<PAGE> 1
REGISTRATION NO. 33-64051
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SECURITIES AND EXCHANGE COMMISSION
-----------------
AMENDMENT NO. 2
to
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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SEAGULL ENERGY CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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TEXAS 74-1764876
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
1001 FANNIN, SUITE 1700
HOUSTON, TEXAS 77002-6714
(713) 951-4700
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
ROBERT W. SHOWER, EXECUTIVE VICE PRESIDENT
AND CHIEF FINANCIAL OFFICER
1001 FANNIN, SUITE 1700
HOUSTON, TEXAS 77002-6714
(713) 951-4700
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE
NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
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COPIES TO:
VINSON & ELKINS L.L.P. SIMPSON THACHER & BARTLETT
2300 FIRST CITY TOWER 425 LEXINGTON AVENUE
HOUSTON, TEXAS 77002-6760 NEW YORK, NEW YORK 10017-3909
ATTN: J. MARK METTS, ESQ. ATTN: ANDREW R. KELLER, ESQ.
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this registration statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]____________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier registration statement for the
same offering. [ ]____________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
====================================================================================================================================
Proposed Proposed
Title of each class of Amount to be maximum offering maximum aggregate Amount of
securities to be registered(1)(2) registered(3) price per unit(4)(5)(6) offering price(4)(5)(6) registration fee(3)
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<S> <C> <C> <C> <C>
Debt Securities(7)
Preferred Stock
Depositary Shares(8)
Common Stock(9)
Securities Warrants $300,000,000 100% $300,000,000 $103,449(10)
Total . . . . . . . . . . . . .
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</TABLE>
(1) Not specified as to each class of securities to be registered pursuant
to General Instruction II(D) to Form S-3 under the Securities Act of
1933, as amended.
(2) This registration statement also covers such indeterminate amount of
securities as may be issued in exchange for, or upon conversion or
exercise of, as the case may be, the Debt Securities, Preferred Stock,
Depositary Shares or Securities Warrants registered hereunder. Any
securities registered hereunder may be sold separately or as units
with other securities registered hereunder.
(3) Pursuant to Rule 429 of the Rules and Regulations of the Securities
and Exchange Commission under the Securities Act of 1933, as amended,
the Prospectus herein also relates to $100,000,000 of Debt Securities
of the Registrant registered under Registration Statement No.
33-65118. A filing fee of $109,375 in respect of such Debt Securities
was paid on June 28, 1993 upon the filing of such Registration
Statement.
(4) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o) of the Rules and Regulations of the Securities
and Exchange Commission under the Securities Act of 1933, as amended.
(5) No separate consideration will be received for any securities
registered hereunder that are issued in exchange for, or upon
conversion of, as the case may be, the Debt Securities, Preferred
Stock or Depositary Shares registered hereunder.
(6) The proposed maximum offering price per unit will be determined from
time to time by the registrant in connection with, and at the time of,
the issuance by the registrant of the securities registered hereunder.
(7) The aggregate principal amount of the Debt Securities may be increased
if any Debt Securities are issued at an original issue discount by an
amount such that the gross proceeds to be received by the registrant
shall be equal to the above amount to be registered. Any offering of
Debt Securities denominated other than in U.S. dollars will be
treated as the equivalent of U.S. dollars based on the exchange rate
applicable to the purchase of such Debt Securities at the time of
initial offering. In no event will the aggregate initial offering
price of all securities issued from time to time pursuant to this
Registration Statement exceed $300,000,000, or the equivalent thereof
in foreign currencies or composite currencies.
(8) Such indeterminate number of Depositary Shares to be evidenced by
Depositary Receipts issued pursuant to a Deposit Agreement. In the
event that the Registrant elects to offer to the public fractional
interests in shares of the Preferred Stock registered hereunder,
Depositary Receipts will be distributed to those persons purchasing
such fractional interests and such shares will be issued to the
Depositary under the Deposit Agreement.
(9) Including associated preferred stock purchase rights. Prior to the
occurrence of certain events, the preferred stock purchase rights will
not be evidenced or traded separately from the Common Stock.
(10) Previously paid.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
Pursuant to the provisions of Rule 429 under the Securities Act of
1933, as amended, the Prospectus contained in this Registration Statement also
relates to $100,000,000 of Debt Securities covered by Registrant's Registration
Statement on Form S-3 (Registration No. 33-65118). Such Registration
Statement is accordingly amended to reflect the information contained herein.
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<PAGE> 2
PROSPECTUS
SEAGULL ENERGY CORPORATION
[SEAGULL LOGO DEBT SECURITIES
APPEARS HERE] PREFERRED STOCK
COMMON STOCK
SECURITIES WARRANTS
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Seagull Energy Corporation ("Seagull" or the "Company") may offer and
sell from time to time, (i) unsecured debt securities, in one or more series,
consisting of notes, debentures or other evidences of indebtedness (the "Debt
Securities"), (ii) shares of preferred stock, par value $1.00 per share, in one
or more series (the "Preferred Stock"), which may be issued in the form of
depositary shares evidenced by depositary receipts (the "Depositary Shares"),
(iii) shares of common stock, par value $.10 per share (the "Common Stock"),
accompanied by rights to purchase Junior Participating Preferred Stock (the
"Rights"), and (iv) Securities Warrants ("Securities Warrants") to purchase
Debt Securities, Preferred Stock, Depositary Shares or Common Stock. The
Company may offer and sell up to $300,000,000 aggregate public offering price
of Debt Securities, Preferred Stock, Depositary Shares, Common Stock and
Securities Warrants (collectively, the "Securities"), and up to an additional
$100,000,000 aggregate public offering price of Debt Securities.
The specific terms of the particular Securities to be issued will be
set forth in a supplement to this Prospectus (a "Prospectus Supplement"), which
will be delivered together with this Prospectus, including, where applicable,
(i) in the case of Debt Securities, the specific designation, aggregate
principal amount, ranking as senior or senior subordinated Debt Securities,
maturity, rate or rates (or method of determining the same) and time or times
for the payment of interest, if any, any exchangeability or conversion terms or
any terms for optional or mandatory redemption or repurchase, or payment of
additional amounts or any sinking fund provisions and any other specific terms
of such Debt Securities, will be set forth in the Prospectus Supplement, (ii)
in the case of Preferred Stock, the specific designation, number of shares and
liquidation value thereof and the dividend, liquidation, redemption, voting and
other rights, including conversion or exchange rights, if any, and any other
special terms, as well as whether interests in the Preferred Stock will be
represented by Depositary Shares, (iii) in the case of Common Stock, the number
of shares, and (iv) in the case of Securities Warrants, the number and terms
thereof, the designation and number or amount of Securities issuable upon their
exercise, the exercise price, the terms of the offering and sale thereof and,
where applicable, the duration and detachability thereof. The Prospectus
Supplement will also contain information regarding the initial public offering
price, the net proceeds to the Company and, where applicable, the United States
Federal income tax considerations relating to the Securities covered by the
Prospectus Supplement.
The Securities may be sold directly by the Company to investors,
through agents designated from time to time or to or through underwriters or
dealers. See "Plan of Distribution." If any agents of the Company or any
underwriters are involved in the sale of any Securities in respect of which the
Prospectus is being delivered, the names of such agents or underwriters and any
applicable commissions or discounts will be set forth in the Prospectus
Supplement.
The Common Stock is listed on the New York Stock Exchange, Inc. under
the symbol "SGO." The Prospectus Supplement will contain information about any
listing on a securities exchange of the Securities covered by the Prospectus
Supplement.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALES OF THE SECURITIES
UNLESS ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
, 1995
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* *
* INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. *
* A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED *
* WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY *
* NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE *
* REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT *
* CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY *
* NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH *
* SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO *
* REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH *
* STATE. *
* *
***************************************************************************
<PAGE> 4
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Reports, proxy
statements and other information filed by the Company may be inspected and
copied at the public reference facilities maintained by the Commission, 450
Fifth Street, N.W., Judiciary Plaza, Room 1024, Washington, D.C. 20549; and at
regional offices of the Commission at the Citicorp Center, 500 West Madison,
Suite 1400, Chicago, Illinois 60661 and at 7 World Trade Center, New York, New
York 10048. Copies of such material may be obtained by mail from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. Such material may also be inspected and copied at
the offices of the New York Stock Exchange, Inc., 20 Broad Street, New York,
New York 10005.
As permitted by the rules and regulations of the Commission, this
Prospectus omits certain information contained in the Registration Statement on
Form S-3 (the "Registration Statement") of which this Prospectus is a part.
For such information, reference is made to the Registration Statement and the
exhibits thereto. Statements made in this Prospectus as to the contents of any
contract, agreement or other document are not necessarily complete; with
respect to each such contract, agreement or other document filed as an exhibit
to the Registration Statement or incorporated by reference herein, reference is
made to such contract, agreement or other document for a more complete
description of the matter involved, and each such statement is qualified in its
entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company hereby incorporates by reference in this Prospectus the
following documents previously filed with the Commission pursuant to the
Exchange Act: (i) the Company's Annual Report on Form 10-K for the year ended
December 31, 1994; (ii) the Company's Quarterly Reports on Form 10-Q for the
quarters ended March 31, 1995, June 30, 1995 and September 30, 1995; and (iii)
the description of the Common Stock contained in the Registration Statement on
Form 8-A declared effective by the Commission on January 30, 1981, together
with the amendments on Form 8 filed with the Commission on January 29, 1981,
January 30, 1981 and October 28, 1991.
Each document filed by the Company pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of the offering of the Securities pursuant hereto
shall be deemed to be incorporated by reference in this Prospectus and to be a
part of this Prospectus from the date of filing of such document. Any
statement contained in this Prospectus or in a document incorporated or deemed
to be incorporated by reference in this Prospectus shall be deemed to be
modified or superseded for purposes of the Registration Statement and this
Prospectus to the extent that a statement contained in this Prospectus or in
any subsequently filed document that also is or deemed to be incorporated by
reference in this Prospectus modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of the Registration Statement or this
Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon the written or oral request of any such person, a
copy of any or all of the documents that are incorporated by reference in this
Prospectus, other than exhibits to such documents (unless such exhibits are
specifically incorporated by reference into such documents). Requests should
be directed to Investor Relations, Seagull Energy Corporation, 1001 Fannin,
Suite 1700, Houston, Texas 77002, telephone (713) 951-4700.
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<PAGE> 5
THE COMPANY
Seagull is an independent energy company focused on natural gas. Its
major activity is exploration, development and production, carried out in
several geographic areas. In addition, the Company's operations include
natural gas marketing; pipeline engineering, design, construction and
operation; and natural gas transmission and distribution in the greater
Anchorage, Alaska metropolitan area.
Of these business segments, exploration and production ("E&P") is the
Company's major area of emphasis. E&P operations are conducted in the Gulf
Coast Region (offshore Texas and Louisiana in the Gulf of Mexico and onshore in
Texas and Louisiana, the Mid-Continent Region (in western and eastern Oklahoma
and northwest Arkansas), and in western Canada (primarily in the province of
Alberta). The Company also is involved in exploration ventures off the east
and west coasts of Great Britain.
The Company was incorporated in Texas in 1973 as a wholly owned
subsidiary of Houston Oil & Minerals Corporation ("HO&M"). In March 1981, the
Company became an independent entity as a result of the spinoff of its shares
to the stockholders of HO&M. The Company's principal executive offices are
located at 1001 Fannin, Suite 1700, Houston, Texas 77002, and the Company's
telephone number is (713) 951-4700. The "Company" or "Seagull" refers to
Seagull Energy Corporation and its consolidated subsidiaries, unless otherwise
indicated or the context otherwise suggests.
USE OF PROCEEDS
Unless otherwise provided in the Prospectus Supplement, the net
proceeds from the sale of the Securities offered by this Prospectus and the
Prospectus Supplement (the "Offered Securities") will be added to the Company's
general funds and used for general corporate purposes. Until so utilized, it
is expected that such net proceeds will be invested in interest bearing time
deposits or short-term marketable securities.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges
for the Company for the periods indicated:
<TABLE>
<CAPTION>
Nine Months Year Ended December 31,
Ended ----------------------------------------------------------------------
September 30, 1995 1994 1993 1992 1991 1990
- ------------------ ----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
-- 1.01 1.86 1.33 1.19 4.02
============= ============== =========== ============ ============ ============
</TABLE>
For purposes of computing the ratio of earnings to fixed charges: (i)
earnings consist of income from continuing operations before provision for
income taxes and cumulative effect of changes in accounting principles plus
fixed charges as described below, excluding capitalized interest for the period
and (ii) fixed charges consist of interest expensed and capitalized and
amortization of debt discount and expense relating to indebtedness. For the
nine months ended September 30, 1995, earnings are not adequate to cover fixed
charges. Additional earnings of approximately $6.372 million would be required
for the ratio of earnings to fixed charges to be 1.0.
There were no shares of Preferred Stock outstanding during any of the
periods indicated above and therefore the combined ratio of earnings to fixed
charges and preferred stock dividend requirements would have been the same as
set forth above for all periods indicated.
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<PAGE> 6
DESCRIPTION OF DEBT SECURITIES
The Debt Securities will be unsecured senior or senior subordinated
debt of the Company and will be issued, in the case of Debt Securities that
will be senior debt ("Senior Debt Securities"), under a Senior Indenture (the
"Senior Debt Indenture") between the Company and The Bank of New York, as
trustee, and, in the case of Debt Securities that will be senior subordinated
debt ("Senior Subordinated Debt Securities"), under a Senior Subordinated
Indenture (the "Senior Subordinated Debt Indenture") between the Company and
The Bank of New York, as trustee. The Senior Debt Indenture and the Senior
Subordinated Debt Indenture are sometimes hereinafter referred to individually
as an "Indenture" and collectively as the "Indentures." The Bank of New York
(and any successor thereto as trustee under either Indenture) is hereinafter
referred to as the "Trustee." The Indentures are filed as exhibits to the
Registration Statement of which this Prospectus is a part. The following
summaries of certain provisions of the Indentures and the Debt Securities do
not purport to be complete and such summaries are subject to the detailed
provisions of the applicable Indenture to which reference is hereby made for a
full description of such provisions, including the definition of certain terms
used herein. Section references in parentheses below are to sections in both
Indentures unless otherwise indicated. Wherever particular sections or defined
terms of the applicable Indenture are referred to, such sections or defined
terms are incorporated herein by reference as part of the statement made, and
the statement is qualified in its entirety by such reference. The Indentures
are substantially identical, except for provisions relating to subordination.
PROVISIONS APPLICABLE TO BOTH SENIOR AND SENIOR SUBORDINATED DEBT SECURITIES
General. The Debt Securities will be unsecured senior or senior
subordinated obligations of the Company and may be issued from time to time in
one or more series. Neither of the Indentures limits the amount of Debt
Securities that may be issued thereunder nor does either limit the aggregate
unsecured indebtedness of the Company or any subsidiary thereof or limit the
payment of dividends or the acquisition of stock of the Company. The Company
currently conducts a substantial portion of its operations through
subsidiaries. Consequently, the rights of the Company to receive assets of any
subsidiary (and thus the ability of holders of Debt Securities to benefit
indirectly from such assets) are subject to the prior claims of creditors of
that subsidiary. Except to the extent set forth in any Prospectus Supplement,
the Indentures do not, and the Debt Securities will not, contain any covenants
or other provisions that are intended to afford holders of the Debt Securities
special protection in the event of either a change of control of the Company or
a highly leveraged transaction by the Company.
