AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 21, 1998.
SUBJECT TO AMENDMENT. REGISTRATION NOS.
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
<TABLE>
<S> <C> <C>
ALABAMA POWER COMPANY ALABAMA 63-0004250
ALABAMA POWER CAPITAL TRUST III DELAWARE 51-6507053
ALABAMA POWER CAPITAL TRUST IV DELAWARE 51-6507054
ALABAMA POWER CAPITAL TRUST V DELAWARE 63-6205832
(Exact name of registrant as specified in its (State or other jurisdiction of (I.R.S. Employer Identification
charter) incorporation or organization) No.)
</TABLE>
600 NORTH 18TH STREET
BIRMINGHAM, ALABAMA 35291
(205) 250-1000
(Address, including zip code, and telephone number, including area code, of each
registrant's principal executive offices)
---------------------
ART P. BEATTIE
VICE PRESIDENT, SECRETARY AND COMPTROLLER
ALABAMA POWER COMPANY
600 NORTH 18TH STREET
BIRMINGHAM, ALABAMA 35291
(205) 257-2505
(Name, address, including zip code, and telephone number, including area code,
of agent for service of each registrant)
---------------------
THE COMMISSION IS REQUESTED TO MAIL SIGNED COPIES OF ALL ORDERS, NOTICES AND
COMMUNICATIONS TO:
<TABLE>
<S> <C> <C>
W . L . WESTBROOK WALTER M. BEALE, JR., ESQ. JOHN D. MCLANAHAN, ESQ.
FINANCIAL VICE PRESIDENT BALCH & BINGHAM LLP TROUTMAN SANDERS LLP
THE SOUTHERN COMPANY 1901 SIXTH AVENUE NORTH 600 PEACHTREE STREET, N.E.
270 PEACHTREE STREET, N.W. SUITE 2600 SUITE 5200
ATLANTA, GEORGIA 30303 BIRMINGHAM, ALABAMA 35203 ATLANTA, GEORGIA 30308-2216
</TABLE>
---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this registration statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] __________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] __________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
---------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=================================================================================================================================
TITLE OF AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
EACH CLASS OF SECURITIES TO BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION
TO BE REGISTERED REGISTERED(1) PER UNIT(1)(2)(3) PRICE(1)(2)(3) FEE(1)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alabama Power Capital Trust III Preferred
Securities............................................
- ---------------------------------------------------------------------------------------------------------------------------------
Alabama Power Capital Trust IV Preferred Securities...
- ---------------------------------------------------------------------------------------------------------------------------------
Alabama Power Capital Trust V Preferred Securities....
- ---------------------------------------------------------------------------------------------------------------------------------
Alabama Power Company Senior Notes....................
- ---------------------------------------------------------------------------------------------------------------------------------
Alabama Power Company Junior Subordinated Notes.......
- ---------------------------------------------------------------------------------------------------------------------------------
Alabama Power Company Guarantees with respect to
Preferred Securities of Alabama Power Capital Trust
III, Alabama Power Capital Trust IV and Alabama Power
Capital Trust V(4)(5).................................
- ---------------------------------------------------------------------------------------------------------------------------------
Total................................................. $966,200,000(6) 100% $966,200,000 $285,029(7)
=================================================================================================================================
</TABLE>
(1) There are being registered hereunder such presently indeterminate number of
Preferred Securities of Alabama Power Capital Trust III, Alabama Power
Capital Trust IV and Alabama Power Capital Trust V and such presently
indeterminate principal amount of Senior Notes and Junior Subordinated Notes
of Alabama Power Company with an aggregate initial offering price not to
exceed $966,200,000. Junior Subordinated Notes also may be issued to Alabama
Power Capital Trust III, Alabama Power Capital Trust IV or Alabama Power
Capital Trust V and later distributed upon dissolution and distribution of
the assets thereof, which would include such Junior Subordinated Notes for
which no separate consideration will be received. Pursuant to Rule 457(o)
under the Securities Act of 1933, which permits the registration fee to be
calculated on the basis of the maximum offering price of all the securities
listed, the table does not specify by each class information as to the
amount to be registered, proposed maximum offering price per unit or
proposed maximum aggregate offering price.
(2) Estimated solely for the purpose of determining the registration fee.
(3) Exclusive of accrued interest and distributions, if any.
(4) No separate consideration will be received for the Alabama Power Company
Guarantees. Pursuant to Rule 457(n) no separate fee is payable in respect of
the Alabama Power Company Guarantees.
(5) Includes the obligations of Alabama Power Company under the respective Trust
Agreements, the Subordinated Note Indenture, the related series of Junior
Subordinated Notes, the respective Guarantees and the respective Agreements
as to Expenses and Liabilities, which include the Company's covenant to pay
any indebtedness, expenses or liabilities of the Trusts (other than
obligations pursuant to the terms of the Preferred Securities or other
similar interests), all as described in this registration statement.
(6) Includes $166,200,000 of unsold Preferred Securities, Senior Notes, Junior
Subordinated Notes and Alabama Power Company Guarantees previously
registered under Registration Statement No. 333-40629.
(7) Pursuant to Rule 429 under the Securities Act of 1933, the registration fee
consists of $236,000 paid herewith and $49,029 which has been previously
paid. See Note (6).
---------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
THE WITHIN PROSPECTUS CONTAINS THE INFORMATION REQUIRED BY RULE 429 OF THE
COMMISSION UNDER THE SECURITIES ACT OF 1933 WITH RESPECT TO THE $166,200,000 OF
PREFERRED SECURITIES, SENIOR NOTES, JUNIOR SUBORDINATED NOTES AND ALABAMA POWER
COMPANY GUARANTEES REMAINING UNSOLD UNDER REGISTRATION STATEMENT NOS. 333-40629,
333-40629-01, 333-40629-02 AND 333-40629-03.
================================================================================
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED MAY 21, 1998
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED , 1998
[ ] PREFERRED SECURITIES
ALABAMA POWER CAPITAL TRUST [ ]
% TRUST PREFERRED SECURITIES
(LIQUIDATION AMOUNT $25 PER PREFERRED SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED, AS SET FORTH HEREIN, BY
ALABAMA POWER COMPANY
A SUBSIDIARY OF THE SOUTHERN COMPANY
---------------------------
The % Trust Preferred Securities (the "Preferred Securities") offered
hereby evidence preferred undivided beneficial interests, representing 97%
undivided beneficial interests in the assets of Alabama Power Capital Trust
[ ], a statutory business trust created under the laws of the State of Delaware
(the "Trust"). Alabama Power Company, an Alabama corporation (the "Company"),
will own all the common securities (the "Common Securities" and, together with
the Preferred Securities, the "Trust Securities") representing the remaining 3%
undivided beneficial interests in the assets of the Trust. The Trust exists for
the sole purpose of issuing the Preferred Securities and Common Securities and
investing the proceeds thereof in an equivalent amount of the Company's Series
% junior subordinated deferrable interest notes due ,
(the "Series Junior Subordinated Notes").
The Series Junior Subordinated Notes will be unsecured obligations of the
Company and will be subordinate and junior in right of payment to Senior
Indebtedness of the Company, as described herein. See "Description of the Junior
Subordinated Notes -- Subordination" in the accompanying Prospectus. Holders of
the Preferred Securities are entitled to receive cumulative cash distributions
at the rate of % per annum (the "Securities Rate"), accruing from the date
of original issuance and payable, unless deferred, quarterly in arrears on March
31, June 30, September 30 and December 31 of each year (each, a "Distribution
Date").
--------------------------- (continued on page S-2)
See "Risk Factors" beginning on page S-7 for certain information relevant
to an investment in the Preferred Securities, including the period and
circumstances during and under which payments of distributions on the Preferred
Securities may be deferred and the related United States federal income tax
consequences of such deferral.
---------------------------
Application has been made to list the Preferred Securities on the New York
Stock Exchange, Inc. (the "NYSE"). If approved, trading of the Preferred
Securities on the NYSE is expected to commence within a 30-day period after the
initial delivery of the Preferred Securities. See "Underwriting."
---------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS
SUPPLEMENT OR THE PROSPECTUS TO WHICH IT RELATES. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
=======================================================================================================================
Price to Underwriting Proceeds to
Public(1) Discount(2)(3) Trust(2)(3)(4)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Preferred Security...................... $ $ $
- -----------------------------------------------------------------------------------------------------------------------
Total....................................... $ $ $
=======================================================================================================================
</TABLE>
(1) Plus accrued distributions, if any, from the Issue Date.
(2) The Company and the Trust have agreed to indemnify the Underwriters against
certain liabilities, including liabilities under the Securities Act of
1933, as amended. See "Underwriting."
(3) Because the proceeds of the sale of the Preferred Securities will be
invested in Series Junior Subordinated Notes, the Company has agreed to
pay to the Underwriters, as compensation (the "Underwriters' Compensation")
for arranging the investment therein of such proceeds, $ per Preferred
Security, except for Preferred Securities sold to certain institutions, for
which the Underwriters' Compensation will be $ per Preferred Security.
Therefore, to the extent that Preferred Securities are sold to such
institutions, the actual amount of Underwriters' Compensation will be less
than and the Proceeds to Trust will be greater than the aggregate amounts
specified above. See "Underwriting."
(4) Expenses of the offering to be paid by the Company are estimated to be
approximately $ .
---------------------------
The Preferred Securities are offered severally by the Underwriters, as
specified herein, subject to receipt and acceptance by them and subject to their
right to reject any order in whole or in part. It is expected that delivery of
the Preferred Securities will be made in book-entry only form through the
facilities of The Depository Trust Company on or about , (the
"Issue Date").
, 199
<PAGE>
(CONTINUED FROM PAGE S-1)
The Securities Rate and the Distribution Dates for the Preferred Securities
will correspond to the interest rate and interest and other payment dates on the
Series Junior Subordinated Notes, which will constitute substantially all the
assets of the Trust. As a result, if principal or interest is not paid on the
Series Junior Subordinated Notes, no amounts will be paid on the Preferred
Securities. THE COMPANY HAS THE RIGHT TO DEFER PAYMENTS OF INTEREST ON THE
SERIES JUNIOR SUBORDINATED NOTES BY EXTENDING THE INTEREST PAYMENT PERIOD ON
THE SERIES JUNIOR SUBORDINATED NOTES, AT ANY TIME AND FROM TIME TO TIME, FOR
UP TO 20 CONSECUTIVE QUARTERS (EACH, AN "EXTENSION PERIOD"). If interest
payments are so deferred, distributions on the Preferred Securities also will be
deferred and the Company will not be permitted to declare or pay any dividend or
distribution on any of its capital stock or make any guarantee payments with
respect to the foregoing, or make any payment on any debt securities issued by
the Company which rank pari passu (equal in priority) with or junior to the
Series Junior Subordinated Notes. During any Extension Period, holders of
Preferred Securities will be required to include income in the form of original
issue discount ("OID") in their gross income for United States federal income
tax purposes in advance of the receipt of the cash payments attributable to such
deferred interest. See "Description of the Series Junior Subordinated
Notes -- Option to Extend Interest Payment Period," "Risk Factors -- Option to
Extend Interest Payment Period" and "Certain Federal Income Tax
Considerations -- Original Issue Discount" and "-- Market Discount." Deferred
installments of interest on the Series Junior Subordinated Notes will bear
interest, compounded quarterly, at a rate per annum equal to the Securities
Rate. The payment of such deferred interest, together with interest thereon,
will be distributed to the holders of the Preferred Securities as received at
the end of any Extension Period.
The Trust Securities are subject to mandatory redemption upon repayment of
the Series Junior Subordinated Notes at maturity or their earlier redemption.
The Series Junior Subordinated Notes are redeemable at the option of the
Company (in whole or in part), from time to time, on or after ,
, or at any time in whole upon the occurrence of a Tax Event or Investment
Company Act Event (either, a "Special Event"). The Company will have the right
at any time to terminate the Trust and cause the Series Junior Subordinated
Notes to be distributed to the holders of the Preferred Securities in
liquidation of the Trust. See "Description of the Preferred
Securities -- Special Event Redemption; Distribution of Series Junior
Subordinated Notes." The Series Junior Subordinated Notes are subordinated and
junior in right of payment to all Senior Indebtedness (as defined herein) of the
Company. See "Description of the Junior Subordinated Notes -- Subordination" in
the accompanying Prospectus. As of , 199 , Senior Indebtedness of the
Company aggregated approximately $ . If the Series Junior Subordinated
Notes are distributed to the holders of the Preferred Securities, the Company
will use its best efforts to have the Series Junior Subordinated Notes listed
on the NYSE or on such other exchange as the Preferred Securities are then
listed. See "Description of the Preferred Securities -- Special Event
Redemption; Distribution of Series Junior Subordinated Notes" and "Description
of the Series Junior Subordinated Notes."
