UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR
THE QUARTER ENDED DECEMBER 31, 1997
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR
THE TRANSITION PERIOD FROM ___ TO ___
Commission IRS Employer
File State of Identification
Number Registrant Incorporation Number
1-7810 Energen Corporation Alabama 63-0757759
2-38960 Alabama Gas Corporation Alabama 63-0022000
2101 Sixth Avenue North
Birmingham, Alabama 35203
Telephone Number 205/326-2700
http://www.energen.com
Alabama Gas Corporation, a wholly owned subsidiary of Energen Corporation,
meets the conditions set forth in General Instruction H(1)(a) and (b) of
Form 10-Q and is therefore filing this Form with reduced disclosure format
pursuant to General Instruction H(2).
Indicate by a check mark whether the registrants (1) have filed all reports
required to be filed by Section 13 or 15(d) of the Securities and Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrants were required to file such reports), and (2) have been
subject to such filing requirements for the past 90 days. YES X NO ____
Indicate the number of shares outstanding of each of the issuers' classes
of common stock, as of February 10, 1998:
Energen Corporation, $0.01 par value 14,506,601 shares
Alabama Gas Corporation, $0.01 par value 1,972,052 shares
<PAGE>
ENERGEN CORPORATION AND ALABAMA GAS CORPORATION
FORM 10-Q FOR THE QUARTER ENDED DECEMBER 31, 1997
TABLE OF CONTENTS
Page
PART I: FINANCIAL INFORMATION (Unaudited)
Item 1. Financial Statements
(a) Consolidated Statements of Income of
Energen Corporation 3
(b) Consolidated Balance Sheets of
Energen Corporation 4
(c) Consolidated Statements of Cash Flows
of Energen Corporation 6
(d) Statements of Income of
Alabama Gas Corporation 7
(e) Balance Sheets of Alabama Gas
Corporation 8
(f) Statements of Cash Flows of
Alabama Gas Corporation 10
(g) Notes to Unaudited Financial
Statements 11
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 15
Selected Business Segment Data of
Energen Corporation 18
PART II: OTHER INFORMATION
Item 2. Changes in Securities 19
Item 4. Submission of Matters to a Vote of
Security Holders 19
Item 6. Exhibits and Reports on Form 8-K 19
SIGNATURES 20
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF INCOME
ENERGEN CORPORATION
(Unaudited)
Three months ended December 31,
(in thousands, except share data) 1997 1996
Operating Revenues
Natural gas distribution $ 95,755 $ 83,305
Oil and gas production activities 30,133 13,697
Total operating revenues 125,888 97,002
Operating Expenses
Cost of gas 50,747 41,460
Operations and maintenance 34,141 30,102
Depreciation, depletion and
amortization 17,836 10,397
Taxes, other than income taxes 10,022 7,088
Total operating expenses 112,746 89,047
Operating Income 13,142 7,955
Other Income (Expense)
Interest expense (7,235) (4,945)
Other, net 818 1,175
Total other expense (6,417) (3,770)
Income Before Income Taxes 6,725 4,185
Income taxes 598 1,008
Net Income $ 6,127 $ 3,177
Basic Earnings Per Average
Common Share* $ 0.42 $ 0.28
Diluted Earnings Per Average
Common Share* $ 0.42 $ 0.28
Dividends Per Common Share* $ 0.31 $ 0.30
Average Common Shares
Outstanding* 14,443,610 11,234,471
*Share data has not been restated to reflect a 2-for-1 stock split
payable March 2, 1998 (see Note 3)
The accompanying Notes are an integral part of these
financial statements.
<PAGE>
CONSOLIDATED BALANCE SHEETS
ENERGEN CORPORATION
December 31, 1997 September 30, 1997
(in thousands) (unaudited)
ASSETS
Current Assets
Cash and cash equivalents $ 8,729 $ 105,402
Accounts receivable, net of allowance
for doubtful accounts of $3,532 at
December 31, 1997, and
$3,185 at September 30, 1997 92,504 70,676
Inventories, at average cost
Storage gas 24,077 25,367
Materials and supplies 7,084 7,281
Liquified natural gas in storage 3,856 3,630
Deferred gas cost 16,677 2,512
Deferred income taxes 7,765 7,438
Prepayments and other 6,677 19,859
Total current assets 167,369 242,165
Property, Plant and Equipment
Oil and gas properties, successful
efforts method 513,361 454,210
Less accumulated depreciation,
depletion and amortization 97,870 87,554
Oil and gas properties, net 415,491 366,656
Utility plant 589,555 583,630
Less accumulated depreciation 291,606 287,749
Utility plant, net 297,949 295,881
Other property, net 4,351 4,466
Total property, plant and
equipment, net 717,791 667,003
Other Assets
Deferred income taxes 2,138 1,144
Deferred charges and other 8,603 9,485
Total other assets 10,741 10,629
TOTAL ASSETS $ 895,901 $ 919,797
The accompanying Notes are an integral part of these financial statements.
<PAGE>
CONSOLIDATED BALANCE SHEETS
ENERGEN CORPORATION
(in thousands, December 31, 1997 September 30, 1997
except share data) (unaudited)
CAPITAL AND LIABILITIES
Current Liabilities
Long-term debt due within one year $ 1,855 $ 1,855
Notes payable to banks 168,000 202,000
Accounts payable 51,601 49,196
Accrued taxes 20,893 18,300
Customers' deposits 17,718 16,399
Amounts due customers 7,619 7,347
Accrued wages and benefits 11,685 13,719
Other 22,535 21,935
Total current liabilities 301,906 330,751
Deferred Credits and Other Liabilities
Other 8,621 8,301
Total deferred credits and
other liabilities 8,621 8,301
Commitments and Contingencies -- --
Capitalization
Preferred stock, cumulative $0.01
par value, 5,000,000
shares authorized -- --
Common shareholders' equity*
Common stock, $0.01 par value;
30,000,000 shares authorized,
14,480,071 shares outstanding
at December 31, 1997, and
14,398,109 shares outstanding
at September 30, 1997 145 144
Premium on capital stock 188,822 185,841
Capital surplus 2,802 2,802
Retained earnings 114,003 112,356
Total common shareholders'
equity 305,772 301,143
Long-term debt 279,602 279,602
Total capitalization 585,374 580,745
TOTAL CAPITAL AND LIABILITIES $ 895,901 $ 919,797
*Share data has not been restated to reflect a 2-for-1 stock split
payable March 2, 1998 (see Note 3)
The accompanying Notes are an integral part of these financial statements.
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
ENERGEN CORPORATION
(Unaudited)
Three months ended December 31,
(in thousands) 1997 1996
Operating Activities
Net income $ 6,127 $ 3,177
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation, depletion
and amortization 17,836 10,397
Deferred income taxes, net (1,375) 1,640
Deferred investment tax credits, net (117) (122)
Net change in:
Accounts receivable (21,828) (29,963)
Inventories 1,261 (14)
Deferred gas cost (14,165) (13,379)
Accounts payable
gas purchases 17,211 39,192
Accounts payable
trade (14,806) 601
Other current assets
and liabilities 15,932 1,191
Other, net 2,713 1,146
Net cash provided by
operating activities 8,789 13,866
Investing Activities
Additions to property, plant
and equipment (68,556) (14,792)
Payments on notes receivable 259 185
Other, net 174 470
Net cash used in investing
activities (68,123) (14,137)
Financing Activities
Payment of dividends on
common stock (4,480) (3,375)
Issuance of common stock 1,141 1,654
Reduction of long-term debt -- (53)
Payment of note payable issued
to purchase U.S. Treasury securities (98,636) --
Net change in short-term debt 64,636 8,000
Net cash provided by
(used in) financing
activities (37,339) 6,226
Net change in cash and cash equivalents (96,673) 5,955
Cash and cash equivalents at
beginning of period 105,402 17,074
Cash and Cash Equivalents at
End of Period $ 8,729 $ 23,029
The accompanying Notes are an integral part of these
financial statements.
<PAGE>
STATEMENTS OF INCOME
ALABAMA GAS CORPORATION
(Unaudited)
Three months ended December 31,
(in thousands) 1997 1996
Operating Revenues $ 95,755 $ 83,305
Operating Expenses
Cost of gas 51,404 42,092
Operations and maintenance 25,000 24,205
Depreciation 6,197 5,759
Income taxes
Current 2,148 22
Deferred, net (927) 966
Deferred investment
tax credits, net (117) (122)
Taxes, other than income taxes 7,252 6,328
Total operating expenses 90,957 79,250
Operating Income 4,798 4,055
Other Income
Allowance for funds used
during construction 85 136
Other, net 79 374
Total other income 164 510
Interest Charges
Interest on long-term debt 2,210 2,211
Other interest expense 569 547
Total interest charges 2,779 2,758
Net Income $ 2,183 $ 1,807
The accompanying Notes are an integral part of these
financial statements.
BALANCE SHEETS
ALABAMA GAS CORPORATION
December 31, 1997 September 30, 1997
(in thousands) (unaudited)
ASSETS
Property, Plant and Equipment
Utility plant $ 589,555 $ 583,630
Less accumulated depreciation 291,606 287,749
Utility plant, net 297,949 295,881
Other property, net 343 347
Current Assets
Cash and cash equivalents 6,841 2,580
Accounts receivable
Gas 57,059 36,098
Merchandise 2,457 2,001
Other 1,810 1,442
Allowance for doubtful accounts (3,500) (3,156)
Inventories, at average cost
Storage gas 24,077 25,367
Materials and supplies 5,428 5,391
Liquified natural gas in storage 3,856 3,630
Deferred gas cost 16,677 2,512
Deferred income taxes 6,016 5,675
Prepayments and other 5,789 6,696
Total current assets 126,510 88,236
Deferred Charges and Other Assets 5,103 5,917
TOTAL ASSETS $ 429,905 $ 390,381
The accompanying Notes are an integral part of these
financial statements.
BALANCE SHEETS
ALABAMA GAS CORPORATION
December 31, 1997 September 30, 1997
(in thousands, (unaudited)
except share data)
CAPITAL AND LIABILITIES
Capitalization
Common shareholder's equity
Common stock, $0.01 par value;
3,000,000 shares authorized,
1,972,052 shares outstanding at
December 31, 1997, and
September 30, 1997 $ 20 $ 20
Premium on capital stock 31,682 31,682
Capital surplus 2,802 2,802
Retained earnings 109,077 106,894
Total common shareholder's
equity 143,581 141,398
Cumulative preferred stock, $0.01
par value, 120,000 shares
authorized, issuable in series -
$4.70 Series -- --
Long-term debt 125,000 125,000
Total capitalization 268,581 266,398
Current Liabilities
Notes payable to banks 25,000 11,000
Accounts payable
Trade 45,575 28,923
Affiliated companies 8,265 4,984
Accrued taxes 20,202 16,745
Customers' deposits 17,718 16,399
Other amounts due customers 7,619 7,347
Accrued wages and benefits 4,299 3,879
Other 9,109 10,481
Total current liabilities 137,787 99,758
Deferred Credits and Other Liabilities
Deferred income taxes 16,282 16,739
Accumulated deferred investment
tax credits 3,012 3,130
Regulatory liability 3,470 3,651
Customer advances for
construction and other 773 705
Total deferred credits
and other liabilities 23,537 24,225
Commitments and Contingencies
TOTAL CAPITAL AND LIABILITIES $ 429,905 $ 390,381
The accompanying Notes are an integral part of these
financial statements.
<PAGE>
STATEMENTS OF CASH FLOWS
ALABAMA GAS CORPORATION
(Unaudited)
Three months ended December 31, 1997 1996
(in thousands)
Operating Activities
Net income $ 2,183 $ 1,807
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation and amortization 6,197 5,759
Deferred income taxes, net (927) 966
Deferred investment
tax credits (117) (122)
Net change in:
Accounts receivable (21,441) (28,714)
Inventories 1,027 (309)
Deferred gas cost (14,165) (13,379)
Accounts payable -
gas purchases 17,211 39,192
Accounts payable - other trade (559) (2,215)
Other current assets and liabilities 5,112 466
Other, net 677 (6)
Net cash provided by (used in)
operating activities (4,802) 3,445
Investing Activities
Additions to property, plant and
equipment (8,197) (6,403)
Net advances from affiliates 3,281 13,727
Other, net (21) 421
Net cash provided by (used in)
investing activities (4,937) 7,745
Financing Activities
Payment of dividends on
common stock -- (3,350)
Net change in short-term debt 14,000 --
Net cash provided by (used in)
financing activities 14,000 (3,350)
Net change in cash and cash equivalents 4,261 7,840
Cash and cash equivalents at
beginning of period 2,580 803
Cash and Cash Equivalents at
End of Period $ 6,841 $ 8,643
The accompanying Notes are an integral part of these
financial statements.
<PAGE>
NOTES TO UNAUDITED FINANCIAL STATEMENTS
ENERGEN CORPORATION AND ALABAMA GAS CORPORATION
1. BASIS OF PRESENTATION
All adjustments to the unaudited financial statements which are, in the
opinion of management, necessary for a fair statement of the results of
operations for the interim periods have been recorded. Such adjustments
consisted of normal recurring items and immaterial adjustments.
The consolidated financial statements and notes thereto should be read
in conjunction with the financial statements and notes for the years
ended September 30, 1997, 1996, and 1995, included in the 1997
Annual Report of Energen Corporation (the Company) on Form 10-K.
Certain reclassifications were made to conform prior years' financial
statements to the current quarter presentation. The Company's natural
gas distribution business is seasonal in character and influenced by
weather conditions. Results of operations for the interim periods
are not necessarily indicative of the results which may be expected
for the fiscal year.
2. REGULATORY
As an Alabama utility, Alabama Gas Corporation (Alagasco) is subject
to regulation by the Alabama Public Service Commission (APSC)
which, in 1983, established the Rate Stabilization and Equalization
(RSE) rate-setting process. RSE was extended with modifications in
1985, 1987 and 1990. On October 7, 1996, RSE was extended, without
change, for a five-year period through January 1, 2002. Under the terms
of that extension, RSE will continue after January 1, 2002, unless, after
notice to the Company and a hearing, the Commission votes to either
modify or discontinue its operation.
Under RSE as extended, the APSC conducts quarterly reviews to
determine, based on Alagasco s projections and fiscal year-to-date
performance, whether Alagasco s return on equity for the fiscal year
will be within the allowed range of 13.15 percent to 13.65 percent.