Reference is made to the Prospectus Supplement for the following terms
of and information relating to the Debt Securities offered by such Prospectus
Supplement ("Offered Debt Securities") (to the extent such terms and
information are applicable to such Offered Debt Securities): (i) the title of
the Offered Debt Securities; (ii) classification as Senior Debt Securities or
Senior Subordinated Debt Securities, aggregate principal amount, purchase price
and denomination; (iii) the date or dates on which the Offered Debt Securities
will mature; (iv) the method by which amounts payable in respect of principal,
premium, if any, or interest, if any, on or upon the redemption of such Offered
Debt Securities may be calculated; (v) the interest rate or rates (or the
method by which such will be determined), and the date or dates from which such
interest, if any, will accrue; (vi) the date or dates on which such interest,
if any, will be payable; (vii) the place or places where and the manner in
which the principal of, premium, if any, and interest, if any, on the Offered
Debt Securities will be payable and the place or places where the Offered Debt
Securities may be presented for transfer; (viii) the right, if any, or
obligation, if any, of the Company to redeem, repay or purchase the Offered
Debt Securities pursuant to any sinking fund or analogous provisions or at the
option of a holder thereof and the period or periods within which, the price or
prices (or the method by which such price or prices will be determined, or
both) at which, the form or method of payment therefor if other than in cash
and the terms and conditions upon which the Offered Debt Securities will be
redeemed, repaid or purchased pursuant to any such obligation; (ix) any
provision relating to the issuance of the Offered Debt Securities at an
original issue discount; (x) if the amounts of payments of principal of,
premium, if any, and interest on the Offered Debt Securities are to be
determined with reference to an index, the manner in which such amounts shall
be determined; (xi) any applicable United States federal income tax
consequences; (xii) the aggregate amount of outstanding indebtedness as of the
most recent practicable date that would be senior to the Senior Subordinated
Debt Securities; and (xiii) any other specific terms of the Offered Debt
Securities, including any deleted, modified or additional events of default or
remedies or additional covenants provided with respect to such Offered Debt
Securities, and any terms that may be required by or advisable under applicable
laws or regulations.
Unless otherwise specified in any Prospectus Supplement, the Debt
Securities will be issuable in registered form and in denominations of $1,000
and any integral multiple thereof (Section 2.7). No service charge will be
made
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for any transfer or exchange of any Debt Securities but the Company may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith (Section 2.8).
Debt Securities may bear interest at a fixed rate or a floating rate.
Debt Securities bearing no interest or interest at a rate that at the time of
issuance is below the prevailing market rate may be sold at a discount below
their stated principal amount. Special United States federal income tax
considerations applicable to any such discounted Debt Securities or to certain
Debt Securities issued at par that are treated as having been issued at a
discount for United States federal income tax purposes will be described in the
applicable Prospectus Supplement.
In determining whether the holders of the requisite aggregate
principal amount of outstanding Debt Securities of any series have given any
request, demand, authorization, direction, notice, consent or waiver under the
Indentures, the principal amount of any series of Debt Securities originally
issued at a discount from their stated principal amount that will be deemed to
be outstanding for such purposes will be the amount of the principal thereof
that would be due and payable as of the date of such determination upon a
declaration of acceleration of the maturity thereof.
Global Securities. The Debt Securities of a series may be issued in
whole or in part in the form of one or more global securities ("Global
Securities") that will be deposited with, or on behalf of, a depositary (the
"Depositary") identified in the Prospectus Supplement relating to such series.
Global Securities may be issued only in fully registered form and in either
temporary or permanent form. Unless and until it is exchanged in whole or in
part for the individual Debt Securities represented thereby, a Global Security
(i) may not be transferred except as a whole and (ii) may only be transferred
(A) by the Depositary for such Global Security to its nominee, (B) by a nominee
of such Depositary to such Depositary or another nominee of such Depositary or
(C) by such Depositary or any such nominee to a successor Depositary or nominee
of such successor Depositary (Section 2.8).
The specific terms of the depositary arrangement with respect to a
series of Debt Securities will be described in the Prospectus Supplement
relating to such series. The Company anticipates that the following provisions
will generally apply to depositary arrangements.
Upon the issuance of a Global Security, the Depositary for such Global
Security or its nominee will credit, on its book-entry registration and
transfer system, the respective principal amounts of the individual Debt
Securities represented by such Global Security to the accounts of persons that
have accounts with such Depositary. Such accounts shall be designated by the
dealers, underwriters or agents with respect to such Debt Securities or by the
Company if such Debt Securities are offered and sold directly by the Company.
Ownership of beneficial interests in a Global Security will be limited to
persons that have accounts with the applicable Depositary ("participants") or
persons that may hold interests through participants. Ownership of beneficial
interests in such Global Security will be shown on, and the transfer of that
ownership will be effected only through, records maintained by the applicable
Depositary or its nominee (with respect to interests of participants) and the
records of participants (with respect to interests of persons other than
participants). The laws of some states require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
limits and such laws may impair the ability to transfer beneficial interests in
a Global Security.
So long as the Depositary for a Global Security or its nominee is the
registered owner of such Global Security, such Depositary or its nominee, as
the case may be, will be considered the sole owner or holder of the Debt
Securities of the series represented by such Global Security for all purposes
under the Indenture governing such Debt Securities. Except as provided below,
owners of beneficial interests in a Global Security will not be entitled to
have any of the individual Debt Securities of the series represented by such
Global Security registered in their names, will not receive or be entitled to
receive physical delivery of any such Debt Securities in definitive form and
will not be considered the owners or holders thereof under the Indenture
governing such Debt Securities.
Payment of principal of, premium, if any, and interest, if any, on
individual Debt Securities represented by a Global Security registered in the
name of a Depositary or its nominee will be made to the Depositary or its
nominee, as the case may be, as the registered owner of the Global Security
representing such Debt Securities. The Company expects that the Depositary for
a series of Debt Securities or its nominee, upon receipt of any payment of
principal of, premium, if any, and interest, if any, in respect of a Global
Security representing any such Debt Securities, immediately will credit
participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the
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<PAGE> 8
principal amount of such Global Security for such Debt Securities as shown on
the records of such Depositary or its nominee. The Company also expects that
payments by participants to owners of beneficial interests in such Global
Security held through such participants will be governed by standing
instructions and customary practices, as is now the case with securities held
for the accounts of customers in bearer form or registered in "street name."
Such payments will be the responsibility of such participants. Neither the
Company, the Trustee for such Debt Securities, any paying agent nor the
registrar for such Debt Securities will have any responsibility or liability
for any aspect of the records relating to or payments made on account of
beneficial ownership interests of the Global Security for such Debt Securities
or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
If the Depositary for a series of Debt Securities is at any time
unwilling, unable or ineligible to continue as depositary and a successor
depositary is not appointed by the Company within 90 days, the Company will
issue individual Debt Securities of such series in exchange for the Global
Security representing such series of Debt Securities. In addition, the Company
may at any time and in its sole discretion, subject to any limitations
described in the Prospectus Supplement relating to such Debt Securities,
determine not to have any Debt Securities of a series represented by one or
more Global Securities and, in such event, will issue individual Debt
Securities of such series in exchange for the Global Security or Securities
representing such series of Debt Securities. Further, if the Company so
specifies with respect to the Debt Securities of a series, an owner of a
beneficial interest in a Global Security representing Debt Securities of such
series may, on terms acceptable to the Company, the Trustee and the Depositary
for such Global Security, receive individual Debt Securities of such series in
exchange for such beneficial interests, subject to any limitations described in
the Prospectus Supplement relating to such Debt Securities. In any such
instance, an owner of a beneficial interest in a Global Security will be
entitled to physical delivery of individual Debt Securities of the series
represented by such Global Security equal in principal amount to such
beneficial interest and to have such Debt Securities registered in its name.
Individual Debt Securities of such series so issued will be issued in
registered form and in denominations, unless otherwise specified by the
Company, of $1,000 and integral multiples thereof.
Limitations on Sale and Leaseback Transactions. At such time as any
series of Debt Securities has been issued and is outstanding, Sale and
Leaseback Transactions are prohibited unless (a) the Company or the Restricted
Subsidiary owning such Principal Property would be entitled to incur Secured
Debt equal to the amount realizable upon the sale or transfer of the property
to be so leased secured by a mortgage on such property without equally and
ratably securing such Debt Securities or (b) an amount equal to the value of
the property so leased is applied to the retirement (other than mandatory
retirement) of the Debt Securities of such series or certain other funded
indebtedness of the Company and its Restricted Subsidiaries ranking prior to or
on a parity with the Debt Securities within 120 days of the effective date of
any such arrangement (Section 3.7).
Restrictions on Transfer of Principal Property to Unrestricted
Subsidiary. The Company and its Restricted Subsidiaries are prohibited from
transferring (whether by merger, consolidation or otherwise), except for fair
value, any Principal Property to any Subsidiary that is not a Restricted
Subsidiary, without retiring indebtedness as summarized in clause (b) of the
preceding paragraph (Section 3.8).
Certain Definitions. The following definitions are applicable to the
discussions of the Indentures (Article One).
"Subsidiary" means any corporation of which the Company, or the
Company and one or more Subsidiaries, or any one or more Subsidiaries, directly
or indirectly own voting securities entitling any one or more of the Company
and its Subsidiaries to elect a majority of the directors, either at all times,
or so long as there is no default or contingency which permits the holders of
any other class or classes of securities to vote for the election of one or
more directors.
"Principal Property" means any real property, manufacturing plant,
processing plant, pipeline, office building, warehouse or other physical
facility, or any other like depreciable or depletable asset of the Company or
of any Restricted Subsidiary, whether owned at July 1, 1993 or thereafter
acquired (other than any facility thereafter acquired for the control or
abatement of atmospheric pollutants or contaminants or water, noise, odor or
other pollution), that in the opinion of the Board of Directors of the Company
is of material importance to the total business conducted by the Company and
its Restricted Subsidiaries, as a whole; provided, however, that any such
property shall not be deemed a Principal Property if such property does not
have a fair value in excess of 3% of the total assets included on a
consolidated balance sheet of the Company and its Restricted Subsidiaries
prepared in accordance with generally accepted accounting principles
consistently applied.
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"Restricted Subsidiary" means (a) any currently existing Subsidiary
whose principal assets and business are located in the United States or Canada,
except certain sales financing, real estate and other Subsidiaries so
designated, and (b) any Subsidiary that is designated by the Company to be a
Restricted Subsidiary.
"Indebtedness" is defined as, with respect to any person,
(a) (i) the principal of and premium, if any, and
interest, if any, on indebtedness for money borrowed of such person
evidenced by bonds, notes, debentures or similar obligations,
including any guaranty by such person of any indebtedness for money
borrowed of any other person, evidenced by bonds, notes, debentures or
similar obligations, including any guarantee by such person of any
indebtedness of money borrowed by any other person, whether any such
indebtedness or guaranty is outstanding on the date of the Indenture
or is thereafter created, assumed or incurred, (ii) the principal of
and premium and interest, if any, on indebtedness for money borrowed,
incurred, assumed or guaranteed by such person in connection with the
acquisition by it or any of its subsidiaries of any other businesses,
properties or other assets and (iii) lease obligations that such
person capitalizes in accordance with Statement of Financial
Accounting Standards No. 13 promulgated by the Financial Accounting
Standards Board or such other generally accepted accounting principles
as may be from time to time in effect;
(b) any other indebtedness of such person, including any
indebtedness representing the balance deferred and unpaid of the
purchase price of any property or interest therein, including any such
balance that constitutes a trade payable, and any guaranty,
endorsement or other contingent obligation of such person in respect
of any indebtedness of another that is outstanding on the date of the
Indenture or is thereafter created, assumed or incurred by such
person; and
(c) any amendments, modifications, refundings, renewals
or extensions of any indebtedness or obligation described as
Indebtedness in clauses (a) or (b) above.
"Secured Debt" means indebtedness for money borrowed by the Company or
a Restricted Subsidiary, and any other indebtedness of the Company or a
Restricted Subsidiary, on which interest is paid or payable (other than
indebtedness owed by a Restricted Subsidiary to the Company, by a Restricted
Subsidiary to another Restricted Subsidiary or by the Company to a Restricted
Subsidiary), that in any such case is secured by (a) a mortgage or other lien
on any Principal Property of the Company or a Restricted Subsidiary, or (b) a
pledge, lien or other security interest on any shares of stock or indebtedness
of a Restricted Subsidiary, or (c) in the case of any such indebtedness of the
Company, a guaranty by any Restricted Subsidiary. The amount of Secured Debt
at any time outstanding shall be the amount then owing thereon by the Company
or a Restricted Subsidiary.
"Consolidated Net Tangible Assets" means the aggregate amount of
assets included on a consolidated balance sheet of the Company and its
Restricted Subsidiaries, less applicable reserves and other properly deductible
items and after deducting therefrom (a) all current liabilities and (b) all
goodwill, trade names, trademarks, patents, unamortized debt discount and
expense and other like intangibles, all in accordance with generally accepted
accounting principles consistently applied.
"Sale and Leaseback Transaction" means the sale or transfer by the
Company or a Restricted Subsidiary of any Principal Property owned by it that
has been in full operation for more than 120 days prior to such sale or
transfer with the intention of taking back a lease on such property (other than
a lease not exceeding 36 months) where the use by the Company or such
Restricted Subsidiary of such property will be discontinued on or before the
expiration of the term of such lease.
Events of Default. Unless otherwise specified in the Prospectus
Supplement, an Event of Default is defined under each Indenture with respect to
the Debt Securities of any series issued under such Indenture as being: (a)
default in the payment of any installment of interest upon any of the Debt
Securities of such series when due, continued for 30 days; (b) default in the
payment of principal of or premium, if any, with respect to Debt Securities of
such series when due; (c) default in the payment or satisfaction of any sinking
fund or other purchase obligation with respect to Debt Securities of such
series when due; (d) default in the performance of any other covenant of the
Company applicable to Debt Securities of such series, continued for 60 days
after written notice to the Company by the Trustee or to the
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<PAGE> 10
Company and the Trustee by the holders of at least 25% in aggregate principal
amount of the Debt Securities of such series then outstanding; (e) certain
events of bankruptcy, insolvency or reorganization; and (f) default under any
bond, debenture, note or other evidence of Indebtedness for money borrowed by
the Company (or, in the case of the Senior Debt Indenture, any Subsidiary) or
under any mortgage, indenture or instrument under which there may be issued or
by which there may be secured or evidenced any Indebtedness for money borrowed
of the Company (or, in the case of the Senior Debt Indenture, any Subsidiary)
resulting in the acceleration of such Indebtedness, or any default in payment of
such Indebtedness (after expiration of any applicable grace periods and
presentation of any debt instruments, if required), if the aggregate amount of
all such Indebtedness that has been so accelerated and with respect to which
there has been such a default in payment shall exceed $25,000,000 and there
shall have been a failure to obtain rescission or annulment of all such
accelerations or to discharge all such defaulted Indebtedness within 10 days
after written notice of the type specified in the foregoing clause (d) (Section
5.1).
