<PAGE>
FILED PURSUANT TO RULE 424(b)(2)
REGISTRATION NO. 333-11239
PROSPECTUS SUPPLEMENT
(To Prospectus Dated September 13, 1996)
LOGO
$125,000,000
ENERGEN CORPORATION
MEDIUM-TERM NOTES, SERIES A
DUE NINE MONTHS OR MORE FROM DATE OF ISSUE
Energen Corporation (the "Corporation") may offer from time to time its
Medium-Term Notes, Series A (the "Notes") in the aggregate principal amount of
up to $125,000,000. Each Note will mature on a date nine months or more from
its date of issue. Each Note also may be subject to redemption at the option
of the Corporation prior to the date on which such Note matures (the "Stated
Maturity"). See "Supplemental Description of the Notes."
Each Note will bear interest either at a fixed rate (a "Fixed Rate Note"),
which may be zero in the case of certain Original Issue Discount Notes, or at
a floating rate (a "Floating Rate Note") determined by reference to the
Commercial Paper Rate, LIBOR or the Treasury Rate or any other Base Rate or
formula, as selected by the purchaser and agreed to by the Corporation,
adjusted by the Spread or Spread Multiplier, if any, applicable to such Note.
Unless otherwise indicated, interest on each Fixed Rate Note will be payable
semiannually in arrears on each April 1 and October 1 and at Stated Maturity
or redemption, if any.
The interest rate or interest rate formula, Issue Price, Stated Maturity,
Interest Payment Dates, redemption provisions and certain other terms with
respect to each Note will be established at the time of issuance and set forth
in a pricing supplement to this Prospectus Supplement ("Pricing Supplement").
Each Note will be represented by a global security (a "Global Note") issued in
fully registered book-entry form (a "Book-Entry Note") or definitive form (a
"Certificated Note"), as set forth in the applicable Pricing Supplement. Each
Book-Entry Note will be represented by a Global Note deposited with or on
behalf of The Depository Trust Company, or such other depositary as identified
in the applicable Pricing Supplement (the "Depositary") and registered in the
name of the Depositary's nominee. Interests in Book-Entry Notes will be shown
on, and transfers thereof will be effected only through, records maintained by
the Depositary (with respect to its participants) and the Depositary's
participants (with respect to beneficial owners). Book-Entry Notes will not be
issuable as Certificated Notes except under the circumstances described
herein. See "Supplemental Description of the Notes -- Book-Entry Notes."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT, ANY PRICING SUPPLEMENT
HERETO OR THE ACCOMPANYING PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRICE TO AGENTS' PROCEEDS TO
PUBLIC (1) COMMISSIONS (2) COMPANY (2)(3)
<S> <C> <C> <C>
Per Note.............. 100.00% .125%-.750% 99.875%-99.250%
Total................. $125,000,000 $156,250-$937,500 $124,843,750-$124,062,500
</TABLE>
- -------------------------------------------------------------------------------
(1) Unless otherwise specified in the applicable Pricing Supplement, the price
to the public will be 100% of the principal amount.
(2) The Corporation will pay Salomon Brothers Inc, Smith Barney Inc. or A.G.
Edwards & Sons, Inc. each as agent (each, an "Agent" and together, the
"Agents"), a commission ranging from .125% to .750% of the principal
amount of any Note, depending on the Stated Maturity, sold through such
Agent. Commissions with respect to Notes with Stated Maturities in excess
of thirty years which are sold through an Agent will be negotiated between
the Corporation and such Agent at the time of sale. Unless otherwise
indicated in the applicable Pricing Supplement, any Note sold to an Agent
as principal shall be purchased by such Agent at a price equal to 100% of
the principal amount thereof less the percentage equal to the commission
applicable to an agency sale of a Note of identical maturity and may be
resold by such Agent. In connection with the purchase by any Agent as
principal, such Agent may use a selling group and may reallow any portion
of the discount or commission payable to such Agent as principal, to other
dealers or purchasers. The Corporation also may sell Notes directly to
investors in which case no commission will be payable.
(3) Before deduction of expenses payable by the Corporation estimated at
$375,207, and before reimbursement of certain expenses of the Agents.
The Notes are being offered on a continuing basis by the Corporation through
the Agents which have agreed to use their reasonable efforts to solicit offers
to purchase Notes. The Corporation may sell Notes at a discount to any Agent
for its own account or for resale to one or more investors at varying prices
related to prevailing market prices at the time of resale, as determined by
such Agent or, if so specified in an applicable Pricing Supplement, for resale
at a fixed public offering price. The Corporation also may arrange for Notes
to be sold through any Agent acting as principal or may sell Notes directly to
investors on its own behalf. The Notes will not be listed on any securities
exchange, and there can be no assurance that any of the Notes offered by this
Prospectus Supplement will be sold or that there will be a secondary market
for the Notes. The Corporation reserves the right to withdraw, cancel or
modify the offer made hereby without notice. The Corporation or an Agent may
reject an offer, whether or not solicited, in whole or in part. See "Plan of
Distribution."
SALOMON BROTHERS INC
SMITH BARNEY INC.
A.G. EDWARDS & SONS, INC.
The date of this Prospectus Supplement is September 13, 1996.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE AGENTS OR UNDERWRITERS MAY OVER-ALLOT
OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE
NOTES AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT FOR RATIOS AND PERCENTAGES)
The following selected financial data for the years ended September 30, 1995,
1994 and 1993 has been derived from previously published audited consolidated
financial statements of the Corporation, prepared in accordance with generally
accepted accounting principles, which have been examined and reported upon by
Coopers & Lybrand, L.L.P., independent accountants. The selected financial
information for the nine-month periods ended June 30, 1996 and 1995 is
unaudited but, in the opinion of management, all adjustments (consisting of
normal recurring accruals) necessary for a fair presentation have been
included. Operating results for the nine-month period ended June 30, 1996 are
not necessarily indicative of the results that may be expected for the year
ending September 30, 1996. The selected financial information should be read in
conjunction with, and is qualified in its entirety by reference to, the
consolidated financial statements from which it has been derived and the
accompanying notes thereto incorporated by reference herein.
INCOME STATEMENT DATA:
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
JUNE 30, YEARS ENDED SEPTEMBER 30,
----------------- --------------------------
1996 1995 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Operating Revenues............... $336,940 $273,927 $321,204 $377,073 $357,116
Net Income....................... 26,779 25,579 19,308 23,751 18,081
Ratio of Earnings to Fixed
Charges(1)...................... 4.47 5.09 2.95 3.68 3.01
</TABLE>
BALANCE SHEET DATA:
<TABLE>
<CAPTION>
JUNE 30, 1996
----------------
<S> <C> <C>
Total Assets.............................................. $487,589
=========
Utility Plant--Net........................................ $270,187
=========
Short-Term Debt (including current maturities of long-term
debt).................................................... $ 20,825
=========
Long-Term Debt (excluding current maturities):
Notes Payable (the Company)............................. $ 30,652
---------
Notes Payable (Alagasco)................................ $100,000
---------
Total Long-Term Debt.................................. $130,652 40%
---------
Common Stock Equity....................................... $194,657 60%
---------
Total Capitalization.................................. $325,309 100%
=========
</TABLE>
- --------
(1) For purposes of calculation of these ratios, "earnings" consist of net
income to which has been added fixed charges and taxes on income. "Fixed
charges" consist of interest on all indebtedness and amortization of debt
expense.
S-2
<PAGE>
THE CORPORATION
The Corporation is a diversified energy holding company engaged primarily in
natural gas distribution and the exploration and production of natural gas and
oil. The Corporation's principal utility subsidiary, Alabama Gas Corporation
("Alagasco"), is the largest natural gas distribution utility in the State of
Alabama. Alagasco purchases natural gas through interstate and intrastate
suppliers and distributes the purchased gas through its distribution
facilities for sale to residential, commercial, industrial and other end-users
of natural gas. Alagasco also provides distribution services for selected
customers. The Corporation's oil and gas exploration, production and
development activities are conducted by its subsidiary, Taurus Exploration,
Inc. ("Taurus"), and involve the exploration for and the production of natural
gas and oil from both conventional and nonconventional reservoirs. Taurus also
seeks to increase its reserves of natural gas and oil through the acquisition
of such properties.
USE OF PROCEEDS
The Corporation intends to use the net proceeds from the sale of $40,000,000
principal amount of the Notes to repay a portion of the short-term debt
incurred by the Corporation to fund the acquisition of various oil and gas
properties made by Taurus during fiscal 1996, including the purchase of the
Black Warrior Basin coalbed methane properties described in the Corporation's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1996,
incorporated by reference herein. The net proceeds from the sale of the
remaining Notes will be used for the purposes described under "Use of
Proceeds" in the accompanying Prospectus. In the five year period beginning
with fiscal 1996, Taurus plans to invest in excess of $400 million for
property acquisitions and related development and an additional $100 million
for offshore exploration and development.
SUPPLEMENTAL DESCRIPTION OF THE NOTES
The following description of the particular terms of the Notes supplements,
and to the extent inconsistent therewith replaces, the description of the
general terms and provisions of the Notes set forth under "Description of Debt
Securities" in the accompanying Prospectus, to which description reference is
hereby made. Capitalized terms used herein unless noted are defined in the
accompanying Prospectus or in the Indenture.
The following information, which is a general description of the Notes, may
be modified or supplemented by information in the applicable Pricing
Supplement.
GENERAL
The Notes will be issued as a series of debt securities under the Indenture.
The Notes will be limited in aggregate principal amount to $125,000,000.
The Notes will be issued in fully registered form only, without coupons.
Each Note will be issued initially as either a Book-Entry Note or a
Certificated Note. Except as set forth herein under "Book-Entry Notes" or in
any Pricing Supplement relating to specific Notes, the Notes will not be
issuable as Certificated Notes. The authorized denominations of Notes will be
$1,000 and any larger amount that is an integral multiple of $1,000.
Each Note will mature on the date ("Stated Maturity") nine months or more
from its date of issue, as selected by the purchaser and agreed to by the
Corporation and specified in the applicable Pricing Supplement. Each Note also
may be subject to redemption at the option of the Corporation prior to its
Stated Maturity.
S-3
<PAGE>
The Pricing Supplement relating to a Note will describe the following terms:
(i) whether such Note is a Fixed Rate Note or a Floating Rate Note; (ii) the
price (expressed as a percentage of the aggregate principal amount thereof) at
which such Note will be issued (the "Issue Price"); (iii) the date on which
such Note will be issued (the "Original Issue Date"); (iv) the Stated
Maturity; (v) if such Note is a Fixed Rate Note, the rate per annum at which
such Note will bear interest, if any, and the Interest Payment Dates; (vi) if
such Note is a Floating Rate Note, the Base Rate, the Initial Interest Rate,
the Interest Reset Period, the Interest Reset Dates, the Interest Payment
Dates, the Index Maturity, the Maximum Interest Rate, if any, the Minimum
Interest Rate, if any, the Spread or Spread Multiplier, if any (all as defined
below), and any other terms relating to the particular method of calculating
the interest rate for such Notes; (vii) if such Note is an Original Issue
Discount Note (as defined below), a statement to that effect; (viii) if such
Note may be redeemed at the option of the Corporation prior to Stated Maturity
as described under "Redemption" below, a description of the provisions
relating to such redemption, including, in the case of an Original Issue
Discount Note, the information necessary to determine the amount due upon
redemption or acceleration; (ix) any sinking fund or other mandatory
redemption provisions applicable to such Note, and any provisions for the
repayment or purchase by the Corporation of such Note at the option of the
Holder; (x) if such Note will be represented by a Certificated Note, a
statement to that effect; and (xi) any other terms of such Note not
inconsistent with the provisions of the Indenture.
"Interest Payment Date" means for Fixed Rate Notes, unless otherwise
specified in the applicable Pricing Supplement, each April 1 and October 1 and
in the case of Floating Rate Notes has the meaning specified under the caption
"Floating Rate Notes" below.
"Original Issue Discount Note" means any Note which provides for an amount
less than the principal amount thereof to be due and payable upon the
declaration of acceleration of the Stated Maturity thereof, described under
"Description of Debt Securities--Events of Default" in the accompanying
Prospectus.
PAYMENT OF PRINCIPAL AND INTEREST
Payments of interest on the Notes by the paying agent will be made by wire
transfer in immediately available funds (except that interest on Certificated
Notes will be paid by check) to the Holders of such Notes (which, in the case
of Global Notes representing Book-Entry Notes, will be a nominee of the
Depositary (as defined below)) as of the Regular Record Date (as defined
below) for each Interest Payment Date and at Maturity (as defined below);
provided, however, that if the Original Issue Date of a Note is after a
Regular Record Date and before the corresponding Interest Payment Date,
interest for the period from and including the Original Issue Date for such
Note to but excluding such Interest Payment Date will be paid on the next
succeeding Interest Payment Date to the Holder of such Note on the related
Regular Record Date.
The Corporation has appointed The Bank of New York as paying agent for the
Notes. Unless otherwise specified in the applicable Pricing Supplement, the
principal of the Notes and premium, if any, thereon payable at Maturity will
be paid by wire transfer in immediately available funds (except that payments
on Certificated Notes will be made by check except in certain circumstances)
upon surrender thereof at the office of The Bank of New York in New York, New
York which is the principal office for the payment of principal, premium, if
any, or interest on the Notes, or at such other place as may be designated by
the Corporation.
If, with respect to any Fixed Rate Note, any Interest Payment Date,
Redemption Date or Stated Maturity is not a Business Day (as defined below),
payment of amounts due on such Fixed Rate Note on such date may be made on the
next succeeding Business Day as if each such payment were made on the date
such payment were due and no interest shall accrue on such amounts for the
period from
S-4
<PAGE>
and after such Interest Payment Date, Redemption Date or Stated Maturity, as
the case may be, to such Business Day.
If, with respect to any Floating Rate Note, any Interest Payment Date other
than the Stated Maturity or a Redemption Date is not a Business Day, such
Interest Payment Date will be postponed until the next succeeding Business
Day, except that, if such Note is a LIBOR Note (as defined below) and such
next succeeding Business Day is in the next succeeding calendar month, such
Interest Payment Date will be the immediately preceding Business Day. If the
Stated Maturity or Redemption Date of a Floating Rate Note is not a Business
Day, payments of principal and interest due on such Floating Rate Note may be
made on the next succeeding Business Day, and no interest shall accrue on such
amounts for the period from and after such Stated Maturity or Redemption Date,
as the case may be, to such Business Day.