Reductions in rates can be made quarterly to bring the projected return
within the allowed range; increases, however, are allowed only once
each fiscal year, effective December 1, and cannot exceed 4 percent
of prior-year revenues. RSE limits the utility s equity upon which a
return is permitted to 60 percent of total capitalization and provides
for certain cost control measures designed to monitor Alagasco s
operations and maintenance (O&M) expense. If the change in O&M
expense per customer falls within 1.25 percentage points above or
below the Consumer Price Index For All Urban Customers
(index range), no adjustment is required. If, however, the change
in O&M expense per customer exceeds the index range, three-quarters
of the difference is returned to customers. To the extent the change is
less than the index range, the utility benefits by one-half of the
difference through future rate adjustments. Under RSE as extended,
an $11.8 million annual increase in revenue became effective
December 1, 1997.
Alagasco calculates a temperature adjustment to customers'
monthly bills to remove the effect of departures from normal
temperature on Alagasco s earnings. The calculation is performed
monthly, and the adjustments to customers bills are made in the
same billing cycle the weather variation occurs.
Alagasco s rate schedules for natural gas distribution charges
contain a Gas Supply Adjustment (GSA) rider, established in
1993, which permits the pass-through to customers of changes
in the cost of gas supply, including Gas Supply Realignment
(GSR) surcharges imposed by Alagasco s suppliers resulting
from changes in gas supply purchases related to the implementation
of Federal Energy Regulatory Commission (FERC) Order 636. The
APSC on October 7, 1996, issued an order providing for the refund
to customers prior to January 31, 1997, of approximately $17
million of supplier refunds, including interest. The Company
refunded these amounts to customers during January 1997.
The refunds were collected from a variety of sources and most
relate to the settlement of rate case and FERC Order 636 proceedings
of Southern Natural Gas Company (Southern) as described herein.
In accordance with APSC-directed regulatory accounting
procedures, Alagasco in 1989 began returning to customers
excess utility deferred taxes which resulted from a reduction in
the federal statutory tax rate from 46 percent to 34 percent using
the average rate assumption method. This method provides for the
return to ratepayers of excess deferred taxes over the lives of the
related assets. In 1993 those excess taxes were reduced as a result
of a federal tax rate increase from 34 percent to 35 percent. Remaining
excess utility deferred taxes of $2.1 million are being returned to
ratepayers over approximately 13 years. At December 31, 1997,
and September 30, 1997, a regulatory liability related to income taxes
of $3.5 million and $3.7 million, respectively, was included in the
consolidated financial statements.
3. SUBSEQUENT EVENTS
On January 28, 1998, Energen announced a 2-for-1 split of the
Company's common stock. The split will be in the form of a
100 percent stock dividend and will be payable on March 2, 1998,
to shareholders of record on February 13, 1998. If the stock dividend
had been applied retroactively, basic earnings per average common
share would have been $.21 and $.14 for the three months ended
December 31, 1997 and 1996, respectively. Effective
January 30, 1998, the Restated Certificate of Incorporation of
Energen Corporation was amended to increase Energen's
authorized common stock, par value $0.01 per share, from
30,000,000 shares to 75,000,000 shares.
On January 29, 1998, Taurus Exploration Inc. (Taurus) closed
on a $17 million purchase of Gulf of Mexico properties from
Chateau Oil and Gas Inc. The acquisition included an estimated
12.5 billion cubic feet (Bcf) of natural gas reserves in the Gulf of
Mexico. Approximately 45 percent of the proved reserves are
developed and producing, and Taurus plans to spend another $0.8
million over the next several years to bring on-line the 55 percent
of behind-pipe reserves. Current net production is 7.1 million
cubic feet a day. Taurus expects to sell approximately 20 percent
of its share to a third party who will serve as the operating partner.
4. DERIVATIVE COMMODITY INSTRUMENTS
Taurus periodically enters into derivative commodity instruments
to hedge its exposure to price fluctuations on oil and gas production.
Such instruments include regulated natural gas and crude oil futures
contracts traded on the New York Mercantile Exchange and
over-the-counter swaps and basis hedges with major energy
derivative product specialists. These transactions are accounted
for under the hedge method of accounting. Under this method,
any unrealized gains and losses are recorded as a current
receivable/payable and a deferred gain/loss. Realized gains and
losses are deferred until the revenues from the related hedged
volumes are recognized in the income statement. These realized
deferred gains and losses are reflected in current liabilities or current
assets, respectively. Cash flows from derivative instruments are
recognized as incurred through changes in working capital.
The Company had deferred gains of $1.6 million and deferred
losses of $12.9 million on the balance sheet at December 31,1997
and September 30, 1997, respectively.
At December 31, 1997, Taurus had entered into contracts and swaps
for 30.5 Bcf of its remaining estimated 1998 flowing gas production
at an average contract price of $2.24 per Mcf and 315 MBbl of its
remaining estimated flowing oil production at an average contract
price of $20.40 per barrel. The program has been extended into
fiscal year 1999 with contracts and swaps in place for 16.5 Bcf of
flowing gas production at an average contract price of $2.20 per Mcf.
Realized prices are anticipated to be lower than hedged prices due to
basis difference and other factors.
All hedge transactions are subject to the Company's risk
management policy, approved by the Board of Directors, which
does not permit speculative positions. To apply the hedge method
of accounting, management must demonstrate that a high correlation
exists between the value of the derivative commodity instrument and
the value of the item hedged. Management uses the historic
relationships between the derivative instruments and the sales
prices of the hedged volumes to ensure that a high level of correlation
exists.
5. RECENT PRONOUNCEMENTS OF THE FASB
During the first quarter, the Company adopted Statement of
Financial Accounting (SFAS) No. 128, Earnings Per Share (EPS),
which specifies computation, presentation, and disclosure
requirements for EPS. SFAS No. 128 requires dual presentation of
basic and diluted EPS on the face of the income statement and
requires a reconciliation of the numerator and denominator of the
basic EPS computation to that of the diluted computation (see Note 7).
The Company also is required to adopt during fiscal 1998,
SFAS No. 129, Disclosures of Information about Capital Structure,
which establishes standards for disclosing information about an
entity's capital structure; interim disclosure is not required.
This adoption is not expected to have a material impact on the
consolidated financial statements.
In June 1997, the FASB issued SFAS No. 130, Reporting
Comprehensive Income, which requires the reporting and
display of comprehensive income and its components in an
entity's financial statements, and SFAS No. 131, Disclosures
about Segments of an Enterprise and Related Information, which
specifies revised guidelines for determining an entity's operating
segments and the type and level of financial information to be required.
The Company is required to adopt these statements in fiscal
year 1999. The impact of these pronouncements on the Company
is currently being evaluated.
6. SUPPLEMENTAL CASH FLOW INFORMATION
ENERGEN CORPORATION
Three months ended December 31, 1997 1996
(in thousands)
Interest paid $ 9,274 $ 4,825
Income taxes paid $ 137 $ 253
Noncash investing activities
(capitalized depreciation
and allowance for funds used
during construction) $ 117 $ 182
ALABAMA GAS CORPORATION
Three months ended December 31, 1997 1996
(in thousands)
Interest paid $ 5,173 $ 3,986
Income taxes paid (refunded) $ (508) $ 1,954
Noncash investing activities
(capitalized depreciation
and allowance for funds used
during construction) $ 117 $ 182
7. RECONCILIATION OF EARNINGS PER SHARE
(in thousands, except Income Shares Per share*
per share amounts) (Numerator) (Denominator) Amount
3 months ended December 31, 1997
Basic EPS*
Income available to
common stockholders $ 6,127 14,444 $ 0.42
Effect of Dilutive Securities
Long-range performance shares 53
Non-qualified stock options 87
Diluted EPS*
Income available to common
stockholders $ 6,127 14,584 $ 0.42
plus assumed conversions
3 months ended December 31, 1996
Basic EPS*
Income available to common
stockholders $ 3,177 11,234 $ 0.28
Effect of Dilutive Securities
Long-range performance shares 44
Non-qualified stock options 46
Diluted EPS*
Income available to common
stockholders $ 3,177 11,324 $ 0.28
plus assumed conversions
*Share data has not been restated to reflect a 2-for-1 stock split payable
March 2, 1998 (see Note 3)
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Energen's net income totaled $6.1 million ($0.42 per share) for the
three months ended December 31,1997, and compared favorably
with net income of $3.2 million ($0.28 per share) recorded in the
same period last year. Taurus Exploration Inc. (Taurus), Energen's
oil and gas exploration and production subsidiary, realized net income
of $3.8 million as compared to $1.5 million in the same period last
year, primarily due to a 136 percent increase in oil and gas production
volumes to 12.9 billion cubic feet equivalent (Bcfe). Taurus also
benefited from increased nonconventional fuels tax credits,
partially offset by increased interest expense. Alagasco, Energen's
natural gas utility, earned $2.2 million during the first fiscal quarter.
This $0.4 million increase from the same period last year primarily
was due to Alagasco's earning within its allowed range of return on
a higher level of equity representing investment in utility plant.
Natural Gas Distribution:
Natural gas distribution revenues increased $12.5 million
for the quarter primarily due to increased residential sales volumes
resulting from colder weather than in the prior year and an increase
in charges recovered through the Gas Supply Adjustment (GSA) rider.
Weather that was 10 percent colder than the same period last year
contributed to a 9 percent increase in residential sales volumes and a
22 percent increase in cost of gas. Gas price fluctuations are passed
through volumetrically to the customer via the Company's GSA rider.
The temperature adjustment provision allows customer bills to be
adjusted on a real-time basis so that temperature variances from
normal do not affect Alagasco's operating margins.
Operations and maintenance expenses increased slightly in the
current year primarily to restore the bad debt reserve to a level
appropriate for current receivable balances.
A slight increase in depreciation expense primarily was due to normal growth
of the utility's distribution system. Taxes other than income primarily
reflect various state and local business taxes as well as
payroll-related taxes. State and local business taxes are generally
based on gross receipts and fluctuate accordingly.
As discussed more fully in Note 2, Alagasco is subject to regulation
by the APSC. On October 7,1996, the APSC issued an order to
extend the Company's rate-setting mechanism through January 1, 2002.
Under the terms of that extension, RSE will continue after
January 1, 2002, unless, after notice to the Company and a
hearing, the Commission votes to either modify or
discontinue its operation.
Oil and Gas Exploration and Production:
Revenues from oil and gas production activities more than
doubled in the current quarter to $30.1 million, primarily
reflecting Taurus's prior-year property acquisitions. Total
production volumes rose 136 percent to 12.9 Bcfe for the quarter.
Natural gas production increased 127 percent to 10.3 Bcf. Oil
volumes increased 65 percent to 259 MBbl. During 1997 Taurus
acquired high BTU-content natural gas reserves in the San Juan
Basin which yielded 176 MBbl in natural gas liquids in the current
quarter. Taurus also benefited from higher realized gas prices. Gas
sales prices increased 7 percent to $2.21 per Mcf. Oil prices, on the
other hand, decreased 3 percent to $17.15 per barrel. Natural gas
liquids sold for an average price of $9.38 per barrel.
Taurus periodically enters into derivative commodity instruments to
hedge its exposure to price fluctuations on oil and gas production.
Such instruments include regulated natural gas and crude oil futures
contracts traded on the New York Mercantile Exchange and
over-the-counter swaps and basis hedges with major energy
derivative product specialists. All hedge transactions are subject
to the Company's risk management policy, approved by the
Board of Directors, which does not permit speculative positions.
At December 31, 1997, Taurus has entered into contracts and swaps
for 30.5 Bcf of its remaining estimated 1998 flowing gas production
at an average contract price of $2.24 per Mcf and 315 MBbl of its
remaining estimated flowing oil production at an average contract
price of $20.40 per barrel. The program has been extended into
fiscal year 1999 with contracts and swaps in place for 16.5 Bcf of
flowing gas production at an average contract price of $2.20 per Mcf.
Realized prices are anticipated to be lower than hedged prices
due to basis difference and other factors.
O&M expenses increased $3.7 million for the quarter primarily
due to significant growth in production and acquisition activity at
Taurus. Lease operating expenses rose by $4.7 million. Exploration
expense was lower by $0.5 million primarily due to the timing of
exploratory efforts in the current period.
Taurus's significantly higher production volumes generated the
majority of the $7 million increase in DD&A for the quarter.
In addition, the average depletion rate in the current year was
$0.87 compared to $0.81 for the same period last year.
Taurus's expense for taxes other than income primarily reflects
production-related taxes which were $2 million higher this
quarter due to increased production.
Non-Operating Items:
Interest expense for the Company increased $2.3 million in
the quarter primarily due to the issuance of $85 million of
Energen medium-term notes in July 1997 to fund growth at
Taurus. The Company also increased borrowings under its
short-term credit facilities for the same purpose.
The Company's effective tax rates are lower than statutory federal
tax rates primarily due to the recognition of nonconventional fuels
tax credits and the amortization of investment tax credits. The
Company's effective tax rates are expected to remain lower than
statutory federal rates through December 31, 2002, as tax credits
generated each year are expected to be fully recognized in the
financial statements. Income tax expense decreased in the current
quarter as the impact of higher consolidated pretax income was
more than offset by significantly greater recognition of
nonconventional fuels tax credits on an interim basis in
the current year.
Like many companies, Energen is in the process of evaluating
its computer software to determine whether modifications will
be required for it to function properly in the year 2000. Costs
associated with evaluation and testing are being expensed as incurred.
The Company has not yet fully determined the total cost of the
project but does not anticipate any material impact on the
consolidated financial statements.
FINANCIAL POSITION AND LIQUIDITY
Operating cash flow was $8.8 million compared to $13.9
million in the prior year. The Company benefited from increased
net income caused by significantly higher oil and gas production;
however, that increase was more than offset by decreased cash
flows from other working capital items, which are highly influenced
by throughput and timing of payments.
The Company invested $68.1 million primarily to acquire oil
and gas properties. In the first quarter, Taurus added $60.4
million in capital expenditures. Utility capital expenditures
totaled $8.3 million and represented primarily normal system
distribution expansion and support facilities.
The Company used $37.3 million for financing activities in
the first quarter. For Alabama shares tax planning purposes,
the Company borrowed $98.6 million in September 1997 to
invest in short-term federal obligations. The Treasuries
matured in early October and the proceeds were used to
repay the debt. This repayment of debt was offset by increased
borrowings under Energen's short-term credit facilities incurred
mainly to finance Taurus's acquisition and development strategy.