If any Event of Default shall occur and be continuing, the Trustee or
the holders of not less than 25% in aggregate principal amount of the Debt
Securities of such series then outstanding, by notice in writing to the Company
(and to the Trustee, if given by the holders), may declare the principal (or,
in the case of any series of Debt Securities originally issued at a discount
from their stated principal amount, such portion of the principal amount as may
be specified in the terms of such series) of all of the Debt Securities of such
series and the interest, if any, accrued thereon to be due and payable
immediately, but the holders of a majority in aggregate principal amount of the
Debt Securities of such series then outstanding, by notice in writing to the
Company and the Trustee, may rescind and annul such declaration and its
consequences if all defaults under such Indenture are cured or waived (Section
5.1).
Each Indenture provides that no holder of any series of Debt
Securities then outstanding may institute any suit, action or proceeding with
respect to, or otherwise attempt to enforce, such Indenture, unless (i) such
holder previously shall have given to the Trustee written notice of default and
of the continuance thereof, (ii) the holders of not less than 25% in aggregate
principal amount of such series of Debt Securities then outstanding shall have
made written request to the Trustee to institute such suit, action or
proceeding and shall have offered to the Trustee such reasonable indemnity as
it may require with respect thereto and (iii) the Trustee for 60 days after its
receipt of such notice, request and offer of indemnity, shall have neglected or
refused to institute any such action, suit or proceeding; provided that,
subject to the subordination provisions applicable to the Senior Subordinated
Debt Securities, the right of any holder of any Debt Security to receive
payment of the principal of, premium, if any, or interest, if any, on such Debt
Security, on or after the respective due dates, or to institute suit for the
enforcement of any such payment shall not be impaired or affected without the
consent of such holder (Section 5.4). The holders of a majority in aggregate
principal amount of the Debt Securities of such series then outstanding may
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee or exercising any trust or power conferred on the
Trustee with respect to the Debt Securities of such series, provided that the
Trustee may decline to follow such direction if the Trustee determines that
such action or proceeding is unlawful or would involve the Trustee in personal
liability (Section 5.7).
The Company is required to furnish to the Trustee annually a
certificate as to the compliance by the Company with all conditions and
covenants under each Indenture (Section 4.3).
Discharge and Defeasance. Unless otherwise specified in the
applicable Prospectus Supplement, the Company can discharge or defease its
obligations with respect to each series of Debt Securities as set forth below
(Article Ten).
The Company may discharge all of its obligations (except those set
forth below) to holders of any series of Debt Securities issued under either
Indenture that have not already been delivered to the Trustee for cancellation
and that have either become due and payable or are by their terms due and
payable within one year (or scheduled for redemption within one year) by
irrevocably depositing with the Trustee cash or U.S. Government Obligations (as
defined in such Indenture), or a combination thereof, as trust funds in an
amount certified to be sufficient to pay when due the principal of and
interest, if any, on all outstanding Debt Securities of such series and to make
any mandatory sinking fund payments thereon when due.
Unless otherwise provided in the applicable Prospectus Supplement, the
Company may also discharge at any time all of its obligations (except those set
forth below) to holders of any series of Debt Securities issued under either
Indenture ("defeasance") if, among other things: (i) the Company irrevocably
deposits with the Trustee cash or U.S. Government Obligations, or a
combination thereof, as trust funds in an amount certified to be sufficient to
pay when
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due the principal of and interest, if any, on all outstanding Debt Securities
of such series and to make any mandatory sinking fund payments thereon when due
and such funds have been so deposited for 91 days; (ii) such deposit will not
result in a breach or violation of, or cause a default under, any agreement or
instrument to which the Company is a party or by which it is bound; and (iii)
the Company delivers to the Trustee an opinion of counsel to the effect that
the holders of such series of Debt Securities will not recognize income, gain
or loss for United States federal income tax purposes as a result of such
defeasance and that defeasance will not otherwise alter the United States
federal income tax treatment of such holders' principal and interest payments
on such series of Debt Securities. Such opinion must be based on a ruling of
the Internal Revenue Service or a change in United States federal income tax
law occurring after the date of the Indenture relating to the Debt Securities
of such series, since such a result would not occur under current tax law
(Section 10.1).
Notwithstanding the foregoing, no discharge or defeasance described
above shall affect the following obligations to or rights of the holders of any
series of Debt Securities: (i) rights of registration of transfer and exchange
of Debt Securities of such series, (ii) rights of substitution of mutilated,
defaced, destroyed, lost or stolen Debt Securities of such series, (iii) rights
of holders of Debt Securities of such series to receive payments of principal
thereof and premium, if any, and interest, if any, thereon, upon the original
due dates therefor (but not upon acceleration), and to receive mandatory
sinking fund payments thereon when due, if any, (iv) rights, obligations,
duties and immunities of the Trustee, (v) rights of holders of Debt Securities
of such series as beneficiaries with respect to property so deposited with the
Trustee payable to all or any of them and (vi) obligations of the Company to
maintain an office or agency in respect of Debt Securities of such series
(Section 10.1).
Modification of the Indenture. Each Indenture provides that the
Company and the Trustee may enter into supplemental indentures without the
consent of the holders of the Debt Securities to (a) evidence the assumption by
a successor entity of the obligations of the Company under such Indenture, (b)
add covenants or new events of default for the protection of the holders of
such Debt Securities, (c) cure any ambiguity or correct any inconsistency in
the Indenture, (d) establish the form and terms of Debt Securities of any
series, (e) evidence the acceptance of appointment by a successor trustee and
(f) in the case of Senior Debt Securities, secure such Debt Securities (Section
8.1).
Each Indenture also contains provisions permitting the Company and the
Trustee, with the consent of the holders of not less than a majority in
aggregate principal amount of Debt Securities of each series then outstanding
and affected, to add any provisions to, or change in any manner or eliminate
any of the provisions of, such Indenture or of any supplemental indenture or
modify in any manner the rights of the holders of the Debt Securities of such
series; provided that the Company and the Trustee may not, without the consent
of the holder of each outstanding Debt Security affected thereby, (a) extend
the stated final maturity of any Debt Security, reduce the principal amount
thereof, reduce the rate or extend the time of payment of interest, if any,
thereon, reduce or alter the method of computation of any amount payable on
redemption, repayment or purchase by the Company, change the coin or currency
in which principal, premium, if any, and interest, if any, are payable, reduce
the amount of the principal of any original issue discount security payable
upon acceleration or provable in bankruptcy, impair or affect the right to
institute suit for the enforcement of any payment or repayment thereof or, if
applicable, adversely affect any right of prepayment at the option of the
holder or (b) reduce the aforesaid percentage in aggregate principal amount of
Debt Securities of any series issued under such Indenture, the consent of the
holders of which is required for any such modification (Section 8.2).
The Senior Subordinated Debt Indenture may not be amended to alter the
subordination of any outstanding Senior Subordinated Debt Securities without
the written consent of each holder of Senior Indebtedness then outstanding that
would be adversely affected thereby (Section 8.6 of the Senior Subordinated
Debt Indenture).
Conversion or Exchange Rights. The Prospectus Supplement for any
Offered Debt Securities offered thereby will state the terms, if any, on which
shares of such Offered Debt Securities are convertible into, or exchangeable
for, securities of the Company or another person.
PROVISIONS APPLICABLE SOLELY TO SENIOR DEBT SECURITIES
General. Senior Debt Securities will be issued under the Senior Debt
Indenture and will rank pari passu with all other unsecured and unsubordinated
debt of the Company.
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Limitations on Liens. At such time as any series of Senior Debt
Securities has been issued and is outstanding, the Company and its Restricted
Subsidiaries are prohibited from creating, incurring, assuming or guaranteeing
any Secured Debt without making effective provision whereby the Senior Debt
Securities then outstanding and any other indebtedness of or guaranteed by the
Company or any such Restricted Subsidiary then entitled thereto, subject to
applicable priorities of payment, shall be secured by such mortgage, security
interest, pledge, lien or encumbrance equally and ratably with any and all
other obligations and indebtedness thereby secured, so long as any such other
obligations and indebtedness shall be so secured; provided, that if any such
mortgage, security interest, pledge, lien or encumbrance securing such
Indebtedness ceases to exist, such equal and ratable security for the benefit
of the holders of Senior Debt Securities shall automatically cease to exist
without any further action; provided, further, that if such Indebtedness is
expressly subordinated to the Senior Debt Securities, the mortgage, security
interest, pledge, lien or encumbrance securing such subordinated Indebtedness
shall be subordinate and junior to the mortgage, security interest, pledge,
lien or encumbrance securing the Senior Debt Securities with the same relative
priority as such Indebtedness shall have with respect to the Senior Debt
Securities (Section 3.6 of the Senior Debt Indenture). The foregoing
restrictions are not applicable to (i) certain purchase money mortgages, (ii)
certain mortgages to finance construction on unimproved property, (iii)
mortgages existing on property at the time of acquisition by the Company or a
Restricted Subsidiary, (iv) mortgages existing on the property or on the
outstanding shares or indebtedness of a corporation at the time it becomes a
Restricted Subsidiary, (v) mortgages on property of a corporation existing at
the time such corporation is merged or consolidated with the Company or a
Restricted Subsidiary, (vi) mortgages in favor of governmental bodies to secure
certain payments of indebtedness, (vii) mortgages, security interests, pledges,
liens or encumbrances existing on property owned by the Company or any of its
Subsidiaries on the date of the applicable Indenture, (viii) mortgages,
security interests, pledges, liens or encumbrances created pursuant to the
creation of trusts or other arrangements funded solely with cash or securities
of the type customarily subject to such arrangements in customary financial
practice with respect to long-term or medium-term indebtedness for borrowed
money, the sole purpose of which is to make provision for the retirement or
defeasance, without prepayment of Indebtedness, (ix) mortgages, security
interests, pledges, liens or encumbrances on the assets or properties of ENSTAR
Natural Gas Company, a division of the Company, or on Alaska Pipeline Company,
a Subsidiary of the Company, or (x) extensions, renewals or replacements of the
foregoing (Section 3.6 of the Senior Debt Indenture). Solely for the purpose
of the foregoing exceptions, the term "mortgage" shall be deemed to include any
arrangements in connection with a production payment or similar financing
arrangement.
Notwithstanding the foregoing restrictions, the Company and any one or
more Restricted Subsidiaries may create, incur, assume or guarantee Secured
Debt not otherwise permitted or excepted without equally and ratably securing
the Senior Debt Securities of each series issued and outstanding under the
Senior Debt Indenture if the sum of (a) the amount of such Secured Debt plus
(b) the aggregate value of Sale and Leaseback Transactions (subject to certain
exceptions) does not exceed 15% of Consolidated Net Tangible Assets (Section
3.6 of the Senior Debt Indenture).
Consolidation, Merger, Sale or Conveyance. No consolidation or merger
of the Company, and no sale of substantially all of its property, shall be made
with or to another corporation if any Principal Property of the Company or a
Restricted Subsidiary would become subject to any mortgage or lien (other than
those permitted by Section 3.6 of the Senior Debt Indenture) unless prior
thereto all Senior Debt Securities then outstanding are secured (equally and
ratably, or with such other relative priority described above, with any other
indebtedness of or guaranteed by the Company or any Restricted Subsidiary then
entitled thereto) by a direct lien on any such Principal Property and certain
other properties (Section 9.2 of the Senior Debt Indenture). Subject to the
foregoing, the Company may, without the consent of the holders of Debt
Securities, consolidate with, merge into or transfer, exchange or dispose of
all of its properties to, any other corporation organized under the laws of the
United States or any political subdivision thereof or therein, provided that
the successor corporation assumes all obligations of the Company under the
Indentures and the Debt Securities and that certain other conditions are met.
PROVISIONS APPLICABLE SOLELY TO SENIOR SUBORDINATED DEBT SECURITIES
Certain Definitions. For purposes of the following discussion, the
following definitions are applicable (Article One of the Senior Subordinated
Debt Indenture).
"Senior Indebtedness" is defined in the Senior Subordinated Debt
Indenture as Indebtedness of the Company outstanding at any time except (a) any
Indebtedness as to which, by the terms of the instrument creating or evidencing
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the same, it is provided that such Indebtedness is not senior in right of
payment to the Senior Subordinated Debt Securities, (b) the Senior Subordinated
Debt Securities, (c) any Indebtedness of the Company to a wholly-owned
Subsidiary of the Company, (d) interest accruing after the filing of a petition
initiating certain events of bankruptcy or insolvency unless such interest is
an allowed claim enforceable against the Company in a proceeding under federal
or state bankruptcy laws and (e) trade payables.
"Senior Subordinated Indebtedness" means the Senior Subordinated Debt
Securities and any other Indebtedness of the Company that ranks pari passu with
the Senior Subordinated Debt Securities. Any Indebtedness of the Company that
is subordinate or junior by its terms in right of payment to any other
Indebtedness of the Company shall be subordinate to Senior Subordinated
Indebtedness unless the instrument creating or evidencing the same or pursuant
to which the same is outstanding specifically provides that such Indebtedness
(i) is to rank pari passu with other Senior Subordinated Indebtedness and (ii)
is not subordinated by its terms to any Indebtedness of the Company which is
not Senior Indebtedness.
"Subordinated Indebtedness" means the Senior Subordinated Debt
Securities, any other Senior Subordinated Indebtedness and any other
Indebtedness that is subordinate or junior in right of payment to Senior
Indebtedness.
Subordination. The Senior Subordinated Debt Securities will be
subordinate and junior in right of payment, to the extent set forth in the
Senior Subordinated Debt Indenture, to all Senior Indebtedness of the Company.
The Senior Subordinated Debt Securities will rank senior to all existing and
future Indebtedness of the Company that is neither Senior Indebtedness nor
Senior Subordinated Indebtedness, and only Indebtedness of the Company that is
Senior Indebtedness will rank senior to the Senior Subordinated Debt Securities
in accordance with the subordination provisions of the Senior Subordinated
Indenture. If (i) the Company should default in the payment of any principal
of, premium, if any, or interest, if any, on any Senior Indebtedness when the
same becomes due and payable, whether at maturity or at a date fixed for
prepayment or by declaration of acceleration or otherwise or (ii) any other
default with respect to Senior Indebtedness shall occur and the maturity of
such Senior Indebtedness has been accelerated in accordance with its terms,
then, upon written notice of such default to the Company by the holders of such
Senior Indebtedness or any trustee therefor, unless and until such default
shall have been cured or waived or shall have ceased to exist or such
acceleration shall have been rescinded, no direct or indirect payment (in cash,
property, securities, by set-off or otherwise) will be made or agreed to be
made for principal of, premium, if any, or interest, if any, on any of the
Senior Subordinated Debt Securities, or in respect of any redemption,
retirement, purchase or other acquisition of the Senior Subordinated Debt
Securities other than those made in capital stock of the Company (or cash in
lieu of fractional shares thereof) (Sections 13.1 and 13.4 of the Senior
Subordinated Debt Indenture).