The payment of distributions on the Preferred Securities is guaranteed by
the Company under the Guarantee Agreement, but only to the extent that the Trust
has funds legally and immediately available therefor (the "Guarantee"). If the
Company fails to make required payments on the Series Junior Subordinated
Notes, the Trust will not have sufficient funds to pay such distributions, and
the Guarantee does not cover the payment of distributions when the Trust does
not have sufficient funds legally available therefor. In such event, the remedy
of a holder of Preferred Securities is to enforce the Series Junior
Subordinated Notes. See "Description of the Series Junior Subordinated Notes"
herein and "Description of the Junior Subordinated Notes" in the accompanying
Prospectus. The Company's obligations under the Guarantee are subordinate and
junior in right of payment to all of its other liabilities and will rank pari
passu with the most senior preferred stock of the Company. See "Description of
the Guarantees" in the accompanying Prospectus. The Company has, through the
Guarantee, the Subordinated Note Indenture, the Series Junior Subordinated
Notes, the Trust Agreement and the Agreement as to Expenses and Liabilities,
fully and unconditionally guaranteed, subject to certain subordination
provisions, all the Trust's obligations with respect to the Preferred
Securities.
In the event of the redemption of the Series Junior Subordinated Notes or
the voluntary or involuntary dissolution, winding-up or termination of the
Trust, the holders of the Preferred Securities will be entitled to receive, for
each Preferred Security, a liquidation amount of $25 plus accrued and unpaid
distributions thereon (including interest thereon) to the date of payment (the
"Redemption Price"), unless in connection with such dissolution, winding-up or
termination, the Series Junior Subordinated Notes are distributed to the
holders of the Preferred Securities. See "Description of the Preferred
Securities -- Liquidation Distribution Upon Dissolution."
The Preferred Securities initially will be represented by a global
certificate or certificates registered in the name of The Depository Trust
Company ("DTC") or its nominee. Beneficial interests in the Preferred Securities
will be shown on, and transfers thereof will be effected only through, records
maintained by Participants (as defined herein) in DTC. Except as described
herein, Preferred Securities in certificated form will not be issued in exchange
for the global certificates. See "Description of the Preferred
Securities -- Book-Entry Only Issuance -- The Depository Trust Company."
---------------------
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE PREFERRED
SECURITIES, INCLUDING OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING
TRANSACTIONS IN SUCH SECURITIES, AND THE IMPOSITION OF A PENALTY BID, IN
CONNECTION WITH THE OFFERING. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE
"UNDERWRITING."
S-2
<PAGE>
SUMMARY OF OFFERING
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus Supplement and in
the accompanying Prospectus. Capitalized terms not otherwise defined shall have
the meanings assigned in the Glossary.
The Company................ The Company is a corporation organized under the
laws of the State of Alabama on November 10,
1927, by the consolidation of a predecessor
Alabama Power Company, Gulf Electric Company and
Houston Power Company. The Company has its
principal office at 600 North 18th Street,
Birmingham, Alabama 35291, telephone (205)
257-1000. The Company is a wholly owned
subsidiary of The Southern Company.
The Company is a regulated public utility engaged
in the generation, transmission, distribution and
sale of electric energy within an approximately
44,500 square mile service area comprising most
of the State of Alabama.
The Trust.................. Alabama Power Capital Trust is a statutory
business trust created under Delaware law solely
for the purpose of holding the Company's Series
Junior Subordinated Notes and issuing Preferred
Securities and Common Securities evidencing the
entire beneficial interest therein (and engaging
in activities necessary, appropriate, convenient
or incidental thereto).
The Trustees............... The Chase Manhattan Bank will act as property
trustee (the "Property Trustee") of the Trust.
Two officers of the Company also will act as
trustees (the "Administrative Trustees") of the
Trust. Chase Manhattan Bank Delaware will be an
additional trustee (the "Delaware Trustee") of
the Trust. The Chase Manhattan Bank also will act
as trustee (the "Indenture Trustee") under the
Subordinated Note Indenture pursuant to which the
Series Junior Subordinated Notes will be issued
and will act as trustee under the Guarantee (the
"Guarantee Trustee").
The Property Trustee, Delaware Trustee and
Administrative Trustees are sometimes referred to
as the "Securities Trustees."
Preferred Securities
Offered................... The Trust will offer Preferred Securities
evidencing preferred undivided beneficial
interests in the assets of the Trust. Holders of
the Preferred Securities are entitled to receive
cumulative cash distributions at the Securities
Rate, accruing from the date of original issuance
and payable quarterly in arrears on March 31,
June 30, September 30 and December 31 of each
year, commencing on , (each, a
"Distribution Date"). The Securities Rate and the
Distribution Dates for the Preferred Securities
will correspond to the interest rate and payment
dates on the Series Junior Subordinated Notes,
which will constitute substantially all the
assets of the Trust. As a result, if principal or
interest is not paid on the Series Junior
Subordinated Notes, no amounts will be paid on
the Preferred Securities. See "Description of the
Preferred Securities" herein.
Record Date................ The record date for each Distribution Date will be
the close of business on the 15th calendar day
prior to such Distribution Date.
S-3
<PAGE>
Series Junior
Subordinated Notes........ The Trust will invest the proceeds from the
issuance of the Preferred Securities and Common
Securities in an equivalent amount of Series
% junior subordinated deferrable interest
notes due . The Series Junior
Subordinated Notes will be subordinate and junior
in right of payment to all indebtedness for
borrowed money and other obligations of the
Company included in the definition of Senior
Indebtedness. See "Description of the Junior
Subordinated Notes -- Subordination" in the
accompanying Prospectus.
Guarantee.................. The payment of distributions on the Preferred
Securities is guaranteed by the Company under the
Guarantee, but only to the extent the Trust has
funds legally and immediately available to make
such distributions. If the Company does not make
principal or interest payments on the Series
Junior Subordinated Notes, the Trust will not
have sufficient funds to make distributions on
the Preferred Securities, in which event the
Guarantee will not apply to such distributions
until the Trust has sufficient funds legally
available therefor. The obligations of the
Company under the Guarantee will be subordinate
and junior in right of payment to all other
liabilities of the Company and will rank pari
passu with the most senior preferred stock issued
by the Company. See "Risk Factors -- Ranking of
and Rights Under the Guarantee" herein and
"Description of the Guarantees" in the
accompanying Prospectus. The Company has, through
the Guarantee, the Subordinated Note Indenture,
the Series Junior Subordinated Notes, the Trust
Agreement and the Agreement as to Expenses and
Liabilities, fully and unconditionally
guaranteed, subject to certain subordination
provisions, all the Trust's obligations with
respect to the Preferred Securities.
Interest Deferral.......... The Company has the right to defer payments of
interest on the Series Junior Subordinated
Notes by extending the interest payment period on
the Series Junior Subordinated Notes, at any
time and from time to time, for up to 20
consecutive quarters (each, an "Extension
Period"). The only restrictions on the Company's
ability to defer payments of interest are that
during the Extension Period the Company may not
(i) pay dividends on or redeem any of its capital
stock or (ii) pay principal or interest on any
debt securities ranking pari passu with or
subordinate to the Series Junior Subordinated
Notes. There could be multiple Extension Periods
of varying lengths throughout the term of the
Series Junior Subordinated Notes.
If interest payments on the Series Junior
Subordinated Notes are deferred, distributions on
the Preferred Securities will also be deferred.
During an Extension Period, holders of Preferred
Securities will be required to include income in
the form of OID in their gross income for federal
income tax purposes in advance of the receipt of
the cash payments attributable to such deferred
interest. See "Description of the Series Junior
Subordinated Notes -- Option to Extend Interest
Payment Period" and "Certain Federal Income Tax
Considerations -- Original Issue Discount" and
"-- Market Discount." Deferred interest will bear
interest, compounded quarterly, at a rate per
annum equal to the Securities Rate from the date
of deferral to the date of payment.
S-4
<PAGE>
Redemption; Distribution... The Preferred Securities are subject to mandatory
redemption upon repayment of the Series Junior
Subordinated Notes at maturity or their earlier
redemption. The Series Junior Subordinated
Notes are redeemable by the Company (in whole or
in part), from time to time on or after ,
or at any time in whole upon the occurrence of a
Special Event. If a partial redemption of the
Series Junior Subordinated Notes would result
in the delisting of the Preferred Securities, the
Company may only redeem the Series Junior
Subordinated Notes in whole. Any partial
redemption of the Series Junior Subordinated
Notes will be effected by the redemption of an
equivalent amount of Trust Securities, to be
allocated approximately 97% to the Preferred
Securities and 3% to the Common Securities. See
"Description of the Preferred
Securities -- Redemption" and "-- Special Event
Redemption; Distribution of Series Junior
Subordinated Notes."
The Company will have the right at any time to
terminate the Trust and cause the Series Junior
Subordinated Notes to be distributed to the
holders of the Preferred Securities in
liquidation of the Trust. This right is optional
and wholly within the discretion of the Company.
Circumstances under which the Company may
determine to exercise such right could include
the occurrence of an Investment Company Act Event
or a Tax Event, adverse tax consequences to the
Company or the Trust that are not within the
definition of a Tax Event because they do not
result from an amendment or change described in
such definition, and changes in the accounting
requirements applicable to the Preferred
Securities as described under "Accounting
Treatment." See "Description of the Preferred
Securities -- Special Event Redemption;
Distribution of Series Junior Subordinated
Notes."
Special Event.............. A Special Event means a Tax Event or an Investment
Company Act Event. A "Tax Event" means that the
Administrative Trustees and the Company shall
have received an opinion from independent tax
counsel experienced in such matters (which may be
counsel to the Company) to the effect that, as a
result of (a) any amendment to, or change
(including any announced prospective change) in,
the laws (or any regulations thereunder) of the
United States or any political subdivision or
taxing authority thereof or therein or (b) any
amendment to, or change in, an interpretation or
application of such laws or regulations, there is
more than an insubstantial risk that (i) the
Trust would be subject to United States federal
income tax with respect to income accrued or
received on the Series Junior Subordinated
Notes, (ii) interest payable on the Series
Junior Subordinated Notes would not be deductible
by the Company for United States federal income
tax purposes, or (iii) the Trust would be subject
to more than a de minimis amount of other taxes,
duties or other governmental charges, which
change or amendment becomes effective on or after
the Issue Date. An "Investment Company Act Event"
means that the Administrative Trustees and the
Company shall have received an opinion of
independent counsel (which may be counsel to the
Company) to the effect that, as a result of a
change in law or regulation or a written change
in interpretation or application of law or
regulation by any legislative body, court,
governmental agency or regulatory authority after
the Issue Date, there is more than an
insubstantial risk that
S-5
<PAGE>
the Trust is or will be considered an investment
company under the Investment Company Act of 1940,
as amended (the "1940 Act").
Redemption Price........... In the event of the redemption of the Trust
Securities or other termination of the Trust
without distribution of the Series Junior
Subordinated Notes, each Preferred Security shall
be entitled to receive a liquidation amount of
$25 plus accrued and unpaid distributions thereon
(including interest thereon) to the date of
payment.
S-6
<PAGE>
RISK FACTORS
Prospective purchasers of Preferred Securities should carefully review the
information contained elsewhere in this Prospectus Supplement and in the
accompanying Prospectus and should consider particularly the following matters:
RANKING OF AND RIGHTS UNDER THE SERIES JUNIOR SUBORDINATED NOTES
No amounts will be available to make payments on the Preferred Securities
except from payments made on the Series Junior Subordinated Notes. The
obligations of the Company under the Series Junior Subordinated Notes are
subordinate and junior in right of payment to all present and future Senior
Indebtedness of the Company. At , 199 , Senior Indebtedness of
the Company aggregated approximately $ . There are no terms in the
Preferred Securities, the Series Junior Subordinated Notes or the Guarantee
that limit the Company's ability to incur additional indebtedness, including
indebtedness that ranks senior to the Series Junior Subordinated Notes. See
"Description of the Guarantees" and "Description of the Junior Subordinated
Notes -- Subordination" in the accompanying Prospectus.
RANKING OF AND RIGHTS UNDER THE GUARANTEE
The Company's obligations under the Guarantee are subordinate and junior in
right of payment to all liabilities of the Company and will be pari passu with
the most senior preferred stock issued by the Company. If the Company were to
default in its obligation to pay amounts payable on the Series Junior
Subordinated Notes, the Trust would lack available funds for the payment of
distributions or amounts payable on redemption of the Preferred Securities or
otherwise, and in such event holders of the Preferred Securities would not be
able to rely upon the Guarantee for payment of such amounts.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
The Company has the right under the Subordinated Note Indenture, and at any
time, and from time to time, to defer payments of interest on the Series
Junior Subordinated Notes for a period of up to 20 consecutive quarters (each,
an "Extension Period"), but not beyond the stated maturity of the Series
Junior Subordinated Notes. Prior to the termination of any Extension Period, the
Company may further defer payments of interest, provided that such Extension
Period, together with all such previous and further extensions thereof, may not
exceed 20 consecutive quarters. Upon the termination of any Extension Period and
the payment of all amounts then due, the Company may select a new Extension
Period, subject to the above requirements. There could be multiple Extension
Periods of varying lengths throughout the term of the Series Junior
Subordinated Notes. Deferred installments of interest on the Series Junior
Subordinated Notes will bear interest, compounded quarterly, at a rate per annum
equal to the Securities Rate. The payment of such deferred interest, together
with interest thereon, will be passed through to the holders of the Preferred
Securities as received at the end of any Extension Period.
