt Payments in compliance with
Section 10.3 and showing in reasonable detail the calculations thereof;
(d) together with each delivery of financial statements pursuant to
subdivision (b) above, a separate report by the independent public
accountants reporting thereon (i) stating that their examination has
included a review of the relevant terms of this Agreement, the Inducement
Agreement and the Notes as they relate to accounting matters, (ii) stating
whether to not their examination has disclosed the existence or occurrence,
during or as at the end of the fiscal year covered by such financial
statements, of any condition or event which constitutes a Default or an
Event of Default, and, if their examination has disclosed such a Default or
Event of Default specifying the nature and period of existence thereof, and
(iii) specifying the amount of all Restricted Investments, Restricted Stock
Payments and Restricted Subordinated Debt Payments made during such fiscal
year and the amount available as at the end of such fiscal year for
Restricted Investments, Restricted Stock Payments and Restricted
Subordinated Debt Payments in compliance with Section 10.3 and showing in
reasonable detail the calculations thereof;
(e) within 15 days of (i) any material amendment, modification or
supplement to the Gas Sale Contract, including any amendment not permitted
by Section 10.10, or (ii) the existence of a payment default under the Gas
Sale Contract, an Officer's Certificate of the Company, with respect to the
period beginning on the later of the date hereof and the date of the last
such certificate and ending on the date of such certificate (x) specifying
the nature of any amendment, modification or supplement to the Gas Sale
Contract (and attaching a copy thereof) made during such period and stating
whether such amendment, modification or supplement is permitted by the
terms of Section 10.10, (y) specifying the amounts and dates of all
payments made during such period by Seagull to the Company pursuant to the
Gas Sale Contract, demonstrating in reasonable detail the calculation
thereof, and (z) stating that the signer has reviewed the relevant terms of
the Gas Sale Contract and that such review has not disclosed the existence
during such period of any payment default by Seagull of its obligations
under the Gas Sale Contract, and that the signer does not have knowledge of
the existence as at the date of such Officer's Certificate of any such
default by Seagull or, if any such default existed or exists, specifying
the nature and period of existence thereof and what action Seagull has
taken or is taking or proposes to take with respect thereto;
(f) prior to becoming liable with respect to any Funded Debt, an
Officer's Certificate of the Company stating that the signer has reviewed
the relevant terms of this Agreement and that the Funded Debt with respect
to which the Company proposes to become liable is permitted by Section 10.1
and showing in reasonable detail the calculations thereof, with the
confirmation thereof endorsed thereon by independent public accountants of
recognized national standing selected by the Company and satisfactory to
you, if you shall then be committed to purchase Notes hereunder, or shall
hold any Notes, except that such confirmation shall not be required if the
officer signing such Officer's Certificate of the Company is engaged in
accounting work of business, whether or not a certified, licensed or public
accountant, provided, however, that the Company's obligation to deliver an
Officer's Certificate pursuant to this Section 6 (f), shall continue only
as long
as it is obligated to deliver a similar Officer's Certificate pursuant to
note agreements under which the Company's (i) 12.70% Series F Notes due
July 1, 1995, (ii) 12.80% Series G Notes due July 1, 2000 and (iii) 12.75%
Series H Notes due July 1, 2000, were issued;
(g) promptly upon receipt thereof, copies of all audit reports
submitted to the Company or Seagull by independent public accountants in
connection with each annual, interim or special audit of the accounts of
the Company or any of its Subsidiaries or the Division made by such
accountants;
(h) promptly upon transmission thereof, copies of each report on
Federal Energy Regulatory Commission Form 2 (or similar report) filed by
the Company with the PUC or any governmental authority succeeding to any of
its functions (and, to the extent requested by you or such holder, copies
of all regular and periodic reports filed by the Company or any of its
Subsidiaries with the PUC or any governmental authority succeeding to any
of its functions) and copies of all regular and periodic reports filed by
the Company or any of its Subsidiaries with any securities exchange or with
the Securities and Exchange Commission or any governmental authority
succeeding to any of its functions;
(i) forthwith upon any principal officer of the Company obtaining
knowledge of any condition or event which constitutes a Default or an Event
of Default, an Officer's Certificate of the Company specifying the nature
and period of existence thereof and what action the Company has taken or is
taking or proposes to take with respect thereto; and
(j) with reasonable promptness, such other information and data with
respect to the Company of any of its Subsidiaries or the Division or the
performance by the Company of this Agreement or by Seagull of the Seagull
Documents as from time to time may be reasonably requested.
7. Inspection of Properties and Books and Confidentiality. 7.1. The Company
will permit you or your authorized representative designated by you, so long as
you shall be committed to purchase Notes hereunder, or shall hold any Notes, to
visit and inspect, at your expense, any of the properties of the Company, its
Subsidiaries or the Division, to examine its and their books of account (and to
make copies thereof and take extracts therefrom) and to discuss its and their
affairs, finances and accounts (including transactions, agreements and other
relations with any stockholders) with, and to be advised as to the same by , its
and their officers and independent public accountants, all at such reasonable
times and intervals as you may desire, provided in all cases that, when a
Default or Event of Default shall not have occurred and be continuing, notice
shall be given at least 24 hours in advance to a principal officer of the
Company. The Company shall be entitled to be present at all discussions with its
independent public accountants, provided that the Company hereby authorizes such
accountants to discuss with your representatives the affairs, finances and
accounts of the Company, its Subsidiaries and the Division, whether or not the
Company is present. As a condition to exercising your inspection rights under
this Section 7, each of you shall be required to comply with the normal
requirements of the Company, its Subsidiaries and the Division regarding health
and safety.
7.2. Confidentiality. You agree that you will use your best efforts not to
disclose without the prior consent of the Company (other than to your employees,
auditors or counsel who need to know the information and who are informed of the
confidential nature thereof, or to another holder of the Notes) any information
with respect to the Company or any Subsidiary which is furnished pursuant to
Section 6 or this Section 7 and which is designated by the Company to you in
writing as confidential, provided that you may disclose any such information (a)
as has become generally available to the public, (b) as may be required or
appropriate in any report, statement or testimony submitted to any municipal,
state or Federal regulatory body having or claiming to have jurisdiction over
you or to the National Association of Insurance Commissioners or similar
organizations or their successors, (c) as may be required or appropriate in
response to any summons or subpoena or in connection with any litigation, (d) to
the extent that you believe it appropriate in order to protect your investment
in the Notes or in order to comply with any law, order, regulation or ruling
applicable to you or (e) to the prospective transferee in connection with any
contemplated transfer of any of the Notes by you, provided that (except in the
case of financial statements) such prospective transferee is informed by you of
the confidential nature of the information.
8. Prepayment of the Series K Notes. 8.1. Fixed Prepayments.
(a) Prepayment of the Series I Notes. On July 1, 1997, and on each
July 1 thereafter until the Series I Notes are paid in full, the Company
will prepay without premium $6,000,000 principal amount of the Series I
Notes or such lesser principal amount thereof as then remains unpaid,
leaving $6,000,000 principal amount or such other principal amount thereof
as then remains unpaid, of the Series I Notes for payment at their stated
maturity on July 1, 2001.
(b) Prepayment of the Series J Notes. On July 1, 2000, and on each
July 1 thereafter until the Series J Notes are paid in full, the Company
will prepay without premium $2,000,000 principal amount of the Series J
Notes or such lesser principal amount thereof as then remains unpaid,
leaving $2,000,000 principal amount, or such other principal amount thereof
as then remains unpaid, of the Series J Notes for payment at their stated
maturity on July 1, 2004.
(c) Prepayment of the Series K Notes. On July 1, 2005, and on each
July 1 thereafter until the Series K Notes are paid in full, the Company
will prepay without premium $2,000,000 principal amount of the Series K
Notes or such lesser principal amount thereof as then remains unpaid,
leaving $2,000,000 principal amount, or such other principal amount thereof
as then remains unpaid, of the Series K Notes for payment at their stated
maturity on July 1, 2009.
(d) No Relief From Required Prepayments. No partial payment of the
Notes pursuant to Section 8.2 shall relieve the Company from its obligation
to make the required prepayments provided for in this Section 8.1.
8.2. Optional Prepayment with Premium. The Company may, at its option, upon
notice as provided in Section 8.5, prepay at any time, all, or from time to
time, any part (in an integral multiple of $1,000 and a minimum of $50,000 of
each series of Notes at the principal amount so prepaid, together with interest
accrued on the
principal amount so prepaid to the date of prepayment, plus a premium equal to
the Make-whole Premium, if any. Any optional payment pursuant to this Section
8.2, shall be allocated between the Series I Notes, the Series J Notes and the
Series K Notes pro rata in accordance with the respective outstanding principal
amounts of each Series.
8.3. Prepayment in Full at Option of Noteholders under Certain
Circumstances. In the event that (a) substantially all of the assets of the
Company or the Division shall be subject to Total Taking or a Total Destruction
or (b) the Division Certificate is terminated, canceled or changed in a manner
materially adverse to the Division, the Company shall forthwith deliver to each
holder of any Note an Officer's Certificate of the Company certifying as to the
occurrence of such event and a notice fixing a date (which shall be not less
than 60 or more than 90 days after the delivery of such notice) on which the
Company will make prepayment of the Notes if requested to do so as provided in
this Section 8.3, and at the written request of the holders of at least 66 2/3%
in principal amount of the Notes at the time outstanding, received by the
Company at any time within 30 days after delivery of such Officer's Certificate
of the Company and such notice, the Company will prepay, on the date specified
therefor in such notice, all, but not less than all, of the Notes at the time
outstanding, such prepayment to be made without premium.
8.4. Allocation of Partial Prepayments. In the case of each prepayment of
less than all of a given Series of Notes, the principal amount of each Series of
Notes to be prepaid shall be allocated (in integral multiples of $1,000) among
all of the Notes of such Series at the time outstanding in proportion, as nearly
as practicable, to the respective unpaid principal amounts thereof not
theretofore called for prepayment, with adjustments, to the extent practicable,
to compensate for any prior prepayments not made exactly in such proportion.
8.5. Notice of Optional Prepayments. In the case of each prepayment of
Notes under Section 8.2, the Company will give written notice thereof to each
holder of any of the Notes not less than 30 nor more than 60 days prior to the
date fixed for such prepayment, in each case specifying such date, the aggregate
principal amount of each Series of Notes to be prepaid on such date, the
principal amount of each Note, if any, held by such holder to be prepaid on such
date, the amount of interest on such principal amount accrued to such date and
the premium, if any, applicable to such prepayment.
8.6. Maturity; Exchange or Notation, Surrender, etc. In the case of each
prepayment of Notes, the principal amount of each note to be prepaid shall
mature and become due and payable on the date fixed for such prepayment,
together with interest on such principal amount accrued to such date and the
applicable premium, if any. Except as otherwise provided in Section 20, the
Company may, as a condition to prepaying any Note in part only, require the
holder thereof to make such Note available to require the Company at the place
of payment specified therein or pursuant thereto for notation thereon of the
portion of the principal amount thereof then being prepaid.
Any Note prepaid in full shall be surrendered to the Company and canceled and
shall not be reissued, and no Note shall be issued in lieu of any prepaid
principal amount of any Note.
8.7. Purchase of Notes. The Company will not, and will not permit any
Subsidiary or Affiliate of the Company to, purchase or otherwise acquire any
Note except pursuant to the provisions for prepayment provided for in this
Section 8.
9. General Covenants. 9.1. Accounting and Reserves. The Company will, and
will cause each Subsidiary to, (a) maintain a standard and uniform system of
accounting and keep proper books of record and account in which full, true and
correct entries will be made of its transactions, all in accordance with
Required Accounting Practice, and (b) set aside on its books for each fiscal
year all such proper reserves for depreciation, depletion, obsolescence,
amortization, bad debts and other purposes in connection with its business as
shall be required by Required Accounting Practices.
9.2. Payment of Taxes and Claims; Tax Sharing Agreement.
(a) The Company will, and will cause each Subsidiary to, pay all
taxes, assessments, rates, excises, levies, fees and other governmental
charges imposed upon it or any of its properties or assets or in respect of
any of its franchises, business, income or profits before any penalty or
interest accrues thereon, and all claims (including, without limitation,
claims for labor, services, materials and supplies) for sums which have
become due and payable and which by law have or might become a lien or
charge upon any of its properties or assets, provided that no such charge
or claim need be paid if the amount, applicability or validity thereof is
currently being contested in good faith by appropriate action promptly
initiated and diligently conducted and if such reserve or other appropriate
provision, if any, as shall be required by Required Accounting Practice
shall have been made therefor.
(b) The Company will not enter into any amendment of the Tax Sharing
Agreement which would materially adversely affect the Company's obligation
to make or right to receive payments thereunder.
9.3. Corporate Existence, etc. The Company will preserve and keep in full
force and effect its corporate existence, rights and franchises and those of
each of its Subsidiaries, except as otherwise permitted by Sections 10.7 and
10.8 and except where any such failure to maintain such existence, rights and
franchises of its Subsidiaries could no be expected to have a material adverse
effect on the Company and its Subsidiaries taken as a whole.
9.4. Maintenance of Properties; Conduct of Business; Company Certificate.
(a) The Company will maintain or cause to maintain in good repair,
working order and condition all properties used or useful in the business
of the Company and its Subsidiaries, and from time to time will make or
cause to be made all appropriate repairs, renewals and replacements
thereof, so that the business carried on in connection therewith may be
properly and advantageously conducted at all times.
(b) The Company will carry on its business and will cause the business
of its Subsidiaries to be carried on in an efficient manner and will not,
and will not permit any Subsidiary to, engage in any business other than
the transmission, transportation or distribution of natural gas and in
businesses directly related thereto, provided that neither the Company nor
any Subsidiary will engage in the business of exploring for or developing
natural gas or other hydrocarbon reserves.
(c) The Company will at all times perform and observe all of the
covenants, agreements, terms, conditions and limitations contained in the
Company Certificate and do all things necessary to keep unimpaired all of
the Company's rights thereunder and to prevent any default by the Company
thereunder or any forfeiture or impairment thereof. The Company will not
cancel or terminate, or permit the cancellation or termination of, or
default under, or make or agree to any amendment, modification or
alteration which would result in a material adverse change in the rights of
the Company under the Company Certificate.
9.5. Insurance. The Company will keep or cause to be kept all of its and
its Subsidiaries' property and business of a character usually insured by
companies of established reputation similarly situated insured by reputable
insurance companies or associations of high standing against loss or damage by
fire and such other hazards and risks (including, without limitation, public
liability, workmen's compensation, war risk and earthquake risk if and to the
extent war risk and earthquake risk insurance are at the time generally
available) as are customarily insured against by companies of established
reputations similarly situated, in such amounts as such properties and business
are usually insured by such companies. The Company will comply, and will cause
each Subsidiary to comply, with all the terms and conditions of all insurance
policies with respect to its property and business or any part thereof and with
all requirements of Boards of Underwriters or similar bodies applicable thereto.
10. Particular Covenants. 10.1. Limitation on Indebtedness. (a) General
Restrictions on Company Funded Debt. The Company will not directly or indirectly
create, incur, issue, assume, guarantee, agree to purchase or repurchase or
provide funds in respect of or otherwise become liable with respect to any
Funded Debt, unless immediately after giving effect thereto and to the
application of proceeds thereof,
(i) aggregate principal amount of all Consolidated Funded Debit of the
Company and its Wholly-Owned Domestic Subsidiaries at the time outstanding
would not exceed 65% of the then Consolidated Total Capitalization of the
Company and its Wholly-Owned Domestic Subsidiaries; and
(ii) consolidated Net Income as Defined of the Company and its
Wholly-Owned Domestic Subsidiaries for the preceding fiscal year of the
Company plus income taxes and interest on Indebtedness of the Company and
its Wholly-Owned Domestic Subsidiaries deducted in determining such
Consolidated Net Income as Defined plus the amount of Division Income Taxes
for such preceding fiscal year would be at least 200% of the annual
interest charges on all such Indebtedness then outstanding.
(b) Restriction on Consolidated Total Debt. The Company will not,
and will not permit any Wholly-Owned Domestic Subsidiary, directly or
indirectly, to create, incur, issue, assume, guarantee, agree to
purchase or repurchase or provide funds in respect of or otherwise
constitute Consolidated Total Debt unless immediately after giving
effect thereto and the application of the proceeds thereof the
aggregate principal amount of Consolidated Total Debt at the time
outstanding would not exceed 75% of the then Consolidated Adjusted
Total Capitalization of the Company and its Wholly-Owned Domestic
Subsidiaries.
(c) Restrictions on Subsidiary Funded Debt and Short-Term
Borrowing. The Company will not permit any Subsidiary, directly or
indirectly, to create, incur, issue, assume, guarantee, agree to
purchase or repurchase or provide funds in respect of or otherwise
become liable with respect to any Funded Debt or Short-Term Borrowing
other than (i) secured or unsecured Funded Debt of a Wholly-Owned
Domestic Subsidiary owing to the Company or a Wholly-Owned Domestic
Subsidiary and (ii) secured or unsecured Short-Term Borrowing of a
Wholly-Owned Domestic Subsidiary owing to the Company or a
Wholly-Owned Domestic Subsidiary.
(d) Prohibition of Incurrence of Funded Debt and Short-Term
Borrowing During Gas Sale Contract Payment Default. Notwithstanding
the foregoing provisions of this Section 10.1, neither the Company nor
any Subsidiary will directly or indirectly, create, incur, issue,
assume, guaranty, agree to purchase or repurchase or provide funds in
respect of or otherwise become liable with respect to any Funded Debt
or Short-Term Borrowing at a time when a payment default has occurred
and is continuing by Seagull in the due and punctual payment of the
price for natural gas under the Gas Sale Contract and such default
shall be continuing.