If any default (other than a default described in the preceding
paragraph) under the Senior Indebtedness, pursuant to which the maturity
thereof may be accelerated immediately or the expiration of any applicable
grace periods occurs (a "Senior Nonmonetary Default"), then, upon the receipt
by the Company and the Trustee of written notice thereof (a "Payment Notice")
from or on behalf of holders of such Senior Indebtedness specifying an election
to prohibit such payment and other action by the Company in accordance with the
following provisions of this paragraph, the Company may not make any payment or
take any other action that would be prohibited by the immediately preceding
paragraph during the period (the "Payment Blockage Period") commencing on the
date of receipt of such Payment Notice and ending on the earlier of (i) the
date, if any, on which the holders of such Senior Indebtedness or their
representative notify the Trustee that such Senior Nonmonetary Default is cured
or waived or ceases to exist or the Senior Indebtedness to which such Senior
Nonmonetary Default relates is discharged or (ii) the 179th day after the date
of receipt of such Payment Notice. Notwithstanding the provisions described in
the immediately preceding sentence, the Company may resume payments on the Debt
Securities after such Payment Blockage Period.
If (i) (A) without the consent of the Company, a receiver,
conservator, liquidator or trustee of the Company or of any of its property is
appointed by the order or decree of any court or agency or supervisory
authority having jurisdiction, and such decree or order remains in effect for
more than 60 days or (B) the Company is adjudicated bankrupt or insolvent or
(C) any of its property is sequestered by court order and such order remains in
effect for more than 60 days or (D) a petition is filed against the Company
under any state or federal bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution, liquidation or receivership law of any
jurisdiction whether now or hereafter in effect, and is not dismissed within 60
days after such filing; or (ii) the Company (A) commences a voluntary case or
other proceeding seeking liquidation, reorganization, arrangement, insolvency,
readjustment of debt,
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dissolution, liquidation or other relief with respect to itself or its debt or
other liabilities under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part
of its property, or (B) consents to any such relief or to the appointment of or
taking possession by any such official in an involuntary case or other
proceeding commenced against it, or (C) fails generally to, or cannot, pay its
debts generally as they become due or (D) takes any corporate action to
authorize or effect any of the foregoing; or (iii) any Subsidiary of the
Company takes, suffers or permits to exist any of the events or conditions
referred to in the foregoing clause (i) or (ii), then all Senior Indebtedness
(including any interest thereon accruing after the commencement of any such
proceedings) will first be paid in full before any payment or distribution,
whether in cash, securities or other property, is made to any holder of Senior
Subordinated Debt Securities on account of the principal of, premium, if any,
or interest, if any, on such Senior Subordinated Debt Securities. Any payment
or distribution, whether in cash, securities or other property (other than
securities of the Company or any other corporation provided for by a plan of
reorganization or readjustment the payment of which is subordinate, at least to
the extent provided in the subordination provisions with respect to the
indebtedness evidenced by the Senior Subordinated Debt Securities, to the
payment of all Senior Indebtedness then outstanding and to any securities
issued in respect thereof under any such plan of reorganization or
readjustment) that would otherwise (but for the subordination provisions) be
payable or deliverable in respect of the Senior Subordinated Debt Securities of
any series will be paid or delivered directly to the holders of Senior
Indebtedness in accordance with the priorities then existing among such holders
until all Senior Indebtedness (including any interest thereon accruing after
the commencement of any such proceedings) has been paid in full. In the event
of any such proceeding, after payment in full of all sums owing with respect to
Senior Indebtedness, the holders of Senior Subordinated Debt Securities,
together with the holders of any obligations of the Company ranking on a parity
with the Senior Subordinated Debt Securities, will be entitled to be repaid
from the remaining assets of the Company the amounts at that time due and owing
on account of unpaid principal of, premium, if any, or interest, if any, on the
Senior Subordinated Debt Securities and such other obligations before any
payment or other distribution, whether in cash, property or otherwise, shall be
made on account of any capital stock or obligations of the Company ranking
junior to the Senior Subordinated Debt Securities and such other obligations
(Section 13.1 of the Senior Subordinated Debt Indenture).
If any payment or distribution of any character, whether in cash,
securities or other property (other than securities of the Company or any other
corporation provided for by a plan of reorganization or readjustment the
payment of which is subordinate, at least to the extent provided in the
subordination provisions with respect to the Senior Subordinated Debt
Securities, to the payment of all Senior Indebtedness then outstanding and to
any securities issued in respect thereof under any such plan of reorganization
or readjustment), shall be received by the Trustee or any holder of any Senior
Subordinated Debt Securities in contravention of any of the terms of the Senior
Subordinated Debt Indenture, such payment or distribution of securities will be
received in trust for the benefit of, and will be paid over or delivered and
transferred to, the holders of the Senior Indebtedness then outstanding in
accordance with the priorities then existing among such holders for application
to the payment of all Senior Indebtedness remaining unpaid to the extent
necessary to pay all such Senior Indebtedness in full (Section 13.1 of the
Senior Subordinated Debt Indenture).
By reason of such subordination, in the event of the insolvency of the
Company, holders of Senior Indebtedness may receive more, ratably, than holders
of the Senior Subordinated Debt Securities. Such subordination will not
prevent the occurrence of any Event of Default (as defined in the Indentures)
or limit the right of acceleration in respect of the Senior Subordinated Debt
Securities.
Limitations on Liens. At such time as any series of Senior
Subordinated Debt Securities has been issued and is outstanding, the Company
and its Restricted Subsidiaries are prohibited from creating, incurring,
assuming or guaranteeing any Secured Debt that is expressly by its terms
Subordinated Indebtedness without making effective provision whereby the Senior
Subordinated Debt Securities then outstanding and any other indebtedness of or
guaranteed by the Company or any such Restricted Subsidiary then entitled
thereto, subject to applicable priorities of payment, shall be secured by such
mortgage, security interest, pledge, lien or encumbrance equally and ratably
with any and all other obligations and indebtedness thereby secured, so long as
any such other obligations and indebtedness shall be so secured; provided, that
if any such mortgage, security interest, pledge, lien or encumbrance securing
such Subordinated Indebtedness ceases to exist, such equal and ratable security
for the benefit of the holders of Senior Subordinated Debt Securities shall
automatically cease to exist without any further action; provided, further,
that if such Subordinated Indebtedness is expressly subordinated to the Senior
Subordinated Debt Securities, the mortgage, security interest, pledge, lien or
encumbrance securing such Subordinated Indebtedness shall be subordinate and
junior to the
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mortgage, security interest, pledge, lien or encumbrance securing the Senior
Subordinated Debt Securities with the same relative priority as such
Subordinated Indebtedness shall have with respect to the Senior Subordinated
Debt Securities (Section 3.6 of the Senior Subordinated Debt Indenture). The
foregoing restrictions are subject to the same exceptions applicable to the
comparable restriction on Secured Debt contained in Section 3.6 of the Senior
Debt Indenture. See "Provisions Applicable Solely to Senior Debt
Securities--Limitation on Liens."
Consolidation, Merger, Sale or Conveyance. No consolidation or merger
of the Company, and no sale of substantially all of its property, shall be made
with or to another corporation if any Principal Property of the Company or a
Restricted Subsidiary would become subject to any mortgage or lien securing
Subordinated Indebtedness (other than those permitted by Section 3.6 of the
Senior Subordinated Debt Indenture) unless prior thereto all Senior
Subordinated Debt Securities then outstanding are secured (equally and ratably,
or with such other relative priority described above, with any other
indebtedness of or guaranteed by the Company or any Restricted Subsidiary then
entitled thereto to the extent such indebtedness constitutes Subordinated
Indebtedness) by a direct lien on any such Principal Property and certain other
properties (Section 9.2 of the Senior Subordinated Debt Indenture). Subject to
the foregoing, the Company may, without the consent of the holders of Debt
Securities, consolidate with, merge into or transfer, exchange or dispose of
all of its properties to, any other corporation organized under the laws of the
United States or any political subdivision thereof or therein, provided that
the successor corporation assumes all obligations of the Company under the
Indentures and the Debt Securities and that certain other conditions are met.
CONCERNING THE TRUSTEE
Pursuant to the Trust Indenture Act of 1939, as amended, should a
default occur with respect to either the Senior Debt Securities or the Senior
Subordinated Debt Securities, The Bank of New York would be required to resign
as Trustee under one of the Indentures within 90 days of such default unless
such default were cured, duly waived or otherwise eliminated.
The Bank of New York, the Trustee under both Indentures, makes loans
to the Company in the normal course of business.
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DESCRIPTION OF COMMON STOCK AND PREFERRED STOCK
The Company's authorized capital stock consists of 100,000,000 shares
of Common Stock, par value $.10 per share, and 5,000,000 shares of Preferred
Stock, par value $1.00 per share, each of which is described below. The
summary description of the capital stock of the Company contained herein is
necessarily general and reference should be made in each case to the Company's
Articles of Incorporation, Bylaws and Rights Agreement described below, which
are exhibits to the Registration Statement of which this Prospectus is a part.
COMMON STOCK
General. As of November 2, 1995, an aggregate of 36,205,678 shares of
Common Stock were issued and outstanding, excluding shares held in treasury and
4,652,188 shares that had been reserved for issuance under the Company's
employee stock option plans. Subject to any prior rights of the Preferred
Stock then outstanding, holders of Common Stock are entitled to receive such
dividends as are declared by the Board of Directors out of funds legally
available therefor. For additional information on restrictions on the payment
of dividends on and repurchases of Common Stock, see "Price Range of and
Dividends on Common Stock." Subject to the voting rights, if any, of the
Preferred Stock, all voting rights are vested in the holders of shares of
Common Stock, each share being entitled to one vote. The holders of Common
Stock are not entitled to cumulative voting rights in the election of
directors. In the event of the liquidation, dissolution or winding up of the
Company, holders of Common Stock are entitled to share ratably in all assets
remaining after payment of liabilities and any preferential amount to which the
holders of Preferred Stock are entitled. The holders of Common Stock have no
preemptive or conversion rights and are not subject to further calls or
assessments by the Company. The Common Stock currently outstanding is, and the
Common Stock to be issued hereunder will be, fully paid and nonassessable.
Classified Board; Removal of Directors. The Bylaws of the Company
provide that the members of the Company's Board of Directors are divided into
three classes as nearly equal as possible. Each class is elected for a
three-year term. At each annual meeting of shareholders, approximately
one-third of the members of the Board of Directors are elected for a three-year
term and the other directors remain in office until their three-year terms
expire. Furthermore, the Bylaws of the Company provide that neither any
director nor the Board of Directors may be removed without cause, and that any
removal for cause would require the affirmative vote of the holders of at least
a majority of the voting power of the outstanding capital stock entitled to
vote for the election of directors. Thus, control of the Board of Directors
cannot be changed in one year without removing the directors for cause as
described above; rather, at least two annual meetings must be held before a
majority of the members of the Board of Directors could be changed. The Bylaws
of the Company provide that the Bylaw provisions related to the classified
board and removal of directors cannot be altered, amended or repealed without
the approval of the holders of at least two-thirds of the outstanding shares
entitled to vote thereon.
Preferred Stock Purchase Rights. In order to protect the Company's
shareholders from coercive or unfair takeover tactics, the Company's Board of
Directors on March 1, 1989 adopted a Share Purchase Rights Plan (the "Share
Purchase Rights Plan"). Pursuant to the Share Purchase Rights Plan, the
Company's Board of Directors declared a distribution of one right ("Right") to
purchase, until March 22, 1999 (or, if earlier, the redemption of the Rights),
a unit consisting of 1/100th of one share of Series B Preferred Stock (the
"Unit") at an exercise price of $65.50 per Unit, subject to certain
antidilution adjustments, for each outstanding share of Common Stock, and
approved the further issuance of Rights for all shares of Common Stock that are
subsequently issued. See "Preferred Stock -- Series B Preferred Stock" below.
Accordingly, a Right will be issued for each share of Common Stock issued
hereunder. Until certain specified conditions described below exist, the
Rights will be represented by the certificates for the Common Stock and will
not be exercisable or transferable apart from the certificates for the Common
Stock.
Generally, in the event that the Company is acquired in a merger or
other business combination transaction or 50% or more of the Company's
consolidated assets or earning power is sold, proper provision will be made so
that each holder of a Right will thereafter have the right to receive, upon the
exercise thereof at the then current exercise price of the Right, the number of
shares of common stock of the acquiring company that at the time of such
transaction will have a market value of two times the exercise price of the
Right.
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After the tenth day following the date on which any person or group of
affiliated or associated persons (other than certain excepted persons) acquires
beneficial ownership of 20% or more of the outstanding shares of Common Stock
(unless such person first acquires 20% or more of the outstanding shares of
Common Stock pursuant to a cash tender offer for all of the Common Stock, which
purchase increases such person's beneficial ownership to 85% or more of the
outstanding Common Stock) (an "Acquiring Person") or during such time as there
is an Acquiring Person, there shall be any reclassification of securities or
recapitalization or reorganization of the Company or other transaction or
series of transactions that has the effect of increasing by more than 1% the
proportionate share of the outstanding shares of any class of equity securities
of the Company or any of its subsidiaries beneficially owned by the Acquiring
Person, proper provision shall be made so that each holder of a Right, other
than Rights beneficially owned by the Acquiring Person (which will thereafter
be void), will thereafter have the right to receive upon exercise that number
of shares of Common Stock having a market value of two times the exercise price
of the Right.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
without conditioning the offer on a substantial number of Rights being acquired
or approval of the Board. The Rights should not interfere with any merger or
other business combination approved by the Board of Directors of the Company
since, among other things, the Board of Directors may, at its option, at any
time until 10 days (subject to extension) following the date on which a person
or group (other than certain excepted persons) acquires 20% or more of the
outstanding Common Stock, redeem all but not less than all the then outstanding
Rights at $.01 per Right.
A Rights Agreement dated as of March 17, 1989, as amended, between the
Company and The First National Bank of Boston, as Rights Agent (as amended, the
"Rights Agreement"), specifies the terms of the Rights and the foregoing
description of the Rights is qualified in its entirety by reference to the
Rights Agreement, a copy of which is available upon written request to Investor
Relations, Seagull Energy Corporation, 1001 Fannin, Suite 1700, Houston, Texas
77002, telephone (713) 951-4700.
The transfer agent and registrar for the Common Stock of the Company
is The First National Bank of Boston.
PREFERRED STOCK
The following description of the terms of the Preferred Stock sets
forth certain general terms and provisions of the Preferred Stock to which any
Prospectus Supplement may relate. Certain terms of a series of the Preferred
Stock offered by any Prospectus Supplement will be described in the Prospectus
Supplement relating to such series of the Preferred Stock. If so indicated in
the Prospectus Supplement, the terms of any such series may differ from the
terms set forth below. The following description of the Preferred Stock
summarizes certain provisions of the Company's Articles of Incorporation and
the form of Statement of Designations filed as an exhibit to the Registration
Statement to which this Prospectus relates and is subject to and qualified in
its entirety by reference to the Articles of Incorporation and such Statement
of Designations that will be filed with the Commission promptly after the
offering of such series of Preferred Stock.