The only restrictions on the Company's ability to defer payments of
interest are that during any Extension Period the Company may not (i) pay
dividends on or redeem any of its capital stock or (ii) pay principal or
interest on any debt securities ranking pari passu with or subordinate to the
Series Junior Subordinated Notes. See "Description of the Preferred
Securities -- Distributions" and "Description of the Series Junior
Subordinated Notes -- Option to Extend Interest Payment Period."
Should the Company exercise its rights to defer payments of interest, each
holder of Preferred Securities will be required to include income in the form of
OID in their gross income for United States federal income tax purposes in
respect of the deferred interest allocable to its Preferred Securities. As a
result, holders of Preferred Securities will recognize income for United States
federal income tax purposes in advance of the receipt of cash and will not
receive the cash from the Trust related to such income if such holders dispose
of their Preferred Securities prior to the record date for the date on which
distributions of such amounts are made. See "Certain Federal Income Tax
Considerations -- Original Issue Discount" and "-- Sale of
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Preferred Securities." INVESTORS SHOULD CONSULT WITH THEIR OWN TAX ADVISORS WITH
RESPECT TO THE TAX CONSEQUENCES OF AN INVESTMENT IN THE PREFERRED SECURITIES.
The Company has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the Series
Junior Subordinated Notes. However, should the Company determine to exercise
such right in the future, the market price of the Preferred Securities is likely
to be affected. A holder that disposes of its Preferred Securities during an
Extension Period, therefore, might not receive the same return on its investment
as a holder that continues to hold its Preferred Securities. In addition, as a
result of the existence of the Company's right to defer interest payments, the
market price of the Preferred Securities (which represent an undivided
beneficial interest in the Series Junior Subordinated Notes) may be more
volatile than other similar securities that do not have such rights.
SPECIAL EVENT REDEMPTION; DISTRIBUTION OF SERIES JUNIOR SUBORDINATED NOTES
If a Special Event shall occur and be continuing, the Company will have the
option to redeem the Series Junior Subordinated Notes in cash (with the result
that the Preferred Securities shall be redeemed). In addition, the Company will
have the right at any time to terminate the Trust and cause the Series Junior
Subordinated Notes to be distributed to the holders of the Preferred Securities
in liquidation of the Trust. See "Description of the Preferred
Securities -- Special Event Redemption; Distribution of Series Junior
Subordinated Notes."
There can be no assurance as to the market price for the Series Junior
Subordinated Notes that may be distributed in exchange for Preferred Securities
if a termination or liquidation of the Trust were to occur. Accordingly, the
Series Junior Subordinated Notes that the investor may receive on termination
and liquidation of the Trust may trade at a discount to the price that the
investor paid to purchase the Preferred Securities offered hereby. See
"Description of the Series Junior Subordinated Notes."
LIMITED VOTING RIGHTS
Holders of Preferred Securities will have limited voting rights and, except
for the rights of holders of Preferred Securities to appoint a Substitute
Property Trustee upon the occurrence of certain events described herein, will
not be entitled to vote to appoint, remove or replace the Securities Trustees,
which voting rights are vested exclusively in the holder of the Common
Securities.
TRADING CHARACTERISTICS OF PREFERRED SECURITIES
The Preferred Securities are expected to be listed on the NYSE, subject to
official notice of issuance. The Preferred Securities are expected to trade at a
price that takes into account the value, if any, of accrued but unpaid
distributions; thus, purchasers will not pay and sellers will not receive
accrued and unpaid interest with respect to the Preferred Securities that is not
included in the trading price thereof. If a Preferred Security is disposed of
prior to the occurrence of an Extension Period, any portion of the amount
received that is attributable to accrued interest will be treated as interest
income to a U.S. holder for tax purposes and will not be treated as part of the
amount realized for purposes of determining gain or loss on the disposition of
the Preferred Security. If an Extension Period occurs, interest on the Series
Junior Subordinated Notes will be included in the gross income of U.S. holders
of Preferred Securities as it accrues rather than when it is paid. Should an
Extension Period occur, a holder who disposes of his Preferred Securities
between record dates for payments of distributions thereon would be required to
include accrued but unpaid interest on the Series Junior Subordinated Notes
through the date of disposition in income as OID, and to add such amount to his
adjusted tax basis in his pro rata share of the related Series Junior
Subordinated Notes deemed disposed of. To the extent the selling price is less
than the holder's adjusted tax basis (which will include, in the form of OID,
all accrued but unpaid interest), a holder generally will recognize a capital
loss. Subject to certain limited exceptions, capital losses cannot be applied to
offset ordinary income for United States federal income tax purposes. See
"Certain Federal Income Tax Considerations -- Original Issue Discount" and
"-- Sale of Preferred Securities."
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The trading price of the Preferred Securities is likely to be sensitive to
the level of interest rates generally. If interest rates rise in general, the
trading price of the Preferred Securities may decline to reflect the additional
yield requirements of the purchasers. Conversely, a decline in interest rates
may increase the trading price of the Preferred Securities, although any
increase will be moderated by the Company's ability to call the Series Junior
Subordinated Notes at any time on or after at a redemption price equal
to 100% of the principal amount to be redeemed plus accrued but unpaid interest.
In addition, because holders of Preferred Securities will be paid only from
payments on the Series Junior Subordinated Notes and may receive Series
Junior Subordinated Notes upon the termination of the Trust, prospective
purchasers of Preferred Securities are making an investment decision with regard
to the Series Junior Subordinated Notes and should carefully review all the
information regarding the Series Junior Subordinated Notes contained herein.
See "Description of the Preferred Securities -- Special Event Redemption;
Distribution of Series Junior Subordinated Notes" and "Description of the
Series Junior Subordinated Notes."
ALABAMA POWER CAPITAL TRUST [ ]
The Trust is a statutory business trust created under Delaware law pursuant
to the filing of a certificate of trust with the Delaware Secretary of State on
November , 199 . The Trust's business is defined in a trust agreement,
executed by the Company, as Depositor, and the Delaware Trustee thereunder. This
trust agreement will be amended and restated in its entirety on the Issue Date
substantially in the form filed as an exhibit to the Registration Statement of
which this Prospectus Supplement and the accompanying Prospectus form a part
(the "Trust Agreement"). The Trust Agreement will be qualified as an indenture
under the Trust Indenture Act of 1939, as amended (the "1939 Act"). The Trust
exists for the exclusive purposes of (i) issuing the Trust Securities
representing undivided beneficial interests in the assets of the Trust, (ii)
investing the gross proceeds of the Trust Securities in the Series Junior
Subordinated Notes, and (iii) engaging in only those other activities necessary,
appropriate, convenient or incidental thereto. The Trust has a term of
approximately years, but may terminate earlier as provided in the Trust
Agreement.
Upon issuance of the Preferred Securities, the purchasers thereof will own
all of the Preferred Securities. The Company will acquire all of the Common
Securities, which will have an aggregate liquidation amount equal to
approximately 3% of the total capital of the Trust. The Common Securities will
rank pari passu, and payments will be made thereon pro rata, with the Preferred
Securities, except that upon the occurrence and continuance of a Subordinated
Note Indenture Event of Default, the rights of the holders of Common Securities
to payment in respect of distributions and payments upon liquidation, redemption
and otherwise will be subordinated to the rights of the holders of the Preferred
Securities.
The Trust's business and affairs will be conducted by the Securities
Trustees, which shall be appointed by the Company as the holder of the Common
Securities. Two officers of the Company initially will serve as Administrative
Trustees. The Chase Manhattan Bank will serve as Property Trustee and will hold
legal title to the Series Junior Subordinated Notes issued by the Company on
behalf of the Trust and the holders of the Trust Securities. Chase Manhattan
Bank Delaware will serve as Delaware Trustee. In certain circumstances, the
holders of a majority in liquidation amount of the Preferred Securities will be
entitled to appoint a Substitute Property Trustee. See "Description of the
Preferred Securities -- Voting Rights."
The Property Trustee will hold legal title to the Series Junior
Subordinated Notes for the benefit of the Trust and the holders of the Trust
Securities and will have the power to exercise all rights, powers and privileges
under the Subordinated Note Indenture as the holder of the Series Junior
Subordinated Notes. The Property Trustee will make payments of distributions and
payments on liquidation, redemption and otherwise to the holders of the Trust
Securities. Subject to the right of the holders of the Preferred Securities to
appoint a Substitute Property Trustee in certain instances, the Company, as the
holder of all the Common Securities, will have the right to appoint, remove or
replace all the Securities Trustees.
The Series Junior Subordinated Notes will constitute substantially all of
the assets of the Trust. Other assets that may constitute "Trust Property" (as
that term is defined in the Trust Agreement) include any cash on deposit in, or
owing to, the payment account as established under the Trust Agreement, as well
as any other
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property or assets held by the Property Trustee pursuant to the Trust Agreement.
In addition, the Trust may, from time to time, receive cash pursuant to the
Agreement as to Expenses and Liabilities.
The rights of the holders of the Preferred Securities, including economic
rights, rights to information and voting rights, are as set forth in the Trust
Agreement, the Delaware Business Trust Act, and the 1939 Act. See "Description
of the Preferred Securities."
The Trust's registered office in the State of Delaware is c/o Chase
Manhattan Bank Delaware, 1201 Market Street, Wilmington, Delaware 19801. The
principal place of business of the Trust shall be c/o the Company, 600 North
18th Street, Birmingham, Alabama 35291, telephone (205) 257-2505, Attn:
Treasurer.
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
, and as adjusted to reflect the issuances described in note (2)
below. The following data is qualified in its entirety by reference to and,
therefore, should be read together with the detailed information and financial
statements appearing in the documents incorporated herein by reference. See also
"Selected Information" in the accompanying Prospectus.
<TABLE>
<CAPTION>
AS OF
-------------------------------
ACTUAL AS ADJUSTED(2)
---------- ------------------
(THOUSANDS, EXCEPT PERCENTAGES)
<S> <C> <C> <C>
Common Stock Equity.........................................
Cumulative Preferred Stock..................................
Company Obligated Mandatorily Redeemable Preferred
Securities of Subsidiary Trusts Holding Company Junior
Subordinated Notes(1).....................................
Senior Notes................................................ --
Junior Subordinated Notes................................... --
Other Long-Term Debt........................................
---------- ---------- -----
Total, excluding amounts due within one year...........
========== ========== =====
</TABLE>
- ---------------
(1) As described herein and in the accompanying Prospectus, substantially all of
the assets of the respective Trusts will be Junior Subordinated Notes of
the Company, and upon redemption of such debt, the related Preferred
Securities will be mandatorily redeemable.
(2) Reflects .
ACCOUNTING TREATMENT
For financial reporting purposes, the Trust will be treated as a subsidiary
of the Company and, accordingly, the accounts of the Trust will be included in
the consolidated financial statements of the Company. The Preferred Securities
will be presented as a separate line item in the consolidated balance sheet of
the Company, and appropriate disclosures concerning the Preferred Securities,
the Guarantee and the Series Junior Subordinated Notes will be included in the
notes to the consolidated financial statements. For financial reporting
purposes, the Company will record distributions payable on the Preferred
Securities as an expense.
DESCRIPTION OF THE PREFERRED SECURITIES
The Preferred Securities will be issued pursuant to the terms of the Trust
Agreement. The Trust Agreement will be qualified as an indenture under the 1939
Act. The Property Trustee will act as the indenture trustee with respect to the
Trust, as well as the Guarantee, for purposes of compliance with the provisions
of the 1939 Act. The terms of the Preferred Securities will include those stated
in the Trust Agreement, the Delaware Business Trust Act, and those made part of
the Trust Agreement by the 1939 Act.
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The following summary of the principal terms and provisions of the Preferred
Securities does not purport to be complete and is subject to, and qualified in
its entirety by reference to, the Trust Agreement, the form of which is filed as
an exhibit to the Registration Statement of which this Prospectus Supplement and
the accompanying Prospectus are a part, as well as the 1939 Act.
GENERAL
The Trust Agreement authorizes the Administrative Trustees, on behalf of
the Trust, to issue the Preferred Securities, which represent preferred
undivided beneficial interests in the assets of the Trust, and the Common
Securities, which represent common undivided beneficial interests in the assets
of the Trust. All of the Common Securities will be owned by the Company. The
Common Securities rank pari passu, and payments will be made thereon on a pro
rata basis, with the Preferred Securities, except that upon the occurrence of a
Subordinated Note Indenture Event of Default, the rights of the holders of the
Common Securities to receive payment of periodic distributions and payments upon
liquidation, redemption and otherwise will be subordinated to the rights of the
holders of the Preferred Securities. The Trust Agreement does not permit the
issuance by the Trust of any securities other than the Trust Securities or the
incurrence of any indebtedness by the Trust. Pursuant to the Trust Agreement,
the Property Trustee will own and hold the Series Junior Subordinated Notes for
the benefit of the Trust and the holders of the Trust Securities. The payment of
distributions out of money held by the Trust, and payments upon redemption of
the Preferred Securities or liquidation of the Trust, are guaranteed by the
Company on a subordinated basis as and to the extent described under
"Description of the Guarantees" in the accompanying Prospectus. The Guarantee
does not cover payment of distributions on the Preferred Securities when the
Trust does not have legally and immediately available funds sufficient to make
such distributions. In such event, the remedy of a holder of Preferred
Securities is to direct the Property Trustee to enforce its rights under the
Series Junior Subordinated Notes. In addition, a holder of Preferred Securities
may institute a legal proceeding directly against the Company, without first
instituting a legal proceeding against the Property Trustee or any other person
or entity, for enforcement of payment to such holder of principal of or interest
on the Series Junior Subordinated Notes having a principal amount equal to the
aggregate stated liquidation amount of the Preferred Securities of such holder
on or after the due dates specified in the Series Junior Subordinated Notes. The
above mechanisms and obligations, together with the Company's obligations under
the Agreement as to Expenses and Liabilities, constitute a full and
unconditional guarantee by the Company of payments due on the Preferred
Securities. See "-- Voting Rights" below.