10.2. Restrictions on Investments, Loans, etc. The Company will not, and
will not permit any Subsidiary to, directly or indirectly purchase or otherwise
acquire or own any Securities of any other Person, or make any capital
contribution, loan or advance to any other Person, or be obligated to provide
funds to guarantee any obligation of any other Person, or otherwise invest in
any other Person, including, in any such case, a transfer of property to such
person for an aggregate consideration of less than the amount determined by the
Company in good faith to be the aggregate fair value of such property
(collectively "Investments"), except that:
(a) the Company and any Subsidiary may purchase and own marketable
direct obligations of the United States of America maturing within one year
from the date of acquisition thereof;
(b) the Company and any Wholly-Owned Domestic Subsidiary may purchase
and own (i) certificates of deposit of any member bank of the Federal
Reserve System which either has (x) a combined capital and surplus of not
less than $250,000,000 or (y) which has a Standard & Poor's corporation
credit rating on its outstanding securities of not less than AA or a
Moody's Investors Service corporation credit rating on its outstanding
securities of not less than Aa2, and (ii) certificates of deposit of the
National Bank of Alaska and of First National Bank of Anchorage, in each
case not exceeding $1,000,000 in the aggregate at any time;
(c) subject to Section 10.3, the Company may purchase and own
Securities of, or make capital contributions to, or make any loan or
advance to, or be obligated to provide funds to, any Wholly-Owned Domestic
Subsidiary or any corporation which simultaneously therewith becomes a
Wholly-Owned Domestic Subsidiary;
(d) so long as no Default or Event of Default shall have occurred and
be continuing, the Company may make any loan or advance to Seagull
evidenced by Intercompany Notes, which Intercompany Notes are secured by
the Intercompany Mortgage and bear interest at the rate of required by
Section 2.02 of the Intercompany Mortgage, but only if either (i) the
proceeds of any such loan or advance made after December 31, 1991 are
applied solely to finance, or to replace funds used in financing, the
construction, acquisition or improvement after January 1, 1992 of property
which is used or useful or intended for use in the Division's business and
which is subjected to the lien of the Intercompany Mortgage, or (ii) after
giving effect to such loan or advance, the Company would be permitted to
make at least $1.00 in Restricted Stock Payments pursuant to Section 10.3;
(e) the Company may purchase and own commercial paper which has a
credit rating not less than (i) A-2 from Standard and Poor's Corporation or
(ii) P2 from Moody's Investors Service, Inc., and which is not issued by an
Affiliate of the Company; and
(f) investments in money market funds substantially all of the assets
of which consist of certificates of deposits of the type described in
Section 10.2 (b and/or commercial paper of the type described in Section
10.2 (e).
For the purpose of clause (d) above, any extension or renewal of Intercompany
Notes shall constitute a new loan or advance to the Division unless the
requirements with respect to fixing the interest rate applicable to Intercompany
Notes set forth in Section 2.02 of the Intercompany Mortgage are complied with
as of the time of such extension and renewal.
10.3. Restricted Investments, Restricted Stock Payments and Restricted
Subordinated Debt Payments. The Company will not, directly or indirectly,
(a) make any Restricted Investment, Restricted Stock Payment or
Restricted Subordinated Debt Payment so long as any Default or Event of
Default shall have occurred and be continuing; or
(b) make any Restricted Investment, Restricted Stock Payment or
Restricted Subordinated Debt Payment from and after December 31, 1991,
unless, after giving effect to the proposed action, the aggregate amount of
such Restricted Investment, such Restricted Stock Payment or such
Restricted Subordinated Debt Payment plus all other Restricted Investments,
Restricted Stock Payments and Restricted Subordinated Debt Payments made
from and after December 31, 1991 plus the aggregate unpaid principal amount
of all loans and advances made by the Company to Seagull after December 31,
1991 pursuant to clause (d) (ii) of Section 10.2 would not exceed the sum
of the following:
(i) $10,000,000; plus
(ii) Consolidated Adjusted Net Earnings accrued during the period from
December 31, 1991 to the end of the next preceding quarterly fiscal period
(the "Computation Period"); plus
(iii) the aggregate amount of net cash proceeds to the Company from
sales during the Computation Period of shares of any class of its stock;
provided that the restrictions in this paragraph (b) shall not prevent
Restricted Investments not exceeding $500,000 in the aggregate, but the
aggregate amount of each such Restricted Investment shall nevertheless be
included in all subsequent calculations of the aggregate amount of
Restricted Investments pursuant to this paragraph (b).
The Company will not, directly or indirectly, declare any dividend (except
a dividend payable solely in Common Stock of the Company) for payment, or order
any distribution to be made to any holders of any stock of the Company, on a
date more than 60 days after the declaration of such dividend or the ordering of
such distribution, as the case may be. The Company will not permit any
Subsidiary to purchase or otherwise acquire or own shares of stock of the
Company of any class or any Subordinated Indebtedness or any warrant, option or
right to purchase, subscribe for or otherwise acquire any such stock or
securities.
10.4. Restrictions of Lease-Backs, Rental Obligations, etc. (a) The Company
will not, and will not permit any Subsidiary to, become or be or remain liable
as lessee, directly or indirectly, upon or with respect to any lease of any
property, real or personal,
(i) previously owned by the Company or a Subsidiary and sold or
transferred by the Company or such Subsidiary after December 31, 1991 with
a view to the leasing of the same back to the Company or a Subsidiary, or
(ii) on terms involving or contemplating the substantial equivalent of
a purchase thereof or an eventual rental thereof at a rent materially below
the fair market value thereof at the time the lease is entered into, or
(iii) involving any option to the lessee to purchase the leased
property for an amount materially below the fair market value thereof at
the time the lease is entered into.
(b) The Company will not permit the aggregate amount (determined on a
consolidated basis) of the net rental obligations of the Company and its
Subsidiaries for any current or future 12-month period under all leases of real
and/or personal property to be at any time in excess of $100,000,000 exclusive
of rental obligations under
(i) leases of office and warehouse space,
(ii) leases of office furniture and equipment, automobiles, airplanes,
mobile transportation equipment, stores equipment, shop equipment,
laboratory equipment, tools and work equipment and mobile communications
equipment,
(iii) leases having a term (including terms of renewal at the option
of the lessor or the lessee, whether or not the lease has theretofore been
renewed) expiring less than 3 years after the time of determination, and
(iv) leases of and leasehold interests in oil and gas properties and
the land covered thereby having net rental obligations of the Company and
its Subsidiaries for any current or future 12-month period not exceeding an
aggregate of $75,000.
For purposes of this paragraph (b), the net rental obligations of the Company or
any Subsidiary for any current or future 12-month period under any such lease
shall be the sum of the rental and other amounts required to be paid in such
12-month period by the Company or such Subsidiary, as the case may be,
thereunder and with respect thereto, not including, however (whether or not
designated in such lease as rental or additional rental payable thereunder), (x)
amounts not exceeding $75,000 in the aggregate during any such 12-month period,
paid as "bonuses" or similar charges with respect to the entering into such
leases of oil and gas properties and lands, and (y) any amounts required to be
paid on account of maintenance and repairs, insurance, taxes, assessments, water
rights and similar charges.
10.5. Restrictions on Liens, etc. The Company will not, and will not permit
any Subsidiary to, directly or indirectly, create, assume or suffer to exist any
mortgage, lien, pledge, charge or encumbrance on or conditional sale or other
title retention arrangement with respect to or security in any property or asset
of the Company or any Subsidiary, whether now owned or hereafter acquired, or
upon any income or profits therefrom, or give its consent to any subordination
of any right or claim of the Company or such Subsidiary to any right or claim of
any other Person, other than
(a) liens on property of a Subsidiary securing Indebtedness of such
Subsidiary owing to the Company;
(b) liens of taxes, assessments and governmental charges not yet
payable, or payable without penalty so long as so payable, or deposits
created in the
ordinary course of business as security for compliance with laws imposing
taxes, assessments or governmental charges;
(c) liens of taxes, assessments and governmental charges the validity
of which are being contested in good faith by appropriate action promptly
initiated and diligently conducted, if such reserve or other appropriate
provision, if any, as shall be required by Required Accounting Practice
shall have been made therefor;
(d) carriers', warehousemen's, materialmen's, mechanics', repairmen's,
employees' or other similar liens for services arising in the ordinary
course of business not yet due or being contested in good faith by
appropriate action promptly initiated in good faith by appropriate action
promptly initiated and diligently conducted, if such reserve or other
appropriate provision, if any, as shall be required by Required Accounting
Practice shall have been made therefor;
(e) liens incurred or deposits made in the ordinary course of business
in connection with workmen's compensation, unemployment insurance and other
social security, or to secure the performance of leases ( provided that all
such liens incurred and deposits made in connection with such leases do not
at any time exceed $250,000), tenders statutory obligations, surety and
appeal bonds, performance and return-of-money bonds and other similar
obligations (exclusive of obligations incurred in connection with the
borrowing of money or the obtaining of advances or credit);
(f) any judgment lien, unless the judgment it secures shall not,
within 30 days after the entry thereof, have been discharged or execution
thereof stayed pending appeal, or shall not have been discharged within 30
days after the expiration of any such stay;
(g) leases granted in the ordinary course of business or leases to
which any property acquired in the ordinary course of business is subject,
provided that such leases are permitted by this Agreement;
(h) encumbrances (other than to secure the payment of money),
easements, rights-of-way, servitudes, permits, reservations, leases and
other rights in respect of gravels, minerals, oil, gases or water or in
respect of grazing, logging, mining, canals, ditches, reservoirs or the
like, conditions, covenants, party wall agreements or other restrictions,
or easements for streets, alleys, highways, pipe lines, telephone lines,
power lines, railways and other rights-of-way, on, over or in respect of
property (other than property used or to be used primarily for compressor
stations) owned by the Company or a Subsidiary or over which the Company or
Subsidiary owns rights-of-way, easements, permits or licenses, provided
that such encumbrances, easements, rights-of-way, servitudes, permits,
reservations, leases, rights, conditions, covenants, party wall agreements
or other restrictions are such that they will not either individually or in
the aggregate, if exercised or availed of, interfere materially with the
proper use or operation of the property affected thereby for the purpose
for which such property is or is to be used, and provided, further, that,
in the case of such of the same as relate only to property on, over or in
respect of which the Company or a Subsidiary owns rights-of-way or
easements exclusively for pipe line purposes or locations for regulator
stations or other pipe line facilities (other than compressor stations),
the Company or such Subsidiary has power under eminent domain or similar
statutes to remove the same;
(i) rights reserved to or vested in any municipality or public
authority to control or regulate any property of the Company or a
Subsidiary or to use such property of the Company or a Subsidiary or to use
such property in any manner which does not materially impair the use of
such property for the purposes for which it is held by the Company or such
Subsidiary;
(j) obligations or duties, affecting the property of the Company or a
Subsidiary, to any municipality or public authority with respect to any
certificate of public convenience and necessity, franchise, grant, license
or permit which do not materially impair the use of such property for the
purposes for which it is held by the Company or such Subsidiary;
(k) zoning laws and ordinances;
(l) irregularities in or deficiencies of title to any rights-of-way,
licenses or permits for pipe lines, telephone lines, power lines, water
lines and/or appurtenances thereto or other improvements thereon, and to
any real estate used or to be used primarily for right-of-way purposes or
for regulator stations or other pipe line facilities (other than compressor
stations), provided that the Company or a Subsidiary shall have obtained
from the apparent owner of the land or estate covered by any such
right-of-way, license or permit a sufficient right, by the terms of the
instrument granting such right-of-way, license or permit to the use thereof
for the construction, operation or maintenance of the lines, appurtenances
or improvements for which the same is used or is to be used, and provided,
further, that the Company or such Subsidiary has power under eminent domain
or similar statutes to remove such irregularities or deficiencies;
(m) reservations and other matters relating to titles to leases and
leasehold interests in oil and gas properties and the lands covered
thereby, if such reservations and other matters do not, in the aggregate,
materially affect the marketability of the title thereto, and do not
materially impair the use of such leases or leasehold interests for the
purposes for which they are held or the value of the interest therein;
(n) liens and other encumbrances incurred in connection with
Indebtedness of the Company not in excess of $10,000,000 at any time
outstanding, issued by a municipality or development corporation to finance
the construction of premises to be used by the Company or a Subsidiary
thereof, the interest on which is exempt from federal income tax under
Section 103(b) of the Code, provided that the incurrence of such
Indebtedness secured thereby is permitted by Section 10.1;
(o) purchase money mortgages, liens or security interests in respect
of property either acquired by the Company or upon which the Company is
constructing improvements after the date of this Agreement, or mortgage,
liens or security interests existing in respect of such property at the
time of acquisition thereof, securing Indebtedness of the Company, provided
that (i) no such mortgage, lien or security interest shall extend to or
cover any other property, or secure any other Indebtedness of the Company
or any Subsidiary, (ii) the incurrence of such Indebtedness secured thereby
is permitted by Section 10.1, (iii) the aggregate principal amount of all
Indebtedness of the Company secured by all such mortgages, liens and
security interests shall not exceed $2,500,000 at any time outstanding, and
(iv) the aggregate principal amount of all Indebtedness secured by all such
mortgages, liens or other security interests in respect of any such
property shall not exceed 90% of the cost or fair market value (as
determined by the Company in good faith), whichever shall be lower, of such
property at the time of the acquisition thereof by the Company; and
(p) liens and other encumbrances resulting from the placement in trust
of United States government securities for the benefit of holders of any
Indebtedness of the Company or such Subsidiary under circumstances where
such Indebtedness is deemed to be extinguished under generally accepted
accounting principles but for which the Company or such Subsidiary remains
legally liable, provided that the current market value as of the date of
such placement in trust of such securities shall not exceed the unpaid
balance of such Indebtedness.
The Company will not, and will not permit any Subsidiary to, sign or file
in any state or other jurisdiction a financing statement under the Uniform
Commercial Code which names the Company or such Subsidiary as debtor or sign any
security agreement authorizing any secured party thereunder to file any such
financing statement, except, in any such case, a financing statement filed or to
be filed to perfect or protect a security interest which the Company or such
Subsidiary is entitled to create, assume or incur, or permit to exist, under
this Section 10.5.
10.6. Issuance and Sale, etc. of Subsidiary Stock; Disposition of
Subsidiary Stock and Indebtedness. The Company will not permit any Subsidiary to
issue, sell or otherwise dispose of any shares of stock of any class, or any
security convertible into or exchangeable for or carrying rights to subscribe
for shares of stock of any class, of such Subsidiary to any Person other than
the Company or a Wholly-owned Domestic Subsidiary, except to qualify directors
if required by law. The Company will not permit any Subsidiary to have
outstanding any shares of Preferred Stock, except shares of Preferred Stock
owned or held by the Company or a Wholly-Owned Domestic Subsidiary of the
Company. The Company will not sell or otherwise dispose of any shares of stock
or any Indebtedness of any Subsidiary or permit any Subsidiary to sell, transfer
or otherwise dispose of any shares of stock or any Indebtedness of any
Subsidiary except (a) to qualify directors if required by law or (b) to the
Company or a Wholly-Owned Domestic Subsidiary of the Company.
10.7. Consolidation or Merger of Subsidiaries; Disposition of Subsidiary
Property as an Entirety. The Company will not permit any Subsidiary to
consolidate with or merge into any Person other than the Company or a
Wholly-Owned Domestic Subsidiary of the Company. The Company will not permit any
Subsidiary to sell, lease or otherwise dispose of its properties and assets as
an entirety or substantially as an entirety except to the Company or a
Wholly-Owned Domestic Subsidiary of the Company.
10.8. Consolidation or Merger of Company; Disposition of Company;
Disposition of Company Property as an Entirety. The Company will not consolidate
with, merge into, or sell, lease or otherwise dispose of its properties and
assets as an entirety or substantially as an entirety to, any Person, unless
(a) the successor formed by or resulting from such consolidation or
merger or to which such disposition shall have been made shall be a solvent
corporation organized under the laws of the United States of America or a
state thereof or the District of Columbia;
(b) simultaneously with such consolidation, merger or disposition,
such successor corporation shall execute and deliver to each holder of any
of the Notes at the time outstanding an instrument, satisfactory in
substance and form to each such recipient, expressly assuming the due and
punctual payment of the principal of and the premium, if any, and interest
on all of the Notes at the time outstanding, according to their tenor, and
the due and punctual performance and observance of all the terms,
covenants, agreements and conditions of such Notes and this Agreement to be
performed or observed by the Company, to the same extent as if such
successor corporation had originally executed this Agreement in place of
the Company and had been the original maker of such Notes;
(c) immediately after giving effect to such consolidation, merger or
sale, the Company could incur $1 of additional Indebtedness pursuant to
Section 10.1 (a) and 10.1 (b) of this Agreement; and
(d) immediately after giving effect to such consolidation, merger or
sale (and the execution and delivery of the instrument of assumption
required under clause (b) of this Section 10.8), no condition or event
shall exist which constitutes a Default or an Event of Default.
No sale, lease, transfer or other disposition of assets permitted by this
Section 10.8 shall have the effect of releasing Alaska Pipeline Company (or any
corporation which shall at any time have assumed the liabilities or obligations
of the Company hereunder to with respect to any of the Notes) from any liability
or obligation hereunder or with respect to any of the Notes.
10.9. Disposition of Company and Subsidiaries' Property. The Company will
not, and will not permit any Wholly-Owned Domestic Subsidiary to, directly or
indirectly sell or otherwise dispose of any of its properties and assets (other
than in a transaction permitted by Section 10.7 or 10.8) unless, immediately
after giving effect to any such disposition,
(a) the Aggregate Value of all such properties and assets so sold or
disposed of during the period of 12 consecutive calendar months ending with
the calendar month of the date of such disposition would not exceed 10% of
Consolidated Net Tangible Assets of the Company and its Wholly-Owned
Domestic Subsidiaries as at the December 31 next preceding the date of such
disposition; or
(b) the Company could become liable (in compliance with Section 10.1
(a) (i)) with respect to $1 of additional Funded Debt.
If the aggregate net cash proceeds of all such sales and other dispositions of
assets of the Company and its Wholly-Owned Domestic Subsidiaries during any
fiscal year of the Company, commencing with the fiscal year ending on December
31, 1991, shall exceed the aggregate amount expended by the Company and its
Wholly-Owned Domestic Subsidiaries offset against such net cash proceeds as
hereinafter provided, then and in each such case the Company will, not later
than November 15 of the next succeeding fiscal year, apply such excess to the
prepayment of its Funded Debt (other than tax-exempt Funded Debt) at the time
outstanding. For purposes of the fore-going, there may be offset against the net
cash proceeds of sales and other dispositions of properties and assets during
any fiscal year all or any portion of the aggregate amount expended by the
Company and its Wholly-Owned Subsidiaries for property, plant and equipment
during the period of such fiscal year and the next following 12-month period
thereafter, provided that no portion of the amount so expended which has been so
offset against the proceeds of sales and dispositions shall again be offset,
directly or indirectly, against the proceeds of any other sales or dispositions.