FUTURE CAPITAL RESOURCES AND LIQUIDITY
The Company plans to continue to implement its diversified
growth strategy. Over the next five years, Taurus plans to
invest approximately $750 million to acquire and develop
producing activities and to participate in exploration and related
development. In fiscal 1998, Taurus plans to spend approximately
$165 million, including $100 million for property acquisitions.
During the first quarter, Taurus spent $50.9 million on property
acquisitions. It should be noted that Taurus's continued ability
to invest in property acquisitions will be significantly influenced
by industry trends as the producing property acquisition market
has historically been cyclical. From time to time, Taurus also
may be engaged in negotiations to sell, trade or otherwise dispose
of previously acquired property.
During the first quarter of 1998, Taurus acquired approximately
79 Bcfe of proved oil and natural gas reserves in the Permian
Basin of west Texas from B.C. Oil and Gas Ltd. and
certain affiliated companies for $43.3 million. More than half
of the proved reserves are behind-pipe and undeveloped, and
Taurus plans to spend an additional $17 million over the next
two to three years to fully develop the behind-pipe, water flood
and undeveloped reserve potential. Oil accounts for 70 percent
of the estimated proved reserves. The properties include
approximately 350 producing wells, of which Taurus will
operate 248. Taurus also purchased an estimated 4.5 Bcfe of
predominantly natural gas reserves in southwest Mississippi
from Oxy USA Inc. for $7.1 million. Current net production
is 5.9 MMcfd and 88 barrels of oil a day.
To finance Taurus's investment program, the Company will
continue to utilize its short-term credit facilities to supplement
internally generated cash flow, with long-term debt and equity
providing permanent financing. In December 1997, Energen filed
a $400 million shelf registration for debt and common stock and
intends to issue long-term debt under that registration during the
second quarter. During the first quarter, Energen increased its
available short-term credit facilities to $228 million to
accommodate its growth plans. Depending upon the Company's
level of activity in acquiring oil and gas properties, Energen
may issue common equity during this fiscal year.
Utility capital expenditures for normal distribution system
renewal and expansion and support facilities could
approximate $60 million in fiscal 1998. Alagasco also
will maintain an investment in storage working gas which
is expected to average approximately $24 million in 1998.
The utility anticipates funding these capital requirements
through internally generated capital and the utilization of
short-term credit facilities.
Forward-Looking Statements and Risks: Certain statements
in this report, including statements of future plans, objectives,
and expected performance of the Company and its subsidiaries,
are forward-looking statements that are dependent on certain
events, risks and uncertainties that may be outside their control
which could cause actual results to differ materially from those
anticipated. Some of these include, but are not limited to, economic
and competitive conditions, inflation rates, legislative and regulatory
changes, financial market conditions, future business decisions, and
other uncertainties, all of which are difficult to predict. There are
numerous uncertainties inherent in estimating quantities of proved
oil and gas reserves and in projecting future rates of production and
timing of development expenditures. The total amount or timing of
actual future production may vary significantly from reserves and
production estimates. In the event Taurus is unable to invest fully
its planned acquisition expenditures, future operating revenues and
proved reserves could be negatively affected. The drilling of
exploratory wells can involve significant risk including that related
to timing, success rates and cost overruns. These risks can be
impacted by lease and rig availability, complex geology and other
factors. Results of operations and cash flows also could be affected
by future oil and gas prices. Although Taurus makes use of futures,
swaps and fixed price contracts to mitigate risk, fluctuations in oil
and gas prices may affect the Company's financial position and
results of operations.
OTHER
Recent Pronouncements of the FASB
During the first quarter, the Company adopted SFAS No. 128,
Earnings Per Share, which specifies computation, presentation,
and disclosure requirements for EPS. SFAS No. 128 requires
dual presentation of basic and diluted EPS on the face of the
income statement and requires a reconciliation of the numerator
and denominator of the basic EPS computation to that of the
diluted computation (see Note 7).
The Company also is required to adopt during fiscal 1998, SFAS
No. 129, Disclosures of Information about Capital Structure, which
establishes standards for disclosing information about an entity's
capital structure; although interim disclosure is not required. This
adoption is not expected to have a material impact on the
consolidated financial statements.
In June 1997, the FASB issued SFAS No. 130, Reporting
Comprehensive Income, which requires the reporting and
display of comprehensive income and its components in an
entity's financial statements, and SFAS No. 131, Disclosures
about Segments of an Enterprise and Related Information, which
specifies revised guidelines for determining an entity's operating
segments and the type and level of financial information to be required.
The Company is required to adopt these statements in fiscal year 1999.
The impact of these pronouncements on the Company is currently
being evaluated.
<PAGE>
SELECTED BUSINESS SEGMENT DATA
ENERGEN CORPORATION
(Unaudited)
Three months ended December 31,
(dollars in thousand,
except sales price data) 1997 1996
Natural Gas Distribution
Operating revenues
Residential $ 62,377 $ 55,524
Commercial and
industrial - small 23,494 19,454
Transportation 9,357 8,554
Other 527 (227)
Total $ 95,755 $ 83,305
Gas delivery volumes (Mmcf)
Residential 7,833 7,182
Commercial and
industrial - small 3,456 3,036
Transportation 16,374 16,336
Total 27,663 26,554
Other data
Depreciation and
amortization $ 6,197 $ 5,759
Capital expenditures $ 8,314 $ 6,585
Operating income $ 5,902 $ 4,921
Oil and Gas Exploration and Production
Operating revenues
Natural gas $ 22,789 $ 9,386
Oil 4,445 2,785
Natural gas liquids 1,649 --
Other 1,250 1,526
Total $ 30,133 $ 13,697
Sales volume
Natural gas (Mmcf) 10,304 4,534
Oil (Mbbl) 259 157
Natural gas liquids (Mbbl) 176 --
Average sales price
Natural gas (Mmcf) $ 2.21 $ 2.07
Oil (barrel) $ 17.15 $ 17.70
Natural gas liquids (barrel) $ 9.38 $ --
Other data
Depreciation, depletion
and amortization $ 11,639 $ 4,638
Capital expenditures $ 60,359 $ 8,389
Exploration expenditures $ 123 $ 645
Operating income $ 7,541 $ 3,824
<PAGE>
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES
Effective January 30, 1998, the Restated Certificate of
Incorporation of Energen Corporation was amended to increase
Energen's authorized common stock, par value $0.01 per share,
from 30,000,000 shares to 75,000,000 shares.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE
OF SECURITY HOLDERS
a. At the annual meeting of shareholders held on
January 28, 1998, the Energen shareholders elected the
following Directors to serve for three year terms expiring
in 2001;
Director Votes cast for Votes withheld
Dr. Stephen D. Ban 12,008,837 546,064
Julian W. Banton 12,001,773 553,128
Wm. Michael Warren, Jr. 12,020,255 534,646
b. A proposed amendment to the Restated Certificate of
Incorporation of Energen Corporation was submitted to
a vote of the shareholders. The proposed amendment, which
became effective January 30, 1998, increased Energen's authorized
common stock, par value $0.01 per share, from 30,000,000
shares to 75,000,000 shares. The amendment passed with
10,275,233 shares of common stock voting in favor of the
proposal, 2,153,431 shares voting against the proposal, and
126,237 shares abstaining.
c. The shareholders approved the Energen Corporation 1997 Stock
Incentive Plan. The Plan was approved with 9,466,573 shares
of common stock voted in favor of the proposal, 1,824,034
shares voted against the proposal, 211,147 shares abstained,
and 1,053,148 broker non-votes.
d. The shareholders approved certain issuances of common
stock under the Energen Corporation 1997 Deferred
Compensation Plan. The proposal was approved with
10,663,055 shares of common stock voted in favor of the
proposal, 600,754 shares voted against the proposal, 237,942
shares abstained, and 1,053,151 broker non-votes.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
3(a) Articles of Amendment to the Restated Certificate of Incorporation,
dated January 30, 1998.
3(b) Restated Certificate of Incorporation, as amended through January
30, 1998.
4(a) First Supplemental Indenture, dated as of September 5, 1997, between
Energen Corporation and The Bank of New York Trustee, to Indenture
dated as of January 1, 1992.
4(b) First Supplemental Indenture, dated as of September 5, 1997, between
Energen Corporation and The Bank of New York Trustee, to Indenture
dated as of March 1, 1993.
27.1 Financial data schedule of Energen Corporation (for SEC purposes
only)
27.2 Financial data schedule of Alabama Gas Corporation (for SEC purposes
only)
b. Reports on Form 8-K
No reports on Form 8-K were filed for the three months ended December
31,1997. <PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
ENERGEN CORPORATION
ALABAMA GAS CORPORATION
February 11, 1998 By/s/ Wm. Michael Warren, Jr.
Wm. Michael Warren, Jr.
Chairman, President and
Chief Executive Officer of
Energen, Chairman and Chief
Executive Officer of Alagasco
February 11, 1998 By/s/ G. C. Ketcham
G. C. Ketcham
Executive Vice President, Chief
Financial Officer and Treasurer
of Energen and Alagasco
February 11, 1998 By/s/ Grace B. Carr
Grace B. Carr
Controller of Energen
February 11, 1998 By/s/ Paula H. Rushing
Paula H. Rushing
Vice President-Finance of
Alagasco
<PAGE>
Exhibit 3(a)
ARTICLES OF AMENDMENT
TO THE
RESTATED CERTIFICATE OF INCORPORATION
OF ENERGEN CORPORATION
TO THE HONORABLE JUDGE OF PROBATE, JEFFERSON COUNTY, ALABAMA:
Pursuant to the provisions of Article 10 of Chapter 2B of
Title 10 of the Code of Alabama of 1975 (Section 10-2B-10.01, et
seq.), the undersigned corporation executes the following
Articles of Amendment to its Restated Certificate of
Incorporation:
(1) The name of the corporation is Energen Corporation.
(2) Section 4.01 of Article IV of the Restated Certificate
of Incorporation of the said corporation shall be amended to read
as follows:
"4.01 The total number of shares of stock which the
Corporation shall have authority to issue is as follows:
(a) Five million (5,000,000) shares, par value of
$0.01 per share, which are hereby designated as
preferred stock (hereinafter called "Preferred
Stock").
(b) Seventy-Five million (75,000,000) shares, par
value of $0.01 per share, which are hereby
designated as common stock (hereinafter called
"Common Stock")."
(3) The foregoing amendment to the Restated Certificate of
Incorporation was adopted by the shareholders of the said
Corporation on January 28, 1998 in the manner prescribed by the
Alabama Business Corporation Act.
(4) The common stock of the Corporation, par value $.01 per
share, was the only voting group entitled to vote on the
foregoing amendment. There were 14,476,686 shares of such common
stock outstanding, and the holders of such shares were entitled
to cast one vote per share, or an aggregate of 14,476,686 votes.
The number of votes entitled to be cast with respect to the
foregoing amendment by holders of the Corporation's common stock
indisputably represented at the meeting of shareholders at which
the foregoing amendment was adopted was 12,554,901.
(5) The total number of votes cast for the amendment by the
holders of the common stock of the Corporation was 10,275,233,
the total number of votes cast against the amendment by the
holders of the common stock of the Corporation was 2,153,431 and
the number of votes cast for the amendment was sufficient for
approval of the amendment by the holders of the common stock of
the Corporation.
Dated this ______ day of January, 1998.
ENERGEN CORPORATION
By_________________________
Wm. Michael Warren, Jr.
Its Chairman of the Board
of Directors
Prepared by:
Amy F. McIntyre
12th Floor, 2101 Sixth Avenue North
Birmingham, AL 35203
<PAGE>
Exhibit 3(b)
RESTATED CERTIFICATE OF INCORPORATION
OF
ENERGEN CORPORATION
[As Amended through January 30, 1998]
STATE OF ALABAMA )
)
COUNTY OF JEFFERSON )
TO THE HONORABLE JUDGE OF PROBATE, JEFFERSON COUNTY, ALABAMA:
Pursuant to the provisions of Article 10 of Chapter 2B
of Title 10 of the Code of Alabama of 1975 (Section 10-2A-110, et
seq.), the undersigned corporation executes the following
Restated Certificate of Incorporation:
I. Name of Corporation:
1.01 The name of the corporation shall be Energen
Corporation.
II. Objects:
2.01 To manufacture, produce, buy, deal in, use, sell,
distribute, furnish and supply gas; to construct, equip, use,
operate and maintain works for holding, receiving, purifying and
distributing gas, and all buildings, works, meters, pipes,
fittings, machinery, apparatus and appliances convenient or
necessary in connection therewith.
2.02 To carry on the business of a gas company in all
its branches; to manufacture, use, deal in, render salable and
sell all products, by-products and residual products obtained in
the production of gas; to manufacture, buy, sell, rent and deal
in all kinds of goods, wares, merchandise and personal property
which may seem calculated directly or indirectly to promote the
consumption of gas.
2.03 To manufacture, produce, buy, deal in, use, sell,
distribute, furnish and supply petroleum, petroleum products and
by-products; to construct, equip, use, operate and maintain works
for holding, receiving, purifying and distributing petroleum,
petroleum products and by-products, and all buildings, works,
meters, pipes, fittings, machinery, apparatus and appliances
convenient or necessary in connection therewith.
2.04 To acquire, buy, hold, own, sell, lease, exchange,
dispose of, finance, deal in, construct, build, equip, improve,
use, operate, maintain and work upon any and all kinds of works,
plants, stations, systems, machinery, generators, apparatus,
devices, supplies and articles of every kind pertaining to or in
anywise connected with the production, use, distribution,
regulation, control or application of light, heat, refrigeration,
ice, water, water-power, electricity, gas, and any other force.
2.05 To acquire, buy, hold, own, sell, lease, exchange,
dispose of, distribute, deal in, use, produce, furnish and supply
light, heat, refrigeration, ice, water, water-power, electricity,
and any other power or force.
2.06 To acquire, buy, hold, own, sell, lease, exchange
and dispose of lands or the gas, oil and mineral rights in lands;
to develop such lands by drilling gas and oil wells thereon; to
produce therefrom gas, oil or other volatile or mineral
substances; to produce, deal in, use, distribute, furnish and
sell such gas or oil or other volatile or mineral substances; to
install, construct, build, equip, improve, use, operate and
maintain any and all manner of plants, machinery and appliances
for any and all such purposes and the marketing and selling of
such products.