DISTRIBUTIONS
Distributions on the Preferred Securities will be fixed at the Securities
Rate and will accrue from the Issue Date and, except in the event of an
Extension Period, will be payable quarterly in arrears on March 31, June 30,
September 30 and December 31 of each year. In the event that any date on which
distributions are to be made on the Preferred Securities is not a Business Day,
then payment of the distributions payable on such date will be made on the next
succeeding day that is a Business Day (and without any interest or other payment
in respect of any such delay) except that, if such Business Day is in the next
succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date. A "Business Day" shall mean any day other than a Saturday or
Sunday, a day on which banks in New York City are authorized or obligated by law
or executive order to remain closed or a day on which the principal corporate
trust office of the Property Trustee or the Indenture Trustee is closed for
business.
Distributions payable on any Distribution Date will be payable to the
holders of record on the Record Date for such Distribution Date, which is the
close of business on the fifteenth calendar day preceding such Distribution
Date. Subject to any applicable laws and regulations and the provisions of the
Trust Agreement, each such payment will be made as described under
"-- Book-Entry Only Issuance -- The Depository Trust Company" below. The amount
of distributions payable for any period will be computed on the basis of a
360-day year of twelve 30-day months.
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The Company has the right under the Subordinated Note Indenture to defer
payments of interest on the Series Junior Subordinated Notes by extending the
interest payment period from time to time on the Series Junior Subordinated
Notes (each, an "Extension Period") which, if exercised, would defer quarterly
distributions on the Preferred Securities during any such extended interest
payment period. Deferred installments of interest on the Series Junior
Subordinated Notes will bear interest, compounded quarterly, at a rate per annum
equal to the Securities Rate. If distributions are deferred, the deferred
distributions and accrued interest thereon shall be paid, if funds are legally
available therefor, to holders of record of the Preferred Securities as they
appear on the books and records of the Trust on the Record Date next following
the termination of such Extension Period. See "Description of the Series Junior
Subordinated Notes -- Interest" and "-- Option to Extend Interest Payment
Period."
Distributions on the Preferred Securities must be paid on the Distribution
Dates to the extent that the Trust has funds legally and immediately available
for the payment of such distributions. The Trust's funds available for
distribution to the holders of the Preferred Securities will be limited to
payments received under the Series Junior Subordinated Notes. See "Description
of the Series Junior Subordinated Notes."
REDEMPTION
The Preferred Securities are subject to mandatory redemption upon repayment
of the Series Junior Subordinated Notes at maturity or their earlier
redemption. The Series Junior Subordinated Notes will mature
on , and may be redeemed, in whole or in part, at the option
of the Company, at any time on or after , or at any time in
whole upon the occurrence of a Special Event. Upon the repayment of the Series
Junior Subordinated Notes, whether at maturity or upon redemption, the proceeds
from such repayment or payment shall simultaneously be applied to redeem a like
amount of Trust Securities upon not less than 30 nor more than 60 days' notice,
at the Redemption Price (as defined below). See "Description of the
Series Junior Subordinated Notes -- Optional Redemption." If a partial
redemption of the Series Junior Subordinated Notes would result in the
delisting of the Preferred Securities, the Company may only redeem the Series
Junior Subordinated Notes in whole. In the event that fewer than all of the
outstanding Trust Securities are to be redeemed, the Preferred Securities to be
redeemed will be selected as described under "-- Book-Entry Only Issuance -- The
Depository Trust Company" below. If the Preferred Securities are no longer in
book-entry only form, the Preferred Securities to be redeemed will be selected
by such method as the Property Trustee shall deem fair and appropriate and which
may provide for the selection for redemption of portions (equal to $25 or
integral multiples thereof) of the aggregate liquidation amount of Preferred
Securities of a denomination larger than $25; provided, however, that before
undertaking the redemption of the Preferred Securities on other than a pro rata
basis, the Property Trustee shall have received an opinion of counsel that the
status of the Trust as a grantor trust for federal income tax purposes would not
be adversely affected.
The Redemption Price for each Preferred Security shall equal the stated
liquidation amount of $25 plus accrued and unpaid distributions thereon to the
date of payment.
SPECIAL EVENT REDEMPTION; DISTRIBUTION OF SERIES JUNIOR SUBORDINATED NOTES
Upon the occurrence of a Special Event at any time, the Company will have
the option to redeem the Series Junior Subordinated Notes in whole (and thus
cause the redemption of the Preferred Securities in whole). A Special Event is
either an Investment Company Act Event or a Tax Event.
An "Investment Company Act Event" means that the Administrative Trustees
and the Company shall have received an opinion of independent counsel (which may
be counsel to the Company) to the effect that, as a result of a change in law or
regulation or a written change in interpretation or application of law or
regulation by any legislative body, court, governmental agency or regulatory
authority after the Issue Date, there is more than an insubstantial risk that
the Trust is or will be considered an investment company under the 1940 Act.
"Tax Event" means that the Administrative Trustees and the Company shall
have received an opinion from independent tax counsel experienced in such
matters (which may be counsel to the Company) to the
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effect that, as a result of (a) any amendment to, or change (including any
announced prospective change) in, the laws (or any regulations thereunder) of
the United States or any political subdivision or taxing authority thereof or
therein or (b) any amendment to, or change in, an interpretation or application
of such laws or regulations, there is more than an insubstantial risk that (i)
the Trust would be subject to United States federal income tax with respect to
income accrued or received on the Series Junior Subordinated Notes, (ii)
interest payable on the Series Junior Subordinated Notes would not be
deductible by the Company for United States federal income tax purposes or (iii)
the Trust would be subject to more than a de minimis amount of other taxes,
duties or other governmental charges, which change or amendment becomes
effective on or after the Issue Date.
The Company will have the right at any time to terminate the Trust and,
after satisfaction of liabilities to creditors of the Trust, if any, cause the
Series Junior Subordinated Notes to be distributed to the holders of the
Preferred Securities in liquidation of the Trust. See "-- Liquidation
Distribution Upon Dissolution" below. This right is optional and wholly within
the discretion of the Company. Circumstances under which the Company may
determine to exercise such right could include the occurrence of an Investment
Company Act Event or a Tax Event, adverse tax consequences to the Company or the
Trust that are not within the definition of a Tax Event because they do not
result from an amendment or change described in such definition, and changes in
the accounting requirements applicable to the Preferred Securities as described
under "Accounting Treatment."
If Series Junior Subordinated Notes are distributed to the holders of the
Preferred Securities, the Company will use its best efforts to have the Series
Junior Subordinated Notes listed on the NYSE or on such other exchange as the
Preferred Securities are then listed. After the date for any distribution of
Series Junior Subordinated Notes upon termination of the Trust, (i) the
Preferred Securities and the Guarantee will no longer be deemed to be
outstanding, (ii) the depositary or its nominee, as the record holder of the
Preferred Securities, will receive a registered global certificate or
certificates representing the Series Junior Subordinated Notes to be delivered
upon such distribution and (iii) any certificates representing Preferred
Securities and the Guarantee not held by the depositary or its nominee will be
deemed to represent Series Junior Subordinated Notes having an aggregate
principal amount equal to the aggregate stated liquidation amount of, with an
interest rate identical to the Securities Rate of, and accrued and unpaid
interest equal to accrued and unpaid distributions on, such Preferred
Securities, until such certificates are presented to the Company or its agent
for transfer or reissuance.
There can be no assurance as to the market prices for the Preferred
Securities or the Series Junior Subordinated Notes that may be distributed in
exchange for the Preferred Securities if a termination and liquidation of the
Trust were to occur. Accordingly, the Preferred Securities that an investor may
purchase, or the Series Junior Subordinated Notes that the investor may
receive on termination and liquidation of the Trust, may trade at a discount to
the price that the investor paid to purchase the Preferred Securities offered
hereby.
REDEMPTION PROCEDURES
In the event that fewer than all of the Trust Securities are to be
redeemed, then the aggregate liquidation amount of the Trust Securities to be
redeemed shall be allocated 97% to the Preferred Securities and 3% to the Common
Securities.
The Preferred Securities redeemed on each redemption date shall be redeemed
at the Redemption Price with the proceeds from the contemporaneous redemption of
the Series Junior Subordinated Notes. The Redemption Price of Preferred
Securities shall be deemed payable on each redemption date only to the extent
that the Trust has funds legally and immediately available for payment of such
Redemption Price.
If the Property Trustee gives a notice of redemption in respect of
Preferred Securities (which notice will be irrevocable), then, by 2:00 P.M., New
York City time, on the redemption date, subject to the immediately preceding
paragraph, the Property Trustee will irrevocably deposit with the securities
depositary, so long as the Preferred Securities are in book-entry only form,
sufficient funds to pay the applicable Redemption Price. See "-- Book-Entry Only
Issuance -- The Depository Trust Company" below. If the Preferred Securities are
no
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longer in book-entry only form, the Property Trustee, subject to the immediately
preceding paragraph, shall irrevocably deposit with the Paying Agent funds
sufficient to pay the applicable Redemption Price and will give the Paying Agent
irrevocable instructions to pay the Redemption Price to the holders thereof upon
surrender of their Preferred Securities certificates. If notice of redemption
shall have been given and funds deposited as required, then immediately prior to
the close of business on the date of such deposit, distributions will cease to
accrue and all rights of holders of such Preferred Securities so called for
redemption will cease, except the right of the holders of such Preferred
Securities to receive the Redemption Price, but without interest on such
Redemption Price. In the event that any date fixed for redemption of Preferred
Securities is not a Business Day, then payment of the Redemption Price payable
on such date will be made on the next succeeding day which is a Business Day
(and without any interest or other payment in respect of any such delay), except
that, if such Business Day falls in the next calendar year, such payment will be
made on the immediately preceding Business Day. In the event that payment of the
Redemption Price in respect of Preferred Securities is improperly withheld or
refused and not paid either by the Trust or by the Company pursuant to the
Guarantee, distributions on such Preferred Securities will continue to accrue at
the then applicable rate, from such redemption date originally established by
the Trust for such Preferred Securities to the date such Redemption Price is
actually paid. See "-- Events of Default" below, "Relationship Among the
Preferred Securities, the Series Junior Subordinated Notes and the Guarantee"
and "Description of the Guarantees -- Events of Default" in the accompanying
Prospectus.
Subject to the foregoing and to applicable law (including, without
limitation, United States federal securities laws), the Company or its
affiliates may, at any time and from time to time, purchase outstanding
Preferred Securities by tender, in the open market or by private agreement.
BOOK-ENTRY ONLY ISSUANCE -- THE DEPOSITORY TRUST COMPANY
DTC will act as the initial securities depositary for the Preferred
Securities. The Preferred Securities will be issued only as fully registered
securities registered in the name of Cede & Co., DTC's nominee. One or more
fully registered global Preferred Securities certificates will be issued,
representing in the aggregate the total number of Preferred Securities, and will
be deposited with DTC.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the 1934 Act. DTC holds
securities that its participants ("Participants") deposit with DTC. DTC also
facilitates the settlement among Participants of securities transactions, such
as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates. Direct Participants
include securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations ("Direct Participants"). DTC is
owned by a number of its Direct Participants and by the NYSE, the American Stock
Exchange, Inc., and the National Association of Securities Dealers, Inc. Access
to the DTC system is also available to others such as securities brokers and
dealers, banks and trust companies that clear through or maintain a custodial
relationship with a Direct Participant, either directly or indirectly ("Indirect
Participants"). The rules applicable to DTC and its Participants are on file
with the Commission.
Purchases of Preferred Securities within the DTC system must be made by or
through Direct Participants, which will receive a credit for the Preferred
Securities on DTC's records. The ownership interest of each actual purchaser of
Preferred Securities ("Beneficial Owner") is in turn to be recorded on the
Direct and Indirect Participants' records. Beneficial Owners will not receive
written confirmation from DTC of their purchases, but Beneficial Owners are
expected to receive written confirmations providing details of the transactions,
as well as periodic statements of their holdings, from the Direct or Indirect
Participants through which the Beneficial Owners purchased Preferred Securities.
Transfers of ownership interests in the Preferred Securities are to be
accomplished by entries made on the books of Participants acting on behalf of
Beneficial Owners. Beneficial Owners will not receive certificates representing
their ownership interests in Preferred Securities, except in the event that use
of the book-entry system for the Preferred Securities is discontinued.