10.10. Gas Contracts. The Company will at all times perform and observe all
the material covenants, agreements, terms, conditions and limitations applicable
to it contained in the Gas Contracts, and will do all things necessary to keep
unimpaired all its material rights thereunder and to prevent any material
default thereunder or any material forfeiture or impairment thereof. Nothing in
this Section 10.10 will permit the Company to take action, or fail to take
action, that could result in the termination of any of the Gas Contracts or a
setoff of amounts owing to the Company under the Gas Contracts. In case the
Company shall at any time receive any notice, demand or other communication from
any other party to any of the Gas Contracts relating to any alleged, potential
or actual material default thereunder or material breach of any of the
covenants, agreements, terms, conditions or limitations thereof, or purporting
to terminate or in any other way materially adversely affect the rights of the
Company thereunder, the Company will immediately deliver to the holders of all
Notes a copy of such notice, demand or other communication. The Company will not
amend, modify, supplement, surrender, cancel, terminate or in any way waive any
covenant, agreement, term, condition or limitation of any of the Gas Contracts,
except that the Company may amend, modify or supplement any of the Gas Contracts
if such amendment, modification or supplement is desirable in, or will not have
a material adverse effect on, the business of the Company and will not be in any
way prejudicial to the holders of the Notes.
10.11. Intercompany Notes, etc. The Company will not transfer, assign or
encumber any of the Intercompany Notes or its rights and privileges under the
Intercompany Notes or its rights and privileges under the Intercompany Notes or
its rights and privileges under the Intercompany Mortgage, nor will the Company
amend, modify, supplement, surrender, cancel, terminate or in any way waive any
covenant, agreement, term, condition or limitation of the Intercompany Mortgage
or any Intercompany Note, unless, such action is desirable in, or will not have
a material adverse effect on, the business of the Company and will not be in any
way prejudicial to the holders of the Notes. The Company will promptly notify
the holders of the Notes in the event it becomes aware of any default under, or
material breach of any of the covenants, agreements, terms, conditions or
limitations contained in, the Intercompany Mortgage or any of the Intercompany
Notes. The Company will cause the Intercompany Mortgage and all supplements
thereto at all times to be recorded, registered and filed and to be kept,
recorded, registered and filed in such manner and in such places, and will pay
or cause to be paid all such mortgage registration, recording, filing and other
taxes and fees, and will comply or cause Seagull to comply with all such
statutes and regulations, all as may be required by law in order fully to
create, preserve, maintain and protect the lien of the Intercompany Mortgage on
the property subject thereto.
10.12. Compliance with ERISA. The Company will not, and will not permit any
Subsidiary or Related Person to,
(a) engage in any transaction in connection with which the Company or
any Subsidiary could be subject to either a civil penalty assessed pursuant
to Section 502 (i) of ERISA or a tax imposed by Section 4975 of the Code,
terminate any Plan (other than a Multiemployer Plan) in a manner, or take
any other action with respect to any such Plan, which could result in any
liability of the Company or any Subsidiary to the Pension Benefit Guaranty
Corporation, fail to make full payment when due of all amounts which, under
the provisions of applicable law, or the terms of any Plan or collective
bargaining agreement, the Company or any Subsidiary is required to pay as
contributions thereto, or permit to exist any accumulated funding
deficiency, whether or not waived, with respect to any Plan (other than a
Multiemployer Plan), if, in any such case, such penalty or tax or such
liability, or the failure to make such payment, or the existence of such
deficiency, as the case may be, could have a material adverse effect on the
Company or any of its Subsidiaries;
(b) permit the aggregate present value of all benefit liabilities
under all Plans maintained at such time by the Company, any Subsidiary and
any Related Persons (other than Multiemployer Plans) that are subject to
Title IV of ERISA to exceed the aggregate current value of the assets of
such Plans allocable to such benefit liabilities by more than $2,500,000;
or
(c) permit the aggregate complete or partial withdrawal liability
under Title IV of ERISA with respect to Multiemployer Plans incurred by the
Company, its Subsidiaries and Related Persons to exceed $3,000,000.
As used in this Section 10.12, the term "accumulated funding deficiency" has the
meaning specified in Section 302 of ERISA and Section 412 of the Code, the terms
"present value," "benefit liabilities" and "current value" have the respective
meanings specified in Sections 3 and 4001 of ERISA.
11. Remedies. 11.1. Events of Default; Acceleration. If any one or more of
the following events ("Events of Default") shall occur and be continuing:
(a) if default shall be made by the Company in the due and punctual
payment of any principal or premium, if any, on any Note when and as the
same shall become due and payable, whether at maturity or a date fixed for
prepayment or by declaration or otherwise;
(b) if default shall be made in the due and punctual payment of any
interest on any Note when and as such interest shall become due and
payable, and such default shall have continued for a period of 5 days;
(c) if default shall be made by Seagull in the due and punctual
payment of any principal or premium, if any, on any Intercompany Note when
and as the same shall become due and payable, whether at maturity or a date
fixed for prepayment or by declaration or otherwise;
(d) if default shall be made by Seagull in the due and punctual
payment of any interest on any Intercompany Note when and as such interest
shall become due and payable, and such default shall have continued for a
period of 5 days;
(e) if default shall be made by the Company in the performance or
observance of any term contained in Section 9.2, 9.3, 9.4(b), 9.4 (c) or 10
(other than immaterial defaults under Section 10.2, 10.4 and 10.5);
(f) if default shall be made by the Company in the performance and
observance of any term and provision of Section 10, other than those
referred to above in this Section 11.1, and if capable of being remedied,
such default shall continue for 30 days;
(g) if default shall be made in the performance or observance of any
term contained in this Agreement (other than those referred to above in
this Section 11.1), and such default shall have continued for a period of
30 days after written notice thereof to the Company by the holder of any
Note;
(h) if default shall be made by Seagull in the performance or
observance of any term contained in Section 5 of the Inducement Agreement
(other than immaterial defaults under Section 5.1, 5.2, 5.4 and 5.5);
(i) if default shall be made by Seagull in performance or observance
of any term contained in Section 5 of the Inducement Agreement, other that
those referred to above in this Section 11.1., and such default shall have
continued for a period of 30 days;
(j) if default shall be made by Seagull in the due and punctual
payment of the price for natural gas under the Gas Sale Contract and such
default shall have continued for a period of 90 days after the end of the
quarterly fiscal period in which such default occurred;
(k) if any representation made by or on behalf of the Company or
Seagull in this Agreement or the Inducement Agreement or in any
certificate, report or other instrument delivered under or pursuant to any
term hereof or thereof shall prove to have been false or incorrect in any
material respect on the date as of which made;
(l) if Seagull shall fail to perform or comply with any term of the
Seagull Documents other than those referred to above in this Section 11.1
and such default shall have continued for a period of 30 days after written
notice thereof to the Company by the holder of any Note;
(m) if the Company or any Subsidiary shall (i) be generally not paying
its debts as they become due, (ii) file, or consent by answer or otherwise
to the filing against it of, or fail to deny the material allegations of or
to contest, a petition for relief or reorganization or arrangement or any
other petition in bankruptcy or insolvency law or other act for the relief
or aid of debtors of any jurisdiction, (iii) make an assignment for the
benefit of its creditors, (iv) consent to or acquiesce in the appointment
of a custodian, receiver, liquidator, fiscal agent, trustee or other
officer with similar powers of itself or themselves or of the whole or any
substantial part of its properties and assets, (v) be adjudicated insolvent
or a bankrupt, or (vi) take corporate action for the purpose of any of the
foregoing;
(n) if a court or governmental authority of competent jurisdiction
shall enter an order, judgment or decree appointing, without the consent or
the acquiescence of the Company or a Subsidiary, as the case may be, a
custodian, receiver, liquidator, fiscal agent, trustee or other officer
with similar powers of the Company or such Subsidiary or of the whole or
any substantial part of its properties and assets, or if an order for
relief shall be entered in any case or proceeding for liquidation or
reorganization or otherwise to take advantage of any bankruptcy or
insolvency law of any jurisdiction, or ordering the reorganization,
arrangement, composition, readjustment, dissolution, winding-up,
liquidation or similar relief of the Company or such Subsidiary, or if any
petition for any such relief shall be filed against the Company or such
Subsidiary and such petition, order, judgment or decree shall not be
dismissed or discharged within 60 days;
(o) if, under the provisions of any other law for the relief or aid of
debtors, any court or competent jurisdiction shall assume custody or
control of the Company or any Subsidiary or of the whole or any substantial
part of its properties and assets and such custody or control shall remain
unterminated or unstayed for an aggregate of 60 days (whether or not
consecutive) from the date of assumption of such custody or control;
(p) if final judgment for the payment of money in excess of $500,000
shall be rendered by a court of record against the Company or any
Subsidiary and the Company or such Subsidiary shall not (i) within 60 days
from the date of entry thereof, discharge the same or provide for its
discharge in accordance with its terms or procure a stay of execution
thereof, and (ii) if execution of such judgment shall be stayed, within
such period of 60 days or such longer period during which execution of such
judgment shall have been stayed, appeal therefrom and cause the execution
thereof to be stayed during such appeal, or, within 60 days after the
expiration of any such stay or the denial of such appeal, discharge the
same or provide for its discharge; or
(q) if the Company or any Subsidiary shall default (as principal or as
guarantor or other surety) in the payment of any principal of or premium,
if any, or interest on any Indebtedness for borrowed money (other than the
Notes), or if any event shall occur or condition shall exist in respect of
any such Indebtedness or under any evidence of any such Indebtedness, or of
any mortgage, indenture or Other Agreements relating thereto which would
permit or shall have cased the acceleration of the payment of such
Indebtedness, and such default, event or condition shall continue for more
than the period of grace, if any, specified therein and shall not have been
waived pursuant thereto;
Then and in any such event any holder or holders of 25% or more in
principal amount of the Notes at the time outstanding may at any time
(unless all defaults shall theretofore have been remedied) at its or their
option, by written notice or notices to the Company, declare all the Notes
to be due and payable, whereupon the same shall forthwith mature and become
due and payable together with interest accrued thereon and, with respect to
each Series of Notes, to the extent permitted by applicable law, a premium
equal to the Make-Whole Premium, without presentment, demand, protest or
notice, all of which are hereby waived, provided that during the existence
of an Event of Default described in subdivision (a) of this Section 11,
then, irrespective of whether the holder or holders of 25% or more in
principal amount of Notes then outstanding shall have declared all the
Notes to be due and payable pursuant to this Section 11, any holder of the
Notes at the time outstanding (excluding any Notes directly or indirectly
owned by the Company or nay of its Subsidiaries or Affiliates) may, at its
option, by notice in writing to the Company, declare the Notes then held by
such holder to be due and payable, whereupon the Notes then held by such
holder shall forthwith mature and become due and payable, together with
interest accrued thereon and with respect to each Series of Notes, to the
extent permitted by applicable law, a premium equal to the Make-Whole
Premium, without presentment, demand, protest or notice, all of which are
hereby waived. If a declaration is made pursuant to this Section 11.1 by
the holder or holders of at least 25% in principal amount of the Notes,
then and in each such case, the holders of at least 75% in aggregate
principal amount of the Notes at the time outstanding may, by written
notice or notices to the Company, rescind and annul such declaration and
the consequences thereof, provided that at the time such declaration is
annulled and rescinded, (i) no judgment or decree has been entered for the
payment of any moneys due pursuant to the Notes or this Agreement, (ii) all
arrears of interest upon all the Notes and all other sums payable under the
Notes and under this Agreement (except any principal or interest on the
Notes which has become due and payable solely by reason of such declaration
under this Section 11.1) shall have been duly paid, and (iii) each
and every other default and Event of Default shall have been remedied, and
provided, further, that no such rescission and annulment shall extend to or
affect any subsequent default or Event of Default or impair any right
consequent thereon.
11.2. Notice of Default. If any holder of any Note shall serve any notice
or take any other action in respect of a claimed default, the Company will
forthwith give written notice thereof the all other holders of the Notes at the
time outstanding describing such notice or action and the nature of the claimed
default.
11.3. Suits for Enforcement, etc. In case any one or more Events of Default
shall have occurred and be continuing, the holder of any Note may proceed to
protect and enforce its rights by suit in equity or action at law, whether for
the specific performance of any term contained in this Agreement or for an
injunction against any breach of any such term or in aid of the exercise of any
power granted in this Agreement, or may proceed to enforce the payment of such
Note or to enforce any other legal or equitable right of the holder of such
Note, or may take any one or more of such actions. In case of a default in the
payment of any principal of or premium, if any, or interest on any Note, the
Company will pay to the holder thereof on demand such further amounts as shall
be sufficient to pay the costs and expenses of collection, including, without
limitation, reasonable attorney's fees, expenses and disbursements.
11.4. Remedies Cumulative. No right, power or remedy conferred upon you or
the holder of any Note shall be exclusive, and each such right, power or remedy
shall be cumulative and in addition to every other right, power or remedy,
whether conferred hereby or by any Note or now or hereafter available at law or
in equity or by statute or otherwise.
11.5. Remedies Not Waived. No course of dealing between the Company and you
or the holder of any Note, and no delay in exercising any right, power or remedy
conferred hereby or by any Note or now or hereafter existing at law or in equity
or by statute or otherwise, shall operate as a waiver of or otherwise prejudice
any such right, power or remedy.
12. Registration Books; Transfer and Exchange of Notes. The Company will
keep or cause to be kept, at its principal office (or the office of its agent
for such purpose) in Anchorage, Alaska, proper books in which the names and
addresses of the holders of all Notes issued by the Company shall be registered
and in which transfers of Notes may be registered. Upon due presentment of any
Note for registration of transfer at such office, or upon surrender of any Note
for exchange at such office, the Company at its expense will issue in exchange
therefor a new Note or Notes, in such denomination or denominations as may be
requested ($1,000 and integral multiples thereof) which aggregate the unpaid
principal amount of the presented or surrendered Note, registered as such holder
or transferee may request, dated the date to which interest has been paid on the
presented or surrendered Note and otherwise of like tenor. Prior to the due
presentment of any Note for registration of transfer, the Company may treat the
registered holder thereof as the absolute owner thereof for the purpose of
receiving all payments of principal, premium, if any, and interest thereon and
for all other purposes thereof and hereof. Notwithstanding the foregoing,
neither you nor any other Noteholder shall transfer any Note (or any interest
therein) except in compliance with applicable securities laws and then only to
an institutional investor or to an intermediary for immediate resale to an
institutional investor.
13. Replacement of Notes. Upon receipt of evidence reasonably satisfactory
to the Company of the loss, theft, destruction or mutilation of any Note and, in
the case of any such loss, theft or destruction of any indemnity reasonably
satisfactory to the Company in form and amount, or, in the case of any such
mutilation, upon the surrender of such Note for cancellation at the office of
the Company maintained pursuant to Section 12, the Company at its expense will
execute and deliver, in lie thereof, a new Note of like tenor, dated the date to
which interest has been paid on such lost, stolen, destroyed or mutilated Note.
14.Definitions. As used herein, unless the context otherwise requires, the
following terms have the following respective meanings:
"Affiliate" of any Person shall mean any Person which directly or
indirectly controls or is controlled by or is under common control with such
Person. For the purposes of this definition, "control" (including, with
correlative meaning, the terms "controlled by" and "under common control with"),
as used with respect to any Person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting Securities or
by contract or otherwise.
"Aggregate Value" shall mean, with reference to any disposition of
properties and assets, the greater of (a) the net book value of all properties
and assets disposed of, as shown on the books of the Company and its
Wholly-Owned Domestic Subsidiaries as at the date of such disposition, and (b)
the fair market value of such properties and assets, as determined in good faith
by the Board of Directors of the Company.
"Board of Directors" of any corporation shall mean the Board of Directors
of such corporation or, to the extent permitted by applicable law and the
articles of incorporation and by-laws of such corporation, the Executive
Committee of such Board of Directors.
"Closing" shall have the meaning specified in Section 2.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time.
"Common Stock" shall mean stock or shares of any class or classes (however
designated) of a corporation, association or business trust, the holders of
which are ordinarily and generally, in the absence of contingencies, entitled to
vote for the election of a majority of the directors (or persons performing
similar functions) of such corporation, association or business trust, even
though the right so to vote has been suspended by the happening of a
contingency.
"Company" shall mean Alaska Pipeline Company, an Alaska corporation.
"Company Certificate" shall have the meaning specified in Section 5.11.
"Consolidated Adjusted Net Earnings" shall mean, as applied to the Company
and its Wholly-Owned Domestic Subsidiaries, the aggregate of the Consolidated
Net Income as Reported of the Company and its Wholly-Owned Domestic Subsidiaries
for each fiscal year or portion thereof during the period in question, provided
that
(a) there shall be deducted an amount equal to the excess, if any, of
(i) the sum of (x) the aggregate amount applied by the Company during such
period to the payment, redemption, retirement and purchase of Funded Debt
of the Company (other than any amount payable at the scheduled maturity of
any such Funded Debt or on account of any mandatory or required sinking,
purchase or other analogous fund with respect to any such Funded Debt) and
(y) the aggregate amount applied by the Company during such period to the
repayment during such period of advances to the Company by Seagull, over
(ii) the sum of (x) the aggregate amount of depreciation and amortization
deducted during such period in determining Consolidated Net Income as
Reported , (y) the aggregate principal amount of Funded Debt incurred by
the Company during such period for the purpose of renewing, extending,
refinancing, refunding, rearranging or replacing any Funded Debt taken into
account under subclause (i) (x) above and (z) the sinking fund payments
made by Seagull to the Company during such period in accordance with
indebtedness of the Division to the Company evidenced by the Intercompany
Notes;
(b) such reserves as shall be required by Required Accounting Practice
for deferred income tax resulting from accelerated depreciation or
amortization shall be deducted; and
(c) if net gains from the sale, abandonment or other disposition of
capital assets and from the purchase, sale, conversion or other disposition
of Securities shall exceed $25,000, such excess shall be excluded and taxes
in respect of such excess shall not be deducted.
Capital assets as used in this definition shall include all fixed assets, both
tangible (such as land, buildings, machinery and equipment) and intangible (such
as patents, copyrights, trademarks, franchises and good will), and Securities.
"Consolidated Adjusted Total Capitalization" shall mean, as applied to the
Company and its Wholly-Owned Domestic Subsidiaries at any date, the aggregate
Consolidated Total Capitalization of the Company and its Wholly-Owned Domestic
Subsidiaries as at such date, plus the aggregate principal amount of
Consolidated Short Term Borrowing outstanding on such date.