General. Under the Company's Articles of Incorporation, the Board of
Directors is authorized, without further shareholder action, to provide for the
issuance of up to 5,000,000 shares of Preferred Stock in one or more series,
with such voting powers, or without voting powers, and with such designations
and relative rights and preferences as shall be set forth in resolutions
providing for the issuance thereof adopted by the Board of Directors. At
present, 500,000 shares of Preferred Stock are designated as Series B Junior
Participating Preferred Stock (the "Series B Preferred Stock") in connection
with the Share Purchase Rights Plan described above, although no such shares of
Series B Preferred Stock are issued and outstanding. No other shares of
Preferred Stock are issued, outstanding or designated as to series. It is not
possible to state the actual effect of the authorization and issuance of a new
series of Preferred Stock upon the rights of holders of the Common Stock and
other series of Preferred Stock unless and until the Board of Directors
determines the attributes of such new series of Preferred Stock and the
specific rights of its holders. Such effects might include, however, (i)
restrictions on dividends on Common Stock and other series of Preferred Stock
if dividends on such new series of Preferred Stock have not been paid; (ii)
dilution of the voting power of Common Stock and other series of Preferred
Stock to the extent that such new series of Preferred Stock has voting rights,
or to the extent that any such new series of Preferred Stock is convertible
into Common Stock; (iii) dilution of the equity interest of Common Stock and
other series of Preferred Stock; and (iv) limitation on the
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<PAGE> 18
right of holders of Common Stock and other series of Preferred Stock to share
in the Company's assets upon liquidation until satisfaction of any liquidation
preference attributable to such new series of Preferred Stock. While the
ability of the Company to issue Preferred Stock provides flexibility in
connection with possible acquisitions and other corporate purposes, its
issuance could be used to impede an attempt by a third party to acquire a
majority of the outstanding voting stock of the Company.
The Preferred Stock will have the dividend, liquidation, redemption
and voting rights set forth below unless otherwise provided in the Prospectus
Supplement relating to a particular series of the Preferred Stock. Reference
is made to the Prospectus Supplement relating to the particular series of the
Preferred Stock offered thereby for specific terms, including: (i) the
designation of such Preferred Stock, the number of shares offered and the
liquidation value thereof; (ii) the price at which such Preferred Stock will be
issued; (iii) the dividend rate (or method of calculation), the dates on which
dividends shall be payable, whether such dividends shall be cumulative or
noncumulative and, if cumulative, the dates from which dividends shall commence
to accumulate; (iv) the liquidation preference thereof; (v) any redemption or
sinking fund provisions; (vi) any conversion or exchange provisions of such
Preferred Stock; and (vii) any additional dividend, liquidation, redemption,
sinking fund and other rights, preferences, limitations and restrictions of
such Preferred Stock.
The Preferred Stock will, when issued, be fully paid and
nonassessable. Unless otherwise specified in the Prospectus Supplement
relating to a particular series of the Preferred Stock, each series of the
Preferred Stock will rank on a parity as to dividends and distributions in the
event of a liquidation with each other series of the Preferred Stock, if any,
and senior to the Series B Preferred Stock. Holders of Preferred Stock will
have no preemptive rights to subscribe for or purchase shares of capital stock.
Dividend Rights. Holders of the Preferred Stock of each series will
be entitled to receive, when, as and if declared by the Board of Directors, out
of assets of the Company legally available therefor, cash dividends at such
rates and on such dates as are set forth in the Prospectus Supplement relating
to such series of the Preferred Stock. Such rate may be fixed or variable or
both. Each such dividend will be payable to the holders of record as they
appear on the stock books of the Company on such record dates as will be fixed
by the Board of Directors or a duly authorized committee thereof. Dividends on
any series of the Preferred Stock may be cumulative or noncumulative, as
provided in the Prospectus Supplement relating thereto. If the Board of
Directors fails to declare a dividend payable on a dividend payment date on any
series of Preferred Stock for which dividends are noncumulative, then the right
to receive a dividend in respect of the dividend period ending on such dividend
payment date will be lost, and the Company shall have no obligation to pay the
dividend accrued for that period, whether or not dividends are declared for any
future period.
No full dividends will be declared or paid or set apart for payment on
preferred stock of any series ranking, as to dividends, on a parity with or
junior to any series of Preferred Stock for any period unless full dividends
have been or contemporaneously are declared and paid, or declared and a sum
sufficient for the payment thereof set apart for such payment on such series of
Preferred Stock for the then-current dividend period and, if such Preferred
Stock is cumulative, all other dividend periods terminating on or before the
date of payment of such full dividends. When dividends are not paid in full
upon any series of the Preferred Stock and any other preferred stock ranking on
a parity as to dividends with such series of the Preferred Stock, all dividends
declared upon such series of the Preferred Stock and any other preferred stock
ranking on a parity as to dividends will be declared pro rata so that the
amount of dividends declared per share on such series of the Preferred Stock
and such other preferred stock will in all cases bear to each other the same
ratio that accrued dividends, including, in the case of cumulative Preferred
Stock, accumulations, if any, in respect of prior dividend periods, per share
on such series of the Preferred Stock and such other preferred stock bear to
each other. Except as provided in the preceding sentence, unless full
dividends, including, in the case of cumulative Preferred Stock, accumulations,
if any, in respect of prior dividend periods, on all outstanding shares of any
series of the Preferred Stock have been paid or declared and set aside for
payment, no dividends (other than a dividend or distribution paid in shares of,
or warrants, rights or options exercisable for or convertible into, Common
Stock or another stock ranking junior to such series of the Preferred Stock as
to dividends and upon liquidation) will be declared or paid or set aside for
payment or other distributions made upon the Common Stock or any other stock of
the Company ranking junior to or on a parity with the Preferred Stock as to
dividends or upon liquidation, nor will any Common Stock or any other stock of
the Company ranking junior to or on a parity with such series of the Preferred
Stock as to dividends or upon liquidation be redeemed, purchased or otherwise
acquired for any consideration (or any moneys be paid to or
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made available for a sinking fund for the redemption of any shares of any such
stock) by the Company (except by conversion into or exchange for stock of the
Company ranking junior to such series of the Preferred Stock as to dividends
and upon liquidation). No interest, or sum of money in lieu of interest, shall
be payable in respect of any dividend payment or payments which may be in
arrears.
The amount of dividends payable for each dividend period will be
computed by annualizing the applicable dividend rate and dividing by the number
of dividend periods in a year, except that the amount of dividends payable for
the initial dividend period or any period longer or short other than a full
dividend period shall be computed on the basis of 30-day months and a 360-day
year.
Each series of Preferred Stock will be entitled to dividends as
described in the Prospectus Supplement relating to such series, which may be
based upon one or more methods of determination. Different series of the
Preferred Stock may be entitled to dividends at different dividend rates or
based upon different methods of determination.
Rights Upon Liquidation. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Company, the holders
of each series of Preferred Stock will be entitled to receive out of assets of
the Company available for distribution to stockholders, before any distribution
of assets is made to holders of Common Stock or any other class of stock
ranking junior to such series of the Preferred Stock upon liquidation,
liquidating distributions in the amount set forth in the Prospectus Supplement
relating to such series of the Preferred Stock plus an amount equal to accrued
and unpaid dividends for the then-current dividend period and, if such series
of the Preferred Stock is cumulative, for all dividend periods prior thereto.
If, upon any voluntary or involuntary liquidation, dissolution or winding up of
the Company, the amounts payable with respect to the Preferred Stock of any
series and any other shares of stock of the Company ranking as to any such
distribution on a parity with such series of the Preferred Stock are not paid
in full, the holders of the Preferred Stock of such series and of such other
shares will share ratably in any such distribution of assets of the Company in
proportion to the full respective preferential amounts to which they are
entitled. After payment of the full amount of the liquidating distribution to
which they are entitled, the holders of such series of Preferred Stock will
have no right or claim to any of the remaining assets of the Company. Neither
the sale of all or substantially all the property or business of the Company
nor the merger or consolidation of the Company into or with any other
corporation shall be deemed to be a dissolution, liquidation or winding up,
voluntary or involuntary, of the Company.
Redemption. A series of the Preferred Stock may be redeemable, in
whole or in part, at the option of the Company, and may be subject to mandatory
redemption pursuant to a sinking fund, in each case upon terms, at the times
and at the redemption prices set forth in the Prospectus Supplement relating to
such series.
The Prospectus Supplement relating to a series of Preferred Stock that
is subject to mandatory redemption will specify the number of shares of such
series of Preferred Stock that will be redeemed by the Company in each year
commencing after a date to be specified, at a redemption price per share to be
specified, together with an amount equal to any accrued and unpaid dividends
thereon to the date of redemption. The redemption price may be payable in
cash, capital stock or in cash received from the net proceeds of the issuance
of capital stock of the Company, as specified in the Prospectus Supplement
relating to such series of Preferred Stock.
If fewer than all the outstanding shares of any series of the
Preferred Stock are to be redeemed, whether by mandatory or optional
redemption, the selection of the shares to be redeemed will be determined by
lot or pro rata as may be determined by the Board of Directors or a duly
authorized committee thereof, or by any other method which may be determined by
the Board of Directors or such committee to be equitable. From and after the
date of redemption (unless default shall be made by the Company in providing
for the payment of the redemption price), dividends shall cease to accrue on
the shares of Preferred Stock called for redemption and all rights of the
holders thereof (except the right to receive the redemption price) shall cease.
In the event that full dividends, including accumulations in the case
of cumulative Preferred Stock, on any series of the Preferred Stock have not
been paid, such series of the Preferred Stock may not be redeemed in part and
the Company may not purchase or acquire any shares of such series of the
Preferred Stock otherwise than pursuant to a purchase or exchange offer made on
the same terms to all holders of such series of the Preferred Stock.
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Conversion or Exchange Rights. The Prospectus Supplement for any
series of the Preferred Stock will state the terms, if any, on which shares of
such series are convertible into, or exchangeable for, securities of the
Company or another person.
Voting Rights. Unless otherwise determined by the Board of Directors
and indicated in the Prospectus Supplement relating to a particular series of
Preferred Stock, the holders of the Preferred Stock will not be entitled to
vote, except as set forth below or except as expressly required by applicable
law. In the event the Company issues share of any series of Preferred Stock
with voting rights, including any voting rights in the case of dividend
arrearages, unless otherwise specified in the Prospectus Supplement relating to
a particular series of Preferred Stock, each such share will be entitled to one
vote on matters on which holders of such series of the Preferred Stock are
entitled to vote. In the case of any series of Preferred Stock having one vote
per share on matters on which holders of such series are entitled to vote, the
voting power of such series, on matters on which holders of such series and
holders of other series of preferred stock are entitled to vote as a single
class, will depend on the number of shares in such series, not on the aggregate
liquidation preference or initial offering price of the shares of such series
of Preferred Stock.
Except as set forth in the Prospectus Supplement relating to a series
of Preferred Stock, if at any time dividends on any series of Preferred Stock
shall be in arrears in an amount equal to six quarterly dividends thereon,
(which, with respect to any series of Preferred Stock whose dividend periods
are other than quarterly, shall be deemed to be a number of dividend periods
containing not less than 540 days), all holders of Preferred Stock on which
dividends are in arrears and as to which similar voting rights have been
conferred, voting as a class, irrespective of series, shall have the right to
elect two directors. Directors so elected by such holders of Preferred Stock
shall continue in office until their successors shall have been elected or
until such time as all accrued and unpaid dividends for all previous dividend
periods and for any current dividend period on all shares of such Preferred
Stock then outstanding shall have been declared and paid or set apart for
payment.
The affirmative vote or consent of the holders of at least two-thirds
of the outstanding shares of any series of Preferred Stock, voting as a
separate class, will be required for any amendment, alteration or repeal,
whether by merger, consolidation or otherwise, of the Articles of Incorporation
that will (i) increase or decrease the aggregate number of authorized shares of
such series or of Preferred Stock, (ii) increase or decrease the par value of
the Preferred Stock, (iii) effect an exchange, reclassification or cancellation
of all or part of the shares of such series or of the Preferred Stock, (iv)
effect an exchange, or create a right of exchange, of all or any part of the
shares of another class into the shares of such series or of Preferred Stock,
(v) change the designations, preferences, limitations or relative rights of the
shares of such series or the Preferred Stock, (vi) change the shares of such
series or the Preferred Stock into the same or a different number of shares of
the same class or series or another class or series, (vii) create a new class
or series of shares having rights and preferences equal, prior or superior to
the shares of such series or the Preferred Stock, or increase the rights and
preferences of any class or series having rights and preferences equal, prior
or superior to the shares of such series or the Preferred Stock, or increase
the rights and preferences of any class or series having rights or preferences
later or inferior to the shares of such series or the Preferred Stock in such a
manner as to become equal, prior or superior to the shares of such class or
series, (viii) divide the shares of Preferred Stock into series and fix and
determine the designation of such series and the variations in the relative
rights and preferences between the shares of such series, (ix) limit or deny
the existing preemptive rights of the shares of such series or of the Preferred
Stock, (x) cancel or otherwise affect dividends on the shares of such series or
the Preferred Stock that had accrued but had not been declared or (xi) include
in or delete from the Articles of Incorporation any provisions required or
permitted to be included in the Articles of Incorporation of a close
corporation within the meaning of the Texas Business Corporation Act. The
foregoing provisions are not applicable to the designation of series by the
Board of Directors in the manner described under the heading "General" above.
If the holders of the outstanding shares of Preferred Stock are entitled to
vote as a class on a proposed amendment and the amendment would affect all
series of such class (other than any series of which no shares are outstanding
or any series that is not affected by the amendment) equally, then the holders
of the separate series shall not be entitled to separate class votes, but shall
instead vote together as one class. Notwithstanding the foregoing, the
approval of a proposed amendment to the Articles of Incorporation that would
solely effect changes in the designations, preferences, limitations and
relative rights, including voting rights, of one or more series of shares that
have been established by the Board of Directors as described above under the
heading "General," shall not require the approval of the holders of the
outstanding shares of any class or series other than such series if the
preferences, limitations and relative rights of such series after giving effect
to such amendment and of any series that may be established as a result of a
reclassification of such series are, in each case, within those permitted to be
fixed and determined by the Board of
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Directors with respect to the establishment of any new series of shares
pursuant to the authority granted the Board of Directors as described above
under the heading "General."
Series B Preferred Stock. In connection with the adoption of the
Share Purchase Rights Plan described above, on March 1, 1989, the Company's
Board of Directors designated 500,000 shares of the Company's authorized but
unissued Preferred Stock as the Series B Preferred Stock. The terms of Series
B Preferred Stock are such that one share of Series B Preferred Stock will be
approximately equivalent to 100 shares of Common Stock. Each 1/100th of one
share of Series B Preferred Stock has the same dividend and voting rights as
one full share of Common Stock. In addition, each 1/100th of one share of
Series B Preferred Stock has a minimum quarterly dividend of $.01, a
liquidation preference and certain other rights preferential to Common Stock.