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DTC has no knowledge of the actual Beneficial Owners of the Preferred
Securities. DTC's records reflect only the identity of the Direct Participants
to whose accounts such Preferred Securities are credited, which may or may not
be the Beneficial Owners. The Participants will remain responsible for keeping
account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
Redemption notices shall be sent to DTC. If less than all of the Preferred
Securities are being redeemed, DTC will reduce the amount of the interest of
each Direct Participant in the Preferred Securities in accordance with its
procedures.
Although voting with respect to the Preferred Securities is limited, in
those cases where a vote is required, neither DTC nor Cede & Co. will itself
consent or vote with respect to Preferred Securities. Under its usual
procedures, DTC would mail an Omnibus Proxy to the Trust as soon as possible
after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or
voting rights to those Direct Participants to whose accounts the Preferred
Securities are credited on the record date (identified in a listing attached to
the Omnibus Proxy).
Distribution payments on the Preferred Securities will be made to DTC.
DTC's practice is to credit Direct Participants' accounts on the relevant
payment date in accordance with their respective holdings shown on DTC's records
unless DTC has reason to believe that it will not receive payments on such
payment date. Payments by Participants to Beneficial Owners will be governed by
standing instructions and customary practices, as is the case with securities
held for the account of customers registered in "street name," and will be the
responsibility of such Participant and not of DTC, the Trust, any trustee or the
Company, subject to any statutory or regulatory requirements as may be in effect
from time to time. Payment of distributions to DTC is the responsibility of the
Trust, disbursement of such payments to Direct Participants is the
responsibility of DTC, and disbursement of such payments to the Beneficial
Owners is the responsibility of Direct and Indirect Participants.
Except as provided herein, a Beneficial Owner in a global Preferred
Security will not be entitled to receive physical delivery of Preferred
Securities. Accordingly, each Beneficial Owner must rely on the procedures of
DTC to exercise any rights under the Preferred Securities. The laws of some
jurisdictions require that certain purchasers of securities take physical
delivery of securities in definitive form. Such laws may impair the ability to
transfer beneficial interests in a global Preferred Security.
DTC may discontinue providing its services as securities depositary with
respect to the Preferred Securities at any time by giving reasonable notice to
the Trust. Under such circumstances, in the event that a successor securities
depositary is not obtained, Preferred Securities certificates will be printed
and delivered to the holders of record. Additionally, the Company may decide to
discontinue use of the system of book-entry transfers through DTC (or a
successor depositary) with respect to the Preferred Securities. In that event,
certificates for the Preferred Securities will be printed and delivered to the
holders of record.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Company and the Trust believe to be
reliable, but the Company and the Trust take no responsibility for the accuracy
thereof. The Trust has no responsibility for the performance by DTC or its
Participants of their respective obligations as described herein or under the
rules and procedures governing their respective operations.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
Pursuant to the Trust Agreement, the Trust shall terminate on ,
or earlier upon (i) the occurrence of a Bankruptcy Event (as defined in the
Trust Agreement) in respect of the Company, dissolution or liquidation of the
Company, or dissolution of the Trust pursuant to a judicial decree; (ii) the
delivery of written direction to the Property Trustee by the Company, as
Depositor, at any time (which direction is
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optional and wholly within the discretion of the Company, as Depositor) to
terminate the Trust and distribute the Series Junior Subordinated Notes to the
holders of the Preferred Securities in liquidation of the Trust (see "-- Special
Event Redemption; Distribution of Series Junior Subordinated Notes" above); or
(iii) the payment at maturity or redemption of all of the Series Junior
Subordinated Notes, and the consequent payment of the Trust Securities.
If an early termination occurs as described in clause (i) or (ii) above,
the Trust shall be liquidated, and the Property Trustee shall distribute to each
holder of Preferred Securities and Common Securities a like amount of Series
Junior Subordinated Notes, unless in the case of an event described in clause
(i) such distribution is determined by the Administrative Trustees not to be
practical, in which event such holders will be entitled to receive, out of the
assets of the Trust available for distribution to holders after satisfaction of
liabilities to creditors, an amount equal to the aggregate of the stated
liquidation preference of $25 per Trust Security plus accrued and unpaid
distributions thereon to the date of payment (such amount being the "Liquidation
Distribution"). If such Liquidation Distribution can be paid only in part
because the Trust has insufficient assets available to pay in full the aggregate
Liquidation Distribution, then subject to the next succeeding sentence, the
amounts payable directly by the Trust on the Trust Securities shall be paid on a
pro rata basis. The holder of the Common Securities will be entitled to receive
distributions upon any such dissolution pro rata with the holders of the
Preferred Securities, except that if a Subordinated Note Indenture Event of
Default has occurred and is continuing, the holders of Preferred Securities
shall have a preference over the holders of Common Securities.
EVENTS OF DEFAULT
Any one of the following events constitutes an "Event of Default" under the
Trust Agreement ("Trust Agreement Event of Default") with respect to the Trust
Securities issued thereunder (whatever the reason for such Event of Default, and
whether it shall be voluntary or involuntary or be effected by operation of law
or pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(i) the occurrence of an "Event of Default" as defined in Section 501
of the Subordinated Note Indenture ("Subordinated Note Indenture Event of
Default") (see "Description of the Junior Subordinated Notes -- Events of
Default" in the accompanying Prospectus); or
(ii) default by the Trust in the payment of any distribution when it
becomes due and payable, and the continuation of such default for a period
of 30 days; or
(iii) default by the Trust in the payment of any Redemption Price of
any Preferred Security or Common Security when it becomes due and payable;
or
(iv) default in the performance, or breach, of any covenant or
warranty of the Securities Trustees in the Trust Agreement (other than a
covenant or warranty a default in the performance of which or the breach of
which is dealt with in clause (ii) or (iii) above), and continuation of
such default or breach for a period of 60 days after there has been given,
by registered or certified mail, to such Securities Trustees by the holders
of at least 10% in liquidation amount of the outstanding Preferred
Securities a written notice specifying such default or breach and requiring
it to be remedied and stating that such notice is a "Notice of Default"
under the Trust Agreement; or
(v) the occurrence of certain events of bankruptcy or insolvency with
respect to the Trust.
Within 90 days after the occurrence of any Trust Agreement Event of
Default, the Property Trustee shall transmit notice of any default known to the
Property Trustee to the holders of Trust Securities and the Company, unless such
Trust Agreement Event of Default shall have been cured or waived.
If a Trust Agreement Event of Default occurs and is continuing, then,
pursuant to the Trust Agreement, holders of a majority in aggregate liquidation
amount of Preferred Securities have the right to direct the exercise of any
trust or power conferred upon the Property Trustee under the Trust Agreement,
including the right to direct the Property Trustee under the Trust Agreement to
exercise the remedies available to it as
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holder of the Series Junior Subordinated Notes. If the Property Trustee fails
to enforce its rights under the Series Junior Subordinated Notes, a holder of
Preferred Securities may, to the fullest extent permitted by applicable law,
institute a legal proceeding directly against the Company to enforce its rights
under the Trust Agreement without first instituting any legal proceeding against
the Property Trustee or the Trust. Notwithstanding the foregoing, a holder of
Preferred Securities may institute a legal proceeding directly against the
Company, without first instituting a legal proceeding against the Property
Trustee or any other person or entity, for enforcement of payment to such holder
of principal of or interest on the Series Junior Subordinated Notes having a
principal amount equal to the aggregate stated liquidation amount of the
Preferred Securities of such holder on or after the due dates specified in the
Series Junior Subordinated Notes. See "Relationship Among the Preferred
Securities, the Series Junior Subordinated Notes and the Guarantee" herein and
"Description of the Guarantees -- Events of Default" in the accompanying
Prospectus.
Unless a Subordinated Note Indenture Event of Default shall have occurred
and be continuing, the Securities Trustees may be removed at any time by act of
the holder of the Common Securities. If a Subordinated Note Indenture Event of
Default has occurred and is continuing, any Securities Trustee may be removed at
such time by act of the holders of a majority in liquidation amount of the
Preferred Securities, delivered to the appropriate Securities Trustee (in its
individual capacity and on behalf of the Trust). No resignation or removal of
any Securities Trustee and no appointment of a successor shall be effective
until the acceptance of appointment by the successor Trustee in accordance with
the requirements of the Trust Agreement.
If a Subordinated Note Indenture Event of Default has occurred and is
continuing, the holders of Preferred Securities shall have a preference over the
holders of Common Securities upon dissolution of the Trust as described above.
See "-- Liquidation Distribution Upon Dissolution."
VOTING RIGHTS
Except as provided below and under "Description of the
Guarantees -- Amendments and Assignment" in the accompanying Prospectus and as
otherwise required by law and the Trust Agreement, the holders of the Preferred
Securities will have no voting rights.
If any proposed amendment to the Trust Agreement provides for, or the
Securities Trustees otherwise propose to effect, (i) any action that would
adversely affect the powers, preferences or special rights of the Preferred
Securities, whether by way of amendment to the Trust Agreement or otherwise, or
(ii) the dissolution, winding-up or termination of the Trust, other than
pursuant to the Trust Agreement, then the holders of outstanding Preferred
Securities will be entitled to vote as a class on such amendment or proposal of
the Securities Trustees, and such amendment or proposal shall not be effective
except with the approval of the holders of at least 66 2/3% in liquidation
amount of such outstanding Preferred Securities.
So long as any Series Junior Subordinated Notes are held by the Property
Trustee, the Securities Trustees shall not (i) direct the time, method and place
of conducting any proceeding for any remedy available to the Indenture Trustee
(as defined herein), or executing any trust or power conferred on the Indenture
Trustee with respect to the Series Junior Subordinated Notes, (ii) waive any
past default which is waivable under Section 513 of the Subordinated Note
Indenture, (iii) exercise any right to rescind or annul a declaration that the
principal of all the Series Junior Subordinated Notes shall be due and
payable, or (iv) consent to any amendment, modification or termination of the
Subordinated Note Indenture or the Series Junior Subordinated Notes, where
such consent shall be required, or to any other action, as the holder of the
Series Junior Subordinated Notes, under the Subordinated Note Indenture,
without, in each case, obtaining the prior approval of the holders of at least
66 2/3% in liquidation amount of the outstanding Preferred Securities; provided,
however, that where a consent under the Subordinated Note Indenture would
require the consent of each holder of Series Junior Subordinated Notes
affected thereby, no such consent shall be given by the Securities Trustees
without the prior consent of each holder of Preferred Securities. The Securities
Trustees shall not revoke any action previously authorized or approved by a vote
of the holders of the Preferred Securities, except pursuant to a subsequent vote
of such holders. The Property Trustee shall
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notify all holders of the Preferred Securities of any notice of default received
from the Indenture Trustee with respect to the Series Junior Subordinated
Notes. In addition to obtaining the foregoing approvals of the holders of the
Preferred Securities, prior to taking any of the foregoing actions, the
Securities Trustees shall obtain an opinion of counsel experienced in such
matters to the effect that the Trust will not be classified as other than a
grantor trust for federal income tax purposes on account of such action.
Any required approval of holders of Preferred Securities may be given at a
separate meeting of holders of Preferred Securities convened for such purpose or
pursuant to written consent. The Administrative Trustees will cause a notice of
any meeting at which holders of Preferred Securities are entitled to vote to be
given to each holder of record of Preferred Securities in the manner set forth
in the Trust Agreement.
Notwithstanding that holders of Preferred Securities are entitled to vote
or consent under any of the circumstances described above, any of the Preferred
Securities that are owned by the Company, the Securities Trustees or any
affiliate of the Company or any Securities Trustee, shall, for purposes of such
vote or consent, be treated as if they were not outstanding.
CO-PROPERTY TRUSTEES AND SEPARATE PROPERTY TRUSTEE
At any time or times, for the purpose of meeting the legal requirements of
the 1939 Act or of any jurisdiction in which any part of the Trust Property (as
defined in the Trust Agreement) may at the time be located, the holder of the
Common Securities and the Property Trustee shall have power to appoint, and upon
the written request of the Property Trustee, the Company, as Depositor, shall
for such purpose join with the Property Trustee in the execution, delivery and
performance of all instruments and agreements necessary or proper to appoint,
one or more persons approved by the Property Trustee either to act as
co-property trustee, jointly with the Property Trustee, of all or any part of
such Trust Property, or to act as separate trustee of any such property, in
either case with such powers as may be provided in the instrument of
appointment, and to vest in such person or persons in such capacity, any
property, title, right or power deemed necessary or desirable, subject to the
provisions of the Trust Agreement. If the Company, as Depositor, does not join
in such appointment within 15 days after the receipt by it of a request so to
do, or in case a Subordinated Note Indenture Event of Default has occurred and
is continuing, the Property Trustee alone shall have power to make such
appointment.
AMENDMENT OF THE TRUST AGREEMENT
The Trust Agreement may be amended from time to time by the Company and the
Securities Trustees without the consent of the holders of the Trust Securities
(i) to cure any ambiguity, correct or supplement any provision therein which may
be inconsistent with any other provision therein, or to make any other
provisions with respect to matters or questions arising under the Trust
Agreement, which shall not be inconsistent with the other provisions of the
Trust Agreement, provided that the amendment does not adversely affect in any
material respect the interests of any holder of Trust Securities, or (ii) to
modify, eliminate or add to any provisions of the Trust Agreement to such extent
as shall be necessary to ensure that the Trust will not be classified as other
than a grantor trust for federal income tax purposes. Except as provided in the
succeeding paragraph, other amendments to the Trust Agreement may be made (i)
upon approval of the holders of not less than 66 2/3% in aggregate liquidation
amount of the Trust Securities then outstanding and (ii) upon receipt by the
Securities Trustees of an opinion of counsel to the effect that such amendment
will not affect the Trust's status as a grantor trust or the Trust's exemption
from the 1940 Act.