"Consolidated Funded Debt" shall mean, as applied to the Company and its
Wholly-Owned Domestic Subsidiaries, the aggregate of the Funded Debt of the
Company and its Wholly-Owned Domestic Subsidiaries outstanding on such date,
determined on a consolidated basis and in accordance with Required Accounting
Practice.
"Consolidated Net Cash Flow" shall mean, as applied to the Company and its
Wholly-Owned Domestic Subsidiaries, Consolidated Net Income as Defined of the
Company and its Wholly-Owned Domestic Subsidiaries during the period in
question, less all amounts included in the determination of Consolidated Net
Income as Defined in respect of undistributed earnings of all Subsidiaries, plus
all amounts deducted in the determination of Consolidated Net Income as Defined
in respect of depreciation and amortization, Division Depreciation and deferred
income taxes.
"Consolidated Net Income as Defined" shall mean, as applied to the Company
and its Wholly-Owned Domestic Subsidiaries, the Consolidated Net Income as
Reported for the period in question plus or minus, as the case may be, without
duplication, the net income or net loss of the Division for such period as
stated in the statement of income of the Division for such period furnished to
the Noteholders pursuant to Section 3 of the Inducement Agreement.
"Consolidated Net Income as Reported" shall mean, as applied to the Company
and its Wholly-Owned Domestic Subsidiaries, the consolidated net income (or
deficit) of the Company and its Wholly-Owned Domestic Subsidiaries for the
period in question, as stated in the combined statement of income of the Company
and its Wholly-Owned Domestic Subsidiaries for such period furnished to the
Noteholders pursuant to Section 6.
"Consolidated Net Tangible Assets" shall mean as applied to the Company and
its Wholly-Owned Domestic Subsidiaries at any date, the gross book value of all
assets (exclusive of franchises, licenses, permits, patents, patent
applications, copyrights, trademarks, trade names, good will, experimental and
organizational expense and other like intangibles, treasury shares and
unamortized debt discount) properly appearing on a consolidated balance sheet of
the Company and its Wholly-Owned Domestic Subsidiaries as at such date prepared
in accordance with Required Accounting Practice on a consolidated basis after
eliminating all intercompany items, less the sum (without duplication) of:
(a) the amount included in such assets of any write-up subsequent to
December 31, 1991 in the book value of any asset owned by the Company or
any Wholly-Owned Domestic Subsidiary on such date resulting from the
revaluation thereof subsequent to such date, or any write-up in excess of
cost of any asset acquired subsequent to such date except as permitted by
clause (d).
(b) all reserves for depreciation, depletion, obsolescence and
amortization of properties (other than those excluded as hereinabove
provided) as shown in such balance sheet and all other proper reserves
(other than general contingency reserves and reserves representing mere
appropriations of surplus) which in
accordance with Required Accounting Practice should be set aside in
connection with the business conducted;
(c) all liabilities (including tax and other proper accruals) which
would, in accordance with Required Accounting Practice, be classified as
current liabilities of the Company and its Wholly-Owned Domestic
Subsidiaries (including current maturities of Funded Debt); and
(d) the amount included in such assets of the excess, if any, of (i)
the cost of any assets acquired by the Company or any Wholly-Owned Domestic
Subsidiary subsequent to December 31, 1991 upon the consolidation or merger
of any other corporation with or into the Company or such Wholly-Owned
Domestic Subsidiary or upon the acquisition by the Company or any
Wholly-Owned Domestic Subsidiary of all or substantially all of the assets
or any other corporation, over (ii) the book value of such assets on the
books of such other corporation at the time of such consolidation, merger
or acquisition (other than a write-up of the book value of an asset made in
accordance with generally accepted accounting principles in connection with
the acquisition of such assets).
"Consolidated Short Term Borrowing" shall mean, as applied to the Company
and its Wholly-Owned Domestic Subsidiaries at any date, the aggregate of the
Short Term Borrowing of the Company and its Wholly-Owned Domestic Subsidiaries
as at such date, determined on a consolidated basis and in accordance with
Required Accounting Practice.
"Consolidated Total Capitalization" shall mean, as applied to the Company
and its Wholly-Owned Domestic Subsidiaries at any date, the aggregate of the
Total Capitalization of the Company and its Wholly-Owned Domestic Subsidiaries
as at such date, determined on a consolidated basis and in accordance with
Required Accounting Practice.
"Consolidated Total Debt" shall mean, as applied to the Company and its
Wholly-Owned Domestic Subsidiaries at any date, the aggregate of the Funded Debt
and the Short Term Borrowing of the Company and its Wholly-Owned Domestic
Subsidiaries as at such date, determined on a consolidated basis and in
accordance with Required Accounting Practice.
"Corporation" shall include, except for the purposes of Section 10.8, an
associate, joint stock company, business trust or other similar organization,
and shall not include, without limitation, partnerships.
"Default" shall mean an event or condition which, with the lapse of time or
the giving of notice or both, would become an Event of Default.
"Division" shall mean all the current gas distribution and sales systems
business located in the State of Alaska, which are presently operating under the
name "ENSTAR Natural Gas Company". Such business comprises and shall comprise
the distribution, transportation and sale of natural, manufactured and mixed gas
in Alaska for residential, commercial, industrial and electrical power plant
use, the sale of gas ranges, water heaters, gas burners and other appliances and
equipment related to the use of such gas, all similar activities in Alaska and
all assets, whether or not located in the State of Alaska, directly relating
thereto or used or intended for use therein.
"Division Certificate" shall have the meaning specified in Section 5.11.
"Division Depreciation" shall mean, for the period in question, all amounts
of depreciation deducted in determining the net income or net loss of the
Division as stated in the statement of income of the Division for such period
furnished to the Noteholders pursuant to Section 6.
"Division Income Taxes" shall mean, for the period in question, all amounts
of income taxes deducted in determining the net income or net loss of the
Division for such period furnished to the Noteholders pursuant to Section 6.
"Domestic Subsidiary" shall mean a Subsidiary incorporated under the laws
of the United States of America or a State thereof or the District of Columbia
and owning substantially all its property and conducting substantially all its
business in the State of Alaska.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Event of Default" shall have the meaning specified in Section 11.1.
"Funded Debt" shall mean, as applied to any Person at any date, all
Indebtedness of such Person which would, in accordance with Required Accounting
Practice, be classified as funded debt, including, without limitation, all
Indebtedness for borrowed money (whether secured or unsecured) and Indebtedness
of the character referred to in subdivisions (b) and (c) of the definition of
Indebtedness, in each case maturing more than one year after the date of the
creation thereof, or directly or indirectly renewable or extendible, by its
terms or otherwise, at the option of such Person, beyond such year, and all
Indebtedness (whether secured or unsecured) incurred under a revolving credit or
similar agreement extending for more than one year after the date of the
creation thereof. Any Indebtedness which is extended or renewed (other than
pursuant to an option of the debtor) shall be deemed to have been created at the
date of the extension or renewal.
"Gas Contracts" shall mean the Gas Purchase Contracts, the Gas Sale
Contract and all other contracts and agreements for the purchase or other
acquisition, sale or other disposition, exchange or transportation of natural,
manufactured or mixed gas to which the Company is now or hereafter may become a
party, and all renewals, extensions additions, amendments and modifications
thereof entered into as permitted hereby. Notwithstanding the foregoing, "Gas
Contracts" shall not include any contract or agreement for the transportation by
the Company of natural, manufactured or mixed gas which (i) is owned by third
parties and (ii) will not be acquired by the Company for sale to the Division
pursuant to the Gas Sale Contract.
"Gas Purchase Contracts" shall mean (i) the Gas Purchase Agreement, dated
May 1, 1998, as amended to the date hereof, between the Company and Marathon Oil
Company, (ii) the Gas Purchase Contract, dated December 20, 1982, as amended to
the date hereof, between the Company and Shell Western E & P, Inc.,
(successor-in-interest to Shell Oil Company) and ARCO Alaska, Inc. (assignee of
Shell Western E & P, Inc., and ARCO Alaska, Inc.) and (iii) all renewals,
extensions, additions, amendments and modifications thereof entered into as
permitted hereby.
"Gas Sale Contract" shall mean the Gas Sale Contract, dated as of January
1, 1984, as amended, between the Company and the Division, and all renewals,
extensions, additions, amendments and modifications thereof entered into as
permitted hereby.
"Indebtedness" shall mean, as applied to any Person at any date,
(a) all items which in accordance with Required Accounting Practice
would be included on the liability side of the balance sheet of such Person
at such date, except (i) items of capital stock and of surplus, (ii)
reserves for deferred income tax resulting from accelerated depreciation or
amortization, (iii) contributions in aid of construction, (iv) unallocated
contingency reserves, and (iv) unallocated contingency reserves, and (v)
reserves properly deductible from assets in accordance with Required
Accounting Practice;
(b) all indebtedness, obligations and liabilities secured by any
mortgage, pledge, lien, charge, conditional sale agreement or other title
retention agreement existing on all property held by such Person at such
date subject to such mortgage, pledge, lien, charge or agreement; all of
such indebtedness, obligations and liabilities shall be treated as
Indebtedness of such Person, whether or not such Person is in fact liable
therefor;
(c) all indebtedness, obligations and liabilities of other Persons, of
the character referred to in the foregoing subdivisions (a) and (b), which
such Person has directly or indirectly guaranteed or upon or with respect
to which such Person is directly or indirectly liable (by discount,
endorsement -- other than for deposit for collection -- sale with recourse,
repurchase agreement or otherwise) or in respect of which such Person is
obligated to advance or supply funds; and
(d) adequate reserves in respect of disputed or contingent
indebtedness, obligations and liabilities of the character referred to in
the foregoing subdivisions (a), (b) and (c), to the extent not included
pursuant to such subdivisions.
Notwithstanding the foregoing, in determining the Indebtedness of any Person
there shall be included all indebtedness of such Person of the character
referred to in subdivisions (a), (b) and (c) deemed to be extinguished under
generally accepted accounting principles but for which such Person remains
legally liable.
"Inducement Agreement" shall have the meaning specified in Section 3.1.
"Intercompany Mortgage" means the first Mortgage and Deed of Trust, dated
as of August 1, 1960, between Seagull (as successor in interest to Alaska Public
Service Corporation) and the Company, as heretofore supplemented, amended and
restated by a Supplemental Mortgage dated as of September 9, 1960, a Second
Supplemental Mortgage dated as of May 1, 1961, a Third Supplemental Mortgage
dated as of December 15, 1969, a Fourth Supplemental Mortgage dated as of
February 18, 1972, a Fifth Supplemental Mortgage dated as of November 15, 1975,
a Sixth Supplemental Mortgage dated as of December 30, 1977, a Seventh
Supplemental Mortgage dated as of January 1, 1984, an Eight Supplemental
Mortgage dated as of June 17, 1985 and a Ninth Supplemental Mortgage dated as of
June 1, 1991 and as hereafter further supplemented and amended in accordance
with this Agreement.
"Intercompany Notes" shall mean the Notes as defined in the Intercompany
Mortgage.
"Investment" shall have the meaning given in Section 10.2.
"Make-Whole Premium" shall mean a premium, determined as of the date of any
prepayment pursuant to Section 8.2 or any acceleration pursuant to Section 11 in
respect of each Note (or portion thereof) of the series being prepaid or each
Note being accelerated, equal to the amount (but not less than zero) obtained by
subtracting (a) the sum of the unpaid principal amount of such Note (or portion
thereof) of the series being prepaid or accelerated and the amount of interest
thereon accred to the prepayment date or the date of acceleration from (b) the
sum of the Current Values of all amounts of principal and interest on such Note
(or portion thereof) being prepaid or accelerated that would otherwise have
become due on and after the date of such determination if such Note were not
being prepaid or accelerated (each such amount of principal or interest being
referred to herein as an "Amount Payable").
The "Current Value" of any Amount Payable means such Amount Payable
discounted (on a semiannual basis) to its present value on the date of
determination at the Treasury Yield plus 50 basis points, in accordance with the
following formula:
Current Value = Amount Payable
(1 = d/2)n
where "d" is the sum of (i) Treasury Yield per annum expressed as a decimal and
(ii) 50 basis points and "n" is an exponent (which need not be an integer) equal
to the number of semiannual periods and portions thereof (any such portion of a
period to be determined by dividing the number of days in such portion of such
period by the total number of days in such period, both computed on the basis of
twelve 30-day months in a 360-day year) between the date of such determination
and the due date of the Amount Payable. For such purposes the due date of any
amount of principal of a Note being paid means the date or dates as of which
such amount is to be credited against the obligation of the Company to make
scheduled payments of principal at maturity of such Note or the scheduled
required principal prepayments of such Note, if any, pursuant to Section 8.2
taking into account the relevant provisions of Section 8.4 with respect to the
manner in which partial prepayments shall be applied.
The "Treasury Yield" shall be determined by reference to the most recent
Federal Reserve Statistical Release H.15 (519) which has become publicly
available at least two Business Days prior to the date of prepayment or
acceleration (or, if such Statistical Release is no longer published, any
publicly available source of similar market data), and shall be the most recent
weekly average yield on actively traded U.S. Treasury securities adjusted to a
constant maturity equal to the then remaining weighted average life to maturity
of all Amounts Payable constituting principal of any Note (the "Remaining
Life"), computed by dividing (a) the sum of all such Amounts Payable into (b)
the total of the products obtained by multiplying (i) the amount of each such
Amount Payable by (ii) the number of years (calculated to the nearest
one-twelfth) which will elapse between the date as of which such computation is
made and the due date of such Amount Payable. If the Remaining Life is not equal
to the constant maturity of a U.S. Treasury security for which a weekly average
yield is given, the Treasury Yield shall be obtained by linear interpolation
(calculated to the nearest one-twelfth of a year) from the weekly average yields
of (a) the actively traded U.S. Treasury security with the duration closest to
and greater than the Remaining Life and (b) the actively traded U.S. Treasury
security with the duration closest to and less than the Remaining Life except
that is the Remaining Life is less than one year, the weekly average yield on
actively traded U.S. Treasury securities adjusted to a constant maturity of one
year shall be used. The Treasury Yield shall be computed to the fifth decimal
place (one thousandth of a percentage point) and then rounded to the fourth
decimal place (one hundredth of a percentage point).
"Multiemployer Plan" shall mean a Plan which is a "multiemployer plan" as
such term is defined in Section 4001 (a) (3) of ERISA.
"Note" and "Notes" shall have the meanings specified in Section 1.
"Officer's Certificate" shall mean a certificate executed on behalf of any
corporation by such corporation's President, Vice-President - Finance or Chief
Financial Officer.
"Person" shall mean an individual, a corporation, a partnership, a joint
venture, a trust, an unincorporated organization or a government or any agency
or political subdivision thereof.
"Plan" shall mean any "employee pension benefit plan" as such term is
defined in Section 3 of ERISA, which is or has been established or maintained,
or to which contributions are or have been made, by the Company or any Related
Person or as to which the Company or any Related Person would be treated as a
contributing sponsor under Section 4069 of ERISA is such plan were to be
terminated.
"Preferred Stock", as applied to the capital stock of any corporation,
shall mean capital stock of any class or classes (however designated) which is
preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of capital stock of any other class of such
corporation.
"PUC" shall mean the Alaska Public Utilities Commission.
"Related Person" shall mean any trade or business, whether or not
incorporated, which, together with the Company, would be treated as a single
employer under Section 414 of the Code.
"Required Accounting Practice" shall mean, as to any corporation or
division thereof, the accounting rules or regulations, if any, at the time
prescribed by the regulatory body or bodies under the jurisdiction of which such
corporation or division, as the case may be, is at the time operating, and, to
the extent that a matter is not covered by such rules or regulations, the
accounting rules or regulations at the time prescribed by the Federal Energy
Regulatory Commission for companies of established reputation engaged in a
business similar to that of such corporation or division, as the case may be,
which are at the time operating under the jurisdiction of the Federal Energy
Regulatory Commission.
"Restricted Investment" shall mean an Investment in a Wholly-Owned Domestic
Subsidiary of the kind referred to in Section 10.2 (c). The amount of
Investments which constitute Restricted Investments shall, for all purposes of
this Agreement, be the aggregate cost to the Company of all such Investments
determined in accordance with generally accepted accounting principles, but
without regard to unrealized increases or decreases in value or write-ups,
write-downs or write-offs, of such Investments (except to the extent that
Consolidated Adjusted Net Earnings has been increased or reduced as the result
thereof) and without regard to the existence of any undistributed earnings or
accrued interest with respect thereto accrued after the respective dates on
which such Investments were made, less any net return of capital realized during
such period upon the sale, repayment or other liquidation of such Investments
(determined in accordance with generally accepted accounting principles, but
without regard to any amounts received during such period as earnings (in the
form of dividends, interest or otherwise) on such Investments or as loans from
any Persons in whom such Investments have been made).
"Restricted Stock Payment" shall mean any of the following:
(a) any direct or indirect declaration ordering, setting aside of
funds for, payment or making of any dividend or other distribution on or
with respect to any stock of the Company of any class now or hereafter
outstanding, other than a dividend payable solely in Common Stock of the
Company; or
(b) any direct or indirect purchase, redemption, retirement or other
acquisition of any stock of the Company of any class now or hereafter
outstanding or of any securities convertible into shares of its stock of
any class (other than payments of Indebtedness evidenced thereby) or of any
warrant, option or right to purchase, subscribe for or otherwise acquire
any such stock or securities, other than one effected for a consideration
consisting solely of Common Stock of the Company. The amount of any
Restricted Stock of the Company. The amount of any Restricted Stock Payment
in property of the Company shall be deemed to be the greater of the fair
value of such property (as determined by the Board of Directors of the
Company) or the net book value of such property on the Company's books (in
accordance with Required Accounting Practice).
"Restricted Subordinated Debt Payment" shall mean any direct or indirect
payment or other distribution on account of the principal of or the premium, if
any, or interest on, or any purchase, redemption, retirement or other
acquisition of, any Subordinated Indebtedness of the Company now or hereafter
outstanding, provided that for the purpose of paragraph (b) of Section 10.3,
Restricted Subordinated Debt Payments shall not include payments, not exceeding
$750,000 during any twelve-month period, on account of Subordinated Indebtedness
consisting of management fees incurred in the ordinary course of business.
"Seagull" shall mean Seagull Energy Corporation, a Texas corporation, and
any successor to such corporation.
"Seagull Documents" shall mean the Inducement Agreement, the Intercompany
Mortgage, the Intercompany Notes and the Gas Sale Contract.