Notwithstanding anything in this Prospectus Supplement to the contrary, if a
Note is an Original Issue Discount Note, the amount payable on such Note in
the event of redemption or repayment prior to its Stated Maturity shall be the
Amortized Face Amount of such Note as of the date of redemption or the date of
repayment, as the case may be. The "Amortized Face Amount" of an Original
Issue Discount Note shall be the amount equal to (i) the Issue Price set forth
in the applicable Pricing Supplement plus (ii) that portion of the difference
between the Issue Price and the principal amount of such Note that has accrued
at the Yield to Maturity set forth in the applicable Pricing Supplement
(computed in accordance with generally accepted United States bond yield
computation principles) as of such date of redemption or repayment, but in no
event shall the Amortized Face Amount of an Original Issue Discount Note
exceed its principal amount.
"Maturity" with respect to any Note means the date on which the principal or
an installment of principal of a Note becomes due and payable, whether at
Stated Maturity, by declaration of acceleration, call for redemption or
otherwise.
The "Regular Record Date" with respect to any Interest Payment Date for a
Floating Rate Note will be the date (whether or not a Business Day) fifteen
calendar days immediately preceding such Interest Payment Date, and for a
Fixed Rate Note (unless otherwise specified in the applicable Pricing
Supplement) shall be the March 15 or September 15 (whether or not a Business
Day) immediately preceding an Interest Payment Date for Fixed Rate Notes.
"Business Day" with respect to any Note means any day, other than a Saturday
or Sunday, which is (1) not a day on which banking institutions or trust
companies in the city in which is located the principal office or agency
maintained for the payment of the principal of or premium, if any, or interest
on such Note are authorized or required by law, regulation or executive order
to remain closed and (ii) if such Note is a LIBOR Note (as defined below), is
also a London Banking Day. "London Banking Day" with respect to any Note means
any day on which dealings in deposits in U.S. dollars are transacted in the
London interbank market.
FIXED RATE NOTES
Each Fixed Rate Note will bear interest from its Original Issue Date at the
rate per annum stated on the face thereof until the principal amount thereof
is paid or made available for payment. Interest payments on Fixed Rate Notes
will equal the amount of interest accrued from and including the next
preceding Interest Payment Date in respect of which interest has been paid (or
from and including the Original Issue Date, if no interest has been paid with
respect to such Fixed Rate Notes), to but excluding the related Interest
Payment Date or Maturity, as the case may be. Unless otherwise set forth in
the applicable Pricing Supplement, interest on each Fixed Rate Note will be
payable semiannually in arrears on each Interest Payment Date and at the
Stated Maturity or a Redemption Date, if any. Each payment of interest in
respect of an Interest Payment Date shall include interest
S-5
<PAGE>
accrued through the day before such Interest Payment Date. Interest on Fixed
Rate Notes will be computed on the basis of a 360-day year of twelve 30-day
months.
FLOATING RATE NOTES
Each Floating Rate Note will bear interest from its Original Issue Date to
the first Interest Reset Date (as defined below) for such Note at the Initial
Interest Rate set forth on the face thereof and in the applicable Pricing
Supplement. Thereafter, the interest rate on such Note for each Interest Reset
Period will be determined by reference to an interest rate basis (the "Base
Rate"), plus or minus the Spread, if any, or multiplied by the Spread
Multiplier, if any. The "Spread" is the number of basis points (one basis
point equals one one-hundredth of a percentage point) that may be specified in
the applicable Pricing Supplement as being applicable to such Note, and the
"Spread Multiplier" is the percentage that may be specified in the applicable
Pricing Supplement as being applicable to such Note. The applicable Pricing
Supplement will designate one of the following Base Rates as applicable to a
Floating Rate Note: (i) the Commercial Paper Rate (a "Commercial Paper Rate
Note"), (ii) LIBOR (a "LIBOR Note"), (iii) the Treasury Rate (a "Treasury Rate
Note"), or (iv) such other Base Rate or formula, as is set forth in such
Pricing Supplement and in such Note. As used herein, the "Index Maturity" for
any Note is the period of maturity of the instrument or obligation from which
the Base Rate is calculated; "H.15 (519)" means the publication entitled
"Statistical Release H.15 (519), Selected Interest Rates," or any successor
publication, published by the Board of Governors of the Federal Reserve
System; and "Composite Quotations" means the daily statistical release
entitled "Composite 3:30 p.m. Quotations for U.S. Government Securities" or
any successor release published by the Federal Reserve Bank of New York.
As specified in the applicable Pricing Supplement, a Floating Rate Note also
may have either or both of the following (in each case expressed as a rate per
annum on a simple interest basis): (i) a maximum limitation, or ceiling, on
the rate at which interest may accrue during any interest period ("Maximum
Interest Rate"), and (ii) a minimum limitation, or floor, on the rate at which
interest may accrue during any interest period ("Minimum Interest Rate"). In
addition to any Maximum Interest Rate that may be applicable to any Floating
Rate Note, the interest rate on a Floating Rate Note will in no event be
higher than the maximum rate permitted by applicable law, as the same may be
modified by United States law of general application.
The Corporation will appoint, and enter into an agreement with, an agent
(the "Calculation Agent") to calculate interest rates on Floating Rate Notes.
Unless otherwise specified in the applicable Pricing Supplement, The Bank of
New York will be the Calculation Agent. All determinations of interest rates
by the Calculation Agent shall, in the absence of manifest error, be
conclusive for all purposes and binding upon the Holders of the Floating Rate
Notes.
The interest rate on each Floating Rate Note will be reset daily, weekly,
monthly, quarterly, semiannually or annually (such period being the "Interest
Reset Period" for such Note, and the first day of each Interest Reset Period
being an "Interest Reset Date"), as specified in the applicable Pricing
Supplement. Unless otherwise specified in the applicable Pricing Supplement,
the Interest Reset Dates will be, in the case of Floating Rate Notes that
reset daily, each Business Day; in the case of Floating Rate Notes (other than
Treasury Rate Notes) that reset weekly, the Wednesday of each week; in the
case of Treasury Rate Notes that reset weekly, the Tuesday of each week
(except as provided below under "Treasury Rate Notes"); in the case of
Floating Rate Notes that reset monthly, the third Wednesday of each month; in
the case of Floating Rate Notes that reset quarterly, the third Wednesday of
March, June, September and December of each year; in the case of Floating Rate
Notes that reset semiannually, the third Wednesday of two months of each year
as specified in the applicable Pricing Supplement; and in the case of Floating
Rate Notes that reset annually, the third Wednesday of one month of each year
as specified in the applicable Pricing Supplement; provided, however, that,
unless otherwise specified in the applicable Pricing Supplement, the interest
rate in
S-6
<PAGE>
effect for the ten days immediately prior to Maturity will be that in effect
on the tenth day preceding maturity. If any Interest Reset Date for any
Floating Rate Note would otherwise be a day that is not a Business Day, such
Interest Reset Date will be postponed to the next succeeding Business Day,
except that, in the case of a LIBOR Note, if such Business Day is in the next
succeeding calendar month, such Interest Reset Date shall be the immediately
preceding Business Day.
Unless otherwise specified in the applicable Pricing Supplement, interest
payable in respect of Floating Rate Notes will be the accrued interest from
and including the Original Issue Date or the last date to which interest has
been paid, as the case may be, to but excluding the immediately succeeding
Interest Payment Date.
Unless otherwise specified in the applicable Pricing Supplement, with
respect to a Floating Rate Note accrued interest will be calculated by
multiplying the principal amount of such Note by an accrued interest factor.
Such accrued interest factor will be computed by adding the interest factors
calculated for each day in the period for which accrued interest is being
calculated. The interest factor (expressed as a decimal calculated to seven
decimal places without rounding) for each such day is computed by dividing the
rate in effect on such day by 360, in the case of Commercial Paper Rate Notes
and LIBOR Notes, or by the actual number of days in the year, in the case of
Treasury Rate Notes. For purposes of making the foregoing calculation, the
interest rate in effect on any Interest Reset Date will be the applicable rate
as reset on such date.
Unless otherwise specified in the applicable Pricing Supplement, all
percentages resulting from any calculation of the rate of interest on a
Floating Rate Note will be rounded, if necessary, to the nearest 1/100,000 of
1% (.0000001), with five one-millionths of a percent point rounded upward, and
all dollar amounts used in or resulting from such calculation on Floating Rate
Notes will be rounded to the nearest cent (with one-half of a cent being
rounded upward).
Unless otherwise indicated in the applicable Pricing Supplement and except
as provided below, interest will be payable in arrears on the following
Interest Payment Dates: in the case of Floating Rate Notes that reset daily,
weekly or monthly, on the third Wednesday of each month or on the third
Wednesday of March, June, September and December of each year, as specified in
the applicable Pricing Supplement; in the case of Floating Rate Notes that
reset quarterly, on the third Wednesday of March, June, September and December
of each year; in the case of Floating Rate Notes that reset semiannually, on
the third Wednesday of each two months of each year specified in the Pricing
Supplement; and in the case of Floating Rate Notes that reset annually, on the
third Wednesday of one month of each year specified in the applicable Pricing
Supplement.
Upon the request of the Holder of any Floating Rate Note, the Calculation
Agent for such Note will provide the interest rate then in effect and, if
determined, the interest rate that will become effective next Interest Reset
Date with respect to such Floating Rate Note.
COMMERCIAL PAPER RATE NOTES
Each Commercial Paper Rate Note will bear interest for each Interest Reset
Period at an interest rate calculated with reference to the Commercial Paper
Rate and the Spread or Spread Multiplier, if any, specified in such Note and
in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the
"Commercial Paper Rate" for each Interest Reset Period will be determined by
the Calculation Agent on the Calculation Date (as defined below) and will be
the Money Market Yield (as defined below) as of the second Business Day prior
to the related Interest Reset Date (a "Commercial Paper Rate Determination
Date") of the rate for commercial paper having the Index Maturity specified in
the applicable Pricing Supplement, as such rate shall be published in
H.15(519) under the heading "Commercial Paper." In the event that such
S-7
<PAGE>
rate is not published prior to 9:00 a.m., New York City time, on the
Calculation Date, then the "Commercial Paper Rate" for such Interest Reset
Period will be the Money Market Yield as of such Commercial Paper Rate
Determination Date of the rate for commercial paper of the specified Index
Maturity as published in Composite Quotations under the heading "Commercial
Paper." If by 3:00 p.m., New York City time, on the Calculation Date such rate
is not yet published in either H.15(519) or Composite Quotations, then the
"Commercial Paper Rate" for such Interest Reset Period shall be the Money
Market Yield of the arithmetic mean of the offered rates, as of 11:00 a.m.,
New York City time, on such Commercial Paper Rate Determination Date of three
leading dealers in commercial paper in The City of New York selected by the
Calculation Agent, in its discretion, for commercial paper of the specified
Index Maturity placed for an industrial issuer whose bonds are rated "AA" or
the equivalent, by a nationally recognized rating agency; provided, however,
that if the dealers selected as aforesaid are not quoting offered rates
described in this sentence, the "Commercial Paper Rate" for such Interest
Reset Period will be deemed to be the same as the Commercial Paper Rate for
the immediately preceding Interest Reset Period (or, if there was no such
Interest Reset Period, the Initial Interest Rate).
"Money Market Yield" will be a yield calculated in accordance with the
following formula:
D X 360
Money Market Yield = __________ X 100
360--(DXM)
where "D" refers to the applicable per annum rate for commercial paper quoted
on a bank discount basis and expressed as a decimal, and "M" refers to the
actual number of days in the period for which interest is being calculated.
The "Calculation Date" pertaining to any Commercial Paper Rate Determination
Date shall be the earlier of (i) the tenth calendar day after such Commercial
Paper Rate Determination Date or, if such day is not a Business Day, the next
succeeding Business Day or (ii) the Business Day preceding the applicable
Interest Payment Date or Maturity, as the case may be.
LIBOR NOTES
Each LIBOR Note will bear interest for each Interest Reset Period at an
interest rate calculated with reference to LIBOR and the Spread or Spread
Multiplier, if any, specified in such Note and in the applicable Pricing
Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "LIBOR" for
each Interest Reset Period will be determined by the Calculation Agent for
such LIBOR Note on the second London Banking Day immediately preceding the
applicable Interest Reset Date (a "LIBOR Determination Date"), as follows:
(i) The Calculation Agent will determine (a) the arithmetic mean of the
offered rates for deposits in U.S. dollars for the period of the Index
Maturity specified in the applicable Pricing Supplement, commencing on the
Interest Reset Date, which appear on the Reuters Screen LIBO Page as of
11:00 a.m., London time, on such LIBOR Determination Date, if at least two
such offered rates appear on the Reuters Screen LIBO Page ("LIBOR
Reuters"), or (b) the offered rate on the LIBOR Determination Date for
deposits in U.S. dollars having the Index Maturity designated in the
applicable Pricing Supplement that appears on the Telerate Page 3750 as of
11:00 a.m. London time, on that LIBOR Determination Date ("LIBOR
Telerate"). "Reuters Screen LIBO Page" means the display designated as page
"LIBO" on the Reuters Monitor Money Rates Service (or such other page as
may replace the LIBO page on that service for the purpose of displaying
London interbank offered rates of major banks). "Telerate Page 3750" means
the display designated as page "3750" on the Telerate Service (or such
other page as may replace
S-8
<PAGE>
the 3750 page on that Service or such other service or services as may be
nominated by the British Bankers' Association for the purpose of displaying
London interbank offered rates for U.S. dollar deposits). If neither LIBOR
Reuters nor LIBOR Telerate is specified in the applicable pricing
supplement, LIBOR will be determined as if LIBOR Telerate had been
specified. In the case where (a) above applies, if fewer than two offered
rates appear on the Reuters Page, or, in the case where (b) above applies,
if no rate appears on the Telerate Page 3750, as applicable, LIBOR with
respect to that Interest Reset Date will be determined as if the parties
had specified the rate described in (ii) below.