Notwithstanding the foregoing, without the consent of each affected holder
of Trust Securities, the Trust Agreement may not be amended to (i) change the
amount or timing of any distribution on the Trust Securities or otherwise
adversely affect the amount of any distribution required to be made in respect
of the Trust Securities as of a specified date, (ii) restrict the right of a
holder of Trust Securities to institute suit for the enforcement of any such
payment on or after such date, or (iii) change the consent required to amend the
Trust Agreement.
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MERGERS, CONSOLIDATIONS OR AMALGAMATIONS
The Trust may not consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other body, except as
described below. The Trust may at the request of the Company, with the consent
of the Administrative Trustees and without the consent of the holders of the
Trust Securities, consolidate, amalgamate, merge with or into, or be replaced by
a trust organized as such under the laws of any state; provided, that (i) such
successor entity either (x) expressly assumes all of the obligations of the
Trust with respect to the Trust Securities or (y) substitutes for the Preferred
Securities other securities having substantially the same terms as the Trust
Securities (the "Successor Securities") so long as the Successor Securities rank
the same as the Trust Securities rank in priority with respect to distributions
and payments upon liquidation, redemption and otherwise, (ii) the Company
expressly appoints a trustee of such successor entity possessing the same powers
and duties as the Property Trustee as the holder of the Junior Subordinated
Notes, (iii) the Preferred Securities or any Successor Securities are listed, or
any Successor Securities will be listed upon notification of issuance, on any
national securities exchange or other organization on which the Preferred
Securities are then listed, (iv) such merger, consolidation, amalgamation or
replacement does not cause the Preferred Securities (including any Successor
Securities) to be downgraded by any nationally recognized statistical rating
organization, (v) such merger, consolidation, amalgamation or replacement does
not adversely affect the rights, preferences and privileges of the holders of
the Trust Securities (including any Successor Securities) in any material
respect, (vi) such successor entity has a purpose substantially identical to
that of the Trust, (vii) prior to such merger, consolidation, amalgamation or
replacement, the Company has received an opinion of counsel to the effect that
(A) such merger, consolidation, amalgamation or replacement does not adversely
affect the rights, preferences and privileges of the holders of the Trust
Securities (including any Successor Securities) in any material respect, and (B)
following such merger, consolidation, amalgamation or replacement, neither the
Trust nor such successor entity will be required to register as an investment
company under the 1940 Act, and (viii) the Company guarantees the obligations of
such successor entity under the Successor Securities at least to the extent
provided by the Guarantee. Notwithstanding the foregoing, the Trust shall not,
except with the consent of holders of 100% in liquidation amount of the Trust
Securities, consolidate, amalgamate, merge with or into, or be replaced by any
other entity or permit any other entity to consolidate, amalgamate, merge with
or into, or replace it if such consolidation, amalgamation, merger or
replacement would cause the Trust or the successor entity to be classified as
other than a grantor trust for federal income tax purposes.
Any corporation or other body into which any of the Property Trustee, the
Delaware Trustee or any Administrative Trustee that is not a natural person may
be merged or converted or with which it may be consolidated, or any corporation
or other body resulting from any merger, conversion or consolidation to which
any such Securities Trustee shall be a party, or any corporation or other body
succeeding to all or substantially all the corporate trust business of any such
Securities Trustee, shall be the successor of such Securities Trustee under the
Trust Agreement, provided such corporation is otherwise qualified and eligible
under the Trust Agreement.
PAYMENT AND PAYING AGENT
So long as DTC is acting as securities depositary for the Preferred
Securities, payments in respect of the Preferred Securities shall be made to
DTC, which is to credit the relevant accounts at DTC on the applicable
Distribution Dates. If the Preferred Securities are not held by DTC, such
payments shall be made by check mailed to the address of the holder entitled
thereto as such address shall appear on the Securities Register (as such term is
defined in the Trust Agreement). The Paying Agent shall initially be the
Property Trustee. The Paying Agent shall be permitted to resign as Paying Agent
upon 30 days' written notice to the Administrative Trustees and the Company. In
such event, the Administrative Trustees shall appoint a successor to act as
Paying Agent.
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REGISTRAR AND TRANSFER AGENT
It is anticipated that the Property Trustee, or one of its affiliates, will
act as registrar and transfer agent (the "Securities Registrar") for the
Preferred Securities.
Registration of transfers of Preferred Securities will be effected without
charge by or on behalf of the Trust, but upon payment in respect of any tax or
other governmental charges which may be imposed in relation to it.
The Securities Registrar will not be required to register or cause to be
registered any transfer of Preferred Securities after they have been called for
redemption.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee, prior to the occurrence of a Trust Agreement Event of
Default with respect to the Trust Securities, undertakes to perform only such
duties as are specifically set forth in the Trust Agreement and, after default,
shall exercise the same degree of care as a prudent individual would exercise in
the conduct of his or her own affairs. Subject to such provisions, the Property
Trustee is under no obligation to exercise any of the powers vested in it by the
Trust Agreement at the request of any holder of Preferred Securities, unless
offered reasonable indemnity by such holder against the costs, expenses and
liabilities which might be incurred thereby.
The Chase Manhattan Bank, the Property Trustee, also serves as Subordinated
Note Indenture Trustee and Guarantee Trustee. The Company and certain of its
affiliates maintain deposit accounts and banking relationships with The Chase
Manhattan Bank. The Chase Manhattan Bank serves as trustee under other
indentures pursuant to which securities of the Company and affiliates of the
Company are outstanding.
GOVERNING LAW
The Trust Agreement and the Trust Securities will be governed by, and
construed in accordance with, the internal laws of the State of Delaware;
provided that the immunities and standard of care of the Property Trustee shall
be governed by New York law.
MISCELLANEOUS
The Administrative Trustees are authorized and directed to operate the
Trust so that the Trust will not be deemed to be an "investment company"
required to be registered under the 1940 Act or taxed as other than a grantor
trust for federal income tax purposes and so that the Series Junior
Subordinated Notes will be treated as indebtedness of the Company for federal
income tax purposes. In this connection, the Administrative Trustees and the
Company are authorized to take any action, not inconsistent with applicable law,
the Trust's certificate of trust or the Trust Agreement, that the Administrative
Trustees and the Company determine in their discretion to be necessary or
desirable for such purposes, as long as such action does not materially and
adversely affect the interests of the holders of the Preferred Securities.
DESCRIPTION OF THE SERIES JUNIOR SUBORDINATED NOTES
Set forth below is a description of the specific terms of the Series
Junior Subordinated Notes. This description supplements, and should be read
together with, the description of the general terms and provisions of the Junior
Subordinated Notes set forth in the accompanying Prospectus under the caption
"Description of the Junior Subordinated Notes." The following description does
not purport to be complete and is subject to, and is qualified in its entirety
by reference to, the description in the accompanying Prospectus and the
Subordinated Note Indenture (as defined therein).
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GENERAL
The Series Junior Subordinated Notes will be issued as a series of Junior
Subordinated Notes under the Subordinated Note Indenture. The Series Junior
Subordinated Notes will be limited in aggregate principal amount to $ ,
such amount being the approximate aggregate liquidation amount of the Trust
Securities.
The entire principal amount of the Series Junior Subordinated Notes will
mature and become due and payable, together with any accrued and unpaid interest
thereon, including Additional Interest, if any, on . The Series
Junior Subordinated Notes are not subject to any sinking fund provision.
The terms of the Series Junior Subordinated Notes correspond to those of
the Preferred Securities, as described herein.
OPTIONAL REDEMPTION
The Company shall have the right to redeem the Series Junior Subordinated
Notes, in whole or in part, without premium, from time to time, on or after
, or at any time in whole upon the occurrence of a Special Event as
described under "Description of the Preferred Securities -- Special Event
Redemption; Distribution of Series Junior Subordinated Notes," upon not less
than 30 nor more than 60 days' notice, at a Redemption Price equal to 100% of
the principal amount to be redeemed plus any accrued and unpaid interest,
including Additional Interest, if any, to the Redemption Date. If a partial
redemption of the Series Junior Subordinated Notes would result in the
delisting of the Preferred Securities, the Company may only redeem the Series
Junior Subordinated Notes in whole.
INTEREST
Each Series Junior Subordinated Note shall bear interest at the
Securities Rate from the Issue Date, payable quarterly in arrears on March 31,
June 30, September 30 and December 31 of each year to the person in whose name
such Series Junior Subordinated Note is registered at the close of business on
the fifteenth calendar day prior to such payment date. The amount of interest
payable will be computed on the basis of a 360-day year of twelve 30-day months.
In the event that any date on which interest is payable on the Series Junior
Subordinated Notes is not a Business Day, then payment of the interest payable
on such date will be made on the next succeeding day which is a Business Day
(and without any interest or other payment in respect of any such delay), except
that, if such Business Day is in the next succeeding calendar year, such payment
shall be made on the immediately preceding Business Day, in each case with the
same force and effect as if made on such date.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
The Company shall have the right at any time, and from time to time, to
defer payments of interest on the Series Junior Subordinated Notes by
extending the interest payment period for up to 20 consecutive quarters, but not
beyond the stated maturity date. At the end of an Extension Period, the Company
shall pay all interest then accrued and unpaid (together with interest thereon
at the Securities Rate compounded quarterly) and all Additional Interest;
provided, that if the Company shall have given notice of its election to select
an Extension Period, (a) the Company shall not declare or pay any dividend or
distribution on, or redeem, purchase, acquire or make a liquidation payment with
respect to, any of its capital stock or make any guarantee payments with respect
to the foregoing, and (b) the Company shall not make any payment of interest,
principal or premium, if any, on or repay, repurchase or redeem any debt
securities (including guarantees other than the Guarantee) issued by the Company
which rank pari passu with or junior to the Series Junior Subordinated Notes.
Prior to the termination of any Extension Period, the Company may further defer
payments of interest by extending the interest payment period, provided that
such Extension Period, together with all such previous and further extensions
thereof, may not exceed 20 consecutive quarters. Upon the termination of any
Extension Period and the payment of all amounts then due, the Company may select
a new Extension Period, subject to the above requirements. The Company has no
present intention of
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exercising its rights to defer payments of interest by extending the interest
payment period on the Series Junior Subordinated Notes. See "Certain Federal
Income Tax Considerations -- Original Issue Discount."
The Company shall give the holder or holders of the Series Junior
Subordinated Notes and the Indenture Trustee notice of its selection or
extension of an Extension Period at least one Business Day prior to the earlier
of (i) the record date relating to the interest payment date on which the
Extension Period is to commence or relating to the interest payment date on
which an Extension Period that is being extended would otherwise terminate or
(ii) the date the Company or the Trust is required to give notice to the NYSE or
other applicable self-regulatory organization of the record date or the date
such distributions are payable.
BOOK-ENTRY AND ISSUANCE
If distributed to holders of Trust Securities in connection with the
voluntary or involuntary dissolution, winding-up or liquidation of the Trust,
the Series Junior Subordinated Notes are expected to be issued in the form of
one or more global certificates registered in the name of the securities
depositary or its nominee. In such event, the procedures applicable to the
transfer and payment of the Series Junior Subordinated Notes are expected to
be substantially similar to those described with respect to the Preferred
Securities in "Description of the Preferred Securities -- Book-Entry Only
Issuance -- The Depository Trust Company."
RELATIONSHIP AMONG THE PREFERRED SECURITIES,
THE SERIES JUNIOR SUBORDINATED NOTES AND THE GUARANTEE
As long as payments of interest and other payments are made when due on the
Series Junior Subordinated Notes, such payments will be sufficient to cover
distributions and payments due on the Trust Securities primarily because (i) the
aggregate principal amount of Series Junior Subordinated Notes will be equal
to the sum of the aggregate stated liquidation amount of the Trust Securities;
(ii) the interest rate and interest and other payment dates on the Series
Junior Subordinated Notes will match the distribution rate and distribution and
other payment dates for the Preferred Securities; (iii) the Company shall pay
for all costs and expenses of the Trust pursuant to the Agreement as to Expenses
and Liabilities; and (iv) the Trust Agreement provides that the Securities
Trustees shall not cause or permit the Trust to, among other things, engage in
any activity that is not consistent with the purposes of the Trust.
Payments of distributions (to the extent funds therefor are legally and
immediately available) and other payments due on the Preferred Securities (to
the extent funds therefor are legally and immediately available) are guaranteed
by the Company as and to the extent set forth under "Description of the
Guarantees" in the accompanying Prospectus. If the Company does not make
interest payments on the Series Junior Subordinated Notes, it is not expected
that the Trust will have sufficient funds to pay distributions on the Preferred
Securities. The Guarantee is a guarantee from the time of its issuance, but does
not apply to any payment of distributions unless and until the Trust has
sufficient funds legally and immediately available for the payment of such
distributions.