Pursuant to the Share Purchase Rights Plan, Rights have been issued to the
holders of the Common Stock, but such Rights have not yet become exercisable or
transferable apart from the certificate for the Common Stock, and no shares of
Series B Preferred Stock have been issued.
DEPOSITARY SHARES
General. The Company may, at its option, elect to offer fractional
shares of Preferred Stock, rather than full shares of Preferred Stock. In the
event such option is exercised, the Company will issue to the public receipts
for Depositary Shares, each of which will represent a fraction (to be set forth
in the Prospectus Supplement relating to a particular series of Preferred
Stock) of a share of a particular series of Preferred Stock as described below.
The shares of any series of Preferred Stock represented by Depositary
Shares will be deposited under a Deposit Agreement (the "Deposit Agreement")
between the Company and a bank or trust company selected by the Company having
its principal office in the United States and having a combined capital and
surplus of at least $50,000,000 (the "Depositary"). Subject to the terms of
the Deposit Agreement, each owner of a Depositary Share will be entitled, in
proportion to the applicable fraction of a share of Preferred Stock represented
by such Depositary Share, to all the rights and preferences of the Preferred
Stock represented thereby (including dividend, voting, redemption and
liquidation rights).
The Depositary Shares will be evidenced by depositary receipts issued
pursuant to the Deposit Agreement ("Depositary Receipts"). Depositary Receipts
will be distributed to those persons purchasing the fractional shares of
Preferred Stock in accordance with the terms of the offering. Copies of the
forms of Deposit Agreement and Depositary Receipt are filed as exhibits to the
Registration Statement of which this Prospectus is a part, and the following
summary is qualified in its entirety by reference to such exhibits.
If required by law or applicable securities exchange rules, engraved
Depositary Receipts will be prepared. Pending the preparation of definitive
engraved Depositary Receipts, the Depositary may, upon the written order of the
Company, issue temporary Depositary Receipts substantially identical to (and
entitling the holders thereof to all the rights pertaining to) the definitive
Depositary Receipts but not in definitive form. Definitive Depositary Receipts
will be prepared thereafter without unreasonable delay, and temporary
Depositary Receipts will be exchangeable for definitive Depositary Receipts at
the Company's expense.
Dividends and Other Distributions. The Depositary will distribute all
cash dividends or other cash distributions received in respect of the Preferred
Stock to the record holders of Depositary Shares relating to such Preferred
Stock in proportion to the number of such Depositary Shares owned by such
holders.
In the event of a distribution other than in cash, the Depositary will
distribute property received by it to the record holders of Depositary Shares
entitled thereto, unless the Depositary determines that it is not feasible to
make such distribution, in which case the Depositary may, with the approval of
the Company, sell such property and distribute the net proceeds from such sale
to such holders.
Redemption of Depositary Shares. If a series of Preferred Stock
represented by Depositary Shares is subject to redemption, the Depositary
Shares will be redeemed from the proceeds received by the Depositary resulting
from the redemption, in whole or in part, of such series of Preferred Stock
held by the Depositary. The redemption price per Depositary Share will be
equal to the applicable fraction of the redemption price per share payable with
respect to such
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series of the Preferred Stock. Whenever the Company redeems shares of
Preferred Stock held by the Depositary, the Depositary will redeem as of the
same redemption date the number of Depositary Shares representing the shares of
Preferred Stock so redeemed. If fewer than all the Depositary Shares are to be
redeemed, the Depositary Shares to be redeemed will be selected by lot or pro
rata as may be determined by the Depositary.
Voting the Preferred Stock. Upon receipt of notice of any meeting at
which the holders of the Preferred Stock are entitled to vote, the Depositary
will mail the information contained in such notice of meeting to the record
holders of the Depositary Shares relating to such Preferred Stock. Each record
holder of such Depositary Shares on the record date (which will be the same
date as the record date for the Preferred Stock) will be entitled to instruct
the Depositary as to the exercise of the voting rights pertaining to the amount
of the Preferred Stock represented by such holder's Depositary Shares. The
Depositary will endeavor, insofar as practicable, to vote the amount of the
Preferred Stock represented by such Depositary Shares in accordance with such
instructions, and the Company will agree to take all action that may be deemed
necessary by the Depositary in order to enable the Depositary to do so. The
Depositary will abstain from voting shares of the Preferred Stock to the extent
it does not receive specific instructions from the holders of Depositary Shares
representing such Preferred Stock.
Amendment and Termination of the Depositary Agreement. The form of
Depositary Receipt evidencing the Depositary Shares and any provision of the
Deposit Agreement may at any time be amended by agreement between the Company
and the Depositary. However, any amendment that materially and adversely
alters the rights of the holders of Depositary Shares will not be effective
unless such amendment has been approved by the holders of at least a majority
of the Depositary Shares then outstanding. The Deposit Agreement may be
terminated by the Company or the Depositary only if (i) all outstanding
Depositary Shares have been redeemed or (ii) there has been a final
distribution in respect of the Preferred Stock in connection with any
liquidation, dissolution or winding up of the Company and such distribution has
been distributed to the holders of Depositary Receipts.
Charges of Depositary. The Company will pay all transfer and other
taxes and governmental charges arising solely from the existence of the
depositary arrangements. The Company will pay charges of the Depositary in
connection with the initial deposit of the Preferred Stock and any redemption
of the Preferred Stock. Holders of Depositary Receipts will pay other transfer
and other taxes and governmental charges and such other charges, including a
fee for the withdrawal of shares of Preferred Stock upon surrender of
Depositary Receipts, as are expressly provided in the Deposit Agreement to be
for their accounts.
Withdrawal of Preferred Stock. Upon surrender of Depositary Receipts
at the principal office of the Depositary, subject to the terms of the Deposit
Agreement, the owner of the Depositary Shares evidenced thereby is entitled to
delivery of the number of whole shares of Preferred Stock and all money and
other property, if any, represented by such Depositary Shares. Partial shares
of Preferred Stock will not be issued. If the Depositary Receipts delivered by
the holder evidence a number of Depositary Shares in excess of the number of
Depositary Shares representing the number of whole shares of Preferred Stock to
be withdrawn, the Depositary will deliver to such holder at the same time a new
Depositary Receipt evidencing such excess number of Depositary Shares. Holders
of Preferred Stock thus withdrawn will not thereafter be entitled to deposit
such shares under the Deposit Agreement or to receive Depositary Receipts e
videncing Depositary Shares therefor.
Miscellaneous. The Depositary will forward to holders of Depository
Receipts all reports and communications from the Company that are delivered to
the Depositary and that the Company is required to furnish to the holders of
the Preferred Stock.
Neither the Depositary nor the Company will be liable if it is
prevented or delayed by law or any circumstance beyond its control in
performing its obligations under the Deposit Agreement. The obligations of the
Company and the Depositary under the Deposit Agreement will be limited to
performance in good faith of their duties thereunder and they will not be
obligated to prosecute or defend any legal proceeding in respect of any
Depositary Shares or Preferred Stock unless satisfactory indemnity is
furnished. They may rely upon written advice of counsel or accountants, or
upon information provided by persons presenting Preferred Stock for deposit,
holders of Depositary Receipts or other persons believed to be competent and on
documents believed to be genuine.
Resignation and Removal of Depositary. The Depositary may resign at
any time by delivering to the Company notice of its election to do so, and the
Company may at any time remove the Depositary, any such resignation or removal
to take effect upon the appointment of a successor Depositary and its
acceptance of such appointment. Such successor Depositary must be appointed
within 60 days after delivery of the notice of resignation or removal and must
be a bank or trust company having its principal office in the United States and
having a combined capital and surplus of at least $50,000,000.
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<PAGE> 23
DESCRIPTION OF SECURITIES WARRANTS
The Company may issue Securities Warrants for the purchase of Debt
Securities, Preferred Stock, Depositary Shares or Common Stock. Securities
Warrants may be issued independently or together with Debt Securities,
Preferred Stock, Depositary Shares or Common Stock offered by any Prospectus
Supplement and may be attached to or separate from any such Offered Securities.
Each series of Securities Warrants will be issued under a separate warrant
agreement (a "Securities Warrant Agreement") to be entered into between the
Company and a bank or trust company, as warrant agent (the "Securities Warrant
Agent"), all as set forth in the Prospectus Supplement relating to the
particular issue of Securities Warrants. The Securities Warrant Agent will act
solely as an agent of the Company in connection with the Securities Warrants
and will not assume any obligation or relationship of agency or trust for or
with any holders of Securities Warrants or beneficial owners of Securities
Warrants. The following summary of certain provisions of the Securities
Warrants does not purport to be complete and is subject to, and is qualified in
its entirety by reference to, all provisions of the Securities Warrant
Agreements.
Reference is made to the Prospectus Supplement relating to the
particular issue of Securities Warrants offered thereby for the terms of and
information relating to such Securities Warrants, including, where applicable:
(i) the designation, aggregate principal amount, currencies, denominations, and
terms of the series of Debt Securities purchasable upon exercise of Debt
Warrants and the price at which such Debt Securities may be purchased upon such
exercise; (ii) the number of shares of Common Stock purchasable upon the
exercise of Common Stock Warrants and the price at which such number of shares
of Common Stock may be purchased upon such exercise; (iii) the number of shares
and series of Preferred Stock and/or Depositary Shares purchasable upon the
exercise of Preferred Stock Warrants and the price at which such number of
shares of such series of Preferred Stock and/or Depositary Shares may be
purchased upon such exercise; (iii) the date on which the right to exercise
such Securities Warrants shall commence and the date on which such right shall
expire (the "Expiration Date"); (iv) United States Federal income tax
consequences applicable to such Securities Warrants; (v) the amount of
Securities Warrants outstanding as of the most recent practicable date; and
(vi) any other terms of such Securities Warrants. Common Stock Warrants will
be offered and exercisable for U.S. dollars only. Securities Warrants will be
issued in registered form only. The exercise price for Securities Warrants will
be subject to adjustment in accordance with the applicable Prospectus
Supplement.
Each Securities Warrant will entitle the holder thereof to purchase
such principal amount of Debt Securities or such number of shares of Preferred
Stock, Depositary Shares or Common Stock at such exercise price as shall in
each case be set forth in, or calculable from, the Prospectus Supplement
relating to the Securities Warrants, which exercise price may be subject to
adjustment upon the occurrence of certain events as set forth in such
Prospectus Supplement. After the close of business on the Expiration Date (or
such later date to which such Expiration Date may be extended by the Company),
unexercised Securities Warrants will become void. The place or places where,
and the manner in which, Securities Warrants may be exercised shall be
specified in the Prospectus Supplement relating to such Securities Warrants.
Prior to the exercise of any Securities Warrants to purchase Debt
Securities, Preferred Stock, Depositary Shares or Common Stock, holders of
such Securities Warrants will not have any of the rights of holders of Debt
Securities, Preferred Stock, Depositary Shares or Common Stock, as the case
may be, purchasable upon such exercise, including the right to receive payments
of principal of, premium, if any, or interest, if any, on the Debt Securities
purchasable upon such exercise or to enforce covenants in the applicable
Indenture, or to receive payments of dividends, if any, on the Preferred Stock,
Depositary Shares or Common Stock purchasable upon such exercise, or to
exercise any applicable right to vote.
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<PAGE> 24
PLAN OF DISTRIBUTION
GENERAL
The Company may sell Securities to or through underwriters or dealers,
and also may sell Securities directly to one or more other purchasers or
through agents. The Prospectus Supplement sets forth the names of any
underwriters or agents involved in the sale of the Offered Securities and any
applicable commissions or discounts.
Underwriters, dealers or agents may offer and sell the Offered
Securities at a fixed price or prices, which may be changed, or from time to
time at market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. In connection with the sale
of the Securities, underwriters or agents may be deemed to have received
compensation from the Company in the form of underwriting discounts or
commissions and may also receive commissions from purchasers of the Securities
for whom they may act as agent. Underwriters or agents may sell the Securities
to or through dealers, and such dealers may receive compensation in the form of
discounts, concessions or commissions from the underwriters or commissions from
the purchasers for whom they may act as agent.
The Securities (other than the Common Stock), when first issued, will
have no established trading market. Any underwriters or agents to or through
whom Securities are sold by the Company for public offering and sale may make a
market in such Securities, but such underwriters or agents will not be
obligated to do so and may discontinue any market making at any time without
notice. No assurance can be given as to the liquidity of the trading market
for any such Securities.
Any underwriters, dealers or agents participating in the distribution
of the Securities may be deemed to be underwriters, and any discounts and
commissions received by them and any profit realized by them on resale of the
Securities may be deemed to be underwriting discounts and commissions under the
Securities Act of 1933, as amended (the "1933 Act"). Underwriters, dealers or
agents may be entitled, under agreements entered into with the Company, to
indemnification against or contribution toward certain civil liabilities,
including liabilities under the 1933 Act.
DELAYED DELIVERY ARRANGEMENTS
If so indicated in the Prospectus Supplement, the Company will
authorize underwriters or other persons acting as the Company's agents to
solicit offers by certain institutions to purchase Securities from the Company
pursuant to contracts providing for payment and delivery on a future date.
Institutions with which such contracts may be made include commercial and
savings banks, insurance companies, pension funds, investment companies,
educational and charitable institutions and others, but in all cases will be
subject to the condition that the purchase of the Securities shall not at the
time of delivery be prohibited under the laws of the jurisdiction to which such
purchaser is subject. The underwriters and such agents will not have any
responsibility in respect of the validity or performance of such contracts.
LEGAL MATTERS
Certain legal matters with respect to the validity of the Securities
will be passed upon for the Company by Vinson & Elkins L.L.P., 2500 First City
Tower, Houston, Texas 77002-6760, and for the underwriters, dealers or agents,
if any, of a particular issue of Securities by Simpson Thacher & Bartlett (a
partnership which includes professional corporations), 425 Lexington Avenue,
New York, New York 10017-3909. Simpson Thacher & Bartlett will rely upon
Vinson & Elkins L.L.P. with respect to matters of Texas law. Mr. J. Evans
Attwell, a partner of Vinson & Elkins L.L.P., is a director of the Company.
EXPERTS
The consolidated financial statements of Seagull Energy Corporation
and subsidiaries as of December 31, 1994 and 1993, and for each of the years in
the three-year period ended December 31, 1994, incorporated by reference herein
and elsewhere in the Registration Statement have been incorporated herein and
in the Registration Statement in reliance
22
<PAGE> 25
upon the reports of KPMG Peat Marwick LLP, independent certified public
accountants, incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing. The report of KPMG Peat Marwick
LLP covering the December 31, 1994 consolidated financial statements refers to
a change in accounting principle for the adoption of the Financial Accounting
Standards Board Statement of Financial Accounting Standard No. 106, Employers'
Accounting for Postretirement Benefits other than Pensions and No. 109,
Accounting for Income Taxes.
Certain information with respect to the gas and oil reserves
associated with the Company's oil and gas properties located in the
Mid-Continent region derived from the report of DeGolyer and MacNaughton,
independent consulting petroleum engineers, has been included and incorporated
by reference herein upon the authority of said firm as experts with respect to
the matters covered by such report and in giving such report.