"Securities" shall mean any stocks, any bonds, debentures, notes or other
evidences of Indebtedness, and any other instruments generally known as
securities; any certificates of interest or participation in, temporary or
interim certificates for, receipts for, guaranties of, or warrants or rights to
subscribe to our purchase any of the foregoing; and any agreements, indentures,
mortgages or other instruments providing for or securing any of the foregoing.
"Series I Notes" shall have the meaning specified in Section 1.
"Series J Notes" shall have the meaning specified in Section 1.
"Series K Notes" shall have the meaning specified in Section 1.
"Short Term Borrowing" shall mean, as applied to any Person at any date,
all Indebtedness for borrowed money of such Person maturing on demand or within
one year or less from the date of the creation thereof and not directly or
indirectly renewable or extendible, by its terms or otherwise, at the option of
the debtor, beyond such year, and not incurred under a revolving credit or
similar agreement extending for more than one year.
"Subordinated Indebtedness" shall mean all Indebtedness of the Company to
Seagull, now existing or hereafter incurred, including, without limitation, all
Indebtedness in respect of advances, open accounts, accounts payable
obligations, loans, notes, bonds, debentures or other evidences of debt whether
for principal, premium, if any, or interest, and all instruments constituting or
evidencing any of the foregoing, whether or not held by Seagull; all of such
Indebtedness being subordinated to the prior payment in full of the Notes.
"Subsidiary" shall mean as to any entity a corporation, association or
business trust a majority (by number of votes) of either the Voting Stock or the
Common Stock of which is at the time owned or controlled, directly or
indirectly, by such entity.
"Tax Sharing Agreement" shall mean the Tax Sharing Agreement, dated June
17, 1985, between the Company and Seagull, as amended from time to time.
"Total Capitalization" shall mean, as applied to a corporation, the sum of
the following, all determined in accordance with Required Accounting Practice
and as shown on the books of account of such corporation:
(a) the principal amount of all Funded Debt of such corporation at the
time outstanding, plus
(b) the amount of the capital stock liability of such corporation and
any premium thereon, plus
(c) the amount of any earned surplus, capital surplus and other
surplus of such corporation, less
(d) the amount of any deficit of such corporation.
"Total Destruction" shall mean, with respect to any assets, any damage to
or destruction of such a substantial part of such assets so that, in the good
faith judgment of the owner of such assets, the restoration, replacement or
rebuilding of such assets or any portion thereof as nearly as possible to their
value and condition immediately prior to such damage or destruction is not
economically feasible.
"Total Taking" shall mean, with respect to any assets, the acquisition
(other than for temporary use) of such a substantial part of such assets by any
one or more governments or municipal corporations or other governmental
subdivisions or governmental authorities or any nominee or designee thereof by
the exercise of the power of condemnation or eminent domain, by the exercise of
a right reserved to purchase the same or by a sale or conveyance by the owner of
such assets in lieu of and in reasonable anticipation of the impending exercise
of such a power or of such a right, so that, in the good faith judgment of the
owner of such assets, the restoration, replacement or rebuilding of such assets
or any portion thereof as nearly as possible to their value and condition
immediately prior to such taking is not economically feasible.
"Voting Stock" shall mean stock or shares of any class or classes (however
designated) of a corporation, association or business trust, the holders of
which are at the time entitled to vote for the election of a majority of the
directors (or persons performing similar functions) of such corporation,
association or business trust, whether or not the right to vote exists by reason
of the happening of a contingency.
"Wholly-Owned Domestic Subsidiary" shall mean a Domestic Subsidiary all of
the outstanding stock of which, of whatever class and having whatever rights
(other than director's qualifying shares, if required, options to acquire which
for a nominal consideration shall have been obtained, together with the
certificates therefor, duly endorsed in blank or accompanied by stock powers
duly executed in blank), is at the time owned by the Company.
15. Expenses, etc. Whether or not the transactions contemplated hereby
shall be consummated, the Company will pay (a) the cost and expenses of
preparing and reproducing this Agreement and the Notes, of furnishing all
opinions by counsel for the Company (including any opinions requested by your
counsel as to the legal matter arising hereunder) and all certificates on behalf
of the Company, and of the Company's performance of and compliance with all
agreements and conditions contained herein on its part to be performed or
complied with (b) the cost of delivering to your home office, insured to your
satisfaction, the Notes acquired by you hereunder and any Notes delivered to you
upon any exchange or surrender pursuant hereto and of your delivering any Notes,
insured to your satisfaction, for any such exchange or surrender, (c) the
reasonable fees, expenses and disbursements of your special counsel in
connection with the transactions contemplated hereby, any matters arising
hereunder and any amendments, waivers and consents under or in respect hereof,
and (d) the reasonable out-of-pocket expenses incurred by you in connection with
the transactions contemplated hereby and any matters arising hereunder. The
Company will also pay and save you and each holder of any Notes harmless against
all liabilities, if any, with respect to all taxes, other than income taxes
(including interest and penalties) which may be payable in connection with the
execution and delivery of this Agreement and the Inducement Agreement, the
offer, issue, sale and delivery of the Notes, and any amendment, waiver or
consent under or in respect of any such instrument. The obligations of the
Company under this Section 15 shall survive any disposition of payment of the
Notes.
16. Survival of Agreements, etc. All agreements, representations and
warranties contained herein or made in writing by or on behalf of the Company in
connection with the transactions contemplated hereby shall survive the execution
and delivery of this Agreement, any investigation at any time made by you or on
your behalf, and the issue, sale and delivery of the Notes and any disposition
or payment of the Notes. All statements contained in any certificate or other
instrument delivered by or on the behalf of the Company pursuant hereto or in
connection with the transactions contemplated hereby shall be deemed
representations and warranties by the Company hereunder.
17. Amendments and Waivers. Any term of this Agreement or of the Notes may,
with the consent of the Company, be amended and the observance of any term of
this Agreement or of the Notes may be waived (either generally or in a
particular instance and either retroactively or prospectively) only by an
instrument or instruments in writing signed by you, so long as you are committed
to purchase Notes hereunder, and by the holders of at least 66-2/3% in principal
amount of the Notes at the time outstanding (excluding any Notes directly or
indirectly owned by the Company or any of its Subsidiaries or Affiliates)
provided that no such amendment or waiver shall, without the prior written
consent of the holders of all the Notes at the time outstanding, (a) change the
stated maturity or principal amount of any Note, (b) reduce the rate or change
the time of payment of interest on any Note, (c) change the amount or the time
of payment of any principal or premium, if any, payable on any prepayment of any
Note, (d) change any of the provisions of Section 11, (e) reduce the aforesaid
percentage of the principal amount of Notes the holders of which are required to
consent to any such amendment or waiver, or (f) change the percentage of
principal amount of the Notes the holders of which are entitled to accelerate
the maturity of the Notes, or reduce the percentage of the principal amount of
the Notes the holders of which are entitled to rescind and annul any such
declaration, as provided in Section 11.1. Any amendment or waiver effected in
accordance with this Section 17 shall be binding upon each holder of any Note at
the time outstanding, each future holder of any Note and the Company.
18. Representations of the Purchasers. You represent to the Company as
follows:
18.1. Purchase of Notes. You are purchasing the Notes hereunder on the
Closing Date for investment and without a view to the distribution of such
Notes, provided that the disposition of your property shall at all times be
within your control.
You understand that such Notes have not been registered under the
Securities Act and may not be sold or otherwise transferred by you except
pursuant to an effective registration statement under the Securities Act or
pursuant to an available exemption therefrom under the Securities Act.
18.2. Source of Funds. Either:
A. no part of the funds used by you to purchase the Notes will be from
the assets of any separate account or fund maintained by you in which any
employee benefit plan (or its related trust) has an interest; or
B. if any part of the funds used by you to purchase the Notes will be
from the assets of any separate account of fund maintained by you in which
any employee benefit plan has an interest,
(i) at least two Business Days prior to the Closing Date you
shall have disclosed to the Company in writing the name of each
employee benefit plan the assets of which are in such separate
account, or
(ii) such fund is a "collective investment fund" entitled to the
exemption granted by the Prohibited Transaction Class Exemption 91-38
issued by the United States Department of Labor, and at least two
Business Days prior to the Closing Date you shall have disclosed to
the Company in writing the names of each employee benefit plan whose
interest in such fund exceeds or is expected to exceed 10% of the
total assets of such fund as of the Closing Date, or
(iii) such separate account is a "pooled separate account"
entitled to the exemption granted by the Prohibited Transaction Class
Exemption 90-1 issued by the United States Department of Labor, and at
least two Business Days prior to the Closing Date you shall have
disclosed to the Company in writing the names of each employee benefit
plan whose assets in such separate account exceed or are expected to
exceed 10% of the total assets of such account as of the Closing Date.
For purposes of clauses (ii) and (iii) above, all employee benefit plans
maintained by the same employer or employee organization are deemed to be a
single employee benefit plan. As used in this Section 18.2, the terms "separate
account" and "employee benefit plan" shall have the respective meanings assigned
to them in ERISA.
19. Payments on Notes; Notice of Sale, etc. So long as you or your nominee
shall be the holder of any Note,, and notwithstanding anything contained herein
or in such Note to the contrary, the Company will pay all sums becoming due on
such Note for principal, premium, if any, and interest by the method and at the
address specified for such purpose in the Schedule of Purchasers, or by such
other commercially reasonable method or at such other address as you shall have
from time to time specified to the Company in writing for such purchase without
the presentation or surrender of such Note or the making of any notation
thereon, except that any Note paid or prepaid in full shall be surrendered to
the Company at its principal office for cancellation. Prior to any sale or other
disposition of any Note held by you or your nominee, you will, at your election,
either endorse thereon (or on a paper annexed thereto) the amount of principal
paid thereon and the last date to which interest has been paid thereon or
surrender such Note to the Company in exchange for a new Note or Notes pursuant
to Section 13. You will promptly notify the Company of any sale or other
disposition of any Note held by you, specifying the name and address of the
transferee, if known to you. The Company will afford the benefits of this
Section 19 to any institutional investor which is the direct or indirect
transferee of any Note purchased by you under this Agreement and which has made
the same agreement relating to such note as you have made in this Section 19.
20. Notices, etc. All notices and other communications hereunder (other
than referred to in Section 19) Shall be in writing and shall be deemed to have
been given when delivered or when mailed by first class mail, postage prepaid,
addressed (a) if to you, at your address specified on the attached Schedule A,
or at such other address as you shall have furnished to the Company in writing,
or (b) if to any other holder of any Note, at the most recent address of such
holder as it appears on the registration books maintained by or on the behalf of
the Company pursuant to Section 12, or (c) if to the Company, at its address as
set forth in the beginning of this Agreement, or at such other address as the
Company shall have furnished to you and each holder of any Note in writing with
a copy to Seagull at its address set forth in the Inducement Agreement or such
other address as Seagull shall have furnished to you and each holder of any Note
in writing.
21. Nonenforcement for Others. Neither this Agreement nor any disposition
of any of the Notes shall be deemed to create any liability or obligation of any
holder of any Note (including you) to enforce any provision hereof or of any of
the Notes for the benefit or on the behalf of any other Person who may be the
holder of any Note.
22. Miscellaneous. This Agreement shall be construed and enforced in
accordance with and governed by the laws of the State of New York. This
Agreement shall be binding upon and shall inure to the benefit of and be
enforceable by the respective successors and assigns of the parties hereto,
including, except as expressly limited herein, any holder or holders at the time
of the Notes or any part thereof, provided that you shall not be obligated to
purchase Notes of any Person other than the present Alaska Pipeline Company.
Except as stated in Section 17, this Agreement embodies the entire agreement and
understanding between you and the Company and supersedes all prior agreements
and understandings relating to the subject matter hereof. The headings in this
Agreement are for the purpose of reference only and shall not limit or otherwise
affect the meaning hereof. Any reference herein to a section refers to a section
of the Agreement unless otherwise specifically stated herein. This agreement may
be executed in any number of counterparts, each of which shall be an original,
but all of which together shall constitute one instrument.
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterparts of this letter, whereupon this letter
shall become a binding agreement between you and the Company. Please then return
one of such signed counterparts to the Company.
Very truly yours,
ALASKA PIPELINE COMPANY
By: /s/ Richard F. Barnes
Title: President
The foregoing Agreement is hereby agreed to as of the date thereof.
AID ASSOCIATION FOR LUTHERANS
By: /s/ James Abitz
- -----------------------------------------
Title: Vice President - Securities
THE EQUITABLE LIFE ASSURANCE SOCIETY
OF THE UNITED STATES
By: /s/ William Gobbo, Jr.
- -----------------------------------------
Title: Investment Officer
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
By: /s/ William Gobbo, Jr.
- -----------------------------------------
Title: Investment Officer
PROVIDENT LIFE & ACCIDENT
INSURANCE COMPANY
By: /s/ James T. Rogers
- -----------------------------------------
Title: Vice President
TEACHERS INSURANCE & ANNUITY
ASSOCIATION OF AMERICA
By: /s/ Kevin R. Lorenz
- -----------------------------------------
Title: Associate Director
Private Placements
Information Relating to Purchasers
Principal Amount of
Name and Address of Purchaser Notes to be Purchased
AID ASSOCIATION FOR LUTHERANS Series I: $10,000,000
(1) All payments by wire transfer of immediately
available funds to:
Harris Trust and Savings Books
111 West Monroe Street
Chicago, Illinois 60690
ABA #:071 000 288
A/C Aid Association for Lutherans
Account No. 164-096-0, regarding
Alaska Pipeline Company 8.15%
Series I Notes due July 1, 2001
(2) All notices of payments and written confirmations
of such wire transfers:
Aid Association for Lutherans
4321 North Ballard Road
Appleton, Wisconsin 54919
Attention: Investment Accounting
(3) All other communications:
Aid Association for Lutherans
4321 North Ballard Road
Appleton, Wisconsin 54919
Attention: Investment Department
(4) Securities to be delivered to:
Aid Association for Lutherans
4321 North Ballard Road
Appleton, Wisconsin 54919
Attention: Judith A. Hooyman
Assistant Treasurer
Principal Amount of
Name and Address of Purchaser Notes of be Purchases
THE EQUITABLE LIFE ASSURANCE SOCIETY Series J: $10,000,000
OF THE UNITED STATES
(1) All payments by wire transfer of
immediately available funds to:
The Chase Manhatten Bank, N.A.
110 West 52nd Street
New York, New York 10019
A/C The Equitable Life Assurance
Society of the United States
Account No. 037-2-409417
(2) All notices of payments to:
The Equitable Life Assurance
Society of the United States
c/o Equitable Capital Management Corporation
135 West 50th Street, 5th Floor
New York, New York 10020
Attention: Cash Operations Department
(3) All other communications to:
The Equitable Life Assurance
Society of the United States
c/o Equitable Capital Management Corporation
1285 Avenue of the Americas, 19th Floor
New York, New York 10019
Attention: Corporate Finance Department
Principal Amount of
Name and Address of Purchaser Notes of be Purchases
THE EQUITABLE LIFE INSURANCE COMPANY Series I: $10,000,000
(1) All payments by wire transfer of immediately
available funds to:
The Chase Manhatten Bank, N.A.
110 West 52nd Street
New York, New York 10019
A/C Equitable Variable Life
Insurance Company
Account No. 037-2-411256
Each such wire transfer shall set forth the name
of the Company, PPN number ___, the amount
of principal and interest being paid, due date of
the payment being made and if such payment is
a final payment.
(2) All notices of payments and written confirmations of
such wire transfers to be sent to:
Equitable Variable Life Insurance Company
c/o Equitable Capital Management Corporation
135 West 50th Street
5th Floor
New York, New York 10019
Attention: Cash Operations
(3) All other communications to be sent to:
Equitable Variable Life Insurance Company
c/o Equitable Capital Management Corporation
1285 Avenue of the Americas, 19th Floor
New York, New York 10019
Attention: Corporate Finance Department
(4) Securities to be delivered to:
Equitable Capital Management Corporation
135 West 50th Street, 5th Floor
New York, New York 10019
Attention: Cash Operations
(5) Tax ID: 13-272-9441
Principal Amount of
Name and Address of Purchaser Notes of be Purchases
PROVIDENT LIFE AND ACCIDENT INSURANCE Series K: $10,000,000
COMPANY
Name of Nominee in which Notes are to be issued: PEPA & CO.
(1) In case of payment on account of the Notes:
By bank wire transfer of Federal funds together
with an advice setting forth (a) the full name,
interest rate and maturity date of the Note; (b)
allocation of payment between principal and
interest; (c) name of Issuer; and (d) confirmation
of principal balance to:
PEPA & CO.
c/o Bankers Trust Company
New York, N.Y.
ABA #0210010033
Attention: 01419540
for credit to Provident Life and Accident
Insurance Company
Custodian Account No. 99296
with sufficient information to identify
the source and application of funds
(2) In the case of all communications with respect
with respect to payments and all other
communications to:
Provident Life and Accident Insurance Company
Investment Department
One Fountain Square
Chattanooga, Tennessee 37402
Attention: Private Placements
Principal Amount of
Name and Address of Purchaser Notes of be Purchases
TEACHERS INSURANCE AND ANNUITY Series I: $10,000,000
ASSOCIATION OF AMERICA
(1) All payments by wire transfer of immediately
available funds to:
Morgan Guaranty Trust Company
of New York
23 Wall Street
New York, New York 10015
A/C Teachers Insurance and Annuity
Association of America
Account No. 121-85-001
with sufficient information to identify the
source and application of such funds and
with instructions to telephone advice of
credit to:
Teachers Insurance and Annuity
Association of America
Treasury Services Department
(212) 916-4000
(2) All other communications to:
Teachers Insurance and Annuity
Association of America
730 Third Avenue
New York, New York 10017
Attention: Securities Division
Telecopier Numbers:
(212) 916-6581Securities Division
(212) 953-9879Investment Law Division
ALASKA PIPELINE COMPANY
8.15% Series I Notes Due July 1, 2001
No._________ New York, New York
[date]
ALASKA PIPELINE COMPANY, (the "Company"), an Alaska corporation, for value
received, hereby promises to pay to________________________, or registered
assigns, the principal amount of ______________ on July 1, 2001, with interest
(computed on the basis of a 360-day year, 30-day month) on the unpaid balance of
such principal amount from the date hereof, payable on January 1, 1993, and
thereafter semi-annually on each July 1 and January 1, at the rate of 8.15% per
annum until the same shall become due and payable (whether at maturity or at a
date fixed for prepayment or by declaration or otherwise), and with interest on
any overdue principal (including any overdue prepayment of principal) and
premium, if any, and (to the extent permitted under applicable law) on any
overdue installment of interest, at the rate of 10.15% per annum until paid,
payable semi-annually as aforesaid or, at the option of the holder hereof, on
demand.