If the Company fails to make interest or other payments on the Series
Junior Subordinated Notes when due (taking into account any Extension Period),
the Trust Agreement provides a mechanism whereby the holders of the Preferred
Securities may appoint a substitute Property Trustee. Such holders may also
direct the Property Trustee to enforce its rights under the Series Junior
Subordinated Notes, including proceeding directly against the Company to enforce
the Series Junior Subordinated Notes. If the Property Trustee fails to enforce
its rights under the Series Junior Subordinated Notes, to the fullest extent
permitted by applicable law, any holder of Preferred Securities may institute a
legal proceeding directly against the Company to enforce the Property Trustee's
rights under the Series Junior Subordinated Notes without first instituting
any legal proceeding against the Property Trustee or any other person or entity.
Notwithstanding the foregoing, a holder of Preferred Securities may institute a
legal proceeding directly against the Company, without first instituting a legal
proceeding against the Property Trustee or any other person or entity, for
enforcement of payment to such holder of principal of or interest on the Series
Junior Subordinated Notes having a principal amount equal to the aggregate
stated liquidation amount of the
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Preferred Securities of such holder on or after the due dates specified in the
Series Junior Subordinated Notes.
If the Company fails to make payments under the Guarantee, the Guarantee
provides a mechanism whereby the holders of the Preferred Securities may direct
the Guarantee Trustee to enforce its rights thereunder. In addition, any holder
of Preferred Securities may institute a legal proceeding directly against the
Company to enforce the Guarantee Trustee's rights under the Guarantee without
first instituting a legal proceeding against the Guarantee Trustee or any other
person or entity.
The Guarantee, the Subordinated Note Indenture, the Series Junior
Subordinated Notes, the Trust Agreement and the Agreement as to Expenses and
Liabilities, as described above, constitute a full and unconditional guarantee
by the Company of the payments due on the Preferred Securities.
Upon any voluntary or involuntary dissolution, winding-up or termination of
the Trust, unless the Series Junior Subordinated Notes are distributed in
connection therewith, the holders of Preferred Securities will be entitled to
receive, out of assets legally available for distribution to holders, the
Liquidation Distribution in cash. See "Description of the Preferred
Securities -- Liquidation Distribution Upon Dissolution." Upon any voluntary or
involuntary liquidation or bankruptcy of the Company, the Property Trustee, as
holder of the Series Junior Subordinated Notes, would be a subordinated
creditor of the Company, subordinated in right of payment to all Senior
Indebtedness, but entitled to receive payment in full of principal and interest,
before any stockholders of the Company receive payments or distributions.
Because the Company is guarantor under the Guarantee and has agreed to pay for
all costs, expenses and liabilities of the Trust (other than the Trust's
obligations to holders of the Preferred Securities) pursuant to the Agreement as
to Expenses and Liabilities, the positions of a holder of Preferred Securities
and a holder of Series Junior Subordinated Notes relative to other creditors
and to stockholders of the Company in the event of liquidation or bankruptcy of
the Company would be substantially the same.
A default or event of default under any Senior Indebtedness would not
constitute a default or Event of Default under the Subordinated Note Indenture.
However, in the event of payment defaults under, or acceleration of, Senior
Indebtedness, the subordination provisions of the Series Junior Subordinated
Notes provide that no payments may be made in respect of the Series Junior
Subordinated Notes until such Senior Indebtedness has been paid in full or any
payment default thereunder has been cured or waived. Failure to make required
payments on the Series Junior Subordinated Notes would constitute an Event of
Default under the Subordinated Note Indenture except that failure to make
interest payments on the Series Junior Subordinated Notes will not be an Event
of Default during an Extension Period; provided, however, that any Extension
Period may not exceed 20 consecutive quarters or extend beyond the stated
maturity of the Series Junior Subordinated Notes.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of certain material United States federal income
tax consequences of the ownership and disposition of the Preferred Securities
and constitutes the opinion of Balch & Bingham LLP, counsel to the Company and
the Trust, insofar as it relates to matters of law and legal conclusions. This
summary deals only with Preferred Securities held as capital assets within the
meaning of Section 1221 of the Internal Revenue Code of 1986, as amended to the
date hereof (the "Code"), by Holders (as defined herein). Moreover, it does not
discuss all of the tax consequences that may be relevant to a Holder in light of
his particular circumstances or to Holders subject to special rules, such as
certain financial institutions, insurance companies, dealers in securities,
individual retirement and certain tax deferred accounts, and persons who engage
in a straddle or a hedge relating to a Preferred Security. Prospective investors
should consult their own tax advisors with regard to the application of the tax
considerations discussed below to their particular situations as well as the
application of any state, local or other tax laws. This summary is based on
laws, existing and proposed regulations, and applicable judicial and
administrative determinations, all of which are subject to change at any time,
and any such changes may be retroactively applied in a manner that could
adversely affect Holders. As used herein, the term "Holder" means a beneficial
owner of a Preferred Security that for United States federal income tax purposes
is (i) a citizen or resident of the United States, (ii) a
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corporation, partnership or other entity created or organized in or under the
laws of the United States or of any political subdivision thereof, (iii) an
estate the income of which is subject to United States federal income taxation
regardless of its source or (iv) a trust if (a) a court within the United States
is able to exercise primary supervision over the administration of the trust and
(b) one or more U.S. persons have the authority to control all substantial
decisions of the trust. Thus, the following summary does not address any tax
consequences that apply specifically to nonresident aliens or foreign entities.
TREATMENT OF THE TRUST AND PREFERRED SECURITIES FOR FEDERAL INCOME TAX PURPOSES
The Trust will be treated as a "grantor trust" and not as an association
taxable as a corporation for federal income tax purposes. Thus, for federal
income tax purposes, each Holder will be treated as the beneficial owner of a
pro rata undivided interest in the Series Junior Subordinated Notes and,
consequently, will be required to include in income the Holder's pro rata share
of the entire income from the Series Junior Subordinated Notes. Each Holder
generally will determine its net income or loss with respect to the Trust in
accordance with its own method of accounting, although income arising from OID,
if any, must be taken into account under the accrual method of accounting even
if the Holder otherwise would use the cash receipts and disbursements method.
PAYMENTS OF INTEREST
Except as set forth below, stated interest on a Series Junior
Subordinated Note will generally be taxable to a Holder as ordinary income at
the time it is paid or accrued in accordance with the Holder's own method of
accounting.
ORIGINAL ISSUE DISCOUNT
Under income tax regulations that recently became effective, the Company
believes that the Series Junior Subordinated Notes will not be treated as
issued with OID. It should be noted that these regulations have not yet been
addressed in any rulings or other interpretations by the Internal Revenue
Service (the "IRS"). Accordingly, it is possible that the IRS could take a
position contrary to the interpretations described herein.
The terms of the Series Junior Subordinated Notes permit the Company to
defer the payment of interest on the Series Junior Subordinated Notes at any
time and from time to time by extending the interest payment period for up to 20
consecutive quarters with respect to each Extension Period; provided, however,
that no Extension Period may extend beyond the stated maturity date of the
Series Junior Subordinated Notes. Should the Company exercise this option to
defer payments of interest, the Series Junior Subordinated Notes would at that
time be treated as issued with OID and all the stated interest payments on the
Series Junior Subordinated Notes would thereafter be treated as OID for so
long as they remained outstanding. As a result, all Holders would, in effect, be
required to accrue interest income even if such Holders are on a cash method of
accounting. Consequently, in the event that the payment of interest is deferred,
a Holder could be required to include OID in income on an economic accrual
basis, notwithstanding that the Company will not make any interest payments
during such period on the Series Junior Subordinated Notes.
MARKET DISCOUNT
A purchaser of a Preferred Security at a discount from the liquidation
amount at maturity of such purchaser's pro rata share of the Series Junior
Subordinated Notes acquires such Preferred Security with "market discount."
However, market discount with respect to a Preferred Security will be considered
to be zero if it is de minimis. Market discount will be de minimis with respect
to a Preferred Security if it is less than the product of (i) 0.25% of the
adjusted issue price of the purchaser's pro rata share of the Series Junior
Subordinated Notes multiplied by (ii) the number of complete years to maturity
of such Series Junior Subordinated Notes after the date of purchase. The
purchaser of a Preferred Security with more than a de minimis amount of market
discount generally will be required to treat any gain on the sale, exchange,
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redemption or other disposition of all or part of the Preferred Securities (or
related Series Junior Subordinated Notes) as ordinary income to the extent of
accrued (but not previously taxed) market discount. Market discount generally
will accrue ratably during the period from the date of purchase of such
Preferred Security to the maturity date of the Series Junior Subordinated
Notes, unless the Holder irrevocably elects to accrue such market discount on
the basis of a constant interest rate.
A Holder who has acquired a Preferred Security at a market discount
generally will be required to defer any deductions of interest expense
attributable to any indebtedness incurred or continued to purchase or carry the
Preferred Security, to the extent such interest expense exceeds the related
interest income. Any such deferred interest expense generally will be allowable
as a deduction not later than the year in which the related market discount
income is recognized. As an alternative to the inclusion of market discount in
income upon disposition of all or a portion of a Preferred Security or the
related Series Junior Subordinated Notes (including redemptions thereof), a
Holder may make an election (which may not be revoked without the Internal
Revenue Service's consent) to include market discount in income as it accrues on
all market discount instruments acquired by the Holder during or after the
taxable year for which the election is made. In that case, the preceding
deferral rule for interest expense will not apply.
In lieu of the foregoing treatment of market discount and interest expense,
a Holder may elect to treat any market discount (including a de minimis amount)
as OID and accrue such discount on a constant-yield basis in the same manner as
the Holder accrues OID.
SALE OF PREFERRED SECURITIES
Upon the sale, retirement (including redemption) or other taxable
disposition of all or part of a Preferred Security, a Holder thereof will
recognize gain or loss equal to the difference between the amount realized on
such sale, retirement or other disposition and such Holder's adjusted tax basis
in the Preferred Security or part thereof. If the Holder disposes of a Preferred
Security prior to the occurrence of an Extension Period, any portion of the
amount received that is attributable to accrued interest will be treated as
interest income to the Holder and will not be treated as part of the amount
realized for purposes of determining gain or loss on the disposition of the
Preferred Security. Any recognized gain or loss will be capital gain or loss,
except to the extent of any accrued market discount (see "Market Discount"
above), and such capital gain or loss will be long-term if the holding period
for the Preferred Security is more than one year at the time of sale, retirement
or other disposition. In the case of individuals, "net capital gain," i.e. the
excess of net long-term capital gain over net short-term capital loss is
generally subject to a reduced rate of federal income tax. Capital gains and
losses from property held for more than 18 months will be taken into account in
determining "adjusted net capital gain," which is subject to a further reduction
in the rate of tax pursuant to a recent amendment of the Code. Also, in taxable
years beginning after December 31, 2000, an additional reduction in the rate of
tax may be available in certain circumstances for capital gains from property
held by the taxpayer for more than five years. A Holder's adjusted tax basis in
a Preferred Security acquired by purchase will equal the cost of such Preferred
Security to the Holder, increased by the amount of any related accrued OID and
market discount included in taxable income by the Holder and reduced by any
prior payments on the Series Junior Subordinated Notes distributed on the
Preferred Security. The redemption of only part of a Preferred Security will
require an allocation of the Holder's adjusted tax basis in his pro rata share
of the related Series Junior Subordinated Notes between the portion of the
Series Junior Subordinated Notes redeemed and retained by the Holder in order
to determine gain or loss.
RECEIPT OF SERIES JUNIOR SUBORDINATED NOTES UPON LIQUIDATION OF THE TRUST
As described under "Description of the Preferred Securities -- Special
Event Redemption; Distribution of Series Junior Subordinated Notes," Series
Junior Subordinated Notes may be distributed to Holders in exchange for the
Preferred Securities and in liquidation of the Trust. Such a distribution would
be treated as a non-taxable event to each Holder and each Holder would receive
an aggregate tax basis in the Holder's Series Junior Subordinated Notes equal
to the Holder's aggregate tax basis in its Preferred Securities. A Holder's
holding period with respect to the Series Junior Subordinated Notes so
received in liquidation of the Trust would include the period for which the
Preferred Securities were held by such Holder.
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<PAGE>
INFORMATION REPORTING TO HOLDERS
Income on the Preferred Securities will be reported to Holders on Form
1099, which form should be mailed to Holders of Preferred Securities by January
31 following each calendar year.
BACKUP WITHHOLDING
A Holder may be subject to "backup withholding" under certain
circumstances. Backup withholding applies to a Holder if the Holder, among other
things, (i) fails to furnish his social security number or other taxpayer
identification number ("TIN") to the payor responsible for backup withholding
(for example, the Holder's securities broker), (ii) furnishes such payor an
incorrect TIN, (iii) fails to provide such payor with a certified statement,
signed under penalties of perjury, that the TIN provided to the payor is correct
and that the Holder is not subject to backup withholding, or (iv) fails to
report properly interest and dividends on his tax return. Backup withholding,
however, does not apply to payments made to certain exempt recipients, such as
corporations and tax-exempt organizations. The backup withholding rate is 31% of
"reportable payments," which generally will include distributions of interest
and principal payments on the Series Junior Subordinated Notes.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE MAY NOT BE APPLICABLE TO
A HOLDER, DEPENDING UPON A HOLDER'S PARTICULAR SITUATION, AND THEREFORE EACH
HOLDER SHOULD CONSULT HIS TAX ADVISOR WITH RESPECT TO THE TAX CONSEQUENCES OF
THE OWNERSHIP AND DISPOSITION OF PREFERRED SECURITIES, INCLUDING THE TAX
CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE
EFFECTS OF CHANGES IN FEDERAL OR OTHER TAX LAW.