Certain information with respect to the gas and oil reserves owned by
Seagull Mid-South Inc. derived from the report of Netherland, Sewell &
Associates, Inc., independent petroleum engineers, has been included and
incorporated by reference herein in reliance upon such firm as experts with
respect to the matters contained therein.
Certain information with respect to the Company's other gas and oil
reserves derived from the report of Ryder Scott Company, independent petroleum
engineers, has been included and incorporated by reference herein in reliance
upon such firm as experts with respect to the matters contained therein.
CERTAIN DEFINITIONS
As used in this Prospectus and any Prospectus Supplement:
With respect to volumes, "bcf" means billion cubic feet, "mcf" means
thousand cubic feet, "mmbbls" means million barrels, one "bcfe" equals the
energy equivalent of one bcf of natural gas, "mmcf/d" means million cubic feet
per day, "mbbls/d" means thousand barrels per day, "bbls/d" means barrels per
day and one "mmcfe/d" means the energy equivalent of one million cubic feet of
natural gas per day. Unless otherwise indicated in this Prospectus or in any
Prospectus Supplement, gas volumes are stated at the legal pressure base of the
state or area in which the reserves are located and at 60 degrees Fahrenheit.
Where crude oil, condensate and natural gas liquids volumes are converted into
natural gas equivalents, a ratio of six mcf to one barrel is used, which
approximates the relative energy content of crude oil, condensate and natural
gas liquids as compared to natural gas.
When used in describing acreage on drilling locations, the term "net"
refers to the total acres on drilling locations in which the Company has a
working interest, multiplied by the percentage working interest owned by the
Company. When used in describing production, the term "net" refers to the sum
of (i) the total production in which the Company has a working interest,
multiplied by the percentage of net revenue interest owned by the Company and
(ii) the total production that is attributable to royalty interests held by the
Company.
"Proved" reserves refer to net proved developed and undeveloped
reserves of crude oil, condensate, natural gas and natural gas liquids that
geological and engineering data demonstrate with reasonable certainty to be
economically recoverable in the future from known reservoirs under existing
conditions. Proved "developed" reserves are those proved reserves reasonably
expected to be recovered with existing equipment and operating methods, while
proved "undeveloped" reserves are those proved reserves reasonably expected to
be recovered from new wells on undrilled acreage, from existing wells where a
relatively large expenditure is required and from acreage where an application
of fluid injection or other improved recovery technique is contemplated (where
such technique has been proved effective by actual tests in the area in the
same reservoir or one with similar rock and fluid properties). THE RESERVE
VOLUMES PROVIDED IN AND INCORPORATED BY REFERENCE IN THIS PROSPECTUS OR IN ANY
PROSPECTUS SUPPLEMENT ARE ESTIMATES ONLY AND SHOULD NOT BE CONSTRUED AS BEING
EXACT QUANTITIES. THEY MAY OR MAY NOT BE ACTUALLY RECOVERED. MOREOVER,
ESTIMATES OF PROVED RESERVES MAY INCREASE OR DECREASE AS A RESULT OF FUTURE
OPERATIONS OF THE COMPANY AND CHANGES IN MARKET CONDITIONS.
A "reserve life index" is a measure of how long it will take to
produce a quantity of reserves, calculated by dividing end of year reserves by
annual production for the most recent fiscal year (in gas equivalents). An
"infill" well is a well drilled between known producing wells to better exploit
the reservoir. "Deliverability" refers to the volume of net production
capability attributable to a well or group of wells. "Workover expenses" are
the remedial costs incurred on producing wells to increase the rate of
production. "Shut in" refers to the closing of the valves on a well so that it
stops producing.
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<PAGE> 26
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses in connection with the issuance and distribution of the
Common Stock being registered are estimated as follows:
<TABLE>
<S> <C>
Registration Fee . . . . . . . . . . . . . . . . . . . . . . . . . $103,449
Blue Sky fees and expenses . . . . . . . . . . . . . . . . . . . . 15,000
Legal fees and expenses . . . . . . . . . . . . . . . . . . . . . . 100,000
Accounting fees and expenses . . . . . . . . . . . . . . . . . . . 25,000
Printing and engraving expenses . . . . . . . . . . . . . . . . . . 100,000
Trustee's fees and expenses . . . . . . . . . . . . . . . . . . . . 5,000
Depositary's fees and expenses . . . . . . . . . . . . . . . . . . 5,000
Miscellaneous expenses . . . . . . . . . . . . . . . . . . . . . . 26,551
------------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 380,000
============
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article 2.02-1 of the Texas Business Corporation Act provides that any
director or officer of a Texas corporation may be indemnified against
judgments, penalties, fines, settlements and reasonable expenses actually
incurred by him in connection with or in defending any action, suit or
proceeding in which he is a party by reason of his position. With respect to
any proceeding arising from actions taken in his official capacity, as a
director or officer, he may be indemnified so long as it shall be determined
that he conducted himself in good faith and that he reasonably believed that
such conduct was in the corporation's best interest. In cases not concerning
conduct in his official capacity as a director or officer, a director or
officer may be indemnified so long as it shall be determined that he conducted
himself in good faith and that he reasonably believed that his conduct was not
opposed to the corporation's best interest. In the case of any criminal
proceeding, a director or officer may be indemnified if he had no reasonable
cause to believe his conduct was unlawful. If a director or officer is wholly
successful, on the merits or otherwise, in connection with such a proceeding,
such indemnification is mandatory.
Article VI of the Company's Bylaws requires the indemnification of
officers and directors to the fullest extent permitted by the Texas Business
Corporation Act. The Company also has policies insuring its officers and
directors against certain liabilities for actions taken in such capacities,
including liabilities under the Securities Act of 1933.
Reference is made to Article Eleven of the Articles of Incorporation
of the Registrant, which was adopted by the Company's shareholders on May 11,
1988 and which provides as follows:
"ARTICLE ELEVEN
A director of the corporation shall not be liable to the corporation
or its shareholders for monetary damages for an act or omission in the
director's capacity as a director, except for liability (i) for any
breach of the director's duty of loyalty to the corporation or its
shareholders; (ii) for acts or omissions not in good faith or that
involve intentional misconduct or a knowing violation of law; (iii)
for any transaction from which the director received an improper
benefit, whether or not the benefit resulted from an action taken
within the scope of the director's office; (iv) for acts or omissions
for which the liability of a director is expressly provided for by
statute; or (v) for acts related to an unlawful stock
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<PAGE> 27
repurchase or dividend payment. Any repeal or amendment of this
Article by the shareholders of the corporation shall be prospective
only, and shall not adversely affect any limitation on the liability
of a director of the corporation existing at the time of such repeal
or amendment. In addition to the circumstances in which a director of
the corporation is not liable as set forth in the preceding sentences,
a director shall not be liable to the fullest extent permitted by any
provision of the statutes of Texas hereafter enacted that further
limits the liability of a director."
Effective as of August 28, 1989, Article 7.06.B of the Texas
Miscellaneous Corporation Laws Act was amended to read in its entirety as
follows:
"B. The articles of incorporation of a corporation may
provide that a director of the corporation shall not be liable, or
shall be liable only to the extent provided in the articles of
incorporation, to the corporation or its shareholders or members for
monetary damages for an act or omission in the director's capacity as
a director, except that this article does not authorize the
elimination or limitation of the liability of a director to the extent
the director is found liable for:
(1) a breach of the director's duty of loyalty to the
corporation or its shareholders or members;
(2) an act or omission not in good faith that constitutes
a breach of duty of the director to the corporation or an act
or omission that involves intentional misconduct or a knowing
violation of the law;
(3) a transaction from which the director received an
improper benefit, whether or not the benefit resulted from an
action taken within the scope of the director's office; or
(4) an act or omission for which the liability of a
director is expressly provided for by an applicable statute."
ITEM 16. EXHIBITS.
<TABLE>
<S> <C>
*1.1 Proposed Form of Underwriting Agreement (Debt Securities).
*1.2 Proposed Form of Underwriting Agreement (Preferred Stock).
*1.3 Proposed Form of Underwriting Agreement (Common Stock).
*1.4 Proposed Form of Underwriting Agreement (Securities Warrants).
**4.1 Form of Debt Securities.
4.2 Senior Indenture by and between the Company and The Bank of New
York, as Trustee, dated as of July 15, 1993 (incorporated by
reference to Exhibit 4.1 to Current Report on Form 8-K dated
August 4, 1993).
4.3 Senior Subordinated Indenture by and between the Company and The
Bank of New York, as Trustee, dated as of July 15, 1993
(incorporated by reference to Exhibit 4.2 to Current Report on
Form 8-K dated August 4, 1993).
4.4 Specimen of 7 7/8% Senior Note due 2003 and resolutions adopted
by the Chairman of the Board of Directors (incorporated by
reference to Exhibit 4.3 to Current Report on Form 8-K dated
August 4, 1993).
4.5 Specimen of 8 5/8% Senior Subordinated Note due 2005 and
resolutions adopted by the Chairman of the Board of Directors
(incorporated by reference to Exhibit 4.4 to Current Report on
Form 8-K dated August 4, 1993).
</TABLE>
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<PAGE> 28
<TABLE>
<S> <C>
4.6 Articles of Incorporation of the Company, as amended,
including Articles of Amendment filed May 12, 1988, May 21,
1991, and May 21, 1993 with the Secretary of State of the
State of Texas, that certain Statement of Relative Rights and
Preferences related to the designation and issuance of the
Company's $2.25 Convertible Exchangeable Preferred Stock,
Series A, filed August 6, 1986 with the Secretary of State of
the State of Texas and that certain Statement of Resolution
Establishing Series of Shares of Series B Junior Participating
Preferred Stock of Seagull Energy Corporation filed March 21,
1989 with the Secretary of State of the State of Texas
(incorporated by reference to Exhibit 3.1 to Quarterly Report
on Form 10-Q for the quarter ended June 30, 1993).
4.7 Bylaws of the Company, as amended through March 17, 1995
(incorporated by reference to Exhibit 3.1 to Quarterly Report on
Form 10-Q for the quarter ended March 31, 1995).
4.8 Rights Agreement dated as of March 17, 1989 between the Company
and NCNB Texas National Bank, as Rights Agent, which includes the
form of Statement of Resolution setting forth the terms of the
Series B Junior Participating Preferred Stock, par value $1.00
per share, as Exhibit A, the form of Right Certificate as Exhibit
B and the Summary of Rights to Purchase Preferred Shares as
Exhibit C (incorporated by reference to Exhibit 4.8 to Quarterly
Report on Form 10-Q for the quarter ended June 30, 1993).
4.9 First Amendment to Rights Agreement by and between the Company
and NationsBank of Texas, N.A. (formerly NCNB Texas National
Bank) dated as of June 18, 1992 (incorporated by reference to
Exhibit 3.4 to Registration Statement on Form S-3 (File No.
33-55426)).
**4.10 Form of Securities Warrants.
*4.11 Form of Depositary Agreement.
*4.12 Form of Depositary Receipt.
**5.1 Opinion of Vinson & Elkins L.L.P.
***12.1 Computation of Ratio of Earnings to Fixed Charges.
***23.1 Consent of KPMG Peat Marwick LLP.
*23.2 Consent of Vinson & Elkins L.L.P. (included in Exhibit 5.1).
***23.3 Consent of Ryder Scott Company, independent petroleum engineers.
***23.4 Consent of DeGolyer and MacNaughton, independent consulting
petroleum engineers.
***23.5 Consent of Netherland, Sewell & Associates, Inc., independent
petroleum engineers.
24.1 Powers of Attorney (contained in the Signatures section of this
registration statement).
***25.1 Statements of eligibility of Trustee.
</TABLE>
_______________
*To be filed by amendment.
**The Company will file any forms of Debt Securities or Securities Warrants,
or any legal opinions, not previously so filed in a Current Report on
Form 8-K. A qualified legal opinion from Vinson & Elkins L.L.P. is filed
herewith.
***Previously filed.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post effective amendment to this registration statement:
(i) To include any prospectus required by section
10(a)(3) of the Securities Act of 1933;
II-3
<PAGE> 29
(ii) To reflect in the prospectus any facts or
events arising after the effective date of the registration
statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high
end of the estimated maximum offering range may be reflected
in the form of prospectus filed with the Commission pursuant
to Rule 424(b) under the Securities Act of 1933 if, in the
aggregate, the changes in volume and price represent no more
than a 20% change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the
effective registration statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
section 13 or section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the provisions set forth in response to
Item 15, or otherwise, the registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of
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<PAGE> 30
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
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<PAGE> 31
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE
REGISTRANT CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS
ALL OF THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS
REGISTRATION STATEMENT AMENDMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED,
THEREUNTO DULY AUTHORIZED IN THE CITY OF HOUSTON, STATE OF TEXAS, ON THE 11TH
DAY OF DECEMBER, 1995.
SEAGULL ENERGY CORPORATION
By: /s/ Barry J. Galt
---------------------------------
Barry J. Galt
Chairman of the Board, President
and Chief Executive Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT AMENDMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
POWER OF ATTORNEY
EACH PERSON WHOSE SIGNATURE APPEARS BELOW APPOINTS BARRY J. GALT AND
ROBERT W. SHOWER, AND BOTH OF THEM, EITHER OF WHOM MAY ACT WITHOUT THE JOINDER
OF THE OTHER, AS HIS TRUE AND LAWFUL ATTORNEYS-IN-FACT AND AGENTS, WITH FULL
POWER OF SUBSTITUTION AND RESUBSTITUTION, FOR HIM, AND IN HIS NAME, PLACE AND
STEAD, IN ANY AND ALL CAPACITIES TO SIGN ANY AND ALL AMENDMENTS (INCLUDING
POST-EFFECTIVE AMENDMENTS) TO THIS REGISTRATION STATEMENT, AND TO FILE THE
SAME, WITH ALL EXHIBITS THERETO AND ALL OTHER DOCUMENTS IN CONNECTION
THEREWITH, WITH THE COMMISSION, GRANTING UNTO SAID ATTORNEYS-IN-FACT AND
AGENTS FULL POWER AND AUTHORITY TO DO AND PERFORM EACH AND EVERY ACT AND THING
REQUISITE AND NECESSARY TO BE DONE, AS FULLY TO ALL INTENTS AND PURPOSES AS HE
MIGHT OR COULD DO IN PERSON, HEREBY RATIFYING AND CONFIRMING ALL THAT SAID
ATTORNEYS-IN-FACT AND AGENTS OR THEIR SUBSTITUTE OR SUBSTITUTES MAY LAWFULLY DO
OR CAUSE TO BE DONE BY VIRTUE HEREOF.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
J. Evans Attwell* Director December 11, 1995
- --------------------------------------
(J. Evans Attwell)
Rodney W. Bridges* Vice President and Controller December 11, 1995
- -------------------------------------- (Principal Accounting Officer)
(Rodney W. Bridges)
John W. Elias* Executive Vice President December 11, 1995
- -------------------------------------- and Director
(John W. Elias)
Peter J. Fluor* Director December 11, 1995
- --------------------------------------
(Peter J. Fluor)
/s/ Barry J. Galt Chairman of the Board, President, December 11, 1995
- -------------------------------------- Chief Executive Officer and
(Barry J. Galt) Director (Principal Executive
Officer)
William R. Grant* Director December 11, 1995
- --------------------------------------
(William R. Grant)
Dean P. Guerin* Director December 11, 1995
- --------------------------------------
(Dean P. Guerin)
Richard M. Morrow* Director December 11, 1995
- --------------------------------------
(Richard M. Morrow)
Dee S. Osborne* Director December 11, 1995
- --------------------------------------
(Dee S. Osborne)
Sam F. Segnar* Director December 11, 1995
- --------------------------------------
(Sam F. Segnar)
Robert W. Shower* Executive Vice President, Chief December 11, 1995
- -------------------------------------- Financial Officer and Director
(Robert W. Shower) (Principal Financial Officer)
George M. Sullivan* Director December 11, 1995
- --------------------------------------
(George M. Sullivan)
*By: /s/ Barry J. Galt
----------------------------------
Barry J. Galt*
Attorney-in-Fact
</TABLE>
II-6
<PAGE> 32
EXHIBIT INDEX
<TABLE>
<CAPTION> Sequential
Number Description Page No.