2.07 To carry on the business of aiding in the
construction and operations of plants and works, including those
of gas companies, electric companies, and other public utility
companies, and for or in connection with any or all of the
foregoing purposes to furnish services and advice of engineers,
auditors, executives and other experts.
2.08 To acquire, organize, assemble, develop, build up
and operate, constructing and operating and other organizations
and systems and to hire, sell, lease, exchange, turn over,
deliver and dispose of such organizations, in whole or in part,
and to enter into and perform contracts, agreements and
undertakings of any kind in connection with any or all of the
foregoing objects.
2.09 To purchase, acquire, hold, own, develop and
dispose of lands and interests in and rights with respect to
lands and waters and fixed and movable property, franchises,
concessions, consents, privileges and licenses in its opinion
useful or desirable for or in connection with any or all of the
foregoing objects.
2.10 To acquire by purchase, subscription or otherwise,
and to sell, use, assign, transfer, mortgage, pledge, exchange or
otherwise dispose of, and to make and enter into all manner and
kinds of contracts, agreements and obligations for the
purchasing, acquiring, dealing in or selling of, real and
personal property of every sort and description and wheresoever
situated, including shares of stock, bonds, debentures, notes,
scrip, securities, evidences of indebtedness, contracts or
obligations of any corporation or corporations, association or
associations, domestic or foreign, or of any firm or individual
of the United States or any state, territory or dependency of the
United States or any foreign country, or any municipality or
local authority within or without the United States, and also to
issue in exchange therefor stocks, bonds or other securities or
evidences of indebtedness of the Corporation and while the owner
or holder of any such property, to receive, collect and dispose
of the interest, dividends and income on or from such property,
and to possess and exercise in respect thereto all of the rights,
powers and privileges of ownership, including voting rights.
2.11 To act as financial, business, managing and/or
purchasing agent, general or special.
2.12 To carry on the business of general brokers and
dealers in stocks, bonds, securities, mortgages and other choses
in action, including the acquisition thereof by original
subscription; to make investments in such property; and to hold,
manage, mortgage, pledge, sell and dispose of the same in like
manner as individuals may do.
2.13 To acquire by purchase or otherwise and to own,
hold, buy, sell, donate, convey, lease, mortgage or incumber real
or personal property both within and without the State of
Alabama; to survey, sub-divide, plat, improve and develop lands
for the purposes of sale or otherwise; to lay off such lands in
streets, lanes, squares, parks and alleys, city blocks and lots
and to sell or otherwise dispose of lots and to secure the
purchase by purchase-money notes, mortgages, or otherwise, to
open and improve the streets, lanes, parks, squares and alleys
which may be laid off and to do and perform all things needful
for the development and improvement of such lands for trade or
business and to make donations of any of its lands when in the
opinion of its Board of Directors the same may be desirable to
further the Corporation's interest.
2.14 To engage in and carry on a general mercantile and
trade business and to buy, manufacture, produce or otherwise
acquire, hold, own, use, import, export, trade or otherwise deal
in or turn to account, sell, lease, pledge or otherwise dispose
of any and all kinds of goods, wares and merchandise and other
articles of commercial and personal property without limit as to
character or manner.
2.15 To borrow or otherwise raise moneys for any of the
purposes of the Corporation from time to time and without limit
as to amount, except as may be provided in a resolution or
resolutions adopted by the shareholders of the Corporation, to
issue bonds, debentures, notes or other obligations of any
nature, or in any manner, and to secure the payment of the
principal and interest of any thereof by mortgage upon, or pledge
or conveyance or assignment in trust of, the whole or any part of
the property of the Corporation, real and personal, whether at
the time owned or thereafter acquired, including contract rights;
and to sell, pledge, or otherwise dispose of such bonds,
debentures, notes or other obligations of any nature of the
Corporation for its corporate purposes.
2.16 To lend and advance money and extend credit,
either with or without security, and to underwrite for
investment, resale or otherwise stocks, bonds and other
securities, and to aid the organization, financing, liquidation
or reorganization of corporations, associations or firms.
2.17 To purchase or otherwise acquire and to hold,
cancel, re-issue, sell or transfer shares of its own capital
stock (so far as may be permitted by law) and its bonds,
debentures, notes, scrip or other securities or evidences of
indebtedness, provided that it shall not use its funds or
property for the purchase of shares of its own capital stock when
such use would cause any impairment of its capital, and provided,
further, that shares of its own capital stock belonging to it
shall not be voted directly or indirectly.
2.18 In connection with the purchase or lease or other
acquisition by the Corporation of any property of whatever
nature, to pay therefor in cash or property or to issue in
exchange therefor shares of its capital stock, bonds, or other
obligations or other securities of the Corporation and to assume
any liabilities of any person, firm, association or corporation.
2.19 To sell, exchange or barter for other property,
assign, transfer, lease as lessor, mortgage, pledge or otherwise
dispose of or encumber any part or parts, or all, of the property
or assets of the Corporation; to cease to conduct the business
connected with any such property or assets so disposed of; to
resume any business which it shall cease to conduct; and the
Corporation may receive any form of; to resume any business which
it shall cease to conduct; and the Corporation may receive any
form of consideration for property so sold, exchanged, bartered
or otherwise disposed of, including (but not excluding other
forms of consideration) bonds, debentures and/or other
obligations and/or shares of stock of any existing corporate or
other entity or of any corporate or other entity in process of
organization.
2.20 To endorse, or otherwise guarantee, or become a
surety with respect to, or obligate itself for, or without
becoming liable therefor, nevertheless, to pledge or mortgage all
or any part of its properties to secure the payment of the
principal of, and interest on, or either thereof, any bonds,
including construction or performance bonds, debentures, notes,
scrip, coupons, contracts or other obligations or evidences of
indebtedness, or the performance of any contract, lease,
construction, performance or other bond, mortgage, or obligation
of any other corporation or association, domestic or foreign, or
of any firm, partnership, joint venture, or other person
whatsoever, in which this Corporation may have a lawful interest,
or on account of, or with respect to, any transaction in which
this Corporation shall receive any lawful consideration,
advantage or benefit, on any account whatsoever. Irrespective of
the relative net worth of the corporations, associations, or
persons involved, and of the relative amounts of obligations
involved, this Corporation shall be deemed to have a lawful
interest in any corporation, association or person (A) which owns
stock in this Corporation, or (B) which owns stock in another
corporation which owns stock in this Corporation, or (C) in which
this Corporation owns stock, or (D) in which another corporation
owns stock which also owns stock in this Corporation, or (E) in
which any one or more persons who own stock in this Corporation
also own stock, or (F) which or who has entered into any
contractual arrangement pursuant to which any such corporation or
persons undertakes corresponding or like obligations of
endorsement, guarantee, or suretyship, with respect to all or any
such obligations or evidences of indebtedness, contracts of this
Corporation, or which may engage with this Corporation, in the
conduct of any joint venture or enterprise, or in the use of
common facilities or services.
2.21 To engage in any commercial, financial,
mercantile, industrial, manufacturing, marine, exploration,
mining, agricultural, research, licensing, servicing or agency
business not prohibited by law, and any, some or all of the
foregoing.
2.22 In general, to do any or all of the things
hereinbefore set forth to the same extent as natural persons
could do, and as principal or agent or otherwise, and either
alone or in conjunction with any other persons, firms,
associations or corporations.
2.23 To exercise its powers in accomplishment of its
objects and purposes in any part of the world and to have one or
more offices out of the State of Alabama.
2.24 To do all acts and things which it shall find
necessary or convenient to do in aid of or in connection with the
transaction, promotion and carrying on of the objects and
purposes hereinabove stated or necessary or incidental to the
protection and benefit of the corporation, and in general to
carry on any lawful business necessary or incidental to the
attainment of the purposes of the Corporation, whether such
business is similar in nature to the objects and powers
hereinabove set forth or otherwise.
2.25 The Corporation's power to acquire property of any
kind which it is or shall be authorized to acquire may be
exercised directly or indirectly through the acquisition of
stocks and bonds representative of such property and for the
purpose of acquiring and holding either in perpetuity or for a
limited period.
The foregoing clauses shall be construed as powers and
provisions for the regulation of the business and the conduct and
affairs of the Corporation, the Directors and stockholders and
each class of stockholders, and it is hereby expressly provided
that the foregoing specific enumeration shall not be held to
limit or restrict in any manner the powers of the Corporation.
III. Location:
3.01 The location of the Corporation's principal office
in the State of Alabama shall be:
1918 First Avenue North
Birmingham, Alabama 35295
IV. Capital Stock:
4.01 The total number of shares of stock which the
Corporation shall have authority to issue is as follows:
(a) Five million (5,000,000) shares, par value of
$0.01 per share, which are hereby designated as preferred stock
(hereinafter called "Preferred Stock").
(b) Seventy-five million (75,000,000) shares, par
value of $0.01 per share, which are hereby designated as common
stock (hereinafter called "Common Stock").
4.02 (a) The Preferred Stock may be issued in such one
or more series as shall from time to time be created and
authorized to be issued by the Board of Directors as hereinafter
provided.
The Board of Directors is hereby expressly authorized,
by resolution or resolutions from time to time adopted providing
for the issuance of Preferred Stock, to fix and determine, to the
extent not fixed by the provisions hereinafter set forth, the
relative rights and preferences of the shares of each series of
Preferred Stock, including (but without limiting the generality
of the foregoing) any of the following with respect to which the
Board of Directors may make specific provisions:
(i) the distinctive name and any serial
designations;
(ii) the annual dividend rate or rates and
the dividend payment dates;
(iii) with respect to the declaration and
payment of dividends upon each series of
the Preferred Stock, whether such
dividends are to be cumulative or
noncumulative, preferred, subordinate or
equal to dividends declared and paid
upon other series of the Preferred Stock
or upon any other shares of stock of the
Corporation, and the participating or
other special rights, if any, of such
dividends;
(iv) the redemption provisions, if any, with
respect to any series, and if any series
is subject to redemption, the manner and
time of redemption and the redemption
price or prices;
(v) the amount or amounts of preferential or
other payment to which any series of
Preferred Stock is entitled over any
other series of Preferred Stock or over
the Common Stock on voluntary or
involuntary liquidation, dissolution or
winding-up, subject to the provisions
set forth in paragraph (c)(ii) of
Section 4.02 hereof;
(vi) any sinking fund or other retirement
provisions and the extent to which the
charges therefor are to have priority
over the payment of dividends on or the
making of sinking fund or other like
retirement provisions for shares of any
other series of Preferred Stock or for
shares of the Common Stock;
(vii) any conversion, exchange, purchase or
other privileges to acquire shares of
any other series of Preferred Stock or
of the Common Stock;
(viii) the number of shares of such series; and
(ix) the voting rights, if any, of such
series, subject to the provisions set
forth in paragraph (c)(i) of Section
4.02 hereof.
Each share of each series of Preferred Stock shall have
the same relative rights and be identical in all respects with
all the other shares of the same series.
Before the Corporation shall issue any shares of
Preferred Stock of any series authorized as hereinbefore
provided, a statement setting forth a copy of the resolution or
resolutions with respect to such series adopted by the Board of
Directors of the Corporation pursuant to the foregoing authority
vested in said Board shall be made, filed and recorded in
accordance with the then applicable requirements, if any, of the
laws of the State of Alabama, or, if no statement is then so
required, a certificate shall be signed and acknowledged on
behalf of the Corporation by its Chairman of the Board, President
or a Vice-President and its corporate seal shall be affixed
thereto and attested by its Secretary or an Assistant Secretary
and such certificate shall be filed and kept on file at the
principal office of the Corporation in the State of Alabama and
in such other place or places as the Board of Directors shall
designate.
(b) The authority of the Board of Directors to
provide for the issuance of any shares of the Corporation's stock
shall include, but shall not be limited to, authority to issue
shares of stock of the Corporation for any purpose and in any
manner (including issuance pursuant to rights, warrants, or other
options) permitted by law, for delivery as all or part of the
consideration for or in connection with the acquisition of all or
part of the stock of another corporation or of all or part of the
assets of another corporation or enterprise, irrespective of the
amount by which the issuance of such stock shall increase the
number of shares outstanding (but not in excess of the number of
shares authorized).
(c) The following relative rights and preferences
of the stock of the Corporation are fixed as follows:
(i) Voting Rights.
(A) Common Stock. At all elections of directors
of the Corporation, and in respect of all other
matters as to which the vote or consent of
stockholders of the Corporation shall be required
to be taken, the holders of the Common Stock shall
be entitled to one (1) vote for each share held by
them.
(B) Preferred Stock. The holders of each series
of the Preferred Stock shall have such voting
rights as may be fixed by resolution or by
resolutions of the Board of Directors providing
for the issuance of each such series.
(ii) Liquidation, Dissolution, etc. In the event of
any voluntary or involuntary liquidation, dissolution or winding-up of the
Corporation, the assets of the Corporation available
for distribution to the stockholders (whether from capital or
surplus) shall be distributed among those of the respective
series of the outstanding Preferred Stock, if any, as may be
entitled to any preferential amounts and among the respective
holders thereof in accordance with the relative rights and
preferences, if any, fixed and determined for each such series
and the holders thereof by resolution or resolutions of the Board
of Directors providing for the issue of each such series of the
Preferred Stock; and after payment in full of the amounts payable
in respect of the Preferred Stock, if any, the holders of any
series of the outstanding Preferred Stock who are not entitled to
preferential treatment pursuant to resolutions of the Board of
Directors providing for the issue thereof and the holders of the
outstanding Common Stock shall be entitled (to the exclusion of
the holders of any series of the outstanding Preferred Stock
entitled to preferential treatment pursuant to resolutions of the
Board of Directors providing for the issue thereof) to share
ratably in all the remaining assets of the Corporation available
for distribution to its stockholders.
A merger, consolidation or reorganization of the
Corporation with or into one or more corporations, or a sale,
lease or other transfer of all or substantially all the assets of
the Corporation, that does not result in the termination of the
enterprise and distribution of the assets to stockholders, shall
not be deemed to constitute a liquidation, dissolution or
winding-
up of the Corporation within the meaning of this paragraph
(c)(ii) of Section 4.02 hereof, notwithstanding the fact that the
Corporation may cease to exist or may surrender its Certificate
of Incorporation.