Payments of principal, premium, if any, and interest shall be made in
lawful money of the United States of America at the principal office of Chemical
Bank in the Borough of Manhattan, City and State of New York.
1. The Series I Notes. This Note is one of the Company's 8.15% Series I
Notes due July 1, 2001 (the "Series I Notes", such term to include any Series I
Notes issued in exchange therefor or in replacement thereof), issued in the
original aggregate principal amount of $30,000,000 pursuant to a Note Agreement
(the "Note Agreement"), dated as of May 14, 1992, between the Company and
certain institutional investors. The holder hereof is entitled to the benefits,
and is subject to the provisions, of the Note Agreement and may enforce the
agreements of the Company contained therein and exercise the remedies provided
for thereby or otherwise available in respect thereof.
2. Prepayment of Notes. As provided in the Note Agreement, the Company will
prepay on July 1, 1997, and on every July 1 thereafter so long as any Series I
Notes shall be outstanding, a principal amount of the Series I Notes specified
in the Note Agreement, in each case without premium but together with interest
on the principal amount so prepaid accrued to the date fixed for such
prepayment. In addition, the Series I Notes are subject to prepayment in whole
or in part, in certain cases with a premium, in other cases without a premium,
all as specified in the Note Agreement.
3. Registration of Transfers, etc. Transfers of this Series I Note shall be
registered upon registration books maintained for such purpose by or on behalf
of the Company as provided in the Note Agreement. Prior to presentment of this
Series I Note for registration of transfer, the Company may treat the registered
holder hereof as the absolute owner of this Series I Note for the purpose of
receiving all payments of principal, premium, if any, and interest hereon and
for all other purposes hereof and of the Note Agreement.
4. Event of Default. In case an Event of Default, as defined in the Note
Agreement, shall occur, the unpaid balance of the principal amount of this
Series I Note may be declared and become due and payable in the manner of and
with the effect provided in the Note Agreement.
5. Governing Law. This Series I Note shall be construed and enforced in
accordance with and governed by the laws of the State of New York.
ALASKA PIPELINE COMPANY
By___________________________
President
ALASKA PIPELINE COMPANY
8.64 % Series J Notes Due July 1, 2004
No. __________ New York, New York
[date]
ALASKA PIPELINE COMPANY, (the "Company"), an Alaska corporation, for value
received, hereby promises to pay to ________________________, or registered
assigns, the principal amount of __________________ on July 1, 2004, with
interest (computed on the basis of a 360-day year, 30-day month) on the unpaid
balance of such principal amount form the date hereof, payable on January 1,
1993, and thereafter semi-annually on each July 1 and January 1, at the rate of
8.64% per annum until the same shall become due and payable (whether at maturity
or at a date fixed for prepayment or by declaration or otherwise), and with
interest on any overdue principal (including any overdue prepayment of
principal) and premium, if any, and (to the extent permitted under applicable
law) on any overdue installment of interest, at the rate of 10.64% per annum
until paid, payable semi-annually as aforesaid or, at the option of the holder
hereof, on demand.
Payments of principal, premium, if any, and interest shall be made in
lawful money of the United States of America at the principal office of Chemical
Bank in the Borough of Manhattan, City and State of New York.
1. The Series J Notes. This Note is one of the Company's 8.64% Series J
Notes due July 1, 2004 (the "Series J Notes," such term to include any Series J
Notes issued in exchange therefor or in replacement thereof), issued in the
original aggregate principal amount of $10,000,000 pursuant to a Note Agreement
(the "Note Agreement"), dated as of May 14, 1992, between the Company and
certain institutional investors. The holder thereof is entitled to the benefits,
and is subject to the provisions, of the Note Agreement and may enforce the
agreements of the Company contained therein and exercise the remedies provided
for thereby or otherwise available in respect thereof.
2. Prepayment of Notes. As provided in the Note Agreement, the Company will
prepay on July 1, 2000, and every July 1 thereafter so long as any Series J
Notes Shall be outstanding, a principal amount of the Series J Notes specified
in the Note Agreement, in each case without premium but together with interest
on the principal amount so prepaid accrued to the date fixed for such
prepayment. In addition, the Series J Notes are subject to prepayment in whole
or in part, in certain cases with a premium and in other cases without a
premium, all as specific in the Note Agreement.
3. Registration of Transfers, etc. Transfers of this Series J Note shall be
registered upon registration books maintained for such purpose or on behalf of
the Company as provided in the Note Agreement. Prior to presentment of this
Series J Note for registration of transfer, the Company may treat the registered
holder thereof as the absolute owner of this Series J Note for the purpose of
receiving all payments of principal, premium, if any, and interest hereon and
for all other purposes hereof and of the Note Agreement.
4. Event of Default. In case an Event of Default, as defined in the Note
Agreement, shall occur, the unpaid balance of the principal amount of this
Series J Notes may be declared and become due and payable in the manner of and
with the effect provided in the Note Agreement.
5. Governing Law. This Series J Note shall be construed and enforced in
accordance with and governed by the laws of the State of New York.
ALASKA PIPELINE COMPANY
By___________________________
President
ALASKA PIPELINE COMPANY
8.81% Series K Notes Due July 1, 2009
No. ________ New York, New York
[date]
ALASKA PIPELINE COMPANY, (the "Company"), an Alaska corporation, for value
received, hereby promises to pay to ___________________, or registered assigns,
the principal amount of $____________________ on July 1, 2009, with interest
(computed on the basis of a 360-day year, 30-day month) on the unpaid balance of
such principal amount from the date hereof, payable on January 1, 1993, and
thereafter semi-annually on each July 1 and January 1, at the rate of 8.81% per
annum until the same shall become due and payable (whether at maturity or at a
date fixed for prepayment or by declaration or otherwise), and with interest on
any overdue principal (including any overdue prepayment of principal) and
premium, if any, and (to the extent permitted under applicable law) on any
overdue installment of interest, at the rate of 10.81% per annum until paid,
payable semi-annually has aforesaid or, at the option of the holder hereof, on
demand.
Payments of principal, premium, if any, and interest shall be made in
lawful money of the United States of America at the principal office of Chemical
Bank, Borough of Manhattan, City and State of New York.
1. The Series K Notes. This Note is one of the Company's 8.81% Series K
Notes due July 1, 2009 (the "Series K Notes," such term to include any Series K
Notes issued in exchange therefor or in replacement thereof), issued in the
original aggregate principal amount of $10,000,000 pursuant to a Note Agreement
(the "Note Agreement"), dated as of May 14, 1992, between the Company and
certain institutional investors. The holder thereof is entitled to the benefits,
and is subject to the provisions, of the Note Agreement and may enforce the
agreements of the Company contained therein and exercise the remedies provided
for thereby or otherwise available in respect thereof.
2. Prepayment of Notes. As provided in the Note Agreement, the Company will
prepay on July 1, 2005, and every July 1 thereafter so long as any Series K
Notes shall be outstanding, a principal amount of the Series K Notes specified
in the Note Agreement, in each case without premium but together with interest
on the principal amount so prepaid accrued to the date fixed for such
prepayment. In addition, the Series K Notes are subject to prepayment in whole
or in part, in certain cases with a premium and in other cases without a
premium, all as specified in the Note Agreement.
3. Registration of Transfers, etc. Transfers of this Series K Note shall be
registered upon registration books maintained for such purposes or on behalf of
the Company as provided in the Note Agreement. Prior to presentment of this
Series K Note for registration of transfer, the Company may treat the registered
holder thereof as the absolute owner of this Series K Note for the purpose of
receiving all payments of principal, premium, if any, and interest hereon and
for all other purposes hereof and of the Note Agreement.
4. Event of Default. In case of Event of Default, as defined in the Note
Agreement, shall occur, the unpaid balance of the principal amount of this
Series K Note may be declared and become due and payable in the manner of and
with the effect provided in the Note Agreement.
5. Governing Law. This Series K Note shall be construed and enforced in
accordance with and governed by the laws of the State of New York.
ALASKA PIPELINE COMPANY
By____________________________
President
================================================================================
SEAGULL ENERGY CORPORATION
TO
AID ASSOCIATION FOR LUTHERANS
THE EQUITABLE LIFE ASSURANCE SOCIETY OF
THE UNITED STATES
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
PROVIDENT LIFE & ACCIDENT INSURANCE COMPANY
AND
TEACHERS INSURANCE & ANNUITY ASSOCIATION OF AMERICA
___________________________
INDUCEMENT AGREEMENT
___________________________
Dated as of: May 14, 1992
================================================================================
TABLE OF CONTENTS
Section Page
1. Representation by Seagull............................................. 2
1.1 Incorporation, Standing, etc. .................................. 2
1.2. Qualification................................................... 2
1.3. Authority; Binding Effect....................................... 2
1.4. Financial Statements............................................ 3
1.5. Changes, etc. .................................................. 3
1.6. Litigation, etc................................................. 4
1.7. Compliance with Other Instruments, etc. ........................ 4
1.8. Governmental Consent, etc....................................... 4
1.9. Title to Properties; Liens...................................... 5
1.10. Holding Company Act............................................. 5
1.11. Disclosure...................................................... 6
2. Subordination......................................................... 6
3. Financial Statements and Other Information............................ 11
4. Inspection............................................................ 13
5. Covenants of Seagull.................................................. 14
5.1. Accounting and Reserves.......................................... 14
5.2. Insurance........................................................ 14
5.3. Maintenance of Corporate Existence, Franchises,
etc.; Restrictions on Business................................. 14
5.4. Maintenance and Improvement of
Division Property.............................................. 15
5.5. Restrictions on Liens, etc. ..................................... 15
5.6. Recordation of Intercompany Mortgage............................. 19
5.7. Performance of Franchises; Extension,
Amendment, etc. of Division Certificate........................ 20
5.8. Gas Sale Contract................................................ 20
5.9. Sale, Merger and Consolidation................................... 21
6. Cost and Expenses..................................................... 22
7. Notices, etc.......................................................... 22
8. Miscellaneous......................................................... 22
SEAGULL ENERGY CORPORATION
1001 Fannin, Suite 1700
Houston, Texas 77002
Dated as of: May 14, 1992
Aid Association for Lutherans
222 West College Avenue
Appleton, Wisconsin 54919
Attention:
The Equitable Life Assurance Society of the United States
1285 Avenue of the Americas - 19th Floor
New York, New York 10019
Attention: Corporate Finance Department
Equitable Variable Life Insurance Company
c/o Equitable Capital Management Corporation
1285 Avenue of the Americas
19th Floor
New York, New York 10019
Attention: Corporate Finance Department
Provident Life & Accident Insurance Company
Investment Department
One Fountain Square
Chattanooga, Tennessee 37402
Attention: Securities Department
Teachers Insurance & Annuity Association of America
730 Third Avenue - 3rd Floor
New York, New York 10017
Attention: Securities Division
Dear Sirs:
You expect to purchase, collectively, $30,000,000 aggregate principal
amount of the 8.15% Series I Notes due July 1, 2001 (the "Series I Notes"),
$10,000,000 aggregate principal amount of the 8.64% Series J Notes due July 1,
2004 (the "Series J Notes") and $10,000,000 aggregate principal amount of the
8.81% Series K Notes due July 1, 2009 (the "Series K Notes" and, together with
the Series I and J Notes, the "Notes") of Alaska Pipeline Company (the
"Company"). Such purchases by each of you will be made pursuant to identical
Note Agreements, dated the date hereof, between the Company and each of you
(collectively, the "Note Agreements"). Capitalized terms used herein without
definition are defined in the Note Agreements. Seagull Energy Corporation, a
Texas corporation ("Seagull"), is the owner of all of the issued and outstanding
capital stock of the Company and the assets and liabilities of the Division. In
order to induce you to enter into the Note Agreements and to purchase the Notes
pursuant thereto, Seagull agrees with each of you as follows:
1. Representations by Seagull. Seagull represents and warrants to you that:
1.11 Incorporation's by Seagull. Seagull is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Texas and has all requisite corporate power and authority to own and operate
its properties, to carry on its business as now conducted and as now proposed to
be conducted, and to enter into and perform the Seagull Documents.
1.2. Qualification. Seagull is duly qualified or licensed and in good
standing as a foreign corporation duly authorized to do business in the State of
Alaska and in each jurisdiction wherein the character of the properties owned or
the nature of the activities conducted by Seagull makes necessary such
qualification or licensing as a foreign corporation, except for such failures to
be so qualified or licensed and in good standing, if any, which when taken
together would not in the aggregate have a material adverse effect on the
condition, business or property of Seagull.
1.3. Authority; Binding Effect. The execution, delivery and performance by
Seagull or this Agreement and other Seagull Documents heretofore executed or
assumed by it have been duly authorized by all necessary action on the part of
Seagull. This Agreement has been duly executed and delivered by the duly
authorized officers of Seagull and, assuming due authorization, execution and
delivery by the other parties thereto, constitutes a legal, valid and binding
obligation of Seagull enforceable against Seagull in accordance with its terms,
except as the enforcement thereof may be limited by applicable bankruptcy,
insolvency or similar laws affecting the enforcement of the rights of creditors
generally and except to the extent that enforcement of rights and remedies set
forth therein may be limited by judicial discretion regarding the enforcement
of, or by applicable laws affecting, remedies (whether in a court of law or a
proceeding in equity). When executed and delivered by Seagull each of the other
Seagull Documents shall have been duly executed and delivered by the duly
authorized officers of Seagull and, assuming due authorization, execution and
delivery by the other parties thereto, shall constitute legal, valid and binding
obligations of Seagull enforceable against Seagull in accordance with their
respective terms, except as the enforcement thereof may be limited by applicable
bankruptcy, insolvency or similar laws affecting the enforcement of the rights
of creditors generally and except to the extent that enforcement of rights and
remedies set forth therein may be limited by judicial discretion regarding the
enforcement of, or by applicable laws affecting, remedies (whether in a court of
law or a proceeding in equity).
1.4. Financial Statements. Seagull has delivered to you financial
statements of Seagull for the years ended December 31, 1990 to 1991, inclusive,
containing consolidated balance sheets to Seagull and its consolidated
subsidiaries as at such dates and the related consolidated statements of income
and surplus for such years, all as certified by KPMG Peat Marwick. Such
financial statements have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved and fairly present the financial condition and the results of
operations of Seagull and its consolidated subsidiaries as at such dates and for
such years. Seagull has also delivered to you copies of (i) Seagull's Annual
Report on Form 10-K for the year ended December 31, 1991 (the "1991 10-K"), (ii)
the Prospectus dated December 5, 1991 relating to the under-written public
offering by Seagull of 1,500,000 shares of its common stock (the "Prospectus")
and (iii) Seagull's Annual Report to Shareholders for 1991. The Company has
delivered to you the financial statements relating to the Division referred to
in Section 5.4 of the Note Agreements (the "Division Financial Statements"). The
1991 10-K, the Prospectus, the Division Financial statements and the financial
statements referred to in this Section 1.4 are hereinafter collectively called
the "Disclosure Documents".
1.5. Changes, etc. Since December 31, 1991, there has been no material
adverse change in the financial condition of Seagull and its consolidated
subsidiaries, taken as a whole, from that reflected in the consolidated balance
sheet as at such date referred to in Section 1.4, and there has been no
occurrence or development which has had or in the opinion of Seagull will have a
materially adverse effect on the financial condition of Seagull and it
consolidated subsidiaries, the Company or the Division, or the ability of
Seagull to perform its obligations under the Seagull Documents.
1.6. Litigation, etc. There is no litigation, proceeding or investigation
pending or, to the best of Seagull's knowledge, threatened against Seagull which
questions the validity of the Seagull Documents or any action taken or to be
taken pursuant to any thereof. There is no litigation, proceeding or
investigation pending or, to the best of Seagull's knowledge, threatened against
Seagull which involves the condemnation, purchase or other acquisition by any
governmental authority of any property (individually or in the aggregate
material) of Seagull, the Company or the Division or which might result in any
materially adverse change in the condition, business or prospects of Seagull,
the Company or the Division or in any of their respective properties or assets
(individually or in the aggregate material), except as described in the
Disclosure Documents.
1.7. Compliance with Other Instruments, etc. The execution, delivery and
performance by the Company of the Note Agreements or the Gas Contracts, or by
Seagull of the Seagull Documents, and the issuance and sale of the Notes, will
not result in any violation of any term or condition of (i) the charterff or
by-laws of Seagull, or (ii) any material contract, agreement, instrument,
judgment, decree, order, franchise, certificate, permit and the like or, to the
actual knowledge of the executive officers of Seagull, any statute, rule,
regulation or ordinance of any court or governmental authority applicable to
Seagull or by which it is bound or to which any of its properties or assets is
subject.
1.8. Governmental Consent, etc. Except for (i) routine filings and the like
required in the ordinary course of business of Seagull, the Company or the
Division and (ii) any filings required pursuant to Section 5.6, no consent,
approval or authorization of, or registration, declaration or filing with, any
governmental or public body or authority is required in connection with the
valid execution, delivery and performance by Seagull of the Seagull Documents,
or the carrying out of any of the transactions contemplated by any thereof.
1.9. Title to Properties; Liens. Seagull has good and marketable title to
(i) substantially all of the Division's real and personal property (except for
property consisting of rights-of way, licenses, permits and franchises, as to
which Seagull will have satisfactory title for the purpose of constructing,
operating and maintaining all property located or proposed to be located on the
real property covered thereby), and (ii) all of the issued subject to no
mortgage, pledge, lien, security interest, lease, charge or encumbrance or
conditional sale or other title retention agreement other than, with respect
only to the Division's real and personal property, those permitted by Section
5.5 and other than, with respect to the outstanding Common Stock of the Company,
the pledge thereof as security for indebtedness of Seagull from time to time
outstanding under one or more loan agreements or credit agreements existing on
the day thereof.