(ii) The Calculation Agent will request the principal London office of
each of four major banks in the London interbank market selected by the
Calculation Agent, in its discretion, to provide the Calculation Agent with
its offered quotations for deposits in U.S. dollars for the period of the
specified Index Maturity, commencing on the Interest Reset Date, to prime
banks in the London interbank market at approximately 11:00 a.m., London
time, on such LIBOR Determination Date and in a principal amount equal to
an amount not less than $1,000,000 that is representative of a single
transaction in such market at such time. If at least two such quotations
are provided, "LIBOR" for such Interest Rate Period will be the arithmetic
mean of such quotations. If fewer than two such quotations are provided,
"LIBOR" for such Interest Reset Period will be the arithmetic mean of rates
quoted by three major banks in The City of New York selected by the
Calculation Agent, in its discretion, at a 11:00 a. m., New York City time,
on such LIBOR Determination Date for loans in U.S. dollars to leading
European banks, for the period of the specified Index Maturity commencing
on such Interest Reset Date and in a principal amount equal to an amount
not less than $1,000,000 that is representative of a single transaction in
such market at such time; provided, however, that if fewer than three banks
selected as aforesaid by the Calculation Agent are quoting rates as
described in this sentence, "LIBOR" for such Interest Reset Period will be
deemed to be the same as LIBOR for the immediately preceding Interest Reset
Period (or, if there was no such Interest Reset Period, the Initial
Interest Rate).
TREASURY RATE NOTES
Each Treasury Rate Note will bear interest for each Interest Reset Period at
an interest rate calculated with reference to the Treasury Rate and the Spread
or Spread Multiplier, if any, specified in such Note and in the applicable
Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the
"Treasury Rate" for each Interest Reset Period will be determined by the
Calculation Agent on the Calculation Date (as defined below) and will be the
rate for the auction held on the Treasury Rate Determination Date (as defined
below) for such Interest Reset Period of direct obligations of the United
States ("Treasury bills") having the Index Maturity specified in the
applicable Pricing Supplement, as such rate shall be published in H.15(519)
under the heading "U.S. Government Securities-Treasury bills-Auction Average
(Investment)" or, in the event that such a rate is not published prior to 3:00
p.m., New York City time, on the Calculation Date, the auction average rate
(expressed as a bond equivalent on the basis of a year of 365 or 366 days, as
applicable, and applied on a daily basis) on such Treasury Rate Determination
Date as otherwise announced by the United States Department of the Treasury.
In the event that the results of the auction of Treasury bills having the
specified index Maturity are not published or reported as provided above by
3:00 p.m., New York City time, on such Calculation Date, or if no such auction
is held on such Treasury Rate Determination Date, then the "Treasury Rate" for
such Interest Reset Period will be calculated by the Calculation Agent and
with a yield to maturity (expressed as a bond equivalent on the basis of a
year of 365 or 366 days, as applicable, and applied on a daily basis) of the
arithmetic mean of the secondary market bid rates, as of approximately 3:30
p.m., New York City time, on such Treasury Rate Determination Date, of three
leading primary United States Government securities dealers selected by such
Calculation Agent for the issue of Treasury bills
S-9
<PAGE>
with a remaining maturity closest to the specified Index Maturity; provided,
however, that if the dealers selected as aforesaid by the Calculation Agent
are not quoting bid rates as described in this sentence, then the "Treasury
Rate" for such Interest Reset Period will be deemed to be the same as the
Treasury Rate for the immediately preceding Interest Reset Period (or, if
there was no such Interest Reset Period, the Initial Interest Rate).
The "Treasury Rate Determination Date" for each Interest Reset Period will
be the day of the week in which the Interest Reset Date for such Interest
Reset Period falls on which Treasury bills would normally be auctioned. At the
date of this Prospectus Supplement, Treasury bills are normally sold at
auction on Monday of each week, unless that day is a legal holiday, in which
case the auction is normally held on the following Tuesday, except that such
auction may be held on the preceding Friday. If, as the result of a legal
holiday, an auction is so held on the preceding Friday, such Friday will be
the Treasury Rate Determination Date pertaining to the Interest Reset Period
commencing in the next succeeding week. If an auction date falls on any day
that would otherwise be an Interest Reset Date for a Treasury Rate Note, then
such Interest Reset Date will instead be the Business Day immediately
following such auction date.
The "Calculation Date" pertaining to any Treasury Rate Determination Date
shall be the earlier of (i) the tenth calendar day after such Treasury Rate
Determination Date or, if such day is not a Business Day the next succeeding
Business Day, or (ii) the Business Day preceding the applicable Interest
Payment Date or Maturity, as the case may be.
REDEMPTION
The Pricing Supplement relating to each Note will indicate either that such
Note cannot be redeemed prior to Stated Maturity or that such Note will be
redeemable at the option of the Corporation (subject to any refunding
limitations described therein) in whole or in part, on any date on or after
the date designated as the Initial Redemption Date in such Pricing Supplement,
at prices declining from a specified premium, if any, to par, together with
accrued interest to the date fixed for redemption.
The Pricing Supplement relating to each Note also will specify any sinking
fund or other mandatory redemption provisions applicable to such Note, and any
provisions for the repayment or purchase by the Corporation of such Note at
the option of the Holder.
BOOK-ENTRY NOTES
Book-Entry Notes will be issued in the form of one or more Global Notes that
will be deposited with, or on behalf of, The Depository Trust Company, New
York, New York ("DTC"), or such other depositary as may be subsequently
designated by the Corporation (the "Depositary"), and registered in the name
of a nominee of the Depositary.
Upon issuance, all Book-Entry Notes having the same issue price, Original
Issue Date, interest rate, redemption provisions and Stated Maturity will be
represented by one or more Global Notes. Book-Entry Notes will not be
exchangeable for Certificated Notes and, except under the circumstances
described below, will not otherwise be issuable as Certificated Notes.
So long as the Depositary for a Global Note, or its nominee, is the
registered owner of such Global Note, such Depositary or such nominee, as the
case may be, will be considered the sole owner or holder of the individual
Book-Entry Notes represented by such Global Note for all purposes under the
Indenture. Payments of principal of and premium, if any, and any interest on
individual Book-Entry Notes represented by a Global Note will be made to the
Depositary or its nominee, as the case may be, as the Holder of such Global
Note. Except as set forth below, owners of beneficial interests in a Global
Note will not be entitled to have any of the individual Book-Entry Notes
represented by such
S-10
<PAGE>
Global Note registered in their names, will not receive or be entitled to
receive physical delivery of any such Book-Entry Notes and will not be
considered the Holders thereof under the Indenture, including, without
limitation, for purposes of consenting to any amendment or supplement to the
Indenture.
DTC currently accepts only Global Notes denominated in U.S. dollars.
If the Depositary is at any time unwilling or unable to continue as
depositary and a successor depositary is not appointed, the Corporation will
issue individual Certificated Notes in exchange for the Global Note or Notes
representing the corresponding Book-Entry Notes. In addition, the Corporation
may at any time and in its sole discretion determine not to have any
particular Book-Entry Notes represented by one or more Global Notes and, in
such event, will issue individual Certificated Notes in exchange for the
Global Notes representing the corresponding Book-Entry Notes. In any such
instance, an owner of a Book-Entry Note represented by a Global Note will be
entitled to physical delivery of individual Certificated Notes equal in
principal amount to such Book-Entry Note and to have such Certificated Notes
registered in its name. Individual Certificated Notes so issued will be issued
as registered Notes in denominations, unless otherwise specified by the
Corporation, of $1,000 and integral multiples thereof.
The following is based solely upon information furnished by the Depositary:
1. DTC will act as securities depositary for the Global Notes. The Global
Notes will be issued as fully-registered securities registered in the name
of Cede & Co. (DTC's partnership nominee). One fully-registered Global Note
will be issued for each issue of the Notes having the same issue date and
terms, each in the aggregate principal amount of such issue, and will be
deposited with DTC.
2. DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code,
and a "clearing agency" registered pursuant to the provisions of Section
17A of the Securities Exchange Act of 1934. DTC holds securities that its
participants ("Participants") deposit with DTC. DTC also facilitates the
settlement among Participants of securities transactions, such as transfers
and pledges, in deposited securities through electronic computerized book-
entry changes in Participants' accounts, thereby eliminating the need for
physical movement of securities certificates. Direct participants ("Direct
Participants") include securities brokers and dealers, banks, trust
companies, clearing corporations and certain other organizations. DTC is
owned by a number of its Direct Participants and by the New York Stock
Exchange, Inc., the American Stock Exchange, Inc. and the National
Association of Securities Dealers, Inc. Access to the DTC system is also
available to others such as securities brokers and dealers, banks, and
trust companies that clear through or maintain a custodial relationship
with a Direct Participant, either directly or indirectly ("Indirect
Participants"). The rules applicable to DTC and its Participants are on
file with the Securities and Exchange Commission (the "Commission").
3. Purchases of Notes under the DTC system must be made by or through
Direct Participants, which will receive a credit for the Notes on DTC's
records. The ownership interest of each actual purchaser of each Note
("Beneficial Owner") is in turn to be recorded on the Direct and Indirect
Participants' records. Beneficial Owners will not receive written
confirmation from DTC of their purchase, but Beneficial Owners are expected
to receive written confirmations providing details of the transaction, as
well as periodic statements of their holdings, from the Direct or Indirect
Participant through which the Beneficial Owner entered into the
transaction. Transfers of ownership interests in the Notes are to be
accomplished by entries made on the books of Participants acting on behalf
of Beneficial Owners. Beneficial Owners will not receive certificates
representing their ownership interests in Notes, except in the event that
use of the book-entry system for the Notes is discontinued.
S-11
<PAGE>
4. To facilitate subsequent transfers, all Global Notes deposited by
Participants with DTC are registered in the name of DTC's partnership
nominee, Cede & Co. The deposit of Global Notes with DTC and their
registration in the name of Cede & Co. effect no change in beneficial
ownership of the Notes. DTC has no knowledge of the actual Beneficial
Owners of the Notes; DTC's records reflect only the identity of the Direct
Participants to whose accounts such Notes are credited, which may or may
not be the Beneficial Owners. The Participants will remain responsible for
keeping account of their holdings on behalf of their customers.
5. Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants and by Direct
Participants and Indirect Participants to Beneficial Owners will be
governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
6. Redemption notices shall be sent to Cede & Co. If less than all of the
Notes within an issue are being redeemed, DTC's practice is to determine by
lot the amount of the interest of each Direct Participant in such issue to
be redeemed.
7. Neither DTC nor Cede & Co. will consent or vote with respect to the
Notes. Under its usual procedures, DTC mails an Omnibus Proxy to the
Corporation as soon as possible after the record date. The Omnibus Proxy
assigns Cede & Co.'s consenting or voting rights to those Direct
Participants to whose accounts the Notes are credited on the record date
(identified in a listing attached to the Omnibus Proxy).
8. Principal and interest payments on the Notes will be made to DTC.
DTC's practice is to credit Direct Participants' accounts on the date on
which interest is payable in accordance with their respective holdings
shown on DTC's records unless DTC has reason to believe that it will not
receive payment on such date. Payments by Participants to Beneficial Owners
will be governed by standing instructions and customary practices, as is
the case with securities held for the accounts of customers in bearer form
or registered in "street name," and will be the responsibility of such
Participant and not of DTC, the Agents or the Corporation, subject to any
statutory or regulatory requirements as may be in effect from time to time.
Payment of principal and interest to DTC is the responsibility of the
Trustee. Disbursement of such payments to Direct Participants shall be the
responsibility of DTC and disbursement of such payments to the Beneficial
Owners shall be the responsibility of Direct and Indirect Participants.
9. DTC may discontinue providing its services as securities depositary
with respect to the Notes at any time by giving reasonable notice to the
Corporation and the Trustee. Under such circumstances, in the event that a
successor securities depositary is not obtained, Notes in certificated form
are required to be printed and delivered.
10. The Corporation may decide to discontinue use of the system of book-
entry transfers through DTC (or a successor securities depositary). In that
event, Notes in certificated form will be printed and delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources (including DTC) that the Corporation believes
to be reliable, but the Corporation takes no responsibility for the accuracy
thereof.
NONE OF THE CORPORATION, THE TRUSTEE, THE AGENTS OR ANY AGENT FOR PAYMENT ON
OR REGISTRATION OF TRANSFER OR EXCHANGE OF ANY GLOBAL NOTE WILL HAVE ANY
RESPONSIBILITY OR LIABILITY FOR ANY ASPECT OF THE RECORDS RELATING TO OR
PAYMENTS MADE ON ACCOUNT OF BENEFICIAL INTERESTS IN ANY GLOBAL NOTE OR FOR
MAINTAINING, SUPERVISING OR REVIEWING ANY RECORDS RELATING TO SUCH BENEFICIAL
INTERESTS.
S-12
<PAGE>
CERTAIN TAX CONSIDERATIONS
GENERAL
The following is a summary of certain United States federal income tax
considerations that may be relevant to a holder of a Note who is subject to
United States income taxation on a net income basis in respect of a Note (an
"Owner"). This summary deals only with Owners who will hold Notes as capital
assets, and does not address tax considerations applicable to (i) holders that
may be subject to special tax rules, such as banks, insurance companies, or
tax-exempt organizations, (ii) holders whose "functional currency" is not the
U.S. dollar, (iii) dealers in securities, or (iv) holders of Notes as a
position in a "straddle" for tax purposes.
This summary is based on laws, existing and proposed regulations,
administrative rulings, and judicial decisions as of the date hereof, all of
which are subject to change so as to result in federal income tax consequences
different from those discussed below. Prospective Investors should consult
their own tax advisors in determining the tax consequences to them of
purchasing, holding, or disposing of Notes, including the application to their
particular situation of the tax considerations discussed below, as well as the
application of state, local or other tax laws and prospects for enactment of
future tax legislation or promulgation of regulations.
INTEREST AND ORIGINAL ISSUE DISCOUNT
Payments of interest on a Note (other than an Original Issue Discount Note
as defined below) generally will be taxable to an Owner as ordinary interest
income at the time that such payments are accrued or are received (in
accordance with the Owner's method of tax accounting).