(iii) Dividends. Dividends on any stock of the
Corporation shall be payable only out of earnings or assets of
the Corporation legally available for the payment of such
dividends and only as and when declared by the Board of
Directors.
(d) No holder of any share or shares of any
class of stock of the Corporation shall have any preemptive
rights to subscribe for any shares of stock of any class of the
Corporation now or hereafter authorized or for any securities
convertible into or carrying any optional rights to purchase or
subscribe for any shares of stock of any class of the Corporation
now or hereafter authorized, provided, however, that no provision
of the Certificate of Incorporation shall be deemed to deny to
the Board of Directors the right, in its discretion, to grant to
the holders of shares of any class of stock at the time
outstanding the right to purchase or subscribe for shares of
stock of any class or any other securities of the Corporation now
or hereafter authorized at such prices and upon such other terms
and conditions as the Board of Directors, in its discretion, may
fix.
4.03 The amount of the capital stock with which the
Corporation shall begin business shall be 1,000 shares of Common
Stock.
V. Officer to Receive Subscription:
5.01 The name and post office address of the officer
designated by the incorporators to receive subscriptions to the
capital of the Corporation are:
Name: A. S. Lacy
Post Office
Address: 1918 First Avenue North
Birmingham Alabama 35295
VI. Incorporators and Shares:
The names and post office addresses of the
incorporators and the number of shares of Common Stock subscribed
for by each are as follows:
Number of Shares
of Common Stock
Name Post Office Address Subscribed for
Howard Higgins 1918 First Avenue North 334
Birmingham, Alabama 35295
Rex J. Lysinger 1918 First Avenue North 333
Birmingham, Alabama 35295
A. S. Lacy 1918 First Avenue North 333
Birmingham, Alabama 35295
Total 1,000
<PAGE>
VII. Directors and Officers:
7.01 The number of directors constituting the initial
board of directors of the Corporation shall be nine. Subject to
Section 10.01 of Article X hereof, the number of directors of the
Corporation shall be as provided in and fixed by the Bylaws of
the Corporation. The names and post office addresses of the
directors and the officers chosen for the first year are:
Directors
Name Post Office Address
Emory O. Cunningham Post Office Box 2581
Birmingham, Alabama 35202
James S. M. French Post Office Box 247
Birmingham, Alabama 35201
Robert F. Henry Post Office Box 2230
Montgomery, Alabama 36103
Howard Higgins 1918 First Avenue North
Birmingham, Alabama 35295
Norman R. Kerredge 1918 First Avenue North
Birmingham, Alabama 35295
Rex J. Lysinger 1918 First Avenue North
Birmingham, Alabama 35295
Harry H. Pritchett Post Office Box 2389
Tuscaloosa, Alabama 35401
Richard A. Puryear, Jr. 3700-A Country Club Drive
Birmingham, Alabama 35213
Robert S. Weatherly 2865 Stratford Road
Birmingham, Alabama 35213
Officers
Officers Title Post Office Address
Howard Higgins Chairman of the 1918 First Avenue N.
Board and CEO Birmingham, AL 35295
Rex J. Lysinger President 1918 First Avenue N.
Birmingham, AL 35295
A. S. Lacy Vice President and 1918 First Avenue N.
Secretary Birmingham, AL 35295
Richard J. Patzke Vice President and 1918 First Avenue N.
Treasurer Birmingham, AL 35295
VIII. Time Limit:
8.01 The duration of the Corporation shall be
perpetual.
IX. Certain Provisions Respecting Business Combinations:
9.01 Definitions.
For the purposes of this Article IX:
(a) "Affiliate" and "Associate" shall have
the respective meanings ascribed to such terms in
Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as in
effect on June 11, 1984.
(b) "Announcement Date" means, with respect
to any Business Combination, the date of the first
public announcement of such Business Combination.
(c) A person shall be a "beneficial owner"
of any Voting Stock:
(i) which such person or any of its
Affiliates or Associates beneficially owns,
directly or indirectly; or
(ii) which such person or any of its
Affiliates or Associates has (A) the right to
acquire (whether such right is exercisable
immediately or only after the passage of
time) pursuant to any agreement, arrangement
or understanding or upon the exercise of
conversion rights, exchange rights, warrants
or options, or otherwise, or (B) the right to
vote or direct the vote pursuant to any
agreement, arrangement or understanding; or
(iii) which is beneficially owned,
directly or indirectly, by any other person
with which such person or any of its
Affiliates or Associates has any agreement,
arrangement, or understanding for the purpose
of acquiring, holding, voting or disposing of
any shares of capital stock of the
Corporation.
(d) For the purposes of determining whether
a person is an Interested Stockholder pursuant to
paragraph (k) of this Section 9.01 hereof, the
number of shares of Voting Stock deemed to be
outstanding shall include shares deemed owned by
the Interested Stockholder through application of
paragraph of Section 9.01 hereof, but shall not
include any other shares of Voting Stock which may
be issuable pursuant to any agreement, or upon
exercise of conversion rights, warrants or
options, or otherwise.
(e) "Board" means the Board of Directors of
the Corporation.
(f) A "Business Combination" shall mean any
one or more of the following:
(i) any merger or consolidation-dation
of the Corporation or any Subsidiary with or
into (A) any Interested Stockholder or
(B) any other corporation (whether or not
itself an Interested Stockholder) which is,
or after such merger or consolidation would
be, an Affiliate of an Interested
Stockholder; or
(ii) any sale, lease, exchange,
mortgage, pledge, transfer or other
disposition (in one transaction or a series
of transactions) to or with any Interested
Stockholder or any Affiliate of any
Interested Stockholder of any assets of the
Corporation or any Subsidiary having an
aggregate Fair Market Value of $1,000,000 or
more; or
(iii) the issuance or transfer by the
Corporation or any Subsidiary (in one
transaction or a series of transactions) of
any securities of the Corporation or any
Subsidiary to any Interested Stockholder or
any Affiliate of any Interested Stockholder
in exchange for cash, securities or other
property (or a combination thereof) having an
aggregate Fair Market Value of $1,000,000 or
more; or
(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 an Affiliate
of any Interested Stockholder; or
(v) any reclassification of securities
(including any reverse stock split), or
recapitalization of the Corporation, or any
merger or consolidation of the Corporation
with any of its Subsidiaries or any similar
transaction (whether or not with or into or
otherwise involving an Interested
Stockholder) which has the effect, directly
or indirectly, of increasing the
proportionate share of the outstanding shares
of any class of equity securities, or
securities convertible into equity
securities, of the Corporation or any
Subsidiary, including, without limitation,
any class or series of Protected Stock, which
is directly or indirectly owned by any
Interested Stockholder or any Affiliate of
any Interested Stockholder.
(g) "Consummation Date" means, with respect
to any Business Combination, the date on which
such Business Combination is effected.
(h) "Determination Date" means, with respect
to any Interested Stockholder, the date on which
such Interested Stockholder first became an
Interested Stockholder.
(i) "Disinterested Director" means any
member of the Board who is unaffiliated with, and
not a nominee of, the Interested Stockholder and
was a member of the Board prior to the time that
the Interested Stockholder became an Interested
Stockholder, and any successor of a Disinterested
Director who is a member of the Board and who is
unaffiliated with, and not a nominee of, the
Interested Stockholder and was recommended to
succeed a Disinterested Director by a majority of
Disinterested Directors on the Board at the time
of such recommendation.
(j) "Fair Market Value" means (i) in the
case of stock, the highest closing sale price
during the thirty-day period immediately preceding
the date in question of a share of such stock on
the Composite Tape for New York Stock Exchange,
Inc. Listed Stocks, or, if such stock is not
quoted on the Composite Tape, on the New York
Stock Exchange, Inc., or, if such stock is not
listed on the New York Stock Exchange, Inc., on
the principal United States securities exchange
registered under the Securities Exchange Act of
1934 on which such stock is listed, or, if such
stock is not listed on any such exchange, the
highest closing bid quotation with respect to a
share of such stock during the thirty-day period
preceding the date in question as reported by the
National Association of Securities Dealers, Inc.
Automated Quotations System or any system then in
use, or if no such quotations are available, the
fair market value on the date in question of a
share of such stock as determined by a majority of
the Disinterested Directors in good faith; and
(ii) in the case of property other than cash or
stock, the fair market value of such property on
the date in question as determined by a majority
of the Disinterested Directors in good faith.
(k) "Interested Stockholder" shall mean, in
respect of any Business Combination, any person
(other than the Corporation) who or which, as of
the date of the first public announcement of such
Business Combination, or on the day immediately
prior to the consummation of any such Business
Combination:
(i) is the beneficial owner, directly
or indirectly, of ten percent (10%) or more
of the voting power of the outstanding Voting
Stock; or
(ii) is an Affiliate of the Corporation
and at any time within two years prior
thereto was the beneficial owner, directly or
indirectly, of ten percent (10%) or more of
the voting power of the then outstanding
Voting Stock; or
(iii) is an assignee of or has
otherwise succeeded to any shares of Voting
Stock of the Corporation which were at any
time within the two-year period immediately
prior to the date in question beneficially
owned by any Interested Stockholder, if such
assignment or succession shall have occurred
in the course of a transaction or series of
transactions not involving a public offering
within the meaning of the Securities Act of
1933.
(l) A "person" shall mean any individual,
firm, corporation or other entity.
(m) "Protected Stock" means all Voting Stock
and all other shares of capital stock of the
Corporation having, or which may have upon the
happening of some contingency, the right to vote
for the election of some or all of the directors
of the Corporation, regardless of whether at the
time in question such shares then have a present
right to so vote.
(n) "Subsidiary" means any corporation of
which a majority of any class of equity security
is owned, directly or indirectly, by the
Corporation.
(o) "Voting Stock" means, at any time, all
shares of capital stock of the Corporation
entitled to vote generally in the election of
directors, which shares shall be considered for
the purpose of the vote required by this Article
IX as one class.
(p) In the event of any Business Combination
in which the Corporation survives, the phrase
"other consideration to be received" as used in
clauses (i) and (ii) of paragraph (b) of 9.03 of
this Article IX shall include the shares of Common
Stock and/or the shares of any other class of
outstanding Protected Stock retained by the
holders of such shares.
9.02 Higher Vote for Certain Business Combinations. In
addition to any affirmative vote required by law or this
Certificate of Incorporation, and except as otherwise expressly
provided in 9.03 of this Article IX, any Business Combination
shall require the affirmative vote of the holders of at least
eighty percent (80%) of the then outstanding shares of Voting
Stock. Such affirmative vote shall be required notwithstanding
the fact that no vote may be required, or that some lesser
percentage may be specified, by law or under the rules of, or in
any agreement with, any United States securities exchange
registered under the Securities Exchange Act of 1934, or any
successor act thereto, on which any of the Voting Stock is
listed, or otherwise.
9.03 When Higher Vote Is Not Required. The provisions
of 9.02 of this Article IX shall not be applicable to any
particular Business Combination, and such Business Combination
shall require only such affirmative vote, if any, as is required
by law and any other Article of this Certificate of
Incorporation, if all of the conditions specified in either of
the following paragraphs (a) and (b) are met:
(a) Approval by the Disinterested Directors.
The Business Combination shall have been approved
by a majority of the Disinterested Directors.
(b) Price and Procedure Requirements. All
of the following conditions shall have been met:
(i) Common Stock. The aggregate amount
of the cash and the Fair Market Value as of
the Consummation Date of consideration other
than cash to be received by holders of the
Common Stock of the Corporation in such
Business Combination, computed on a per share
basis, shall be at least equal to the higher
of the following:
(A) (if applicable) the highest per share
price (including any brokerage
commissions, transfer taxes and
soliciting dealers' fees) paid by the
Interested Stockholder for any shares of
Common Stock acquired by the Interested
Stockholder (i) within the two-year
period immediately prior to the
Announcement Date or (II) in the
transaction or transactions by which the
Interested Stockholder became an
Interested Stockholder, whichever is
higher; or
(B) the Fair Market Value per share of the
Common Stock on the Announcement Date or
the Determination Date, whichever is
higher.
(ii) Protected Stock. The aggregate
amount of cash and the Fair Market Value as
of the Consummation Date of consideration
other than cash to be received per share by
holders of shares of any other class of
outstanding Protected Stock regardless of
whether the Interested Stockholder has
previously acquired any shares of a
particular class of such Protected Stock
shall be at least equal to the highest of the
following:
(A) (if applicable) the highest per share
price (including any brokerage
commissions, transfer taxes and
soliciting dealers' fees) paid by the
Interested Stockholder for any shares of
such class of Protected Stock acquired
by the Interested Stockholder (i) within
the two-year period immediately prior to
the Announcement Date or (II) in the
transaction or transactions by which the
Interested Stockholder became an
Interested Stockholder, whichever is
higher;
(B) the highest preferential amount per
share to which the holders of shares of
such class of Protected Stock are
entitled in the event of any voluntary
or involuntary liquidation, dissolution
or winding up of the Corporation; or
(C) the Fair Market Value per share of such
class of Protected Stock on the
Announcement Date or the Determination
Date, whichever is higher.
(iii) Form of Consideration. The
consideration to be received by holders of a
particular class or series of outstanding
Protected Stock (including Common Stock)
shall be in cash or in the same form as the
Interested Stockholder has paid for shares of
such class of Protected Stock prior to the
Consummation Date. If the Interested
Stockholder has paid for shares of any class
of Protected Stock with varying forms of
consideration, the form of consideration for
such class of Protected Stock shall be either
cash or the form used to acquire the largest
number of shares of such class of Protected
Stock previously acquired by it.
(iv) Maintain Dividends. After such
Interested Stockholder has become an
Interested Stockholder and prior to the
consummation of such Business Combination:
(A) except as approved by a majority of the
Disinterested Directors, there shall have
been no failure to declare and pay at the
regular date therefor any full quarterly
dividends (whether or not cumulative) on any
outstanding Preferred Stock of the
Corporation; and (B) there shall have been
(i) no reduction in the annual rate of
dividends paid on the Common Stock except as
necessary to reflect any subdivision of the
Common Stock, except as approved by a
majority of the Disinterested Directors, and
(II) an increase in such annual rate of
dividends as necessary to reflect any
reclassification (including any reverse stock
split), recapitalization, reorganization or
any similar transaction which has the effect
of reducing the number of outstanding shares
of the Common Stock unless the failure so to
increase such annual rate is approved by a
majority of the Disinterested Directors.
(v) Acquisition of Additional Shares.