1.10. Holding Company Act. Neither Seagull nor any of its subsidiaries
(including the Company) (i) is subject to regulation under the Public Utility
Holding Company Act of 1935, as amended ("PUCHA"). except as to Section 9 (a)
(2) thereof, or (ii) is in violation of the provisions, rules, regulations or
orders of or under PUHCA. Further, none of the transactions contemplated by this
Agreement or the Note Agreements, including, without limitation, the issue and
sale of the Notes pursuant to the Note Agreements, shall cause or constitute a
violation on the part of Seagull or the Company of any of the provisions, rules,
regulations or orders of PUHCA and PUHCA does not in any manner impair the
legality, validity or enforceability of the Notes. Seagull has filed with the
Securities and Exchange Commission (the "SEC") good faith applications (the
"Applications") under Section 2(a) (8)of PUHCA with respect to each Person
(each, a "Specified Stockholder") which owns, directly or indirectly, a
sufficient quantity of the "voting stock" of Seagull to be construed as a
"holding company", as such terms are defined in PUHCA with respect to Seagull.
All of the information contained in the Applications, as amended, was true as of
the most recent filing date, it being understood and agreed that Seagull has
relied solely upon written information furnished by any Specified Shareholder
with respect to background information about such Specified Shareholder and the
nature of the ownership by such Specified Shareholder or its Affiliates of the
"voting stock" of Seagull. Moreover, Seagull knows of no reason why each
Application, if acted upon by the SEC, would not be approved. True and correct
copies of the Applications and any amendments thereto, as filed, since January
1, 1991 have been furnished to special counsel for the Purchasers.
1.11. Disclosure. Neither this Agreement nor any certificate, statement or
other document furnished by or on behalf of Seagull in connection with the
transactions referred to in this Agreement contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements contained herein and therein not misleading in light of the
circumstances under which they were made. There is no fact (other than matters
of a general economic nature) known to Seagull which materially adversely
affects or in the future may (so far as Seagull can now reasonably foresee)
materially adversely affect the business operations, affairs or condition of
Seagull, the Company or the Division or any of its properties or assets
(individually or in the aggregate material) which has not been set forth in this
Agreement, or in the other documents, certificates or statements furnished to
you by or on behalf of Seagull prior to the date hereon pursuant hereto in
connection with such transactions.
2. Subordination. All Indebtedness of the Company to Seagull, now existing
or hereafter incurred, incurred, including, without limitation, all obligations
of the Company to repay any amount with respect to any Shortfall Amount (as such
term is defined in Article V of the Gas Sale Contract) pursuant to Article V of
the Gas Sale Contract, all Indebtedness in respect of advances, open accounts,
accounts payable obligations, loans, notes, bonds, debentures or other evidences
of debt whether for principal, premium, if any, or interest, and all instruments
constituting or evidencing any of the foregoing, whether or not held by Seagull
(the "Subordinated Indebtedness") shall be subordinate, subject and junior in
right of payment to the prior payment in full of all the Notes in the manner and
with the effect provided below in this Section 2:
(a) Upon the happening of an event which would constitute a
Default under any of the Note Agreements unless and until such Default
shall have been remedied or waived or shall have ceased to exist, no
direct or indirect payment (in cash, property or securities or by
set-off or otherwise) shall be made or agreed to be made on account of
the principal of, or premium, if any, or interest on any Subordinated
Indebtedness, or as a sinking fund for the Subordinated Indebtedness,
or in respect of any redemption, retirement, purchase or other
acquisition of any of the Subordinated Indebtedness.
(b) In the event of (i) any insolvency, bankruptcy, receivership,
liquidation, reorganization, readjustment, composition or other
similar proceeding relative to the Company, its creditors, as such, or
its property, (ii) any proceeding for the liquidation, dissolution or
other winding-up of the Company, voluntary or involuntary, whether or
not involving insolvency or bankruptcy proceedings, (iii) any
assignment by the Company for the benefit of creditors, or (iv) any
other marshaling of the assets of the Company, then and in any such
event:
(1) the holders of Subordinated Indebtedness shall not be
entitled to receive any payment or distribution of any character,
whether in cash, securities or other property, in respect of any
Subordinated Indebtedness unless and until all the Notes
(including any interest thereon accruing at the legal rate after
the commencement of any such proceedings and any additional
interest thereon that would have accrued thereon but for the
commencement of such proceedings) shall have been paid in full;
(2) all Subordinated Indebtedness shall forthwith become due
and payable (notwithstanding the terms thereof) and any payment
or distribution of any character, whether in cash, securities or
other property, which would otherwise (but for the terms of this
Section 2) be payable or deliverable in respect of any
Subordinated Indebtedness shall be paid or delivered directly to
the holders of the Senior Notes (defined below), to be applied,
pro rata, to the reduction of the then outstanding principal
balance of the Senior Notes (and accrued interest thereon) until
all the Senior Notes shall have been paid in full;
(3) the holders of Subordinated Indebtedness irrevocably
authorize and empower you to demand, sue for, collect and receive
all such payments and distributions and to receipt therefor, and
to file and prove all such claims and take all such other action
in the name of the holders of Subordinated Indebtedness, or
otherwise, as you may determine to be necessary or appropriate
for the enforcement of this Section 2; and
(4) the holders of Subordinated Indebtedness will execute
and deliver to you all such further instruments confirming the
above authorization, and all such powers of attorney, proofs of
claim, assignments of claim and other instruments, and will take
all such other action as may be reasonably requested by you in
order to enable you to enforce all claims upon such payment or
distribution in respect of Subordinated Indebtedness.
(c) As used in this Section 2, "Senior Notes" means, collectively, (i)
the Notes, (ii) the Company's 10-1/4% Series B Notes due January 1, 1995,
(iii) the Company's 9.95% Series D Notes due April 1, 1997, (iv) the
Company's 12.70% Series F Notes due July 1, 1995, (v) the Company's 12.80%
Series G Notes due July 1, 2000, (vi) the Company's 12.75% Series H Notes
due July 1, 2000 and (vii) all promissory notes of the Company which may be
issued for money borrowed after the Closing Date but, in the case of each
such promissory note, only if (x) such promissory note has an original
average life of not less than two years and (y) neither such promissory
note, nor the instrument pursuant to which it is outstanding, provides that
the indebtedness evidenced thereby is subordinate in right of payment to
any of the Notes described in clauses (i) through (vi) above.
(d) In the event that any Subordinated Indebtedness is declared due
and payable as a result of the occurrence of one or more defaults in
respect thereof under circumstances when the terms of subdivision (b) are
not applicable, no payment shall be made in respect of any Subordinated
Indebtedness unless and until all the Senior Notes outstanding at the time
such Subordinated Indebtedness is so declared due and payable shall have
been paid in full or such declaration and its consequences shall have been
rescinded and all such defaults shall have been remedied or waived or shall
have ceased to exist.
(e) If any payment or distribution of any character, whether in cash,
securities or other property in respect of any Subordinated Indebtedness
(other than payments not prohibited pursuant to this Section 2) shall,
despite the foregoing pursuant to this Section 2) shall, despite the
foregoing terms, be received by any holders of Subordinated Indebtedness
before all the Senior Notes shall have been paid in full, such payment or
distribution shall be received in trust for the benefit of the holders of
the Senior Notes. Such trust and all claims of the holdersof the Senior
Notes with respect to any such payment or distribution received by any
holder of Subordinated Indebtedness shall terminate 365 days of following
the receipt of such payment or distribution by such holders of Subordinated
Indebtedness unless, (x) prior or the expiration of such 365-day period,
such holders of Subordinated Indebtedness shall have actual knowledge or
should have had actual knowledge that a Default had occurred and was
continuing under any of the Note Agreements at the time of such payment or
distribution or (y) such Default shall relate to any act or omission of
Seagull or any condition with respect to Seagull. Unless such trust and
such claims shall terminate in accordance with the prior sentence, each
such payment and distribution so received shall be paid over or delivered
and transferred to the holders of the Senior Notes, and applied, pro rata,
to the reduction of the then outstanding principal balance of the Senior
Notes to the extent necessary to pay all the Senior Notes in full. In the
event of the failure of the holder of any Subordinated Indebtedness to
endorse or assign any such payment, distribution or security, each holder
of the Senior Notes is hereby irrevocably authorized to endorse or assign
the same.
(f) No present or future holder of the Notes shall be prejudiced in
the right to enforce subordination of Subordinated Indebtedness by any act
or failure to act on the part of the Company.
(g) The Company will not execute and deliver, issue or give, and
neither Seagull nor any other holder of Subordinated Indebtedness will
demand, accept or receive, any instrument or other evidence of any
Subordinated Indebtedness.
(h) Unless and until all the Notes shall have been paid in full,
neither Seagull nor any other holder of Subordinated Indebtedness will
assign or otherwise transfer any Subordinated Indebtedness without, in each
case, your prior written consent, except that all Subordinated Indebtedness
held by Seagull may be transferred to any corporation assuming the
obligations of Seagull hereunder in accordance with a transaction permitted
by Section 5.
(i) Seagull and the Company will each mark its books of account in
such manner as shall be effective to give proper notice of the
subordination effected by this Agreement.
(j) This agreement shall continue to be effective, or be reinstated,
as the case may be, if at any time payment, in whole or in part, of any of
the sums due any holder of the Notes for principal, interest or premium, if
any, is rescinded or must otherwise be restored or returned by such holder
upon the insolvency, bankruptcy, dissolution, liquidation or reorganization
of the Company, or upon or as a result of the appointment of a custodian,
receiver, liquidator, fiscal agent, trustee or other officer with similar
powers with respect to the Company or any substantial part of its property,
or otherwise, all as though such payments had not been made. For the
purposes of this Agreement, no Note shall be deemed to have been paid in
full unless the holder thereof shall have received (free and clear of any
lien, charge or encumbrance created by or through the Company), cash equal
to the principal amount of such Note at the time remaining unpaid, together
with interest, and premium, if any, then due thereon, and none of such cash
shall be required to be restored or returned by such holder for a reason
set forth above or for any other reason.
(k) Upon the payment in full of all the Notes, the holders of
Subordinated Indebtedness shall be subrogated to all rights of any holders
of the Notes to receive any further payments or distributions applicable to
the Notes until the Subordinated Indebtedness shall have been paid in full,
and for the purposes of such subrogation, no payment or distribution
received by the holders of the Notes of cash, securities or other property
to which the holders of the Subordinated Indebtedness would have been
entitled except for these subordination provisions shall, as between the
Company and its creditors other than the holders of the Notes, on the one
hand, and the holders of Subordinated Indebtedness, on the other, be deemed
to be a payment or distribution by the Company to or on account of the
Notes.
3. Financial Statements and Other Information. Seagull will deliver (in
duplicate) to you, so long as you shall hold any Notes, and to each other holder
of at least 10% in principal amount of the Notes at the time outstanding:
(a) as soon as available and in any event within 60 days after the end
of the first, second and third quarterly accounting periods in each fiscal
year of Seagull, a balance sheet of the Division and a consolidated balance
sheet of Seagull and its consolidated subsidiaries as at the end of such
period and the related statements of income and surplus and cash flows of
the Division and consolidated statements of income and surplus and cash
flows of Seagull and its consolidated subsidiaries for the period from the
beginning of the current fiscal year to the end of such quarterly period,
setting forth in each case in comparative periods of the previous year, all
in reasonable detail and certified, subject to changes resulting from
year-end audit adjustments, by a principal financial officer of Seagull;
(b) as soon as available and in any event within 100 days after the
end of each fiscal year of Seagull, a balance sheet of the Division and a
consolidated balance sheet of Seagull and its consolidated subsidiaries as
at the end of such fiscal year and the related statements of income and
surplus and cash flows of the Division and consolidated statements of
income and surplus and cash flows of Seagull and its consolidated
subsidiaries for such fiscal year, setting forth in each case in
comparative form the figures for the previous fiscal year, all in
reasonable detail and accompanied by the report and opinion thereon of
independent public accountants of recognized national standing selected by
Seagull;
(c) together with each delivery of financial statements pursuant to
subdivisions (a) and (b) above, an Officer's Certificate stating that the
signer has reviewed the relevant terms of the Seagull Documents, and has
made, or caused to be made under his supervision, a review of the
transactions and conditions of the Division and of Seagull and its
consolidated subsidiaries during the period in question, and that such
review has not disclosed the existence during such period, and that the
signer did not have knowledge of the existence as at the date of such
Officer's Certificate, of any default by Seagull under any Seagull
Documents or, if any such default existed or exists, specifying the nature
and period of existence thereof and what action Seagull has taken or is
taking or proposes to take with respect thereto;
(d) together with each delivery of financial statements pursuant to
subdivision (b) above, a separate report by the independent public
accountants reporting thereon (i) stating that their examination has
included a review of the relevant terms of the Seagull Documents, as they
relate to accounting matters, and (ii) stating whether or not their
examination has disclosed the existence, during or as at the end of the
fiscal year covered by such financial statements, of any default under any
Seagull Document and, if their examination has disclosed such a default,
specifying the nature and period of existence thereof;
(e) promptly upon transmission thereof, copies of each report on
Federal Energy Regulatory Commission Form 2 (or similar report) filed by
Seagull with the PUC or any governmental authority succeeding to any of its
functions (and, to the extent requested by you or such holder, copies of
all regular and periodic reports filed by Seagull with the PUC or any
governmental authority succeeding to any of its functions) and copies of
all regular and periodic reports filed by Seagull with any securities
exchange or with the Securities and Exchange Commission or any governmental
authority succeeding to any of its functions; and
(f) with reasonable promptness, such other financial data and
information as from time to time may be reasonably requested.
4. Inspection. At any and all reasonable times, Seagull will permit you (or
any agents or representatives designated by you), so long as you shall hold any
Notes, and each other registered holder of at least 10% of the aggregate
principal amount of the Notes then outstanding, or any agents or representatives
designated by it, to examine all the books of account, records, reports and
other papers of Seagull and of the Division (and to make copies and extracts
therefrom), to inspect any property of Seagull and of the Division and to
discuss the business and affairs of Seagull and of the Division with its and
their officers and independent public accountants; provided, however, that
Seagull shall have no obligation to provide access to (i) trade secrets, (ii)
proprietary information of Seagull or any of its subsidiaries (other than the
Division), (iii) any information covered by a confidentiality restriction or
covenant entered into in good faith and applicable to Seagull or any of its
Subsidiaries (other than the Division) or (iv) any information (including,
without limitation, Seagull's shareholder lists) not relating to the Division
and not reasonably related to the performance by Seagull of its obligations
under the Seagull Documents. As a condition to exercising its rights under this
Section 4, each holder shall be required (i) to give at least 24 hours advance
notice to Seagull except when a Default shall have occurred and be continuing
and (ii) to comply with normal requirements of Seagull and the Division
regarding health and safety. Seagull shall be entitled to be present at all
discussions with its or the Division's independent public accountants (provided
that Seagull hereby authorizes such accountants to discuss with your
representatives the affairs, finances and accounts of Seagull and the Division,
whether or not Seagull is present).
5. Covenants of Seagull.
5.1. Accounting and Reserves. Seagull will (a) maintain a standard and
uniform system of accounting and keep proper books of record and account in
which full, true and correct entries will be made of its transactions and,
separately, transactions of the Division, all in accordance with generally
accepted accounting principles or, in the case of the Division, Required
Accounting Practice, and (b) set aside its books and on the books of the
Division for each fiscal year all such proper reserves for depreciation,
depletion, obsolescence, amortization, bad debts and other purposes in
connection with its business and the business of the Division as shall be
required by Required Accounting Practice.
5.2. Insurance. Seagull will keep or cause to be kept all of its and its
Subsidiaries' property, directly relating to or used or useful or intended for
use in the business of the Division and of a character usually insured by
companies of established reputation similarly situated insured by reputable
insurance companies or associations of high standing against loss or damage be
fire and such other hazards and risks (including, without limitation, public
liability, workmen's compensation and war risks and earthquake risks, if and to
the extent war risk and earthquake risk insurance is at the time generally
available) as are customarily insured against by companies of established
reputation similarly situated, in such amount as such property and business is
usually insured by such companies. Seagull will comply with all the terms and
conditions of all insurance policies with respect to such property and business
or any part thereof and with all requirements of Boards of Underwriters or
similar bodies applicable thereto.
5.3. Maintenance of Corporate Existence, Franchises, etc.; Restrictions on
Business. (a) Seagull will at all times maintain and keep and cause to be
maintained and kept in full force and effect its corporate existence, good
standing, franchises, rights and privileges as a foreign corporation under the
laws of the State of Alaska and its qualification and good standing as a foreign
corporation in each jurisdiction wherein the character of the properties owned
or the nature of the activities conducted makes such qualification or licensing
necessary, except where any such failure to maintain franchises, rights and
privileges in such jurisdictions could not be reasonably expected (in the
judgment of Seagull's executive officers) to have a material adverse effect on
Seagull, the Division or the Company; provided, however, that nothing in this
paragraph shall prohibit Seagull from merging or consolidating with any entity
(whether as the surviving or resulting corporation or not) to the extent
permitted by Section 5.8.
(b) The Division will not engage in any business other than the
construction, ownership, operation and maintenance of systems for the
distribution or transportation of natural, manufactured or mixed gas, and
activities incidental to the foregoing.
5.4. Maintenance and Improvement of Division Property. Seagull will at all
times maintain, preserve and keep all of its property used or useful or intended
for use in the Division's business and all of the Division's property in proper
repair, working order and condition's property in proper repair, working order
and condition, and make all necessary or appropriate repairs, renewals,
replacements, additions, betterments and improvements to such property, so that
the efficiency of all such property shall at all times be properly preserved and
maintained, provided that Seagull need not make such repair, renewal,
replacement, addition, betterment or improvement if Seagull shall in good faith
determine that such repair, renewal, replacement, addition, betterment or
improvement is not necessary or desirable for the continued efficient and
profitable operation of the Division's properties and business.