A Note may be issued for an amount that is less than its stated redemption
price at Stated Maturity. The difference will be original issue discount
("OID") unless the following de minimis tests are satisfied. (A Note Issued
with OID is referred to in this section as an "Original Issue Discount Note.")
The amount of discount is de minimis if it is less than 0.25 percent of the
stated redemption price at Stated Maturity multiplied by the number of full
years to maturity. Notice will be given in the appropriate Pricing Supplement
when the Corporation determines a particular Note will be an Original Issue
Discount Note.
Under applicable Treasury Regulations, the "stated redemption price at
maturity" of a Note is the sum of all payments in respect of the Note other
than "qualified stated interest" payments. In general, the term "qualified
stated interest" includes stated interest that is unconditionally payable at
least annually at a single fixed rate, a single "qualified floating rate" (a
rate that can reasonably be expected to measure contemporaneous variations in
the cost of newly borrowed funds), a single qualified floating rate followed
by one or more qualified floating rates, a single fixed rate followed by one
or more qualified floating rates or a single "objective rate." An "objective
rate" includes a rate (other than a qualified floating rate) determined by a
single formula fixed throughout the term of the Note and based on the price of
property that is actively traded, or an index of the prices of such property,
or one or more qualified floating rates.
Owners of Original Issue Discount Notes should be aware that they must, in
general, include OID income in advance of the receipt of some or all of the
related cash payments. With respect to Original Issue Discount Notes having a
term in excess of one year, the amount of OID includible in income with
respect to a Note is the sum of the "daily portions" of the OID with respect
to such Note for each day during the taxable year or portion thereof in which
such Owner held such Note. To determine the "daily portion" of OID on any Note
with OID, OID accruing during an accrual period (generally, the period between
dates on which interest is paid) is divided by the number of days in the
accrual period. An "accrual period" may be of any length and may vary in
length over the term of the Note, provided that each accrual period is no
longer than one year and each scheduled payment of principal or interest
S-13
<PAGE>
occurs either on the final day of an accrual period or on the first day of an
accrual period. The amount of the OID accruing during an accrual period is
equal to the excess of (i) the product of the Note's adjusted issue price at
the beginning of the accrual period and its yield to maturity (determined on
the basis of compounding at the close of each accrual period and appropriately
adjusted to take into account the length of the particular accrual period)
over (ii) the amount of any qualified stated interest payments allocable to
the accrual period. A Note's "adjusted issue price" at the beginning of any
accrual period generally equals the sum of (i) the issue price of the Note
plus (ii) the accrued OID for each prior accrual period, reduced by the amount
of any payments on the Note for each prior accrual period other than payments
of qualified stated interest. Under these rules, Owners generally will have to
include in income increasingly greater amounts of OID in successive accrual
periods. Accrued OID must be included in income by subsequent as well as
original Owners of Original Issue Discount Notes. See "--Premium and Market
Discount."
In certain cases, specifically where interest payments are deemed not to be
qualified stated interest or to be contingent, Notes that bear interest from a
non-tax standpoint may be deemed instead to bear OID for federal income tax
purposes, with the result that the inclusion of interest in income for federal
income tax purposes may vary from the actual payments of interest on such
Notes, generally accelerating income for cash method taxpayers. For these
purposes, the Treasury Regulations provide rules for determining whether
payments on a Floating Rate Note will be treated as payments of qualified
stated interest. The Pricing Supplement for any series of Notes will specify
whether they are Original Issue Discount Notes subject to these rules.
In the case of Original Issue Discount Notes having a term of one year or
less ("Short-Term OID Notes"), OID is included in income currently either on a
straight-line basis or, if the Owner so elects, under the constant yield
method used generally for OID. However, certain categories of Owners
(generally individuals or other cash method taxpayers) are not required to
include accrued OID on Short-Term OID Notes in their income currently unless
they elect to do so. If such an Owner that does not elect to currently include
the OID in income subsequently recognizes a gain upon the disposition of the
Note, such gain will be treated as ordinary interest income to the extent of
the accrued OID. Furthermore, such an Owner of a Short-Term OID Note may be
required to defer deductions for a portion of the Owner's interest expenses
with respect to any indebtedness incurred or maintained to purchase or carry
such a Note. In the case of Owners that are required to include OID on Short-
Term OID Notes in income currently, the amount of accrued OID included in
income will be added to the Owner's tax basis in the Note.
Certain of the Notes may be redeemable at the option of the Corporation
prior to their Stated Maturity. The treatment of such Notes may differ from
the treatment discussed above and the treatment of Notes with premium, as
discussed below, and investors intending to purchase such Notes should consult
their tax advisors.
Since the Notes are publicly offered, i.e., registered with the Commission,
the Corporation is not obligated to provide information on the face of debt
instruments with respect to OID. The Corporation will provide annual
information statements to the holders (other than corporations and other
exempt holders) of Original Issue Discount Notes and to the Internal Revenue
Service regarding the amount of OID determined to be attributable to such
Notes for that year; however, the amount reported by the Corporation may not
equal the amount of OID required to be included in income by an Owner that is
not an initial purchaser of the Notes. Prospective investors are advised to
consult their tax advisors with respect to the particular OID characteristics
of any Original Issue Discount Note.
BASIS AND SALE, EXCHANGE OR RETIREMENT
An Owner's tax basis in a Note generally will equal the cost of such Note to
such Owner, increased by any amounts includable in income by the Owner as OID
or market discount (as described below) and reduced by any amortized
acquisition premium (as described below) and any payments other than qualified
stated interest made on such Note. Upon the sale, exchange or retirement of a
S-14
<PAGE>
Note, an Owner generally will recognize gain or loss equal to the difference
between the amount realized on the sale, exchange or retirement (less any
accrued interest, which will be taxable as such) and the Owner's tax basis in
the Note.
Special rules may apply to the treatment of gain realized with respect to
certain Short-Term OID Notes where an Owner has not currently included accrued
OID income. See "--Interest and Original Issue Discount."
Except as discussed above, and below with respect to market discount, gain
or loss recognized by an Owner on the sale, exchange or retirement of a Note
generally will be long-term capital gain or loss if the Owner has held the
Note for more than one year at the time of disposition. Under current law, net
capital gains are, under certain circumstances, taxed at lower rates than
ordinary income and net short-term capital gains. The distinction between
capital gain or loss and ordinary income or loss is also important, for
example, for purposes of the limitations on an Owner's ability to offset long-
term capital losses against short-term capital gains, as well as the Owner's
ability to offset capital losses against ordinary income and for determining
the allowance for charitable deductions.
PREMIUM AND MARKET DISCOUNT
An Owner who purchases an Original Issue Discount Note for an amount that is
greater than its "adjusted issue price" (defined as the sum of the issue price
of the Note and the aggregate amount of the OID includable, without regard to
the rules for premium discussed below, in the gross income of any previous
holder of the Note, less any payment previously made on the Note other than a
payment of qualified stated interest) as of the purchase date, but less than
the sum of all amounts payable on the Original Issue Discount Note after the
purchase date other than qualified stated interest, will be considered to have
purchased such Note at an "acquisition premium." The amount of OID that such
Owner must include in gross income with respect to such Note for any taxable
year is generally reduced by the portion of such acquisition premium properly
allocable to such year. If an Owner purchases a Note for an amount that is
greater than its stated redemption price at maturity, such Note will have no
OID and such Owner may elect to amortize such premium, using a constant
interest method, generally over the remaining term of the Note. Such premium
shall be deemed to be an offset to interest otherwise includable under a Note.
Amortizable bond premium on a Note held by an Owner that does not make such an
election will decrease the gain or increase the loss otherwise recognized on
disposition of the Note. Other rules may apply if the Owner made an election
to treat all interest received on Original Issue Discount Notes as OID.
If the Owner purchases a Note that is not an Original Issue Discount Note
for an amount that is less than its stated redemption price at maturity or, in
the case of an Original Issue Discount Note, for an amount that is less than
its revised issue price (defined as the sum of the issue price of the Original
Issue Discount Note and the aggregate amount of the OID includable in the
gross income of any previous holder of the Original Issue Discount Note
(disregarding any reduction on account of acquisition premium), presumably
less any cash payment (other than qualified stated interest) previously made
on the Original Issue Discount Note) as of the purchase date, the amount of
the difference generally will be treated as "market discount" for federal
income tax purposes, unless such difference is less than a specified de
minimis amount. The market discount rules also do not apply to Short-Term OID
Notes or installment obligations. Under the market discount rules, an Owner
will be required to treat any principal payment on, or any gain on the sale,
exchange, retirement or other disposition of, a Note as ordinary income to the
extent of the market discount that has not previously been included in income
and is treated as having accrued on such Note at the time of such payment
S-15
<PAGE>
or disposition. In addition, the Owner may be required to defer, until the
Stated Maturity of the Note or its earlier disposition in a taxable
transaction, the deduction of all or a portion of the interest expense on any
indebtedness incurred or continued to purchase or carry such Note.
Any market discount will be considered to accrue ratably during the period
from the date of acquisition to the maturity date of the Note, unless the
Owner elects to accrue on a constant interest
method. An Owner of a Note may elect to include market discount in income
currently as it accrues (under either the ratable or constant interest
method), in which case the rule described above regarding deferral of interest
deductions will not apply. This election to include market discount in income
currently, once made, applies to all market discount obligations acquired in
or after the first taxable year to which the election applies and may not be
revoked without the consent of the Internal Revenue Service. Other rules may
apply if the Owner made an election to treat all interest received on Original
Issue Discount Notes as OID.
BACKUP WITHHOLDING
In general, if a non-corporate Owner fails to furnish a correct taxpayer
identification number or certification of foreign or other exempt status,
fails to report dividend and interest income in full, or fails to certify that
such Owner has provided a correct taxpayer identification number and is not
subject to backup withholding, a 31% federal backup withholding tax may be
withheld on amounts of interest payable to the Owner. An individual's taxpayer
identification number is his or her social security number. The backup
withholding tax is not an additional tax and may be credited against an
Owner's regular federal income tax liability or refunded by the IRS where
applicable.
PLAN OF DISTRIBUTION
The Notes are being offered on a continuing basis by the Corporation through
the Agents, which have agreed to use their reasonable efforts to solicit
offers to purchase Notes. Initial purchasers may propose certain terms of the
Notes, but the Corporation will have the right to accept orders to purchase
Notes and may reject proposed purchases in whole or in part. The Agents will
have the right, in their discretion reasonably exercised and without notice to
the Corporation, to reject any proposed purchase of Notes in whole or in part.
The Corporation will pay each Agent a commission ranging from .125% to .750%
of the principal amount of Notes sold through it, depending upon Stated
Maturity. Commissions with respect to Notes with Stated Maturities in excess
of thirty years which are sold through an Agent will be negotiated between the
Corporation and such Agent at the time of sale, and such commissions will be
set forth in the applicable Pricing Supplement. The Corporation may arrange
for Notes to be sold through any Agent acting as principal or may sell Notes
directly to investors on its own behalf. In the case of sales made directly by
the Corporation, no commission or discount will be paid or allowed. The
Corporation also may sell Notes to any Agent as principal for its own account
at a price to be agreed upon at the time of sale. Unless otherwise indicated
in the applicable Pricing Supplement, any Note sold to an Agent as principal
shall be purchased by such Agent at a price equal to 100% of the principal
amount thereof less the percentage equal to the commission applicable to an
agency sale of a Note of identical maturity and may be resold by such Agent.
In connection with the purchase by any Agent as principal, such Agent may use
a selling group and may reallow any portion of the discount or commission
payable to such Agent to other dealers or purchasers. Such Notes may be resold
at prevailing market prices, or at prices related thereto, at the time of such
resale, as determined by such Agent or, if so specified in an applicable
Pricing Supplement, for resale at a fixed public offering price. After the
initial public offering of Notes, the public offering price (in the case of
Notes to be resold at a fixed public offering price), the commission and the
discount may be changed.
S-16
<PAGE>
No Note will have an established trading market when issued. The Notes will
not be listed on any securities exchange. The Agents may make a market in the
Notes, but the Agents are not obligated to do so and may discontinue any
market-making at any time without notice. There can be no assurance of a
secondary market for any Notes, or that the Notes will be sold.
The Agents, whether acting as agent or principal, may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933, as amended.
The Corporation has agreed to indemnify the Agents, and the Agents have agreed
to indemnify the Corporation, against certain liabilities, including
liabilities under the Securities Act of 1933, as amended, or to contribute to
payments that the Agents or the Corporation, respectively, may be required to
make in respect thereof.
Salomon Brothers Inc, Smith Barney Inc., A.G. Edwards & Sons, Inc. and
certain affiliates thereof engage in transactions with and perform services
for the Corporation and its affiliates in the ordinary course of business.
S-17
<PAGE>
PROSPECTUS
$250,000,000
ENERGEN CORPORATION
DEBT SECURITIES
COMMON STOCK
Energen Corporation (the "Corporation") may offer from time to time up to an
aggregate amount of $250,000,000 (or the equivalent thereof if any of the
securities offered hereby are denominated in a currency, currency unit or
composite currency other than the U.S. dollar) of (i) its notes, debentures or
other evidences of unsecured indebtedness (the "Debt Securities") in one or
more currencies on terms to be determined at the time of sale and (ii) shares
of its common stock, par value $.01 per share (the "Common Stock"), on terms
to be determined at the time of sale. The Common Stock is referred to herein
as the "Equity Securities," and the Debt Securities and the Equity Securities
are collectively referred to herein as the "Offered Securities." The Offered
Securities may be sold for U.S. Dollars, foreign currencies or foreign
currency units, and the principal of or any interest on the Debt Securities
may be payable in U.S. Dollars, foreign currencies or foreign currency units.
The Debt Securities will rank equally with all other outstanding unsecured
senior indebtedness of the Corporation. The Debt Securities may be issued in
one or more series with the same or various maturities, at par or with an
original issue discount. The Debt Securities of any series may be in
registered or bearer form and may be represented by a single global security
registered in the name of a securities depositary.