After such Interested Stockholder has become
an Interested Stockholder and prior to the
consummation of such Business Combination,
such Interested Stockholder shall not have
become the beneficial owner of any additional
shares of Voting Stock except as part of the
transaction which results in such Interested
Stockholder becoming an Interested
Stockholder.
(vi) No Disproportionate Benefits.
After such Interested Stockholder has become
an Interested Stockholder, such Interested
Stockholder shall not have received the
benefit, directly or indirectly (except
proportionately as a stockholder), of any
loans, advances, guarantees, pledges or other
financial assistance or any tax credits or
other tax advantages provided by the
Corporation, whether in anticipation of or in
connection with such Business Combination or
otherwise.
(vii) Furnish Information. A proxy or
information statement describing the proposed
Business Combination and complying with the
requirements of the Securities Exchange Act
of 1934 and the rules and regulations
thereunder (or any subsequent provisions
replacing such Act, rules or regulations)
shall be mailed to all stockholders of this
Corporation at least 30 days prior to the
consummation of such Business Combination
(whether or not such proxy or information
statement is required to be mailed pursuant
to such Act or any such subsequent
provisions).
9.04 Powers of Board of Directors. A majority of the
Disinterested Directors of the Corporation shall have the power
and duty to determine for the purposes of this Article IX on the
basis of the information known to them after reasonable inquiry,
(1) the number of shares of Voting Stock beneficially owned by
any person, (2) whether a person is an Interested Stockholder or
is an Affiliate or Associate of another person, (3) whether a
person has an agreement, arrangement or understanding with
another as to the matters referred to in paragraph (C) of Section
9.01 of this Article IX, (4) whether the assets which are the
subject of any Business Combination have, or the consideration to
be received for the issuance or transfer of securities by the
Corporation or any Subsidiary in any Business Combination has, an
aggregate Fair Market Value of $1,000,000 or more, or (5) whether
the requirements of paragraph (a) or (b) of Section 9.03 of this
Article IX have been met with respect to any Business
Combination.
9.05 No Effect on Fiduciary Obligations of Interested
Stockholders. Nothing contained in this Article IX shall be
construed to relieve any Interested Stockholder from any
fiduciary obligation imposed by law.
9.06 Amendment, Repeal, Etc. Notwithstanding any other
provisions of this Certificate of Incorporation or the Bylaws of
the Corporation (and notwithstanding the fact that some lesser
percentage may be specified by law, this Certificate of
Incorporation or the Bylaws of the Corporation), the affirmative
vote of the holders of at least eighty percent (80%) of the
shares of the then outstanding Voting Stock shall be required to
amend or repeal, or adopt any provisions inconsistent with, this
Article IX of this Certificate of Incorporation.
X. Board of Directors:
10.01 (a) Number, election and terms. All corporate
powers shall be exercised by or under the authority of, and the
business and affairs of the Corporation shall be managed under
the direction of, a Board of Directors which, except as otherwise
fixed by or pursuant to the provisions of Article IV hereof
relating to the rights of the holders of any class or series of
Preferred Stock to elect additional directors under specified
circumstances, shall consist of not less than nine (9) nor more
than fifteen (15) persons. The exact number of directors within
the minimum and maximum limitations specified in the preceding
sentence shall be fixed from time to time by the Board of
Directors pursuant to a resolution adopted by a majority of the
entire Board of Directors. At the annual meeting of stockholders
of the Corporation held in 1985, the directors, other than those
who may be elected by the holders of any class or series of
Preferred Stock, shall be divided into three classes, as nearly
equal in number as possible, with the term of office of the first
class of directors to expire at the annual meeting of
stockholders of the Corporation to be held in 1986, the term of
office of the second class of directors to expire at the annual
meeting of stockholders of the Corporation to be held in 1987 and
the term of office of the third class of directors to expire at
the annual meeting of stockholders of the Corporation to be held
in 1988. At each annual meeting of stockholders of the
Corporation following such initial classification and election,
and except as otherwise so fixed by or pursuant to the provisions
of Article IV hereof relating to the rights of the holders of any
or series of Preferred Stock to elect additional directors under
specified circumstances, directors elected to succeed those
directors whose terms expire at such annual meeting shall be
elected for a term of office to expire at the third succeeding
annual meeting of stockholders of the Corporation after their
election.
(b) Vacancies and Newly Created Directorships.
Subject to the rights of the holders of any series of Preferred
Stock then outstanding, any vacancy occurring in the Board of
Directors may be filled by the affirmative vote of a majority of
the remaining directors though less than a quorum of the Board of
Directors. A director elected to fill a vacancy shall be elected
to serve until the next annual meeting of stockholders. Any
directorship to be filled by reason of an increase in the number
of directors shall be filled by election at an annual meeting or
at a special meeting of stockholders called for that purpose,
unless applicable law then permits such directorship to be filled
by the affirmative vote of a majority of the remaining directors
(even though less than a quorum of the Board of Directors). No
decrease in the number of directors constituting the Board of
Directors shall shorten the term of any incumbent director.
(c) Continuance in Office. Notwithstanding the
foregoing provisions of Section 10.01 hereof, any director whose
term of office has expired shall continue to hold office until
his successor shall be elected and qualify.
(d) Removal. Subject to the rights of the
holders of any class or series of Preferred Stock then
outstanding, any director, or the entire Board of Directors, may
be removed from office at any time, with or without cause, but
only by the affirmative vote of the holders of at least eighty
percent (80%) of the voting power of all of the shares of the
Corporation then entitled to vote for the election of directors.
(e) Amendment, repeal, etc. Notwithstanding any
other provisions of this Certificate of Incorporation or the
Bylaws of the Corporation (and notwithstanding the fact that some
lesser percentage may be specified by law, this Certificate of
Incorporation or the Bylaws of the Corporation), the affirmative
vote of the holders of at least eighty percent (80%) of the
voting power of all of the shares of the Corporation then
entitled to vote for the election of directors shall be required
to amend or repeal, or to adopt any provision inconsistent with,
Section 10.01 hereof.
10.02 In furtherance, not in limitation, of the
powers conferred upon the Board of Directors by statute, the
Board of Directors is expressly authorized, without any vote or
other action by stockholders other than such as at the time shall
be expressly required by statute applicable to such action, to
exercise in a manner not inconsistent with any of the provisions
of the Certificate of Incorporation all of the powers, rights and
privileges of the Corporation (whether expressed or implied in
this Certificate of Incorporation or conferred by statute) and do
all acts and things which may be done by the Corporation, and
particularly, among other things:
(a) Subject to Section 9.06 of Article IX and
paragraph (e) of Section 10.01 hereof, to make, alter and repeal
Bylaws of the Corporation, subject to the power of the
stockholders to alter or repeal Bylaws made by the Board of
Directors, which action by the directors shall fully protect
third parties in dealing with the Corporation; provided, however,
that the Board of Directors may not alter, amend or repeal any
Bylaw establishing what constitutes a quorum at any meeting of
the stockholders of the Corporation;
(b) To determine, subject to the provisions of
Article IX hereof, whether any, and if any, what part, of the net
income of the Corporation or of its net assets in excess of its
capital shall be declared in dividends and paid to the
stockholders and whether or not in cash or capital stock of the
Corporation or in other property, and generally to determine and
direct the use and disposition of any such net income or any such
excess of net assets over capital; and to fix the times for the
declaration and payment of dividends;
(c) From time to time, to fix the amount to be
reserved over and above the capital stock of the Corporation paid
in and to determine and direct how amount so reserved shall be
used;
(d) To determine from time to time at what times
and places and under what conditions and regulations the accounts
and books of the Corporation, or any of them, shall be open to
the inspection of stockholders; and no stockholders shall have
any right to inspect any account or book or document of the
Corporation except as conferred by the laws of the State of
Alabama or authorized by resolution of the Board of Directors or
of the stockholders;
(e) From time to time, and without other limit as
to amount, except as may be provided in a resolution or
resolutions adopted by the stockholders of the Corporation, to
borrow or otherwise raise moneys for any of the purposes of the
Corporation; to authorize the issue of bonds, debentures, notes,
or other obligations of the Corporation, of any nature, or in any
manner, and to authorize the creation of mortgages upon, or the
pledge or conveyance or assignment in trust of, the whole or any
part of the property of the Corporation, real or personal,
whether at the time owned or thereafter acquired, including
contract rights, to secure the payment of any of such bonds,
debentures, notes or other obligations and the interest thereon;
and to authorize the sale or pledge or other disposition of such
bonds, debentures, notes or other obligations of the Corporation
for its corporate purposes;
(f) To provide, subject to the requirements of
law and the bylaws of the Corporation, for the holding of
stockholders and Directors meetings within or without the State
of Alabama at such places as may be from time to time designated
by resolution of the Board of Directors and to provide for an
office or offices and for the keeping of the books of the
Corporation (subject to the provisions of the statute) within or
without the State of Alabama;
(g) By resolution adopted by majority vote of all
the Directors of the Corporation as at the time fixed by its
bylaws, to designate three or more of their number to constitute
an executive committee, which, to the extent provided in such
resolution or in the bylaws of the Corporation, shall have and
may exercise the powers of the Board of Directors in the
management of the business and affairs of the Corporation, and
may have power to authorize the seal of the Corporation to be
affixed to all papers which may require it, and by like
resolution, from time to time, to constitute other committees out
of their number, with such powers as shall be provided in such
resolutions or in the bylaws of the Corporation;
(h) Any action required or permitted to be taken
at any meeting of the Board of Directors or any committee thereof
may be taken without a meeting, if prior to such action a written
consent thereto is signed by all members of the Board or such
committee, as the case may be, and such written consent is filed
with the minutes of proceedings of the Board or committee;
(i) To exercise such further powers as may be
conferred by the bylaws of the Corporation in addition to the
powers and authority expressly conferred in the foregoing or by
law.
XI. Limitation of Liability:
11.01 A director of the Corporation shall not be
liable to the Corporation or its shareholders for money damages
for any action taken, or failure to take action, as a director,
except for (i) the amount of a financial benefit received by such
director to which such director is not entitled; (ii) an
intentional infliction of harm by such director on the
Corporation or its shareholders; (iii) a violation of Section 10-2B-8.33 of
the Code of Alabama of 1975 or any successor provision
to such section; (iv) an intentional violation by such director
of criminal law; or (v) a breach of such director's duty of
loyalty to the Corporation or its shareholders. If the Alabama
Business Corporation Act, or any successor statute thereto, is
hereafter amended to authorize the further elimination or
limitation of the liability of a director of a corporation, then
the liability of a director of the Corporation, in addition to
the limitations on liability provided herein, shall be limited to
the fullest extent permitted by the Alabama Business Corporation
Act, as amended, or any successor statute thereto. The
limitation on liability of directors of the Corporation contained
herein shall apply to liabilities arising out of acts or
omissions occurring subsequent to the adoption of this Article XI
and, except to the extent prohibited by law, to liabilities
arising out of acts or omissions occurring prior to the adoption
of this Article XI. Any repeal or modification of this Article
XI by the shareholders of the Corporation shall be prospective
only and shall not adversely affect any limitation on the
liability of a director of the Corporation existing at the time
of such repeal or modification.
XII. General Provisions
12.01 Capital surplus, paid-in surplus and premiums
on stock of the Corporation now existing or hereafter created
shall not be available for the payment of dividends other than
liquidating dividends.
12.02 All persons who shall acquire stock in the
Corporation shall acquire it subject to the provisions of this
Certificate of Incorporation.
12.03 So far as not otherwise expressly provided by
the laws of the State of Alabama, the Corporation shall be
entitled to treat the person in whose name any share is
registered as the owner thereof for all purposes and shall not be
bound to recognize any equitable or other claim to or interest in
said share on the part of any other person, whether or not the
Corporation shall have notice thereof.
12.04 Attached hereto, marked Exhibit "A" and made
a part hereof, is a statement, under oath, made by A. S. Lacy,
the officer or agent authorized by the incorporators to receive
subscriptions to the capital stock of the Corporation subscribed
for and the amount thereof which has been paid in. There is also
attached hereto, marked Exhibit "B" and made a part hereof, a
true and correct copy of the subscription list of the Corporation
showing the amount of capital stock subscribed for by the
incorporators and the manner in which such subscriptions are
provided to be discharged.
The board of directors of the Corporation adopted a
resolution with respect to the restatement of the certificate of
incorporation of the corporation on July 19, 1984.
The foregoing restated certificate of incorporation of
the Corporation sets forth all of the operative provisions of the
Certificate of Incorporation of the Corporation, correctly sets
forth without change the corresponding provisions of the
Certificate of Incorporation of the Corporation as heretofore
amended and supersedes the original Certificate of Incorporation
of the Corporation and all amendments thereto.
Dated this 20th day of July, 1984.
ENERGEN CORPORATION
By /s/ Rex J. Lysinger
Its Chairman of the Board of
Directors and President
and /s/ A. S. Lacy
Its Secretary
STATE OF ALABAMA )
)
COUNTY OF JEFFERSON )
Before me, the undersigned authority in and for said
County in said State, personally appeared Rex J. Lysinger known
to me, who being first duly sworn doth depose and say that he is
the Chairman of the Board of Directors and President of Energen
Corporation, that he signed the foregoing Restated Certification
of Incorporation of said corporation as Chairman of the Board of
Directors and President of said corporation and with full
authority and that the statements made in the foregoing Restated
Certification of Incorporation of said corporation are true and
correct.
/s/ Rex J. Lysinger
Rex J. Lysinger
Subscribed and sworn before me on this 20th day of
July, 1984, in witness whereof I hereunto subscribe my name and
attach the seal in my office.
Margaret G. Priola
Notary Public
[NOTARIAL SEAL] My Commission Expires: 4/20/85
<PAGE>
EXHIBIT "A"
STATE OF ALABAMA )
)
COUNTY OF JEFFERSON )
Before me, Evelyn E. Pulley, a Notary Public in and for
said county in said state, personally appeared A. S. Lacy, who is
known to me, and who, being by me first duly sworn according to
law, deposed and said that he is the officer or agent designated
and authorized by the incorporators of Energen Corporation, an
corporation proposed to be incorporated under the laws of the
State of Alabama, to receive the subscription to the capital
stock of said corporation; that the amount of capital stock of
said corporation that has been paid in cash is One Thousand
Dollars ($1,000.00) which amount is at least twenty percent (20%)
of the stock subscribed; that a true copy of the subscription
list of capital stock of said corporation and the price paid in
cash therefor by each subscriber is attached hereto, marked
Exhibit "B" and made a part hereof; and that affiant now holds
said cash for delivery to said corporation, upon completion of
the organization thereof.