- ------ ----------- --------
<S> <C>
*1.1 Proposed Form of Underwriting Agreement (Debt Securities).
*1.2 Proposed Form of Underwriting Agreement (Preferred Stock).
*1.3 Proposed Form of Underwriting Agreement (Common Stock).
*1.4 Proposed Form of Underwriting Agreement (Securities Warrants).
**4.1 Form of Debt Securities.
4.2 Senior Indenture by and between the Company and The Bank of New York, as Trustee, dated as of July 15,
1993 (incorporated by reference to Exhibit 4.1 to Current Report on Form 8-K dated August 4, 1993).
4.3 Senior Subordinated Indenture by and between the Company and The Bank of New York, as Trustee, dated as of
July 15, 1993 (incorporated by reference to Exhibit 4.2 to Current Report on Form 8-K dated August 4,
1993).
4.4 Specimen of 7 7/8% Senior Note due 2003 and resolutions adopted by the Chairman of the Board of Directors
(incorporated by reference to Exhibit 4.3 to Current Report on Form 8-K dated August 4, 1993).
4.5 Specimen of 8 5/8% Senior Subordinated Note due 2005 and resolutions adopted by the Chairman of the Board
of Directors (incorporated by reference to Exhibit 4.4 to Current Report on Form 8-K dated August 4,
1993).
4.6 Articles of Incorporation of the Company, as amended, including Articles of Amendment filed May 12, 1988,
May 21, 1991, and May 21, 1993 with the Secretary of State of the State of Texas, that certain Statement
of Relative Rights and Preferences related to the designation and issuance of the Company's $2.25
Convertible Exchangeable Preferred Stock, Series A, filed August 6, 1986 with the Secretary of State of
the State of Texas and that certain Statement of Resolution Establishing Series of Shares of Series B
Junior Participating Preferred Stock of Seagull Energy Corporation filed March 21, 1989 with the Secretary
of State of the State of Texas (incorporated by reference to Exhibit 3.1 to Quarterly Report on Form 10-Q
for the quarter ended June 30, 1993).
4.7 Bylaws of the Company, as amended through March 17, 1995 (incorporated by reference to Exhibit 3.1 to
Quarterly Report on Form 10-Q for the quarter ended March 31, 1995).
4.8 Rights Agreement dated as of March 17, 1989 between the Company and NCNB Texas National Bank, as Rights
Agent, which includes the form of Statement of Resolution setting forth the terms of the Series B Junior
Participating Preferred Stock, par value $1.00 per share, as Exhibit A, the form of Right Certificate as
Exhibit B and the Summary of Rights to Purchase Preferred Shares as Exhibit C (incorporated by reference
to Exhibit 4.8 to Quarterly Report on Form 10-Q for the quarter ended June 30, 1993).
4.9 First Amendment to Rights Agreement by and between the Company and NationsBank of Texas, N.A. (formerly
NCNB Texas National Bank) dated as of June 18, 1992 (incorporated by reference to Exhibit 3.4 to
Registration Statement on Form S-3 (File No. 33-55426)).
**4.10 Form of Securities Warrants.
*4.11 Form of Depositary Agreement.
*4.12 Form of Depositary Receipt.
**5.1 Opinion of Vinson & Elkins L.L.P.
</TABLE>
II-7
<PAGE> 33
<TABLE>
<S> <C>
12.1 Computation of Ratio of Earnings to Fixed Charges.
***23.1 Consent of KPMG Peat Marwick LLP.
*23.2 Consent of Vinson & Elkins L.L.P. (included in Exhibit 5.1).
***23.3 Consent of Ryder Scott Company, independent petroleum engineers.
***23.4 Consent of DeGolyer and MacNaughton, independent consulting petroleum engineers.
***23.5 Consent of Netherland, Sewell & Associates, Inc., independent petroleum engineers.
24.1 Powers of Attorney (contained in the Signatures section of this registration statement).
***25.1 Statements of eligibility of Trustee.
</TABLE>
- ---------------
*To be filed by amendment.
**The Company will file any forms of Debt Securities or Securities Warrants,
or any legal opinions, not previously so filed in a Current Report on
Form 8-K. A qualified legal opinion from Vinson & Elkins L.L.P. is filed
herewith.
***Previously filed.
II-8
<PAGE> 1
EXHIBIT 5.1
VINSON & ELKINS
ATTORNEYS AT LAW
VINSON & ELKINS L.L.P.
2300 FIRST CITY TOWER
1001 FANNIN STREET
HOUSTON, TEXAS 77002-6760
TELEPHONE (713) 758-2222
FAX (713) 758-2346
WRITER'S TELEPHONE WRITER'S FAX
(713) 758-2222 (713) 758-2346
December 11, 1995
Seagull Energy Corporation
1001 Fannin
Suite 1700
Houston, Texas 77060
Re: Seagull Energy Corporation (the "Company"): Registration
Statement on Form S-3 (File No. 33-64051) (the "Registration
Statement") under the Securities Act of 1933 (the "Act")
Ladies and Gentlemen:
We have acted as counsel for the Company, a Texas corporation,
relating to the Company's (i) unsecured debt securities, in one or more series,
consisting of notes, debentures or other evidences of indebtedness (the "Debt
Securities"), (ii) shares of preferred stock, par value $1.00 per share, in one
or more series (the "Preferred Stock"), which may be issued in the form of
depositary shares evidenced by depositary receipts (the "Depositary Shares"),
(iii) shares of common stock, par value $.10 per share (the "Common Stock"),
accompanied by rights to purchase Junior Participating Preferred Stock (the
"Rights"), and (iv) Securities Warrants ("Securities Warrants") to purchase
Debt Securities, Preferred Stock, Depositary Shares or Common Stock to be
issued from time to time pursuant to Rule 415 under the Act for an aggregate
initial offering price not to exceed $300,000,000. Each capitalized term used
herein, unless otherwise defined herein, has the meaning ascribed to it in the
Registration Statement.
Before rendering our opinion, we examined certain corporate records of
the Company, including its Articles of Incorporation, its Bylaws, and certain
resolutions of the Board of Directors of the Company. We also examined the
Registration Statement, together with the exhibits thereto, and such
certificates of officers of the Company, other documents and records as we have
deemed necessary for the purposes of this opinion. As to matters of fact
relevant to the opinions expressed herein, and as to factual matters arising in
connection with our examination of corporate documents, records and other
documents and writings, we relied upon certificates and other communications of
corporate officers of the Company, without further investigation as to the
facts set forth therein.
<PAGE> 2
Seagull Energy Corporation
Page 2
December 11, 1995
In connection with this opinion, we have assumed that (i) the
Registration Statement, and any amendments thereto (including post-effective
amendments), will have become effective; (ii) a Prospectus Supplement will have
been prepared and filed with the Securities and Exchange Commission (the
"Commission") describing the Securities offered thereby; (iii) all Securities
will be issued and sold in compliance with applicable federal and state
securities laws and in the manner stated in the Registration Statement and the
appropriate Prospectus Supplement; (iv) a definitive purchase, underwriting or
similar agreement with respect to any Securities offered will have been duly
authorized and validly executed and delivered by the Company and the other
parties thereto; and (v) any Securities issuable upon conversion, exchange or
exercise of any Security being offered will be duly authorized, created and,
if appropriate, reserved for issuance upon such conversion, exchange or
exercise.
Based upon the foregoing, we are of the opinion that:
(a) with respect to Debt Securities to be issued under either of
the Indentures, when (i) the Indenture have been duly
qualified under the Trust Indenture Act of 1939, as amended;
(ii) the Board (as hereinafter defined) has taken all
necessary corporate action to approve the issuance and terms
of such Debt Securities, the terms of the offering thereof and
related matters; and (iii) such Debt Securities have been duly
executed, authenticated, issued and delivered in accordance
with the provisions of the applicable Indenture and either (a)
in accordance with the applicable definitive purchase,
underwriting or similar agreement approved by the Board upon
payment of the consideration therefor provided for therein, or
(b) upon exercise of any other Security, in accordance with
the terms of such Security or the instrument governing such
Security providing for such exercise as approved by the Board,
for the consideration approved by the Board, such Debt
Securities will be legally issued and will constitute valid
and binding obligations of the Company, enforceable against
the Company in accordance with their terms, except as such
enforcement is subject to any applicable bankruptcy,
insolvency, reorganization or other law relating to or
affecting creditors' rights generally and general principles
of equity;
(b) with respect to shares of Preferred Stock, when (i) the Board
has taken all necessary corporate action to approve the
issuance and terms of the shares of Preferred Stock, the terms
of the offering thereof and related matters, including the
adoption of a statement establishing relative rights and
preferences relating to such Preferred Stock and the filing of
such statement with the Secretary of State of the State of
Texas; and (ii) certificates representing the shares of
Preferred Stock have been duly executed, countersigned,
registered and delivered either (a) in accordance with the
applicable definitive purchase, underwriting or similar
agreement approved by the Board upon payment of the
consideration therefor provided for therein, or (b) upon
exercise of any other Security, in accordance with the terms
of such Security or the instrument governing such Security
providing for such exercise as approved by the Board, for
<PAGE> 3
Seagull Energy Corporation
Page 3
December 11, 1995
the consideration approved by the Board, the shares of
Preferred Stock will be duly authorized, validly issued, fully
paid and nonassessable;
(c) with respect to the Depositary Shares, when the terms of the
Depository Shares and of their issuance and sale have been
duly established in conformity with applicable law, the
Deposit Agreement relating to the Depository Shares has been
duly executed and delivered, and the Preferred Stock that is
represented by Depository Shares has been duly issued and
delivered to the depository as contemplated in paragraph (b)
above, and Depository Receipts evidencing the Depository
Shares have been duly issued against the deposit of Preferred
Stock in accordance with the Deposit Agreement, the Depository
Receipts will be validly issued;
(d) with respect to shares of Common Stock, when (i) the Board of
Directors of the Company or, to the extent permitted by
Article 2.13 of the Texas Business Corporation Act, a duly
constituted and acting committee thereof (such Board of
Directors or committee being referred to herein as the
"Board"), has taken all necessary corporate action to approve
the issuance of and the terms of the offering of the shares of
Common Stock and related matters; and (ii) certificates
representing the shares of Common Stock have been duly
executed, countersigned, registered and delivered either (a)
in accordance with the applicable definitive purchase,
underwriting or similar agreement approved by the Board upon
payment of the consideration therefor (not less than the par
value of the Common Stock) provided for therein, or (b) upon
conversion, exchange or exercise of any other Security in
accordance with the terms of such Security or the instrument
governing such Security providing for such conversion,
exchange or exercise as approved by the Board, for the
consideration approved by the Board (not less than the par
value of the Common Stock), (X) the shares of Common Stock
will be duly authorized, validly issued, fully paid and
nonassessable and (Y) the Rights, assuming that they are
issued prior to the Distribution Date (as defined in the
Rights Agreement) and prior to the redemption or termination
of the Rights, will be validly issued, fully paid,
nonassessable and the holders thereof will be entitled to the
benefits of the Rights Agreement; provided, however, that we
express no opinion as to the anti-dilution provision contained
in the Rights Agreement; and
(e) with respect to the Securities Warrants, when (i) the Board
has taken all necessary corporate action to approve the
creation of and the issuance and terms of the Securities
Warrants, the terms of the offering thereof and related
matters; (ii) the Securities Warrant Agreement and other
agreements relating to the Securities Warrants have been duly
authorized and validly executed and delivered by the Company
and the warrant agent appointed by the Company; and (iii) the
Securities Warrants or certificates representing the
Securities Warrants have been duly executed, countersigned,
registered and delivered in accordance with the appropriate
Securities
<PAGE> 4
Seagull Energy Corporation
Page 4
December 11, 1995
Warrant Agreement, any other agreements relating to the
Securities Warrants and the applicable definitive purchase,
underwriting or similar agreement approved by the Board upon
payment of the consideration therefor provided for therein, the
Securities Warrants will be duly authorized and validly issued.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. By giving such consent, we do not admit that we are
within the category of persons whose consent is required under Section 7 of the
Act or the rules and regulations of the Commission issued thereunder. For
purposes of this opinion, we assume that the securities to be issued pursuant
to the Registration Statement will be issued in compliance with all applicable
state securities or Blue Sky laws.
Very truly yours,
VINSON & ELKINS L.L.P.
<PAGE> 1
Exhibit 12.1
Seagull Energy Corporation
Computation of Ratio of Earnings to Fixed Charges(1)
(In thousands of dollars except ratios)
<TABLE>
<CAPTION>
Nine
Months
Ended Year Ended December 31,
September 30, ------------------------------------------------------------
1995 1994 1993 1992 1991 1990
------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Earnings (loss) before income taxes
and cumulative effect of changes
accounting principles $ (5,740) $ 932 $ 33,278 $ 6,915 $ 5,307 $ 30,789
Fixed Charges:
Interest expense 41,499 51,550 36,753 17,574 17,875 9,340
Capitalized interest 632 632 880 873 1,684 638
-------- -------- -------- -------- -------- --------
Total fixed charges $ 42,131 $ 52,182 $ 37,633 $ 18,447 $ 19,559 $ 9,978
======== ======== ======== ======== ======== ========
Earnings (loss) plus fixed charges
excluding capitalized interest $(35,759) $ 52,482 $ 70,031 $ 24,489 $ 23,182 $ 40,129
======== ======== ======== ======== ======== ========
Ratio of earnings to fixed charges (0.85)(2) 1.01 1.86 1.33 1.19 4.02
======== ======== ======== ======== ======== ========
</TABLE>
(1) For purposes of computing the ratio of earnings to fixed charges: (i)
earnings consist of income from continuing operations before provision for
income taxes and cumulative effect of changes in accounting principles plus
fixed charges as described below, excluding capitalized interest for the
period and (ii) fixed charges consist of interest expensed and capitalized
and amortization of debt discount and expense relating to indebtedness.
(2) For the nine months ended September 30, 1995, the amount of earnings is not
adequate to cover fixed charges by $6,372.