When Debt Securities are offered, a supplement to this Prospectus (the
"Prospectus Supplement") will set forth the specific terms of such Debt
Securities, including, where applicable, the specific designation, aggregate
principal amount, authorized denominations, currency or currency unit of
denomination and payment, maturity, interest rate (which may be fixed or
variable) and time of payment of interest, if any, any terms for redemption
(which either may be at the option of the Corporation or the holder), any
terms for sinking fund payments, and information about any listing on a
securities exchange of such Debt Securities. When Equity Securities are
offered, a Prospectus Supplement will set forth the aggregate number of shares
offered. Any Prospectus Supplement will also set forth the initial public
offering price, the net proceeds to the Corporation and other specific terms
of the Offered Securities.
The Offered Securities may be sold to or through underwriters, dealers or
agents, or directly to purchasers. If any agents of the Corporation or any
underwriters are involved in the sale of the Offered Securities, their names,
and any applicable fee, commission or discount arrangements with them will be
set forth in any applicable Prospectus Supplement. See "Plan of Distribution."
No Offered Securities may be sold without delivery of a Prospectus Supplement
describing such series or issue of Offered Securities and the method and the
terms thereof.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
The date of this Prospectus is September 13, 1996.
<PAGE>
AVAILABLE INFORMATION
The Corporation is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith, files reports and other information with the Securities and
Exchange Commission (the "Commission"). Reports, proxy and information
statements and other information filed by the Corporation can be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549 and at the Commission's regional
offices at 7 World Trade Center, Suite 1300, New York, New York 10048 and 500
West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such
material also can be obtained at prescribed rates from the Public Reference
Section of the Commission at its principal office at 450 Fifth Street, N.W.,
Washington, D.C. 20549. The Commission also maintains a web site
(http://www.sec.gov) that contains reports, proxy and information statements
and other information regarding reporting companies, including the
Corporation. The shares of Common Stock of the Corporation are listed on the
New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005.
Reports, proxy and information statements and other information concerning the
Corporation can be inspected at the offices of that exchange.
The Corporation has filed a Registration Statement on Form S-3 (herein,
together with all exhibits and amendments thereto, called the "Registration
Statement") with the Commission under the Securities Act of 1933, as amended
(the "Securities Act"), with respect to the Offered Securities. This
Prospectus does not contain all of the information included in the
Registration Statement and the exhibits and schedules thereto. For further
information with respect to the Corporation and the Offered Securities,
reference is hereby made to the Registration Statement and the exhibits and
schedules thereto. The registration statement may be inspected without charge
at the offices of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, and copies thereof may be obtained from the Public Reference Section of
the Commission at such address at prescribed rates.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Corporation with the Commission are
incorporated by reference in the Prospectus:
(a) The Corporation's Annual Report on Form 10-K for the year ended
September 30, 1995 filed pursuant to Section 13(a) of the Exchange Act;
(b) The Corporation's Quarterly Reports on Form 10-Q for the quarters
ended December 31, 1995, March 31, 1996, and June 30, 1996 filed pursuant
to Section 13(a) of the Exchange Act;
(c) The Corporation's Current Report on Form 8-K filed August 23, 1996,
as amended by the Corporation's Amendment No. 1 to Form 8-K on Form 8-K/A
filed September 3, 1996, each filed pursuant to Section 13(a) of the
Exchange Act;
(d) The description of the Corporation's preferred stock purchase rights
contained in, and the Rights Agreement filed as an exhibit to, the
Corporation's Registration Statement on Form 8-A, as amended, File No. 1-
7810, dated August 8, 1988.
All documents filed by the Corporation pursuant to Sections 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of the offering of the securities offered hereby
shall be deemed to be incorporated by reference in this Prospectus and to be a
part hereof from the date of filing such documents. Any statement contained in
a document incorporated or deemed to be incorporated by reference herein shall
be deemed to be modified or superseded, for purposes of this Prospectus, to
the extent that a statement contained herein or in any other subsequently
filed document which also is or is deemed to be incorporated by reference
herein modifies or replaces such statement. Any statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The information relating to the Company contained in this Prospectus
summarizes, is based upon, or refers to, information and financial statements
contained in one or more of the documents incorporated by reference in
2
<PAGE>
this Prospectus; accordingly, such information contained herein is qualified
in its entirety by reference to such incorporated documents and should be read
in conjunction therewith.
The Corporation will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon the
written or oral request of such person, a copy of any and all of the
information that has been incorporated by reference in the Prospectus (not
including exhibits to the information that is incorporated by reference in the
Prospectus unless such exhibits are specifically incorporated by reference
into the information that the Prospectus incorporates). Requests for such
copies should be addressed to Energen Corporation, Investor Relations
Department, 2101 Sixth Avenue North, Birmingham, Alabama 35203 (telephone
number (800) 654-3206 or (205) 326-2634).
ENERGEN CORPORATION
The Corporation is a diversified energy holding company engaged primarily in
natural gas distribution and the exploration and production of natural gas and
oil. The Corporation's principal utility subsidiary, Alabama Gas Corporation
("Alagasco"), is the largest natural gas distribution utility in the State of
Alabama. Alagasco purchases natural gas through interstate and intrastate
suppliers and distributes the purchased gas through its distribution
facilities for sale to residential, commercial, industrial and other end-users
of natural gas. Alagasco also provides distribution services for selected
customers. The Corporation's oil and gas exploration, production and
development activities are conducted by its subsidiary, Taurus Exploration,
Inc. ("Taurus"), and involve the exploration for and the production of natural
gas and oil from both conventional and nonconventional reservoirs. Taurus also
seeks to increase its reserves of natural gas and oil through the acquisition
of such properties.
The Corporation's executive offices are located at 2101 Sixth Avenue North,
Birmingham, Alabama 35203, and its telephone number is (205) 326-2700.
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
The following are the consolidated ratios of earnings to fixed charges for
each of the periods indicated:
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
------------------------ NINE MONTHS ENDED
1995 1994 1993 1992 1991 JUNE 30, 1996
---- ---- ---- ---- ---- -----------------
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed
Charges....................... 2.95 3.68 3.01 2.52 2.28 4.47
</TABLE>
For purposes of computing the consolidated ratio, earnings represent net
income applicable to Common Stock, plus applicable income taxes and fixed
charges. Fixed charges represent interest expense, capitalized interest and
amortization of debt expense.
3
<PAGE>
USE OF PROCEEDS
Except as may otherwise be described or referred to in a Prospectus
Supplement, the Company intends to use the net proceeds from the sale of the
Offered Securities for general corporate purposes, including the Corporation's
working capital needs, the funding of investments in, or extensions of credit
to, its subsidiaries, the possible acquisition of other corporations or their
assets or liabilities, including the acquisition of natural gas and oil
properties, the reduction of short-term or other outstanding indebtedness and
the funding of Alagasco's share of supplier refunds due customers in
accordance with the settlement of certain rate cases between Southern Natural
Gas Company and the Federal Energy Regulatory Commission. Pending such use,
the Corporation may temporarily invest the net proceeds in investment grade
securities. The Corporation may, from time to time, engage in additional
capital financings of a character and in amounts to be determined by the
Corporation in light of its need at such time or times and in light of
prevailing market conditions.
DESCRIPTION OF DEBT SECURITIES
The following description of the terms of the Debt Securities sets forth
certain general terms and provisions of the Debt Securities to which any
applicable Prospectus Supplement may relate. The particular terms of the Debt
Securities offered by any applicable Prospectus Supplement (the "Offered Debt
Securities") and the extent, if any, to which such general provisions may
apply to the Debt Securities so offered will be described in the Prospectus
Supplement relating to such Offered Debt Securities.
The Debt Securities will be issued under an Indenture (the "Indenture")
between the Corporation and The Bank of New York (the "Trustee"). A copy of
the Indenture is filed as an exhibit to this Registration Statement. The
following summaries of the Debt Securities and the Indenture do not purport to
be complete and are subject to, and are qualified in their entirety by
reference to, all the provisions of the Indenture, including the applicable
definitions therein of certain terms used in this Prospectus. All capitalized
terms not defined in this Prospectus shall have the definitions ascribed to
them in the Indenture. Copies of the Indenture are available for inspection
during normal business hours at the principal office of the Corporation or at
the corporate trust office of the Trustee.
GENERAL
The Debt Securities will be direct, unsecured obligations of the Corporation
and will rank pari passu with all outstanding unsecured senior indebtedness of
the Corporation. The Indenture does not limit the aggregate principal amount
of Debt Securities that may be issued thereunder and provides that Debt
Securities may be issued thereunder from time to time in one or more series.
All securities issued under the Indenture will rank equally and ratably with
all other securities to be issued under such Indenture.
The Debt Securities will be obligations exclusively of the Corporation.
Since substantially all of the operations of the Corporation are conducted
through its subsidiaries, principally Alagasco and Taurus, the Corporation's
cash flow and consequently its ability to service debt is dependent upon the
cash flow of its subsidiaries and the payment of funds by those subsidiaries
in the form of dividends.
The Prospectus Supplement and any related Pricing Supplement will describe
certain terms of the Offered Debt Securities, including: (1) the title of the
Offered Debt Securities; (2) any limit on the aggregate principal amount of
the Offered Debt Securities; (3) the date or dates on which the principal of
the Offered Debt Securities is payable; (4) the rate or rates per annum (which
may be fixed or variable) at which the Offered Debt Securities will bear
interest, if any, or any method by which such rate or rates shall be
determined, and the date or dates from which such interest will accrue; (5)
the date or dates on which interest, if any, on the Offered Debt Securities
will be payable and the Regular Record Dates for any such Interest Payment
Dates; (6) each office or agency where the principal of, and premium, if any,
and any interest on the Offered Debt Securities will be payable and may be
surrendered for registration of transfer or exchange; (7) the period or
periods within which,
4
<PAGE>
the price or prices at which, and the terms and conditions upon which the
Offered Debt Securities may be redeemed, in whole or in part, at the option of
the Corporation; (8) the obligation, if any, of the Corporation to redeem or
purchase the Offered Debt Securities pursuant to any sinking fund or similar
provisions or at the option of a Holder thereof and the period or periods
within which, the price or prices at which and the terms and conditions upon
which the Offered Debt Securities will be redeemed or purchased, in whole or
in part, pursuant to any such obligation; (9) whether the Offered Debt
Securities are to be issued in whole or in part in the form of one or more
global notes, and, if so, the identity of the depositary for such global notes
and the terms and conditions, if any, on which interests in such global notes
may be exchanged for the individual securities represented thereby; (10)
whether the Offered Debt Securities are to be issued with original issue
discount within the meaning of section 1273(a) of the Internal Revenue Code of
1986, as amended (the "Code"), and the regulations thereunder and the amount
of such discount; (11) the obligations or instruments which shall be
considered to be Eligible Obligations in respect of Offered Debt Securities
denominated in any currency other than United States Dollars or in a composite
currency, and any additional or alternative provisions for the reinstatement
of the Company's indebtedness in respect of Offered Debt Securities after the
satisfaction and discharge thereof; (12) any provisions for payment of
additional amounts for taxes, and any provisions for redemption in the event
the Corporation must comply with withholding tax or other tax reporting
requirements in respect of an Offered Debt Security other than a Floating Rate
Security ("Affected Security") or must pay such additional amounts in respect
of any Offered Debt Security; (13) any index used to determine the amount of
payment of principal of, and premium, if any, and any interest on the Offered
Debt Securities; (14) the applicable Overdue Rate, if any; (15) any addition
to, or modification or deletion of, any Events of Default or covenants
provided for with respect to the Offered Debt Securities; (16) if the
principal of or premium, if any, or interest, if any, on the Offered Debt
Securities are to be payable, at the election of the Corporation or a Holder
thereof, in a coin or currency other than that in which the Debt Securities
are stated to be payable, the period or periods within which, and the terms
and conditions upon which, such election may be made; (17) the currency or
currencies, including composite currencies, in which payment of the principal
of and premium, if any, and interest, if any, on the Offered Debt Securities
shall be payable (if other than the currency of the United States); (18) if
the principal of or premium, if any, or interest on the Offered Debt
Securities are to be payable, or are to be payable at the election of the
Corporation or a Holder thereof, in securities or other property, the type and
amount of such securities or other property, or the method by which such
amount shall be determined, and the period or periods within which, and the
terms and conditions upon which, any such election may be made; (19) the
terms, if any, pursuant to which the Offered Debt Securities may be converted
into or exchanged for shares of capital stock or other securities of the
Corporation; (20) the obligations or instruments, if any, which shall be
considered to be Eligible Obligations (as defined herein) in respect of the
Offered Debt Securities denominated in any currency other than United States
Dollars or in a composite currency, and any additional or alternative
provisions for the reinstatement of the Corporation's indebtedness in respect
of such Debt Securities after the satisfaction and discharge thereof; and (21)
any other terms and provisions of the Offered Debt Securities which are not
inconsistent with the Indenture.
Unless otherwise provided in the Prospectus Supplement or a Pricing
Supplement, the Debt Securities will be issued only in fully registered form,
without coupons, in denominations of $1,000 or any integral multiple thereof.
Debt Securities may be issued as Discount Securities to be sold at a
substantial discount below their principal amount. Discount Securities mean
any Debt Securities issued with "original issue discount" within the meaning
of Section 1273(a) of the Code and the regulations thereunder. Special United
States income tax and other considerations applicable to Discount Securities
will be described in any applicable Prospectus Supplement relating thereto.
Discount Securities may provide for the declaration of acceleration of the
Maturity of an amount less than the principal amount thereof upon the
occurrence of an Event of Default and the continuation thereof.
The Indenture provides that all Debt Securities of any one series need not
be issued at the same time and that the Corporation may, from time to time,
issue additional Debt Securities of a previously issued series. In addition,
the Indenture provides that the Corporation may issue Debt Securities with
terms different from those
5
<PAGE>
of any other series of Debt Securities and, within a series of Debt
Securities, terms (such as interest rate or manner in which interest is
calculated, original issue date, redemption provisions and maturity date) may
differ.