/s/ A. S. LACY
A. S. Lacy
Subscribed and sworn to before me this
26th day of October, 1978.
/s/ Evelyn E. Pulley
Notary Public in and for the County of
Jefferson, Alabama
My Commission expires: March 16, 1980<PAGE>
EXHIBIT "B"
SUBSCRIPTION LIST OF THE CAPITAL STOCK
OF
ENERGEN CORPORATION
We, the undersigned, do hereby respectively subscribe
for and agree to take and pay in cash for the number of shares of
common stock of the par value of One Dollar ($1.00) per share of
Energen Corporation, a corporation proposed to be organized under
the laws of the State of Alabama, that is set opposite our
respective signatures.
IN WITNESS WHEREOF, each of the undersigned subscribers
has signed his name hereto, all opposite the number of shares
subscribed for by each of the undersigned, this 19th day of
October, 1978.
NUMBER AMOUNT
OF PAID
SHARES IN CASH
/s/ Howard Higgins 334 $334.00
Howard Higgins
/s/ Rex J. Lysinger 333 $333.00
Rex J. Lysinger
/s/ A. S. Lacy 333 $333.00
A. S. Lacy
<PAGE>
Exhibit 4(a)
ENERGEN CORPORATION
and
THE BANK OF NEW YORK
Trustee
FIRST SUPPLEMENTAL INDENTURE
Dated as of September 5, 1997
$20,000,000
8% Debentures
Due February 1, 2007
THIS FIRST SUPPLEMENTAL INDENTURE dated as of September
5, 1997, between ENERGEN CORPORATION, an Alabama corporation
("Corporation"), and THE BANK OF NEW YORK, a New York banking
corporation ("Trustee"),
W I T N E S S E T H:
WHEREAS, the Corporation and Boatmen's Trust Company, a
Missouri corporation ("Boatmen's"), have heretofore executed and
delivered that certain Indenture, dated as of January 1, 1992
(the "1992 Indenture"), pursuant to which the Corporation's 8%
Debentures Due February 1, 2007 (the "Debentures") were issued;
and
WHEREAS, the Trustee has succeeded Boatmen's as the
trustee under the Indenture pursuant to Section 8.09 of the
Indenture; and
WHEREAS, the Corporation has requested that the 1992
Indenture be amended in certain respects as more fully set forth
herein (the "Amendments") and solicited the written consent of
the Holders of the Debentures to the Amendments; and
WHEREAS, there is presently outstanding $18,704,000
principal amount of the Debentures; and
WHEREAS, in accordance with Section 10.01 of the 1992
Indenture, approval of the Amendments requires the written
consent of the Holders of greater than $9,352,000 principal
amount of the Debentures; and
WHEREAS, the Holders of greater than $9,352,000
principal amount of the Debentures have consented in writing to
the Amendments; and
WHEREAS, the Corporation and the Trustee desire to
execute and deliver this First Supplemental Indenture to the 1992
Indenture to evidence the Amendment of the 1992 Indenture;
NOW, THEREFORE, in consideration of the foregoing
premises and covenants and for other good and valuable
consideration, each party agrees as follows for the benefit of
the other party and for the equal and ratable benefit of the
Holders of the Debentures:
Section 1. Definitions. Except as provided herein,
all definitions of terms contained in Section 1.01 and Section
1.02 of the 1992 Indenture are incorporated herein by reference.
Section 2. Amendment of 1992 Indenture.
(a) Elimination of Section 5.05 of the 1992 Indenture.
The 1992 Indenture is hereby amended by deleting Section 5.05 of
the 1992 Indenture in its entirety.
(b) Addition of Article IV-A to the 1992 Indenture.
The 1992 Indenture is hereby amended by adding thereto following
Article IV thereof a new Article IV-A, which shall read as
follows:
ARTICLE IV-A
EFFECT OF RATING DECLINE
Section 4A-01. Definitions. For purposes of this Article,
the following terms shall have the meanings set forth in this
Section 4A.01:
"Lowest Investment Grade" shall mean a rating of BBB-
by S&P, Baa 3 by Moody's or the equivalent of such rating by any
other Rating Agency; if either S&P or Moody's should modify its
rating categories, "Lowest Investment Grade" with respect to such
agency shall be the rating generally recognized as the lowest
investment grade rating by such agency.
"Debentures to be Redeemed" means all of the Debentures
then outstanding in the case of a Mandatory Repurchase Event, or
all Debentures as to which a proper and timely Exercise Notice
has been given in the case of a Put Event.
"Exercise Notice" shall mean a notice in writing by a
Holder of such Holder's exercise of a Put Right as provided in
Section 4A.02.
"Mandatory Repurchase Event" shall mean either (i) a
rating of the Debentures by one or more Rating Agencies that is
lower than the Lowest Investment Grade, or (ii) failure of the
Corporation to obtain a rating for the Debentures from a Rating
Agency within 60 days following any date on which the Debentures
are not rated by at least one Rating Agency.
"Moody's" shall mean Moody's Investors Service, Inc.
and its successors.
"Put Event" shall mean a rating of the Debentures by
one or more Rating Agencies at the Lowest Investment Grade.
"Put Right" shall mean the right of a Holder to have
such Holder's Debentures redeemed following a Put Event.
"Rating Agency" shall mean Moody's or S&P, or if
neither Moody's nor S&P shall make a rating on the Debentures
publicly available, a nationally recognized securities rating
agency or agencies, as the case may be, selected by the
Corporation which shall be substituted for Moody's and S&P.
"Repurchase Date" shall mean the date that is 100 days
after the public notice of the occurrence of a Put Event or a
Mandatory Repurchase Event, and thereafter, in the case of a Put
Event, each February 1 and August 1 occurring more than 100 days
after a Put Event (each such February 1 and August 1, a
"Subsequent Repurchase Date"), unless, on the 70th day prior to
any such Subsequent Repurchase Date, the Debentures are rated by
all Rating Agencies higher than the Lowest Investment Grade.
"Repurchase Price" with respect to any Debenture shall
mean the following prices (expressed as percentages of principal
amount of the Debentures), plus accrued interest to the
Repurchase Date:
If redeemed during the 12-month period beginning
February 1:
Year Percentage
1997 103%
1998 103%
1999 102%
2000 101%
2001 until maturity 100%
"S&P" shall mean Standard & Poor's Corporation and its
successors.
Section 4A.02. Put Right of Holders Upon a Put Event. In
the event that there occurs at any time a Put Event, each Holder
of the Debentures shall have the Put Right, at the Holder's
option and in the manner set forth in Section 4A.07, to require
the Corporation to redeem all or any part of such Holder's
Debentures on each Repurchase Date at the Repurchase Price;
provided, however, that Debentures redeemed in part will be
redeemed only in integral multiples of $1,000 principal amount.
Section 4A.03. Redemption of Debentures upon a Mandatory
Repurchase Event. In the event there occurs at any time a
Mandatory Repurchase Event, the Debentures shall be redeemed in
full by the Corporation on the Repurchase Date at the Repurchase
Price.
Section 4A.04. Notice to Trustee. On or before the twenty-
eighth day after the occurrence of a Put Event or a Mandatory
Repurchase Event, the Corporation shall notify the Trustee of
such event.
Section 4A.05. Notice to Holders. Notice of each
Repurchase Date with respect to the Debentures shall be given or
caused to be given by the Corporation to each Holder of the
Debentures on or before the thirty-third day after the occurrence
of a Mandatory Repurchase Event or a Put Event and not less than
60 days prior to each Subsequent Repurchase Date in the case of a
Put Event.
The notice as to Repurchase Date shall describe briefly the
Put Event or the Mandatory Repurchase Event, as the case may be,
and the rights of the Holders resulting therefrom and shall
state:
(a) The Repurchase Date;
(b) the Repurchase Price;
(c) the place or places where such Debentures are
to be surrendered for payment of the Repurchase
Price; and
(d) in the case of a Put Event:
(1) the date by which Debentures are to be
surrendered in order to be repurchased;
(2) a description of the procedure which a Holder
must follow to exercise a Put Right; and
(3) that exercise of the option to elect
redemption is irrevocable.
At the Corporation's request, the Trustee shall give notice
of the Repurchase Date in the Corporation's name and at its
expense.
No failure of the Corporation to give the foregoing notice
shall limit any Holder's right to exercise a Put Right or to
have such Holder's Debentures redeemed following a Mandatory
Repurchase Event.
Section 4A.06. Deposit of Repurchase Price. By the
Repurchase Date, the Corporation shall deposit with the Paying
Agent an amount of money sufficient to pay the Repurchase Price
of the Debentures which are to be redeemed on that date.
Principal and interest on the Notes to be redeemed shall be
considered paid on the Repurchase Date if the Trustee or any
Paying Agent holds on the Repurchase Date money sufficient to pay
all principal and interest then due.
Section 4A.07. Exercise of Put Right by Holder. To
exercise the Put Right set forth in Section 4A.02, the Holder of
such Debentures must deliver at least thirty days prior to the
applicable Repurchase Date the Exercise Notice to the Trustee
together with the Debentures with respect to which the Put Right
is being exercised, duly endorsed for transfer. If any Debenture
so delivered is, at the option of the Holder, to be redeemed only
in part, such Exercise Notice from the Holder shall state the
principal amount of the Debenture which is to be redeemed. The
written notice given by any Holder pursuant to this Section 4A.07
shall be irrevocable.
If the Debentures are in the form of a Global Security at
the time a Put Right is exercised, the Exercise Notice may be
made by delivering such notice to the Depository, in the case of
a Participant which is the Beneficial Owner of an interest in
such Global Security, or to the Participant through whom the
Beneficial Owner owns such interest, in form satisfactory to the
Participant, in either case in sufficient time for the Exercise
Notice to be delivered to the Depository (in the case of a
Beneficial Owner which is not a Participant) and by the
Depository to the Trustee. The Exercise Notice shall specify
the principal amount of the interest in the Global Security to
be redeemed. An Exercise Notice in form satisfactory to a
Participant, together with certification by the Participant that
it holds the interest on behalf of the Person giving the Exercise
Notice, shall be provided to the Depository by a Participant and
the Depository will forward the Exercise Notice to the Trustee.
Exercise Notices shall be in form satisfactory to the Trustee.
The Company will have no obligation to redeem an interest in the
Global Security as to which the Exercise Notice is not delivered
to the Trustee by the Depository at least thirty days prior to
the applicable Repurchase Date.
Section 4A.08. Debentures Payable on Repurchase Date. The
Debentures so to be redeemed shall, on the applicable Repurchase
Date, become due and payable at the Repurchase Price applicable
thereto and from and after such date (unless the Corporation
shall default in the payment of the Repurchase Price) such
Debentures shall cease to bear interest. Upon surrender of any
such Debenture for redemption, such Debenture shall be paid by
the Corporation at the Repurchase Price, provided, however, that
installments of interest payable on or prior to such Repurchase
Date shall be payable to the Holders of such Debentures
registered as such at the close of business on the relevant
record date for payment of such interest according to their
terms. If any Debentures shall not be paid upon surrender
thereof for redemption, the principal shall, until paid, bear
interest from the Repurchase Date at the rate prescribed therefor
in such Debentures.
Section 4A.09. Debentures Redeemed in Part. In the case of
a Put Event, any Debenture which at the option of the Beneficial
Owner is to be redeemed only in part shall be surrendered to the
Trustee (with, if the Corporation or the Trustee so requires, due
endorsement by, or a written instrument of transfer in form
satisfactory to the Corporation and the Trustee duly executed by,
the Holder thereof or his attorney duly authorized in writing),
and the Corporation shall execute, and the Trustee shall
authenticate and deliver to the Holder of such Debenture without
service charge, a new Debenture or Debentures, of any authorized
denomination as requested by such Holder, in aggregate principal
amount equal to and in exchange for the unredeemed portion of the
principal of the Debenture so surrendered.
Section 4A.10. Substitute Rating Agency. Should either S&P
or Moody's or both cease to rate the Debentures, the Corporation
shall, as soon as practicable but in any event not more than 60
days thereafter, obtain a rating for the Debentures by another
Rating Agency.
Section 3. Confirmation of 1992 Indenture. All the
terms, covenants, and conditions of the 1992 Indenture, as
amended hereby, are hereby in all respects ratified and
confirmed, and the 1992 Indenture as so amended shall continue in
full force and effect.
[The remainder of this page is left blank intentionally.]<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this
First Supplemental Indenture to be executed in its corporate name
and on its behalf by its executive vice president and treasurer
and its corporate seal to be hereunto affixed and attested by its
assistant secretary, and the Trustee has caused this First
Supplemental Indenture to be executed in its corporate name and
on its behalf by a duly authorized officer, and the Corporation
and the Trustee have caused this instrument to be dated as of
September 5, 1997.
Dated: September 12, 1997 ENERGEN CORPORATION
("Corporation")
(SEAL) By /s/ G.C. Ketcham
Its Executive Vice President
and Treasurer
Attest /s/ J.D. Woodruff
Its Assistant Secretary
Dated: September 24, 1997 THE BANK OF NEW YORK
("Trustee")
By /s/ Marie Trimboli
Its Assistant Treasurer
<PAGE>
Exhibit 4(b)
ENERGEN CORPORATION
and
THE BANK OF NEW YORK
Trustee
FIRST SUPPLEMENTAL INDENTURE
Dated as of September 5, 1997
$15,000,000
Series 1993 Notes
<PAGE>
THIS FIRST SUPPLEMENTAL INDENTURE (the "First
Supplemental Indenture") dated as of September 5, 1997, between
ENERGEN CORPORATION, an Alabama corporation ("Corporation"), and
THE BANK OF NEW YORK, a New York banking corporation ("Trustee"),
W I T N E S S E T H:
WHEREAS, the Corporation and Boatmen's Trust Company, a
Missouri corporation ("Boatmen's"), have heretofore executed and
delivered that certain Indenture, dated as of March 1, 1993 (the
"1993 Indenture"), pursuant to which the Corporations's Series
1993 Notes (the "Notes") were issued; and
WHEREAS, the Trustee has succeeded Boatmen's as the
trustee under the Indenture pursuant to Section 8.09 of the
Indenture; and
WHEREAS, the Corporation has requested that the 1993
Indenture be amended in certain respects as more fully set forth
herein (the "Amendments") and solicited the written consent of
the Holders of the Notes to the Amendments; and
WHEREAS, there is presently outstanding $12,753,000
principal amount of the Notes; and
WHEREAS, in accordance with Section 10.01 of the 1993
Indenture, approval of the Amendments requires the written
consent of the Holders of greater than $6,376,500 principal
amount of the Notes; and
WHEREAS, the Holders of greater than $6,376,500
principal amount of the Notes have consented in writing to the
Amendments; and
WHEREAS, the Corporation and the Trustee desire to
amend and restate the 1993 Indenture as provided herein;
NOW, THEREFORE, in consideration of the foregoing
premises and covenants and for other good and valuable
consideration, each party agrees as follows for the benefit of
the other party and for the equal and ratable benefit of the
Holders of the Notes:
Section 1. Definitions. Except as provided herein, all
definitions of terms contained in Section 1.01 and Section 1.02
of the 1993 Indenture are incorporated herein by reference.