5.5. Restrictions on Liens, etc. Seagull will not directly or indirectly
create, assume or suffer to exist any mortgage, lien, pledge, charge or
encumbrance on or conditional sale or other title retention arrangement with
respect to any property or asset of the Division, whether owned on the date of
delivery hereof or subsequently acquired, or upon any income or profits
therefrom, other than:
(a) the lien of the Intercompany Mortgage;
(b) liens of taxes, assessments and governmental charges not yet
payable, or payable without penalty so long as so payable, or deposits
created in the ordinary course of business of the Division as security for
compliance with laws imposing taxes, assessments or governmental charges;
(c) liens of taxes, assessments and governmental charges the validity
of which are being contested in good faith by appropriate action promptly
initiated and diligently conducted, if such reserve or other appropriate
provision, if any, as shall be required by Required Accounting Practice
shall have been made therefor;
(d) carriers' warehousemen's, materialmen's mechanics', repairmen's,
employees' or other similar liens for services arising in the ordinary
course of the business of the Division not yet due or being contested in
good faith by appropriate action promptly initiated and diligently
conducted, if such reserve or other appropriate provision, if any, as shall
be required by Required Accounting Practice shall have been made therefor;
(e) liens incurred or deposits made in the ordinary course of the
business of the Division in connection with workmen's compensation,
unemployment insurance and other social security, or to secure the
performance of leases (provided that all such liens incurred and deposits
made in connection with such leases do not at any time exceed $1,000,000),
tenders, statutory obligations, surety and appeal bonds, performance and
return-of-money bonds and other similar obligations (exclusive of
obligations incurred in connection with the borrowing of money or the
obtaining of advances of credit);
(f) any judgment lien, unless the judgment it secures shall not,
within 30 days after the entry thereof, have been discharged or execution
thereof stayed pending appeal, or shall not have been discharged within 30
days after the expiration of any such stay;
(g) leases granted in the ordinary course of the business of the
Division or leases to which any property acquired in the ordinary course of
the business of the Division is subject;
(h) encumbrances (other than to secure the payment of money),
easements, rights-of-way, servitudes, permits, reservations, leases and
other rights in respect of gravels, minerals, oil, gases or water or in
respect of grazing, logging, mining, canals, ditches, reservoirs or the
like, conditions, covenants, party wall agreements or other restrictions,
or easements for streets, alleys, highways, pipe lines, telephone lines,
power lines, railways and other rights-of-way, on, over or in respect of
property (other than property used or to be used primarily for compressor
stations) owned by Seagull or over which Seagull owns rights-of-way,
easements, permits or licenses, provided that such encumbrances, easements,
rights-of-way, servitudes, permits, reservations, leases, rights,
conditions, covenants, party wall agreements or other restrictions are such
that they will not either individually or in the aggregate, if exercised or
availed of, interfere materially with the proper use or operation of the
property affected thereby for the purpose for which such property is or is
to be used, and provided, further, that in case of such of the same as
relate only to property on, over or in respect of which Seagull owns
rights-of-way or easements exclusively for pipe line purposes or locations
for regulator stations or other pipe line facilities (other than compressor
stations), Seagull has power under eminent domain or similar statutes to
remove the same;
(i) rights reserved to or vested in any municipality or public
authority to control or regulate any property of Seagull or to use such
property in any manner which does not materially impair the use of such
property for the purposes for which it is held;
(j) obligations or duties, affecting the property of Seagull, to any
municipality or public authority with respect to any certificate of public
convenience or necessity, franchise, grant, license or permit which do not
materially impair the use of such property for the purposes for which it is
held;
(k) zoning laws and ordinances;
(l) irregularities in or deficiencies of title to any rights-of-way,
licenses or permits for pipe lines, telephone lines, power lines, water
lines and/or appurtenances thereto or other improvements thereon, and to
any real estate used or to be used primarily for right-of-way purposes or
for regulator stations or other pipe line facilities (other than compressor
stations), provided that Seagull shall have obtained from the apparent
owner of the land or estate covered by any such right-of-way, licenses or
permits, and shall hold as an asset of the Division a sufficient right, by
the terms of the instrument granting such right-of-way, license or permit
to the use thereof for the construction, operation or maintenance of the
lines, appurtenances or improvements for which the same is used or is to be
used, and provided, further, that Seagull has power under eminent domain or
similar statutes to remove such irregularities or deficiencies;
(m) reservations and other matters relating to titles to leases and
leasehold interests in oil and gas properties and the lands covered
thereby, if such reservations and other matters do not, in the aggregate,
materially affect the marketability of the title thereto, and do not
materially impair the use of such leases or leasehold interests for the
purposes for which they are held or the value of the interest therein;
(n) liens and other encumbrances incurred in connection with
Indebtedness of Seagull not in excess of $10,000,000 at any time
outstanding issued by a municipality or development corporation to finance
the acquisition and construction of the property subject to such lien to be
used by the Company or a Subsidiary thereof, the interest on which is
exempt from federal income tax under section 103(b) of the Code; and
(o) purchase money mortgages, liens or security interests in respect
of property held as an asset of the Division either acquired by Seagull or
upon which Seagull is constructing improvements after the date of this
Agreement, or mortgages, liens, or security interests existing in respect
of such property at the time of acquisition thereof, securing Indebtedness
of Seagull, provided that (i) no such mortgage, lien or security interest
shall extend to or cover any other property, or secure any other
Indebtedness of Seagull, (ii) the aggregate principal amount of all
Indebtedness of Seagull secured by all such mortgages, liens and security
interest shall not exceed $2,500,000 at any time outstanding, and (iii) the
aggregate principal amount of all Indebtedness secured by all such
mortgages, liens or other security interest in respect of any such property
shall not exceed 90% of the cost or fair market value (as determined by
Seagull in good faith), whichever shall be lower, of such property at the
time of the acquisition thereof by Seagull.
Seagull will not sign or file in any state or other jurisdiction a financing
statement under the Uniform Commercial Code with respect to any such property or
asset or sign any security agreement with respect to any such property or asset
authorizing statement, except, in any such case, a financing statement filed or
to be filed to perfect or protect a security interest which Seagull is entitled
to create, assume or incur, or permit to exist, under this Section 5.5. In no
event will the capital stock of the Company constitute, or be deemed to
constitute, an asset or property of the Division for purposes of this Section
5.5.
5.6. Recordation of Intercompany Mortgage. Seagull, at its expense, will at
all times cause the Intercompany Mortgage and any instruments amendatory thereof
or supplemental thereto and any instruments of assignment thereof (and any
appropriate financing statements or other instruments and continuations thereof
with respect to any thereof) to be recorded, registered and filed and to be kept
recorded, registered and filed in such manner and in such places, and will pay
all such recording, registration, filing fees and other charges, and will comply
with all such statutes and regulations as may be required by law in order to
establish, preserve, perfect and protect the lien of the Intercompany Mortgage
as a valid, direct first mortgage lien on and first priority perfected security
interest in the property subject thereto, subject only to any encumbrances
permitted thereby. Seagull will pay or cause to be paid all taxes (including
interest and penalties) at any time payable in connection with the filing and
recording of the Intercompany Mortgage and any and all supplements and
amendments thereto. Seagull, at its expense, will execute and deliver to the
Company (and will record) an instrument supplemental to the Intercompany
Mortgage, whenever such an instrument is necessary or desirable under applicable
law to subject to the lien of the Intercompany Mortgage all right, title and
interest of the Division in and to all property required by the Intercompany
Mortgage to be subject to the lien thereof and acquired by the Division since
the date of the Intercompany Mortgage or the date of the most recent
supplemental instrument so subjecting property to the lien thereof, whichever is
later. Seagull, at its expense, will furnish to the holders of the Notes upon
request from you, so long as you hold any Notes, or any other holder of at least
10% of the aggregate principal amount of Notes then outstanding, an opinion of
counsel reasonably satisfactory to you specifying the action taken by Seagull to
comply with this Section 5.6 since the date of the most recent opinion furnished
pursuant to this Section 5.6 (or, if no opinion has been so furnished, since the
date hereof), stating that in the opinion of such counsel such action has been
duly taken and stating that no other action is at the time required to be taken
pursuant to this Section 5.6 or if any such action is then required, specifying
the same; provided, however, that in no event shall Seagull be required to
furnish more than one such opinion of counsel during any 12-month period.
5.7. Performances of Franchises; Extension, Amendment, etc. of Division
Certificate. (a) Seagull will at all times perform and observe all of the
material contained in the Division Certificate and all other franchises for the
distribution of gas at the time held by the Division or held by Seagull and
directly relating to or used or useful or intended for use in the operations of
the Division, and do all things necessary to keep unimpaired all of Seagull's
rights thereunder and to prevent any default by Seagull thereunder or any
forfeiture or impairment thereof.
(b) Seagull will not cancel or terminate, or permit the cancellation
or termination of, or default under, or make or agree to any amendment,
modification or alteration which would result in a material adverse change
in the rights of Seagull under the Division Certificate.
5.8. Gas Sale Contract. Seagull will not assign, pledge, mortgage or
otherwise hypothecate, or permit the assignment, pledge, mortgage or
hypothecation of, any of its right, title or interest in, to or under the Gas
Sale Contract. Seagull will at all times perform and observe all the convenants,
agreements, terms, conditions and limitations applicable to it contained in the
Gas Sale Contract and will do all things necessary to keep unimpaired all its
rights under the Gas Sale Contract and to prevent any default thereunder or any
forfeiture or impairment thereof; and, without limitation, Seagull, subject to
delays resulting from disputes in good faith and to adverse claims of
independent third parties, will promptly make the payments to the Company
specified in the Gas Sale Contract, provided however, that nothing contained in
this Section 5.8 will permit a delay in the prompt payment by Seagull of any
Shortfall Amounts pursuant to the Gas Sale Contract. Seagull will not amend,
modify, supplement, surrender, cancel, terminate or replace or in any way waive
any covenant, agreement, term, condition or limitation of the Gas Sale Contract,
except that Seagull may amend, modify or supplement the Gas Sale Contract if
such amendment, modification or supplement does not contravene the provisions of
Article IV or Article V of the Gas Sale Contract and if, in the good faith
judgment of Seagull, such amendment, modification or supplement is desirable in,
or will not have a material adverse effect on, the business of the Division and
will not be in any way prejudicial to the holders of the Notes.
5.9. Sale, Merger and Consolidation. Seagull will not directly or
indirectly sell, transfer, or otherwise dispose of all or substantially all of
its properties and assets, or merge into or consolidate with any other
corporation, or permit any other corporation to consolidate with or merge into
it, unless
(a) such sale of properties and assets, or such merger, as the case
may be, effects the transfer of the properties and assets of the Division
and all of the then issued and outstanding Common Stock of the Company as a
unit to the acquiring or surviving Person or results in the retention of
the same, as a unit, by Seagull;
(b) if such properties and assets are so transferred, the acquiring or
surviving Person shall be a corporation incorporated under the laws of the
United States of America or any state thereof and (if other than Seagull)
shall expressly assume in writing all obligations of Seagull under the
Seagull Documents; and
(c) immediately after giving effect to such action (and, if
applicable, such assumption) no default shall exist under any Seagull
Document, provided that no such sale, transfer or other disposition of all
or substantially all of the properties and assets of Seagull shall release
Seagull from any of its obligations hereunder or under the Intercompany
Notes or the Intercompany Mortgage. Except as provided in the prior
sentences, Seagull will not directly or indirectly sell, transfer or
otherwise dispose of all or substantially all of the properties and assets
of the Division.
6. Costs and Expenses. Seagull will pay (or provide reimbursement for) all
costs and expenses (including, without limitation, attorney's fees and expenses)
reasonably incurred by or on behalf of any holder of the Notes in enforcing the
obligation of Seagull under this Agreement or in connection with any amendment,
modification or waiver of this Agreement.
7. Notices, etc. Any notice or other communication hereunder shall be in
writing and shall be deemed to have been properly given when a single copy
thereof shall have been delivered or mailed by first class registered or
certified mail, postage prepaid, addressed
(a) if to the holder of any Note at the last address of such holder
appearing on the registration books of the Company maintained pursuant to
the Note Agreements, or at such other address as such holder shall have
furnished to the Company and Seagull in writing; or
(b) if to the Company, at 3000 Spenard Road, Anchorage, Alaska, or at
such other address as the Company shall have furnished to Seagull and each
holder of a Note in writing, with a copy to Seagull; (b) if to the Company,
at 3000 Spenard Road, Anchorage, Alaska, or at such other address as the
Company shall have furnished to Seagull and each holder of a Note in
writing, with a copy to Seagull; provided that failure to deliver any such
notices or communication to Seagull pursuant to this Section 7 (b) will not
affect the effectiveness of such notice or communication to the Company; or
(c) if to Seagull, at 1001 Fannin, Suite 1700, Houston, Texas 77002,
or at such other address as Seagull shall furnish to the Company and each
holder of a Note in writing.
8. Miscellaneous. This Agreement may be changed, waived, discharged or
terminated only by an instrument in writing signed by the Company, Seagull and,
so long as any of the Notes remain unpaid, by the holders of 66 2/3% in
principal amount of the Notes at the time outstanding. Any change, waiver,
discharge or termination pursuant to the preceding sentence shall apply equally
to all holders of the Notes and shall be binding upon them, upon each future
holder of any Note and upon Seagull and the Company. This Agreement shall be
binding upon the respective successors and assigns of the Company and Seagull
and shall inure to the benefit of you and each other holder of Notes and shall
be enforceable by each of you, so long as you shall hold any Notes, and by each
other holder of at least 10% in principal amount of any Series of the Notes at
the time outstanding. This Agreement shall be construed in accordance with and
governed by the laws of the State of New York. This Agreement embodies the
entire agreement and understanding between you and Seagull and supersedes all
prior agreements and understandings relating to the subject matter hereof. The
headings in this Agreement are for the purpose of reference only and shall not
limit or otherwise affect the meaning hereof. Nothing contained herein shall be
construed to constitute a guarantee by Seagull of the Notes or of the payment by
the Company of any principal, premium or interest due or to become due thereon.
This Agreement may be executed in any number of counterparts, each of which is
an original, but all of which shall constitute one instrument.
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterparts of this letter, whereupon this letter
shall become a binding agreement between you and Seagull. Please then return one
of such signed counterparts to Seagull.
Very truly yours,
SEAGULL ENERGY CORPORATION
By:/s/ Robert W. Shower___________
Title: Senior Vice President
The Company hereby acknowledges receipt of this Inducement Agreement and
agrees to perform and observe all the provisions therein relating to the
Company.
ALASKA PIPELINE COMPANY
By:/s/ Richard F. Barnes
Title: President
The foregoing Agreement is hereby
agreed to as of the date hereof.
AID ASSOCIATION FOR LUTHERANS
By: /s/ James Abitz___________________
Title: Vice President-Securities
THE EQUITABLE LIFE ASSURANCE SOCIETY
OF THE UNTIED STATES
By: \s\ William Gobbo, Jr._____________
Title: Investment Officer
EQUITABLE VARIABLE LIFE INSURANCE
COMPANY
By: /s/ William Gobbo, Jr._____________
Title: Investment Officer
PROVIDENT LIFE & ACCIDENT
INSURANCE COMPANY
By: /s/ James T. Rogers_______________
Title: Vice President
TEACHERS INSURANCE & ANNUITY
ASSOCIATION OF AMERICA
By: /s/ Kevin R. Lorenz______________
Title: Associate Director Private Placements
AMEDMENT
TO
1985 INDUCEMENT AGREEMENT
THIS AMENDMENT dated as of ______________, 1992 (this "Amendment") among
SEAGULL ENERGY CORPORATION, ALASKA PIPELINE COMPANY, THE EQUITABLE LIFE
ASSURANCE SOCIETY OF THE UNITED STATE, THE TRAVELERS INSURANCE COMPANY and THE
TRAVELERS LIFE INSURANCE COMPANY.
WHEREAS, the parties hereto are parties to an Inducement Agreement dates as
of June 17, 1985 (the "1985 Inducement Agreement"); and
WHEREAS, the parties hereto wish to amend the 1985 Inducement Agreement in
certain respects.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Section 3 of the 1985 Inducement Agreement is hereby amended by changing
clause (2) of paragraph (b) thereof to read in its entirety as follows:
(2) all Subordinated Indebtedness shall forthwith become due and
payable (notwithstanding the terms thereof) and any payment or distribution
of any character, whether in cash, securities or other property, which
would otherwise (but for the terms of this Section 3) be payable or
deliverable in respect of any Subordinated Indebtedness shall be paid or
delivered directly to the holders of the Senior Notes (defined below), to
be applied, pro rata, to the reduction of the then outstanding principal
balance of the Senior Notes (and accrued interest thereon) until all the
Senior Notes shall have been paid in full. 2. Section 3 of the 1985
Inducement Agreement is hereby further amended by relettering paragraphs
(c), (d), (e), (f), (g), (h), (i), (j) thereof as paragraphs (d), (e),
(f), (g), (h), (i), (j) and (k), respectively.
3. Section of the 1985 Inducement Agreement is hereby further amended by
adding the following new paragraph (c) immediately after paragraph (b) thereof:
(c) As used in this section 3, "Senior Notes" means, collectively, (i)
the Notes, (ii) the Company's 8.15% Series I Notes Due July 1, 2001, (iii)
the Company's 8.64% Series J Notes Due July 1, 2004 and (iv) the Company's
8.81% Series K Notes Due July 1, 2009 and (v) all promissory notes of the
Company which may be issued for money borrowed after the Closing Date but,
in the case of each such promissory note, only if (x) such promissory note
has an original average life of not less than two years and (y) neither
such promissory note, nor the instrument pursuant to which it is
outstanding, provides that the indebtedness evidenced thereby is
subordinate in right of payment to any of the Notes described in clauses
(i) through (v) above.
4. Section 3 of the 1985 Inducement Agreement is hereby further amended by
replacing the term "Notes", wherever it appears in paragraphs (d) and (e)
(formerly paragraphs (c) and (d), respectively) thereof, with the term "Senior
Notes".
5. Each reference in the 1985 Inducement Agreement, or in any document or
instrument referred to therein, to the 1985 Inducement Agreement shall be deemed
to be a reference to the 1985 Inducement Agreement as amended hereby.
6. Except as herein otherwise expressly provided, the 1985 Inducement
Agreement shall remain unchanged and in full force and effect.
7. This Amendment shall be construed in accordance with and governed by the
laws of the State of New York.
8. This Amendment shall be binding upon the respective successors and
assigns of the parties hereto.
9. This Amendment may be executed in any number of counterparts, each of
which is an original, but all of which shall constitute one instrument.
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to
be duly executed.
SEAGULL ENERGY CORPORATION
By:_____________________________
Name:___________________________
Title:__________________________
ALASKA PIPELINE COMPANY
By:____________________________
Name:__________________________
Title:_________________________
THE EQUITABLE LIFE ASSURANCE
SOCIETY OF THE UNITED STATES
By:____________________________
Name:__________________________
Title:_________________________
THE TRAVELERS INSURANCE
COMPANY
By:____________________________
Name:__________________________
Title:_________________________
THE TRAVELERS LIFE INSURANCE
COMPANY
By:____________________________
Name:__________________________
Title:_________________________