CERTAIN CONDITIONS FOR ISSUANCE OF ADDITIONAL INDEBTEDNESS
Under the indentures relating to its Series 1993 Notes due annually
beginning March 1, 1996 to March 1, 2008 (the "1993 Notes") and 8% Debentures
due 2007 (the "8% Debentures"), the Corporation is not permitted to create or
issue any indebtedness, other than indebtedness maturing on demand or within
one year, which ranks prior to or on a parity with the 1993 Notes or the 8%
Debentures in right of payment unless immediately thereafter, and after giving
effect thereto and to the application of the proceeds thereof, Consolidated
Net Utility Fixed Assets (defined generally as the aggregate value of all the
physical property owned by the Corporation and its consolidated subsidiaries
used or useful in the business of furnishing or distributing gas service, less
accumulated depreciation) shall be at least equal to Consolidated Funded
Indebtedness (defined generally as all outstanding indebtedness of the
Corporation and its consolidated subsidiaries, other than indebtedness
maturing on demand or within one year).
Pursuant to Section 234 of the Constitution of Alabama of 1901, the bonded
indebtedness of Alabama corporations may not be increased without the consent
of shareholders. The Corporation currently has shareholder approval to issue
bonded indebtedness in an amount not exceeding, when taken together with then
outstanding bonded indebtedness, $75 million, and may not issue more than such
amount without the further consent of shareholders. Based upon such
requirement, the Corporation may presently issue an additional $40 million of
bonded indebtedness. The Corporation intends to request an increase in such
amount at the next annual meeting of shareholders in January 1997.
GLOBAL NOTES
If the Prospectus Supplement so provides, the Offered Debt Securities of a
series may be issued in whole or in part in the form of one or more Global
Notes that will be deposited with or on behalf of a depositary located in the
United States identified in any applicable Prospectus Supplement relating to
such series. The laws of some jurisdictions 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 Note. The specific terms of the depositary arrangement with
respect to any Offered Debt Securities of a series will be described in any
applicable Prospectus Supplement relating to such series.
PAYMENT AND PAYING AGENTS
Except as may be provided in the applicable Prospectus Supplement, interest,
if any, on each Debt Security payable on each Interest Payment Date will be
paid to the person in whose name such Debt Security is registered as of the
close of business on the Regular Record Date relating to such Interest Payment
Date. However, if there has been a default in the payment of interest on any
Debt Security, such defaulted interest may be payable to the Holder of such
Debt Security as of the close of business on a date selected by the Trustee
not more than 15 days and not less than 10 days prior to the date proposed by
the Corporation for payment of such defaulted interest.
Unless otherwise indicated in any applicable Prospectus Supplement,
principal of, and premium and interest, if any, on the Debt Securities will be
payable at the office of the Trustee designated for such purpose or at any
paying agent maintained by the Corporation for such purpose, except that at
the option of the Corporation payment of any interest may be made (i) by check
mailed to the address of the Person entitled thereto as such address shall
appear in the Security Register, or (ii) by wire transfer to an account
maintained by the Person entitled thereto. The Corporation may appoint one or
more Paying Agents and may remove any Paying Agent, all in its discretion.
The transfer of the Debt Securities may be registered, and the Debt
Securities may be exchanged for other Debt Securities of authorized
denominations and of like tenor and aggregate principal amount at the office
of the Trustee designated for such purpose or at any paying agency maintained
by the Corporation for such purpose.
6
<PAGE>
The Corporation may appoint one or more additional security registrars or
transfer agents and may remove any security registrar or transfer agent, all
in its discretion. The applicable Prospectus Supplement will identify any
additional security registrar or transfer agent appointed.
No service charge will be made for any registration of transfer or exchange
of the Debt Securities, but the Corporation may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. The Corporation will not be required (a) to issue, register the
transfer of or exchange Debt Securities during the period of 15 days prior to
giving any notice of redemption or (b) to issue, register the transfer of or
exchange any Debt Security selected for redemption in whole or in part, except
the unredeemed portion of any Debt Security being redeemed in part.
All moneys paid by the Corporation to the Trustee or a Paying Agent for the
payment of principal of, and premium, if any, and any interest on any Debt
Securities which remain unclaimed at the end of two years after such
principal, premium or interest shall become due and payable will be repaid,
subject to applicable laws of escheat, to the Corporation, and the Holder of
such Debt Securities will thereafter look only to the Corporation for payment
thereof.
REDEMPTION
Any terms for the optional or mandatory redemption of the Offered Debt
Securities will be set forth in the applicable Prospectus Supplement. In
accordance with the terms of the Indenture, Debt Securities will be redeemable
only upon notice, by mail, not less than 30 nor more than 60 days prior to the
date fixed for redemption and, if less than all of the Debt Securities of any
series are to be redeemed, the particular Debt Securities will be selected by
the Security Registrar by such method as the Trustee deems fair and
appropriate.
Any notice of optional redemption may state that such redemption shall be
conditional upon the receipt by the Trustee, on or prior to the date fixed for
such redemption, of money sufficient to pay the principal of and premium and
interest, if any, on such Debt Securities and that if such money has not been
so received, such notice will be of no force or effect and the Corporation
will not be required to redeem such Debt Securities.
EVENTS OF DEFAULT
The following are Events of Default under the Indenture with respect to the
Debt Securities of a series: (a) failure to pay any interest on any Debt
Security of that series within 30 days after the same becomes due and payable;
(b) failure to pay the principal of or premium, if any, on any Debt Security
of that series within three business days after the same becomes due and
payable; (c) failure to perform, or breach of, any other covenant or warranty
of the Corporation in the Indenture (other than a covenant or warranty
included in the Indenture solely for the benefit of one or more series of Debt
Securities other than such series), continued for 90 days after written notice
by the Trustee to the Corporation or by the Holders of at least 25% in
principal amount of all Outstanding Debt Securities of such series to the
Corporation and the Trustee as provided in the Indenture; (d) certain events
involving bankruptcy, insolvency, conservatorship, receivership or
reorganization of the Corporation or Alagasco or Taurus, whether voluntary or
involuntary; (e) a default under any other indebtedness of the Corporation or
Alagasco or Taurus or instrument under which there may be issued or by which
there may be secured or evidenced any indebtedness of the Corporation or
Alagasco or Taurus, in each case aggregating in excess of $10,000,000, which
default constitutes a failure to pay any portion of the principal of such
indebtedness when due or results in the acceleration of the maturity of such
indebtedness, unless within a period of 10 days after written notice of such
default has been given to the Corporation by the Trustee or to the Corporation
and the Trustee by the Holders of at least 10% in principal amount of the
Outstanding Debt Securities of any series, such indebtedness has been
discharged or such acceleration has been rescinded or annulled; and (f) any
other Event of Default provided for with respect to Debt Securities of that
series.
Except as described in (e) above, no Event of Default with respect to the
Debt Securities of one series necessarily constitutes an Event of Default with
respect to the Debt Securities of any other series issued under the Indenture.
7
<PAGE>
REMEDIES
If any Event of Default with respect to the Debt Securities of any series
occurs and is continuing, either the Trustee or the Holders of at least 33% in
aggregate principal amount of all the Outstanding Debt Securities of that
series may declare the principal amount of all the Outstanding Debt Securities
of that series to be due and payable immediately; provided, however, that if
an Event of Default occurs and is continuing with respect to more than one
series of Debt Securities, the Trustee or the Holders of not less than 33% in
aggregate principal amount of the Outstanding Debt Securities of all such
series, considered as one class, may make such declaration of acceleration and
not the Holders of the Debt Securities of any one of such series.
The Holders of a majority in aggregate principal amount of the Outstanding
Debt Securities of each series may, on behalf of all Holders of the Debt
Securities of that series, waive any past default and its consequences under
the Indenture with respect to the Debt Securities of that series, except a
default in the payment of principal or premium or interest, if any, on any
Debt Security of that series, or in respect of a provision of the Indenture
which cannot be amended or modified without the consent of the Holder of each
Outstanding Debt Security of the series affected.
At any time after the declaration of acceleration with respect to Debt
Securities of any series has been made, but before a judgment or decree for
the payment of money due has been obtained, the Event or Events of Default
giving rise to such declaration of acceleration shall, without further act, be
deemed to have been waived, and such declaration and its consequences shall,
without further act, be deemed to have been rescinded and annulled if (a) the
Corporation has paid or deposited with the Trustee a sum sufficient to pay (1)
all overdue interest on all of such Debt Securities; (2) the principal of and
premium, if any, on any of such Debt Securities which have become due
otherwise than by such declaration of acceleration and interest thereon at the
rate or rates prescribed therefor in such Debt Securities; (3) to the extent
that payment of such interest is lawful, interest upon overdue interest at the
rate or rates prescribed therefor in such Debt Securities; (4) all amounts due
to the Trustee under the Indenture; and (b) any other Events of Default with
respect to the Debt Securities of such series, other than the nonpayment of
the principal of such Debt Securities which has become due solely by such
declaration of acceleration, have been cured or waived as provided in the
Indenture.
MISCELLANEOUS RIGHTS AND OBLIGATIONS OF TRUSTEE
The Indenture provides that, subject to the duty of the Trustee during the
continuance of an Event of Default to act with the required standard of care,
the Trustee will be under no obligation to exercise any of its rights or
powers under the Indenture at the request or direction of any of the Holders,
unless such Holders shall have offered to the Trustee reasonable security or
indemnity. Subject to such provisions for the indemnification of the Trustee
and subject to certain other limitations, the Holders of a majority in
aggregate principal amount of the Outstanding Debt Securities of any series
will have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust or
power conferred on the Trustee, with respect to the Debt Securities of that
series; provided, however, that if an Event of Default occurs and is
continuing with respect to more than one series of Debt Securities, the
Holders of a majority in aggregate principal amount of the outstanding Debt
Securities of all such series, considered as one class, will have the right to
make such direction, and not the Holders of the Debt Securities of any one of
such series; and provided, further, that (a) such direction will not be in
conflict with any rule of law or with the Indenture and would not involve the
Trustee in personal liability in circumstances where reasonable indemnity
would not, in the Trustee's sole discretion, be adequate, (b) the Trustee
shall not have determined that the action so directed would be unjustly
prejudicial to the Holders not taking part in such direction and, (c) the
Trustee may take any other action it deems proper which is not inconsistent
with such direction. The right of a Holder of any Debt Security of such series
to institute a proceeding with respect to the Indenture is subject to certain
conditions precedent, but each Holder has an absolute right to receive payment
of principal and premium and interest, if any, when due and to institute suit
for the enforcement of any such payment. The Indenture provides that the
Trustee, within 90 days after the occurrence of any default thereunder with
respect to the Debt Securities of a series, is required to give the Holders of
the Debt Securities of such series notice of any default known to it, unless
cured or waived;
8
<PAGE>
provided, however, that, except in the case of a default in the payment of
principal of or premium or interest, if any, on any Debt Securities of such
series, the Trustee may withhold such notice if the Trustee determines that it
is in the interest of such Holders to do so; and, provided, further, that in
the case of an Event of Default of the character specified above in clause (c)
under "Events of Default," no such notice shall be given to such Holders until
at least 75 days after the occurrence thereof.
The Corporation is required to furnish to the Trustee annually a statement
as to the performance by the Corporation of certain of its obligations under
the Indenture and as to any default in such performance. The Corporation is
also required to notify the Trustee of any Event of Default within 10 days
after certain of its officers obtain actual knowledge thereof.
MODIFICATION, WAIVER AND AMENDMENT
Certain modifications and amendments of the Indenture may be made by the
Corporation and the Trustee without the consent of the Holders, including
those which: (a) evidence the assumption by any successor to the Corporation
of the Corporation's obligations under the Indenture or with respect to the
Debt Securities; (b) add to the covenants of or surrender any rights of the
Corporation under the Indenture; (c) add any Events of Default, in addition to
those specified in the Indenture, with respect to all or any series of
Outstanding Debt Securities; (d) change or eliminate any provision of the
Indenture or add any new provision to the Indenture; provided, however, that
if such change, elimination or addition will materially and adversely affect
the interests of Holders of Debt Securities of any series, such change,
elimination or addition will become effective with respect to such series only
when there is no Debt Security of such series remaining outstanding under the
Indenture; (e) provide collateral security for the Debt Securities; (f)
establish the form or terms of Debt Securities of any series; (g) evidence the
appointment of a successor Trustee with respect to the Debt Securities of one
or more series and to add to or change any of the provisions of the Indenture
as shall be necessary to provide for or facilitate the administration of the
trusts under the Indenture by more than one trustee; (h) provide for the
procedures required to permit the utilization of a noncertificated system of
registration for all or any series of Debt Securities; (i) subject to certain
conditions, change the place where Debt Securities may be transferred,
exchanged or paid; or (j) cure any ambiguity or inconsistency or make any
other provisions with respect to matters and questions arising under the
Indenture, provided such provisions shall not adversely affect the interests
of the Holders of Debt Securities of any series in any material respect.
Without limiting the generality of the foregoing, if the Trust Indenture Act
of 1939, as amended (the "Trust Indenture Act"), is amended after the date of
the Indenture to require changes to the Indenture or the incorporation therein
of additional provisions or permit changes to, or the elimination of,
provisions which at the date of the Indenture are required by the Trust
Indenture Act to be contained in the Indenture, the Corporation and the
Trustee may, without the consent of any Holders, enter into one or more
supplemental indentures to effect or reflect any such change, incorporation or
elimination.
Modifications of and amendments to the Indenture may be made by the
Corporation and the Trustee with the consent of the Holders of not less than a
majority in aggregate principal amount of the Outstanding Debt Securities of
each series affected by such modification or amendment voting separately;
provided, however, that no such modification or amendment may, without the
consent of the Holder of each Outstanding Debt Security affected thereby, (a)
change the Stated Maturity of the principal of, or any installment of
principal or interest on, any Debt Security; (b) reduce the principal amount
thereof or the rate of interest thereon or any premium payable upon redemption
thereof; (c) reduce the amount of the principal of Discounted Securities that
would be due and payable upon a declaration of acceleration of the maturity
thereof; (d) change the coin or currency in which any Debt Security or any
premium or the interest thereon is payable; (e) impair the right to institute
suit for the enforcement of any such payment; (f) reduce the percentage in
principal amount of Outstanding Debt Securities of any series, the consent of
whose Holders is required for modification or amendment of the Indenture or
for waiver of compliance with certain provisions of the Indenture or for
waiver of certain defaults; (g) reduce the requirements for quorum or voting;
or (h) modify the provisions of the Indenture relating to the modification of
the Indenture, or the circumstances under which the Holders may waive past
defaults by and certain covenants of the Corporation except to increase the
percentages in principal amount referred to therein.