Section 2. Amendment of 1993 Indenture.
(a) Elimination of Section 5.05 of the 1993 Indenture.
The 1993 Indenture is hereby amended by deleting Section 5.05 of
the 1993 Indenture in its entirety.
(b) Addition of Article IV-A to the 1993 Indenture.
The 1993 Indenture is hereby amended by adding thereto following
Article IV thereof a new Article IV-A, which shall read as
follows:
ARTICLE IV-A
EFFECT OF RATING DECLINE
Section 4A-01. Definitions. For purposes of this Article,
the following terms shall have the meanings set forth in this
Section 4A.01:
"Lowest Investment Grade" shall mean a rating of BBB-
by S&P, Baa 3 by Moody's or the equivalent of such rating by any
other Rating Agency; if either S&P or Moody's should modify its
rating categories, "Lowest Investment Grade" with respect to such
agency shall be the rating generally recognized as the lowest
investment grade rating by such agency.
"Notes to be Redeemed" means all of the Notes then
outstanding in the case of a Mandatory Repurchase Event, or all
Notes as to which a proper and timely Exercise Notice has been
given in the case of a Put Event.
"Exercise Notice" shall mean a notice in writing by a
Holder of such Holder's exercise of a Put Right as provided in
Section 4A.02.
"Mandatory Repurchase Event" shall mean either (i) a
rating of the Notes by one or more Rating Agencies that is lower
than the Lowest Investment Grade, or (ii) failure of the
Corporation to obtain a rating for the Notes from a Rating Agency
within 60 days following any date on which the Notes are not
rated by at least one Rating Agency.
"Moody's" shall mean Moody's Investors Service, Inc.
and its successors.
"Put Event" shall mean a rating of the Notes by one or
more Rating Agencies at the Lowest Investment Grade.
"Put Right" shall mean the right of a Holder to have
such Holder's Notes redeemed following a Put Event.
"Rating Agency" shall mean Moody's or S&P, or if
neither Moody's nor S&P shall make a rating on the Notes publicly
available, a nationally recognized securities rating agency or
agencies, as the case may be, selected by the Corporation which
shall be substituted for Moody's and S&P.
"Repurchase Date" shall mean the date that is 100 days
after the public notice of the occurrence of a Put Event or a
Mandatory Repurchase Event, and thereafter, in the case of a Put
Event, each March 1 and September 1 occurring more than 100 days
after a Put Event (each such March 1 and September 1, a
"Subsequent Repurchase Date"), unless, on the 70th day prior to
any such Subsequent Repurchase Date, the Notes are rated by all
Rating Agencies higher than the Lowest Investment Grade.
"Repurchase Price" with respect to any Note shall mean
the following prices (expressed as percentages of principal
amount of the Notes), plus accrued interest to the Repurchase
Date:
If redeemed during the 12-month period
beginning March 1:
Year Percentage
1997 103%
1998 103%
1999 102%
2000 101%
2001 until maturity 100%
"S&P" shall mean Standard & Poor's Corporation and its
successors.
Section 4A.02. Put Right of Holders Upon a Put Event. In
the event that there occurs at any time a Put Event, each Holder
of the Notes shall have the Put Right, at the Holder's option and
in the manner set forth in Section 4A.07, to require the
Corporation to redeem all or any part of such Holder's Notes on
each Repurchase Date at the Repurchase Price; provided, however,
that Notes redeemed in part will be redeemed only in integral
multiples of $1,000 principal amount.
Section 4A.03. Redemption of Notes upon a Mandatory
Repurchase Event. In the event there occurs at any time a
Mandatory Repurchase Event, the Notes shall be redeemed in full
by the Corporation on the Repurchase Date at the Repurchase
Price.
Section 4A.04. Notice to Trustee. On or before the twenty-
eighth day after the occurrence of a Put Event or a Mandatory
Repurchase Event, the Corporation shall notify the Trustee of
such event.
Section 4A.05. Notice to Holders. Notice of each
Repurchase Date with respect to the Notes shall be given or
caused to be given by the Corporation to each Holder of the Notes
on or before the thirty-third day after the occurrence of a
Mandatory Repurchase Event or a Put Event and not less than 60
days prior to each Subsequent Repurchase Date in the case of a
Put Event.
The notice as to Repurchase Date shall describe briefly the
Put Event or the Mandatory Repurchase Event, as the case may be,
and the rights of the Holders resulting therefrom and shall
state:
(a) The Repurchase Date;
(b) the Repurchase Price;
(c) the place or places where such Notes are to be
surrendered for payment of the Repurchase Price;
and
(d) in the case of a Put Event:
(1) the date by which Notes are to be surrendered
in order to be repurchased;
(2) a description of the procedure which a Holder
must follow to exercise a Put Right; and
(3) that exercise of the option to elect
redemption is irrevocable.
At the Corporation's request, the Trustee shall give notice
of the Repurchase Date in the Corporation's name and at its
expense.
No failure of the Corporation to give the foregoing notice
shall limit any Holder's right to exercise a Put Right or to
have such Holder's Notes redeemed following a Mandatory
Repurchase Event.
Section 4A.06. Deposit of Repurchase Price. By the
Repurchase Date, the Corporation shall deposit with the Paying
Agent an amount of money sufficient to pay the Repurchase Price
of the Notes which are to be redeemed on that date. Principal
and interest on the Notes to be redeemed shall be considered paid
on the Repurchase Date if the Trustee or any Paying Agent holds
on the Repurchase Date money sufficient to pay all principal and
interest then due.
Section 4A.07. Exercise of Put Right by Holder. To
exercise the Put Right set forth in Section 4A.02, the Holder of
such Notes must deliver at least thirty days prior to the
applicable Repurchase Date the Exercise Notice to the Trustee
together with the Notes with respect to which the Put Right is
being exercised, duly endorsed for transfer. If any Note so
delivered is, at the option of the Holder, to be redeemed only in
part, such Exercise Notice from the Holder shall state the
principal amount of the Note which is to be redeemed. The
written notice given by any Holder pursuant to this Section 4A.07
shall be irrevocable.
If the Notes are in the form of a Global Security at the
time a Put Right is exercised, the Exercise Notice may be made by
delivering such notice to the Depository, in the case of a
Participant which is the Beneficial Owner of an interest in such
Global Security, or to the Participant through whom the
Beneficial Owner owns such interest, in form satisfactory to the
Participant, in either case in sufficient time for the Exercise
Notice to be delivered to the Depository (in the case of a
Beneficial Owner which is not a Participant) and by the
Depository to the Trustee. The Exercise Notice shall specify
the principal amount of the interest in the Global Security to
be redeemed. An Exercise Notice in form satisfactory to a
Participant, together with certification by the Participant that
it holds the interest on behalf of the Person giving the Exercise
Notice, shall be provided to the Depository by a Participant and
the Depository will forward the Exercise Notice to the Trustee.
Exercise Notices shall be in form satisfactory to the Trustee.
The Company will have no obligation to redeem an interest in the
Global Security as to which the Exercise Notice is not delivered
to the Trustee by the Depository at least thirty days prior to
the applicable Repurchase Date.
Section 4A.08. Notes Payable on Repurchase Date. The Notes
so to be redeemed shall, on the applicable Repurchase Date,
become due and payable at the Repurchase Price applicable thereto
and from and after such date (unless the Corporation shall
default in the payment of the Repurchase Price) such Notes shall
cease to bear interest. Upon surrender of any such Note for
redemption, such Note shall be paid by the Corporation at the
Repurchase Price, provided, however, that installments of
interest payable on or prior to such Repurchase Date shall be
payable to the Holders of such Notes registered as such at the
close of business on the relevant record date for payment of such
interest according to their terms. If any Notes shall not be
paid upon surrender thereof for redemption, the principal shall,
until paid, bear interest from the Repurchase Date at the rate
prescribed therefor in such Notes.
Section 4A.09. Notes Redeemed in Part. In the case of a
Put Event, any Note which at the option of the Beneficial Owner
is to be redeemed only in part shall be surrendered to the
Trustee (with, if the Corporation or the Trustee so requires, due
endorsement by, or a written instrument of transfer in form
satisfactory to the Corporation and the Trustee duly executed by,
the Holder thereof or his attorney duly authorized in writing),
and the Corporation shall execute, and the Trustee shall
authenticate and deliver to the Holder of such Note without
service charge, a new Note or Notes, of any authorized
denomination as requested by such Holder, in aggregate principal
amount equal to and in exchange for the unredeemed portion of the
principal of the Note so surrendered.
Section 4A.10. Substitute Rating Agency. Should either S&P
or Moody's or both cease to rate the Notes, the Corporation
shall, as soon as practicable but in any event not more than 60
days thereafter, obtain a rating for the Notes by another Rating
Agency.
Section 3. Confirmation of 1993 Indenture. All the
terms, covenants, and conditions of the 1993 Indenture, as
amended hereby, are hereby in all respects ratified and
confirmed, and the 1993 Indenture as so amended shall continue in
full force and effect.
[The remainder of this page is left blank intentionally.]
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this
First Supplemental Indenture to be executed in its corporate name
and on its behalf its executive vice president and treasurer and
its corporate seal to be hereunto affixed and attested by its
assistant secretary, and the Trustee has caused this First
Supplemental Indenture to be executed in its corporate name and
on its behalf by a duly authorized officers, and the Corporation
and the Trustee have caused this instrument to be dated as of
September 5, 1997.
Dated: September 12, 1997 ENERGEN CORPORATION
("Corporation")
(SEAL) By /s/ G.C. Ketcham
Its Executive Vice
President
and Treasurer
Attest /s/ J.D. Woodruff
Its Assistant Secretary
Dated: September 24, 1997 THE BANK OF NEW YORK
("Trustee")
By /s/ Marie Trimboli
Its Assistant Treasurer
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE
FINANCIAL STATEMENTS OF ENERGEN CORPORATION FOR THE THREE-MONTHS
ENDED
DECEMBER 31, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000277595
<NAME> ENERGEN CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-1-1997
<PERIOD-END> DEC-31-1997
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 297,949
<OTHER-PROPERTY-AND-INVEST> 419,842
<TOTAL-CURRENT-ASSETS> 167,369
<TOTAL-DEFERRED-CHARGES> 8,603
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 895,901
<COMMON> 145
<CAPITAL-SURPLUS-PAID-IN> 191,624
<RETAINED-EARNINGS> 114,003
<TOTAL-COMMON-STOCKHOLDERS-EQ> 305,772
0
0
<LONG-TERM-DEBT-NET> 279,602
<SHORT-TERM-NOTES> 168,000
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 1,855
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 140,672
<TOT-CAPITALIZATION-AND-LIAB> 895,901
<GROSS-OPERATING-REVENUE> 125,888
<INCOME-TAX-EXPENSE> 598
<OTHER-OPERATING-EXPENSES> 112,746
<TOTAL-OPERATING-EXPENSES> 113,344
<OPERATING-INCOME-LOSS> 13,142
<OTHER-INCOME-NET> (6,417)
<INCOME-BEFORE-INTEREST-EXPEN> 13,362
<TOTAL-INTEREST-EXPENSE> 7,235
<NET-INCOME> 6,127
0
<EARNINGS-AVAILABLE-FOR-COMM> 6,127
<COMMON-STOCK-DIVIDENDS> 4,480
<TOTAL-INTEREST-ON-BONDS> 5,045
<CASH-FLOW-OPERATIONS> 8,789
<EPS-PRIMARY> 0.42
<EPS-DILUTED> 0.42
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM
THE FINANCIAL STATEMENTS OF ALABAMA GAS CORPORATION FOR THE
THREE-MONTHS
ENDED DECEMBER 31, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000003146
<NAME> ALABAMA GAS CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-1-1997
<PERIOD-END> DEC-31-1997
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 297,949
<OTHER-PROPERTY-AND-INVEST> 343
<TOTAL-CURRENT-ASSETS> 126,510
<TOTAL-DEFERRED-CHARGES> 5,103
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 429,905
<COMMON> 20
<CAPITAL-SURPLUS-PAID-IN> 34,484
<RETAINED-EARNINGS> 109,077
<TOTAL-COMMON-STOCKHOLDERS-EQ> 143,581
0
0
<LONG-TERM-DEBT-NET> 125,000
<SHORT-TERM-NOTES> 25,000
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 136,324
<TOT-CAPITALIZATION-AND-LIAB> 429,905
<GROSS-OPERATING-REVENUE> 95,755
<INCOME-TAX-EXPENSE> 1,104
<OTHER-OPERATING-EXPENSES> 89,853
<TOTAL-OPERATING-EXPENSES> 90,957
<OPERATING-INCOME-LOSS> 4,798
<OTHER-INCOME-NET> 164
<INCOME-BEFORE-INTEREST-EXPEN> 4,962
<TOTAL-INTEREST-EXPENSE> 2,779
<NET-INCOME> 2,183
0
<EARNINGS-AVAILABLE-FOR-COMM> 2,183
<COMMON-STOCK-DIVIDENDS> 0
<TOTAL-INTEREST-ON-BONDS> 2,210
<CASH-FLOW-OPERATIONS> (4,802)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>ALABAMA GAS CORPORATION (ALAGASCO) IS A SUBSIDIARY OF ENERGEN
CORPORATION.
EARNINGS PER SHARE IS NOT CALCULATED FOR ALAGASCO AS AMOUNT
WOULD NOT
BE MEANINGFUL.
</FN>
</TABLE>