9
<PAGE>
The Holders of not less than a majority in aggregate principal amount of the
Outstanding Debt Securities of all series with respect to which a certain
covenant or restriction has been specified, may, on behalf of all Holders of
Debt Securities waive compliance by the Corporation with certain covenants of
the Indenture. The Holders of a majority in aggregate principal amount of the
Outstanding Debt Securities of any series may, on behalf of all Holders of
Debt Securities of that series (a) waive any past default under the Indenture
with respect to Debt Securities of that series, except a default (i) in the
payment of principal, premium, if any, or interest on any Debt Security, or
(ii) in respect of a covenant or provision that cannot be modified or amended
without the consent of the Holder of each Outstanding Debt Security affected
thereby, and (b) waive any Event of Default resulting in acceleration of such
Debt Securities in specified circumstances.
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Indenture provides that the Corporation shall not consolidate with or
merge into any other corporation, association, company, joint stock company,
limited liability company or business trust (the "Successor Corporation") or
convey, transfer or lease its properties and assets substantially as an entity
to any Person unless (i) the Successor Corporation into which the Corporation
is merged or into which it is consolidated or the Person to which
substantially all of the Corporation's assets or properties are conveyed,
transferred or leased, is a Person organized under the laws of the United
States, any state thereof or the District of Columbia, and expressly assumes
by means of a supplemental indenture the due and punctual payment of the
principal (and premium, if any) and interest on all the Outstanding Debt
Securities and the performance of every covenant of the Corporation in the
Indenture; (ii) upon the occurrence of such a transaction, treating any
indebtedness for borrowed money which becomes an obligation of the Corporation
as a result of such transaction as having been incurred by the Corporation at
the time of such transaction, no Event of Default, and no event which, after
notice or lapse of time, or both, would become an Event of Default, shall
occur or be continuing; and (iii) the Corporation or the Successor Corporation
or Person delivers to the Trustee an Officers' Certificate and an Opinion of
Counsel stating that the consolidation, merger, conveyance, transfer or lease
and the supplemental indenture complies with the Indenture and all conditions
precedent for such transaction in the Indenture have been complied with.
CERTAIN COVENANTS
Maintenance of Property. The Corporation will cause (or, with respect to
property owned in common with others, make reasonable effort to cause) all its
properties used or useful in the conduct of its business to be maintained and
kept in good condition, repair and working order and will cause (or with
respect to property owned in common with others, make reasonable effort to
cause) to be made all necessary repairs, renewals, replacements, betterments
and improvements thereof, all as, in the judgment of the Corporation, may be
necessary so that the business carried on in connection therewith may be
properly conducted; provided, however, that the foregoing shall not prevent
the Corporation from discontinuing, or causing the discontinuance of, the
operation and maintenance of any of its properties if such discontinuance, in
the judgment of the Corporation, (a) is desirable in the conduct of its
business and (b) will not adversely affect the interests of the Holders of
Debt Securities of any series in any material respect.
Corporate Existence. Subject to the rights of the Corporation described
under "Consolidation, Merger and Sale of Assets," the Corporation will do or
cause to be done all things necessary to preserve and keep in full force and
effect its corporate existence and rights (charter and statutory) and
franchises of the Corporation; provided, however, that the Corporation shall
not be required to preserve any such right or franchise if, in the judgment of
the Corporation (a) preservation thereof is no longer desirable in the conduct
of the business of the Corporation and (b) the failure to preserve any such
right or franchise will not adversely affect the interests of the Holders of
Debt Securities of any series in any material respect.
Restriction on Liens. The Corporation will not create, assume, incur or
suffer to exist any mortgage, lien, pledge, charge or encumbrance of any kind
(other than "Excepted Encumbrances") upon property of the Corporation (other
than "Excepted Property") to secure indebtedness without effectively providing
that the Debt
10
<PAGE>
Securities shall be secured equally and ratably with the indebtedness secured
by such mortgage, lien, pledge, charge or encumbrance. Subject to the next
succeeding sentence, the foregoing restriction shall not apply to (1) pledging
of any assets of the Corporation as security for payment of taxes or other
similar charges in connection with a good faith contest by the Corporation as
to its liability for such payment; (2) pledging of any assets of the
Corporation to secure a stay or discharge in connection with a legal
proceeding in which the Corporation or a subsidiary is a party or for the
purpose of obtaining insurance coverage or other surety obligations providing
for securing such stay or discharge in the event such stay or discharge should
be required; (3) making deposits or providing security in connection with
tenders, redemptions, contracts or leases to which the Corporation is a party
or deposits for the purpose of terminating obligations under an indenture; (4)
pledging of assets in connection with the incurrence of indebtedness in
aggregate principal amount not exceeding 5% of the assets of the Corporation
as presented in the financial statements of the Corporation contained in the
most recently filed report on Form 10-K or 10-Q (or successor forms thereto)
filed with the Commission at the time of such pledge; (5) liens, pledges,
security interests or other encumbrances on property, stock or indebtedness of
any corporation existing at the time such corporation becomes a subsidiary of
or is merged into the Corporation, or existing at the time of acquisition of
such property or stock by the Corporation; (6) incurring liens, licenses,
pledges, security interests or other encumbrances to secure payment of all or
a part of the price of acquisition, construction or improvement of property or
stock acquired by the Corporation or to secure any indebtedness incurred by
the Corporation prior to, at the time of, or within 180 days after the later
of the acquisition or completion of construction where the secured debt is
incurred for the purpose of financing all or any part of the purchase price of
such property or construction or improvements thereon; (7) liens, pledges,
security interests or other encumbrances on property of the Corporation
created in favor of a government or any political subdivision or
instrumentality thereof, to secure partial progress, installment, advance or
other payments pursuant to any contract or statute or to secure any
indebtedness or other obligation incurred for the purpose of financing all or
any part of the purchase price or the cost of construction of property subject
to the encumbrance; or (8) any extension, renewal or replacement of any lien
or encumbrance referred to above, provided that the principal amount of the
indebtedness secured thereby is not increased and the lien or security
interest securing the indebtedness is not extended to cover additional
property. Notwithstanding the foregoing, in no event shall the Corporation
create, assume, incur or suffer to exist pursuant to the foregoing clauses (1)
and (3) through (8) any mortgage, lien, pledge, charge or encumbrance on the
capital stock of either of Alagasco or Taurus directly or indirectly owned by
the Corporation. The term "Excepted Encumbrances" means liens for taxes,
assessments or governmental charges not delinquent; liens securing
indebtedness existing in or relating to real estate acquired for right-of-way
purposes; easements or reservations in property of the Company by statute or
ordinance; liens and charges incidental to current construction activities;
obligations or duties created or imposed by municipalities or other public
authority affecting property of the Company; rights reserved to or vested in
any municipality or public authority to control or regulate the Company or use
of its property; irregularities or deficiencies of title with respect to
rights-of-way; and leases made or existing in the ordinary course of business
of the Company. The term "Excepted Property" generally means certain property
or equipment of the Corporation used in the ordinary course of business,
including current assets, vehicles, certain inventories and equipment, as more
particularly defined in the Indenture, and excludes capital stock issued by
Alagasco and Taurus.
Restriction on Sale-Leaseback Transactions. The Corporation will not enter
into any arrangement providing for the lease to the Corporation of any
property of the Corporation (except for temporary leases for a term, including
any renewal thereof, of not more than three years), which property has been or
is to be sold or transferred by the Corporation to the lessor unless the
proceeds of such sale are at least equal to the fair value of such property
and either: (i) the Corporation would be entitled, under the sub-caption
"Restriction on Liens," to create, assume, incur or suffer to exist a
mortgage, lien, pledge, charge or encumbrance to secure indebtedness on the
property to be leased without equally and ratably securing the Offered
Securities; or (ii) the Corporation shall, or covenants that it will, within
120 days of the effective date of any such arrangement (or in the case of
clause (a) below, within six months thereafter pursuant to a commitment
entered into within such 120 day period), apply an amount not less than the
fair value of such property to any one or more of (a) the optional redemption
of, or the purchase and retirement of, the Debt Securities, or (b) the payment
or other retirement of
11
<PAGE>
Funded Debt (as defined therein) incurred or assumed by the Corporation which
ranks pari passu with the Debt Securities (other than Funded Debt owned by the
Corporation), or (c) the purchase at not more than the fair value of property
by the Corporation (other than property of the Corporation involved in such
sale).
SATISFACTION AND DISCHARGE; DEFEASANCE
The Indenture, with respect to any and all series of Debt Securities (except
for certain specified surviving obligations) will be discharged and canceled
upon the satisfaction of certain conditions, including: (a) the payment in
full of the principal of (and premium, if any) and interest on all series of
the Debt Securities or the deemed payment in full of such Debt Securities, as
described below; (b) the payment by the Corporation of all other sums required
under the Indenture; and (c) the delivery of a certificate by the Corporation
to the Trustee stating that all conditions precedent relating to the
satisfaction and discharge of the Indenture have been complied with.
In addition, the Corporation may at any time (i) terminate certain of its
obligations under the Indenture with respect to Debt Securities of any series
("legal defeasance") or (ii) terminate its obligations under certain covenants
set forth in the Indenture with respect to Debt Securities of any series,
including the provisions described above under "Certain Covenants--Restriction
on Liens," "--Restriction on Sale-Leaseback Transactions" and "Consolidation,
Merger and Sale of Assets" (after which any omission to comply with such
obligations shall not constitute a Default with respect to such Debt
Securities) ("covenant defeasance"). To exercise either legal defeasance or
covenant defeasance, the Corporation must irrevocably deposit in trust with
the Trustee, for the benefit of the Holders, cash or Eligible Obligations, or
a combination thereof, in such amounts as will be sufficient to pay the
principal of and premium and interest, if any, due and to become due on the
Debt Securities of such series on or prior to their redemption or maturity
date in accordance with the terms of the Indenture and such Debt Securities;
provided that such money or the proceeds of such Eligible Obligations shall
either (i) have been on deposit with the Trustee for a period of at least 90
days, or (ii) the Trustee shall have received an Opinion of Counsel to the
effect that payments to Holders with such moneys as proceeds are not
recoverable as a preference under any applicable United States federal or
state law relating to bankruptcy, insolvency, receivership, winding-up,
liquidation, reorganization or relief of debtors. The Corporation must also
comply with certain other conditions, including the delivery of an opinion of
counsel to the effect that the holders of such Debt Securities will not
realize income, gain or loss for Federal income tax purposes as a result of
such defeasance but will realize income, gain or loss on the Debt Securities,
including payments of interest thereon, in the same manner and at the same
times as would have been the case if such defeasance had not occurred. In the
case of legal defeasance, the opinion of counsel must be accompanied by a
ruling of the Internal Revenue Service issued to the Corporation, or based on
a change in law or regulation occurring after the date of the Indenture.
Eligible Obligations include: (a) with respect to Debt Securities
denominated in United States Dollars, Government Obligations (which include
direct obligations of, or obligations unconditionally guaranteed by, the
United States of America entitled to the benefit of the full faith and credit
thereof and certificates, depository receipts or other instruments which
evidence a direct ownership interest in such obligations or in any specific
interest or principal payments due in respect thereof); and (b) with respect
to Debt Securities denominated in a currency other than United States Dollars
or in a composite currency, such other obligations or instruments as shall be
specified with respect to such Debt Securities, as contemplated by the
Indenture.
GOVERNING LAW
The Debt Securities and the Indenture will be governed by, and construed in
accordance with, the laws of the State of New York.
U.S. FEDERAL TAXATION
The Prospectus Supplement will contain a brief summary of the relevant
United States federal income tax laws applicable to the Offered Debt
Securities.
12
<PAGE>
DESCRIPTION OF CAPITAL STOCK
The Corporation's authorized capital stock consists of 30,000,000 shares of
Common Stock, par value $.01 per share (hereinafter and hereinbefore referred
to as the "Common Stock"), and 5,000,000 shares of Preferred Stock, par value
$.01 per share ("Preferred Stock"), each of which is described below. On
August 27, 1996, 11,119,466 shares of Common Stock were issued and
outstanding, excluding shares held in treasury, and no shares of Preferred
Stock were issued or outstanding. The summary description of the capital stock
of the Corporation contained herein is necessarily general and reference
should be made in each case to the Corporation's Restated Certificate of
Incorporation, Certificate of Adoption of Resolutions Designating Series A
Junior Participating Preferred Stock, Bylaws and Rights Agreement which are
exhibits to the Registration Statement of which this Prospectus is a part.
COMMON STOCK
General. Subject to any prior rights of the Preferred Stock then
outstanding, holders of Common Stock are entitled to receive dividends as and
when they are declared by the Board of Directors out of funds legally
available therefor. Subject to the 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, which means that the
holders of more than 50% of the shares of Common Stock voting for election of
directors can elect 100% of the directors if they choose to do so and, in such
event, the holders of the remaining less than 50% of the shares voting for the
election of directors are not able to elect any person or persons to the Board
of Directors. Subject to any prior rights of the Preferred Stock, in the event
of liquidation, the holders of Common Stock are entitled to receive pro rata
any assets distributable to shareholders in respect of shares held by them.
Holders of Common Stock do not have any right to subscribe to any additional
securities which may be issued by the Company. The outstanding shares of
Common Stock are fully paid and nonassessable.
Special Vote Requirements for Certain Transactions. The Restated Certificate
of Incorporation of the Corporation provides that certain specified
transactions or a series of such transactions with an "Interested Stockholder"
(generally defined as a holder of 10% or more of the voting power of the
outstanding voting stock of the Corporation or an affiliate of such a holder)
require approval by the vote of the holders of at least 80% of the then
outstanding shares of voting stock of the Corporation, except in cases in
which either certain price criteria and procedural requirements are satisfied
or the transaction is approved by a majority of the members of the Board of
Directors who are unaffiliated with, and not a nominee of, the Interested
Stockholder and who were directors before the Interested Stockholder became an
Interested Stockholder (or successors to such directors who are neither
affiliated with, nor the nominee of, the Interested Stockholder and who were
recommended to succeed their predecessors by a majority of the directors
meeting such criteria). The specified transactions include (i) a merger or
consolidation of the Corporation or any of its subsidiaries with or into an
Interested Stockholder or any other corporation which is, or after such merger
or consolidation would be, an Affiliate (as defined) of an Interested
Stockholder; (ii) the sale, lease, exchange, mortgage, pledge, transfer or
other disposition of assets of the Corporation or any of its subsidiaries
having a value of $1,000,000 or more to or with an Interested Stockholder or
any Affiliate of an Interested Stockholder; (iii) the issuance or transfer of
stock or other securities of the Corporation or of any of its subsidiaries to
an Interested Stockholder or any Affiliate of any Interested Stockholder in
exchange for cash, securities or other property having a value of $1,000,000
or more; (iv) the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation proposed by or on behalf of an Interested
Stockholder or any Affiliate of any Interested Stockholder; or (v) any
reclassification of securities, recapitalization, merger or consolidation of
the Corporation with a subsidiary or any similar transaction which has the
effect, directly or indirectly, of increasing an Interested Stockholder's or
any Affiliate of an Interested Stockholder's proportionate share of the
outstanding equity securities (or securities convertible thereinto) of the
Corporation or any of its subsidiaries. At present, the Corporation is not
aware of the existence of any shareholder who would be an Interested
Stockholder.
Provisions with respect to Board of Directors. The Restated Certificate of
Incorporation of the Corporation provides that the members of the Board of
Directors are divided into three classes as nearly equal as
13
<PAGE>
possible. Each class is elected for a three-year term. At each annual meeting
of shareholders, 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. Thus, control of the Board of Directors cannot
be changed in one year; rather, at least two annual meetings must be held
before a majority of the members of the Board of Directors can be changed.
Vacancies on the Board of Directors other than those caused by an increase
in the number of directors may be filled by a majority of the remaining
directors though less than a quorum. A director elected to fill such a vacancy
is elected to serve until the next annual meeting of shareholders. Any
directorship to be filled as a result of an increase in the number of
directors may be filled only by election at an annual meeting or at a special
meeting of shareholders called for such purpose unless Alabama law at such
time permits such vacancy to be filled by a majority of the remaining
directors.
The Alabama Business Corporation Act provides (unless otherwise provided in
a corporation's charter) that a director, or the entire Board of Directors,
may be removed by the shareholders at a meeting of shareholders expressly
called for that purpose with or without cause by vote of the holders of a
majority of the shares of the Corporation then entitled to vote on election of
directors. The Restated Certificate of Incorporation and Bylaws of the
Corporation, however, provide that the affirmative vote of the holders of at
least 80% of the voting power of the outstanding capital stock entitled to
vote for the elections of directors is required to remove a director or the
entire Board of Directors from office.
Special Vote Requirements for Certain Amendments to Restated Certificate of
Incorporation. Certain portions of the Restated Certificate of Incorporation
of the Corporation described in certain of the preceding paragraphs, including
those related to business combinations and the classified Board of Directors,
may be amended only by the affirmative vote of the holders of 80% of the
voting power of the outstanding voting stock of the Corporation.
Possible Effects of Special Provisions. Certain of the provisions contained
in the Restated Certificate of Incorporation and Bylaws of the Corporation
described above have the effect of making it more difficult to change the
Board of Directors and may make the Board of Directors less responsive to
shareholder control. Certain of these provisions also may tend to discourage
attempts by third parties to acquire the Corporation because of the additional
time and expense involved and a greater possibility of failure, and, as a
result, may decrease the likelihood of an acquisition of the Corporation by a
potential purchaser or adversely affect the price that a potential purchaser
would be willing to pay for the capital stock of the Corporation.
Preferred Stock Purchase Rights. In order to protect the Corporation's
shareholders from coercive or unfair takeover tactics, the Corporation's Board
of Directors on July 27, 1988 adopted a Shareholder Rights Plan (the
"Shareholder Rights Plan"). Pursuant to the Shareholder Rights Plan, each
share of the Corporation's Common Stock outstanding has associated with it
two-thirds of one right (a "Right") to purchase, until July 27, 1998 (or, if
earlier, the redemption of the Rights), a unit consisting of 1/100th of one
share of Series A Junior Participating Preferred Stock (the "Unit") at an
exercise price of $80 per Unit, subject to certain antidilution and other
adjustments as provided in the Shareholder Rights Plan. The Shareholder Rights
Plan also approved the further issuance of Rights for all shares of Common
Stock that are subsequently issued unless otherwise specified by the Board.
Accordingly and subject to adjustment as provided above, two-thirds of a Right
will be issued for each share of Common Stock offered hereby. Until certain
specified conditions 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.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the
Corporation without conditioning the offer on a substantial number of Rights
being acquired. The Rights should not interfere with any merger or other
business combination approved by the Board of Directors of the Corporation
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 acquires 20% or more of the outstanding Common Stock, except under
certain circumstances, redeem all but not less than all the then outstanding
Rights at $.02 per Right.
14
<PAGE>
A Rights Agreement dated as of July 27, 1988, between the Corporation and
AmSouth Bank, N.A., as amended, specifies the terms of the Rights and the
foregoing description of the Rights is qualified in its entirety by reference
to such Rights Agreement, which is an exhibit to the Corporation's
Registration Statement on Form 8-A, as amended, File No. 1-7810, dated August
8, 1988, and which is incorporated by reference herein. See "Incorporation of
Certain Documents by Reference".
Limitations on Dividend Payments. The Corporation is subject to several
indentures and other debt instruments which restrict the Corporation's ability
to pay dividends. Under the most restrictive indenture or other debt
instrument, the Corporation is required to maintain a consolidated tangible
net worth of not less than $80,000,000. At June 30, 1996, the Corporation had
a consolidated tangible net worth of approximately $194,657,000 and therefore,
under the indenture restriction, the Corporation could make dividend payments
in respect of its Common Stock of $114,657,000.
Transfer Agent and Registrar. The transfer agent and registrar for the
Common Stock is Harris Trust Company of New York, 77 Water Street, New York,
New York 10005. The Company's Common Stock is listed on the New York Stock
Exchange.
PREFERRED STOCK
General. Under the Corporation's Restated Certificate 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 issue thereof adopted by the Board of Directors.
It is not possible to state the actual effect of the authorization and
issuance of Preferred Stock upon the rights of holders of the Common Stock
unless and until the Board of Directors determines the attributes of the
Preferred Stock and the specific rights of its holders. Such effects may
include, however, (i) restrictions on dividends on Common Stock if dividends
on Preferred Stock have not been paid; (ii) dilution of the voting power of
Common Stock to the extent that Preferred Stock has voting rights, or to the
extent that any Preferred Stock series is convertible into Common Stock; (iii)
dilution of the equity interest of Common Stock unless Preferred Stock is
redeemed by the Corporation; and (iv) limitation on the right of holders of
Common Stock to share in the Corporation's assets upon liquidation until
satisfaction of any liquidation preference granted to Preferred Stock.
Although the ability of the Corporation 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 Corporation.
Series A Junior Participating Preferred Stock. In connection with the
adoption of the Shareholder Rights Plan described above, on July 27, 1988, the
Corporation's Board of Directors designated 150,000 shares of the
Corporation's authorized but unissued Preferred Stock as "Series A Junior
Participating Preferred Stock" (the "Series A Preferred Stock"). The terms of
the Series A Preferred Stock are such that one share of Series A Preferred
Stock will be approximately equivalent to 100 shares of Common Stock. Each
1/100th of one share of Series A Preferred Stock has the same dividend and
voting right as one full share of Common Stock, except that, if dividend
payments on the Series A Preferred Stock are in arrears for six consecutive
quarters, the Corporation's ability to pay dividends on its Common Stock is
restricted and holders of the Series A Preferred Stock will have enhanced
voting rights. In addition each 1/100th of one share of Series A Preferred
Stock has a minimum quarterly dividend of $.05 per 1/100th of one share, a
liquidation preference and certain other rights preferential to Common Stock.
Pursuant to the Shareholder Rights Plan, Rights have been issued to the
Corporation's shareholders, but such Rights have not yet become exercisable
and no shares of Series A Preferred Stock have been issued.
15
<PAGE>
PLAN OF DISTRIBUTION
The Corporation may sell the Offered Securities being offered hereby to
underwriters or through agents or directly to purchasers. The applicable
Prospectus Supplement will set forth the terms of the offering of the Offered
Securities to which such Prospectus Supplement relates, including the name or
names of any underwriters or agents with whom the Corporation has entered into
arrangements with respect to the sale of such Offered Securities, the public
offering or purchase price of such Offered Securities and the net proceeds to
the Corporation from such sale, any underwriting discounts and other items
constituting underwriters' compensation, any discounts and commissions allowed
or paid to dealers, if any, any commissions allowed or paid to agents, and the
securities exchanges, if any, on which the Offered Securities will be listed.
The Offered Securities may be purchased to be re-offered to the public
through underwriting syndicates led by one or more managing underwriters, or
through one or more underwriters. The underwriter or underwriters with respect
to an underwritten offering of the Offered Securities will be named in any
applicable Prospectus Supplement relating to such offering and, if an
underwriting syndicate is used, the managing underwriter or underwriters will
be set forth on the cover page of any applicable Prospectus Supplement. Unless
otherwise set forth in any applicable Prospectus Supplement, the obligations
of the underwriters to purchase the Offered Securities will be subject to
certain conditions precedent, and each of the underwriters with respect to a
sale of Offered Securities will be obligated to purchase all of its allocated
Offered Securities if any are purchased. Any initial public offering price and
any discount or concessions allowed or reallowed or paid to dealers may be
changed from time to time.
Offered Securities may be offered and sold by the Corporation, directly or
through agents designated by the Corporation from time to time, which agents
may be affiliates of the Corporation. Any agent involved in the offer and sale
of the Offered Securities in respect of which this Prospectus is being
delivered will be named, and any commissions payable by the Corporation to
such agent will be set forth, in any applicable Prospectus Supplement. Unless
otherwise indicated in any applicable Prospectus Supplement, any such agent
will be acting on a reasonable efforts basis for the period of its
appointment.
The Debt Securities will be new issues of securities with no established
trading market. Any underwriters to whom such Debt Securities are sold by the
Corporation for public offering and sale may make a market in such Debt
Securities, but such underwriters 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 Offered Securities.
Any underwriter or agent participating in the distribution of the Offered
Securities may be deemed to be an underwriter, as that term is defined in the
Securities Act, of the Offered Securities so offered and sold and any
discounts or commissions received by them from the Corporation and any profit
realized by them on the sale or resale of the Offered Securities may be deemed
to be underwriting discounts and commissions under the Securities Act.
Underwriters, agents and their controlling persons may be entitled, under
agreements entered into with the Corporation, to indemnification by the
Corporation against certain civil liabilities, including liabilities under the
Securities Act or to contribution with respect to payments which the
underwriters or agents may be required to make in respect thereof.
LEGAL OPINIONS
The legality of the Offered Securities being offered hereby will be passed
upon for the Corporation by Bradley, Arant, Rose & White, Birmingham, Alabama,
and certain legal matters will be passed upon for any underwriters, dealers or
agents by Winthrop, Stimson, Putnam & Roberts, New York, New York. As of June
30, 1996, the partners and associates of Bradley, Arant, Rose & White
beneficially owned approximately 5,000 shares of Common Stock of the
Corporation.
16
<PAGE>
EXPERTS
The consolidated balance sheets of Energen Corporation and its subsidiaries
as of September 30, 1995 and 1994 and the consolidated statements of income,
shareholders' equity, and cash flows for each of the three years in the period
ending September 30, 1995, which are included in Energen's annual report on
Form 10-K for the year ended September 30, 1995 and which are incorporated by
reference in the Prospectus, have been incorporated herein in reliance on the
report, which includes an explanatory paragraph regarding Energen changing its
method of accounting for certain other post-retirement benefits effective
October 1, 1993, of Coopers & Lybrand L.L.P., independent accountants, given
on the authority of that firm as experts in auditing and accounting.
17
<PAGE>
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFOR-
MATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED OR INCORPORATED BY REFER-
ENCE IN THIS PROSPECTUS SUPPLEMENT, THE ACCOMPANYING PROSPECTUS AND ANY PRIC-
ING SUPPLEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE CORPORATION OR BY ANY OF
THE AGENTS OR BY ANY OTHER PERSON. THIS PROSPECTUS SUPPLEMENT, THE ACCOMPANY-
ING PROSPECTUS AND ANY PRICING SUPPLEMENT DO NOT CONSTITUTE AN OFFER TO SELL
OR A SOLICITATION OF AN OFFER TO BUY A SECURITY OTHER THAN THE NOTES OFFERED
HEREBY, NOR DO THEY CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER
TO BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY PERSON IN ANY JURISDICTION
IN WHICH IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION TO SUCH PERSON.
NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT, THE ACCOMPANYING PROSPEC-
TUS OR ANY PRICING SUPPLEMENT NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIR-
CUMSTANCES CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
---------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
PROSPECTUS SUPPLEMENT
<S> <C>
Selected Consolidated Financial Information................................ S-2
The Corporation............................................................ S-3
Use of Proceeds............................................................ S-3
Supplemental Description of the Notes...................................... S-3
Certain Tax Considerations................................................. S-13
Plan of Distribution....................................................... S-16
PROSPECTUS
Available Information...................................................... 2
Incorporation of Certain Documents by Reference............................ 2
Energen Corporation........................................................ 3
Consolidated Ratios of Earnings to Fixed Charges........................... 3
Use of Proceeds............................................................ 4
Description of Debt Securities............................................. 4
Description of Capital Stock............................................... 13
Plan of Distribution....................................................... 16
Legal Opinions............................................................. 16
Experts.................................................................... 17
</TABLE>
LOGO
$125,000,000
ENERGEN CORPORATION
MEDIUM-TERM NOTES, SERIES A DUE NINE MONTHS OR MORE
FROM DATE OF ISSUE
SALOMON BROTHERS INC
SMITH BARNEY INC.
A.G. EDWARDS & SONS, INC.
PROSPECTUS SUPPLEMENT
DATED SEPTEMBER 13, 1996