S-26
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
(the "Underwriting Agreement"), the Trust has agreed to sell to the Underwriters
named below, and the Underwriters, for whom is acting as
representative (the "Representative"), have severally agreed to purchase the
number of Preferred Securities set forth opposite their respective names below.
In the Underwriting Agreement, the Underwriters have agreed, subject to the
terms and conditions set forth therein, to purchase all of the Preferred
Securities offered hereby if any of the Preferred Securities are purchased.
<TABLE>
<CAPTION>
NUMBER OF
NAME PREFERRED SECURITIES
---- --------------------
<S> <C>
---------
Total.............................................
=========
</TABLE>
The Underwriters have advised the Company and the Trust that they propose
to offer the Preferred Securities in part directly to the public at the price to
the public, as set forth on the cover page of this Prospectus Supplement, and in
part to certain securities dealers at such price less a concession not in excess
of $ per Preferred Security. The Underwriters may allow, and such dealers
may reallow, a concession not in excess of $ per Preferred Security to
certain other dealers. After the Preferred Securities are released for sale to
the public, the offering price and other selling terms may from time to time be
varied by the Underwriters.
The Preferred Securities are expected to be approved for listing on the
NYSE, subject to official notice of issuance. Trading of the Preferred
Securities on the NYSE is expected to commence within a 30-day period after the
initial delivery of the Preferred Securities. The Representative has advised the
Company and the Trust that it intends to make a market in the Preferred
Securities prior to the commencement of trading on the NYSE. The Representative
will have no obligation to make a market in the Preferred Securities, however,
and may cease market making activities, if commenced, at any time.
Prior to this offering, there has been no public market for the Preferred
Securities. In order to meet one of the requirements for listing the Preferred
Securities on the NYSE, the Underwriters will undertake to sell lots of 100 or
more Preferred Securities to a minimum of 400 beneficial holders.
In connection with the offering, the Underwriters may purchase and sell the
Preferred Securities in the open market. These transactions may include
over-allotment and stabilizing transactions and purchases to cover syndicate
short positions created in connection with the offering. Stabilizing
transactions consist of certain bids or purchases for the purpose of preventing
or retarding a decline in the market price of the Preferred Securities; and
syndicate short positions involve the sale by the Underwriters of a greater
number of Preferred Securities than they are required to purchase from the Trust
in the offering. The Underwriters also
S-27
<PAGE>
may impose a penalty bid, whereby selling concessions allowed to syndicate
members or other broker dealers in respect of the securities sold in the
offering for their account may be reclaimed by the syndicate if such Preferred
Securities are repurchased by the syndicate in stabilizing or covering
transactions. These activities may stabilize, maintain or otherwise affect the
market price of the Preferred Securities, which may be higher than the price
that might otherwise prevail in the open market; and these activities, if
commenced, may be discontinued at any time. These transactions may be effected
on the NYSE, in the over-the-counter market or otherwise.
The Company and the Trust have agreed to indemnify the Underwriters against
certain liabilities, including liabilities under the 1933 Act.
Certain of the Underwriters engage in transactions with, and, from time to
time, have performed services for, the Company and its affiliates in the
ordinary course of business.
LEGAL OPINIONS
Certain matters of Delaware law relating to the validity of the Preferred
Securities will be passed upon on behalf of the Company and the Trust by
Richards, Layton & Finger, P.A., Wilmington, Delaware, special Delaware counsel
to the Company and the Trust. The validity of the Series Junior Subordinated
Notes, the Guarantee and certain matters relating thereto will be passed upon on
behalf of the Company by Balch & Bingham LLP, Birmingham, Alabama, and by
Troutman Sanders LLP, Atlanta, Georgia. Balch & Bingham LLP will also pass upon
certain matters relating to United States federal income tax considerations.
Certain legal matters will be passed upon for the Underwriters by Dewey
Ballantine LLP, New York, New York.
S-28
<PAGE>
GLOSSARY
1933 Act................... The Securities Act of 1933, as amended.
1934 Act................... The Securities Exchange Act of 1934, as amended.
1939 Act................... The Trust Indenture Act of 1939, as amended.
1940 Act................... The Investment Company Act of 1940, as amended.
Additional Interest........ Amounts payable by the Company as defined under
"Description of the Junior Subordinated
Notes -- Additional Interest" in the accompanying
Prospectus.
Administrative Trustees.... William E. Zales, Jr. and J. Randy DeRieux.
Agreement as to Expenses
and Liabilities.......... The agreement between the Company and the Trust
pursuant to which the Company has agreed to pay all
indebtedness, expenses or liabilities of the Trust,
other than the Trust's obligations to pay to the
holders of the Preferred Securities the amounts due
such holders pursuant to the terms thereof.
Code....................... The Internal Revenue Code of 1986, as amended.
Common Securities.......... The Trust Securities being sold to the Company.
Company.................... Alabama Power Company
Delaware Trustee........... Chase Manhattan Bank Delaware
DTC........................ The Depository Trust Company, a "clearing
corporation" that initially will hold (through its
agents) a global certificate evidencing the
Preferred Securities.
Distribution Dates......... March 31, June 30, September 30 and December 31 of
each year.
Extension Period........... Any period during which interest is not paid on the
Series Junior Subordinated Notes (and,
consequently, on the Preferred Securities) at the
election of the Company to the extent permitted
under the terms of the Series Junior Subordinated
Notes.
Guarantee.................. The guarantee by the Company of the payments by the
Trust on the Preferred Securities from funds
available in the Trust.
Guarantee Payments......... Payments required to be made pursuant to the
Guarantee as described in "Description of the
Guarantees -- General" in the accompanying
Prospectus.
Guarantee Trustee.......... The trustee under the Guarantee; initially, The
Chase Manhattan Bank.
Indenture Trustee.......... The trustee under the Subordinated Note Indenture;
initially, The Chase Manhattan Bank.
Issue Date................. The date set forth on the cover page on which the
Series Junior Subordinated Notes and Preferred
Securities are scheduled to be issued.
Investment Company
Act Event................ An event of the type described in "Description of
the Preferred Securities -- Special Event
Redemption; Distribution of Series Junior
Subordinated Notes."
NYSE....................... New York Stock Exchange.
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<PAGE>
Preferred Securities....... The Trust Securities being offered to investors
pursuant to this Prospectus Supplement and the
accompanying Prospectus.
Property Trustee........... A trustee under the Trust designated to hold the
trust property; initially The Chase Manhattan Bank.
Record Date................ The close of business on the 15th calendar day
prior to a Distribution Date.
Redemption Price........... The stated liquidation amount of $25 per Preferred
Security, plus accrued and unpaid distributions
thereon (and interest thereon) to the date of
payment.
Securities Rate............ The per annum interest rate expressed as a
percentage of the stated liquidation amount of $25
per Preferred Security, and set forth on the cover
page of this Prospectus Supplement.
Securities Trustees........ The Property Trustee, Administrative Trustees and
Delaware Trustee.
Senior Indebtedness........ Indebtedness of the Company described hereunder
under "Description of the Junior Subordinated
Notes -- Subordination" in the accompanying
Prospectus.
Series Junior
Subordinated Notes........ The Series % junior subordinated deferrable
interest notes of the Company due
.
Special Event.............. A Tax Event or Investment Company Act Event.
Subordinated Note
Indenture................. The indenture pursuant to which the Company's
Series Junior Subordinated Notes will be issued.
Subordinated Note Indenture
Event of Default......... As described under "Description of the Junior
Subordinated Notes -- Events of Default" in the
accompanying Prospectus.
Tax Event.................. An event of the type described in "Description of
the Preferred Securities -- Special Event
Redemption; Distribution of Series Junior
Subordinated Notes."
Trust...................... Alabama Power Capital Trust , a Delaware business
trust that will issue the Trust Securities.
Trust Agreement............ The agreement pursuant to which the Trust is
organized as it may be amended and restated from
time to time.
Trust Agreement Event of
Default.................. As described under "Description of the Preferred
Securities -- Events of Default."
Trust Securities........... The Preferred Securities and the Common Securities.
S-30
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED MAY 21, 1998
PROSPECTUS
$966,200,000
ALABAMA POWER COMPANY
SENIOR NOTES
JUNIOR SUBORDINATED NOTES
---------------------------
ALABAMA POWER CAPITAL TRUST III
ALABAMA POWER CAPITAL TRUST IV
ALABAMA POWER CAPITAL TRUST V
TRUST PREFERRED SECURITIES
FULLY AND UNCONDITIONALLY GUARANTEED, AS SET FORTH HEREIN, BY
ALABAMA POWER COMPANY
A SUBSIDIARY OF THE SOUTHERN COMPANY
---------------------------
Alabama Power Company, an Alabama corporation (the "Company"), may offer,
from time to time, (i) its senior notes (the "Senior Notes") in one or more
series or (ii) its junior subordinated notes (the "Junior Subordinated Notes")
in one or more series. The Senior Notes will be unsecured obligations of the
Company and will rank pari passu (equal in priority) with all other unsecured
and unsubordinated debt of the Company. The Junior Subordinated Notes will be
unsecured obligations of the Company and will be subordinate and junior in right
of payment to Senior Indebtedness (as defined herein) of the Company.
Alabama Power Capital Trust III, Alabama Power Capital Trust IV and Alabama
Power Capital Trust V, each a statutory business trust created under the laws of
the State of Delaware (individually, a "Trust" and collectively, the "Trusts"),
may offer, from time to time, trust preferred securities (collectively, the
"Preferred Securities") representing preferred undivided beneficial interests in
the assets of the respective Trusts. The Company will own all the common
securities (the "Common Securities" and, together with the Preferred Securities,
the "Trust Securities") representing common undivided beneficial interests in
the assets of the respective Trusts. The payment of periodic cash distributions
on the Preferred Securities of each Trust and payments on liquidation or
redemption with respect to such Preferred Securities, in each case to the extent
such Trust has funds legally and immediately available therefor, will be
guaranteed by the Company as described herein (individually, a "Guarantee" and
collectively, the "Guarantees"). See "Description of the Guarantees." The
Company's obligations under each Guarantee will be subordinate and junior in
right of payment to all of its other liabilities and will rank pari passu with
the most senior preferred stock of the Company. Concurrently with the issuance
by a Trust of its Preferred Securities, such Trust will invest the proceeds
thereof and of the Company's purchase of the Common Securities of such Trust in
a related series of Junior Subordinated Notes of the Company with terms
corresponding to the terms of such Trust's Preferred Securities. Junior
Subordinated Notes may subsequently be distributed pro rata to holders of the
Trust Securities of a Trust in connection with the termination of such Trust
upon the occurrence of certain events as may be described in an accompanying
Prospectus Supplement.
As described herein, the Company will, through each Guarantee, the
Subordinated Note Indenture, the Junior Subordinated Notes of the related
series, the related Trust Agreement and the related Agreement as to Expenses and
Liabilities, fully and unconditionally guarantee all of each Trust's obligations
with respect to its Preferred Securities.
Specific terms of the Senior Notes or the Junior Subordinated Notes of any
series or the Preferred Securities of any Trust in respect of which this
Prospectus is being delivered will be set forth in an accompanying Prospectus
Supplement with respect to such securities, which will describe, without
limitation and where applicable, the following: (a) in the case of Senior Notes
or Junior Subordinated Notes, the specific designation, aggregate principal
amount, denominations, maturity, interest payment dates, interest rate (or the
method of determining such rate), any redemption, exchange or sinking fund
provisions, and any other specific terms of the offering, and (b) in the case of
Preferred Securities, the specific designation, number of Preferred Securities,
liquidation amount per security, distribution rate (or the method of determining
such rate), dates on which distributions will be payable, voting rights, any
redemption, exchange or sinking fund provisions, and any other rights,
preferences, privileges, limitations and restrictions.
The Senior Notes, Junior Subordinated Notes and Preferred Securities may be
offered in amounts, at prices and on terms to be determined at the time of
offering; provided, however, that the aggregate initial public offering price of
all Senior Notes, Junior Subordinated Notes and Preferred Securities shall not
exceed $966,200,000.
The Prospectus Supplement relating to any series of Senior Notes, Junior
Subordinated Notes or Preferred Securities will contain information concerning
certain United States federal income tax considerations, if applicable to such
Senior Notes, Junior Subordinated Notes or Preferred Securities.
---------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------------------
The Senior Notes, Junior Subordinated Notes and Preferred Securities may be
sold directly, through agents, underwriters or dealers as designated from time
to time, or through a combination of such methods. See "Plan of Distribution."
If agents or any underwriters or dealers are involved in the sale of Senior
Notes, Junior Subordinated Notes or Preferred Securities in respect of which
this Prospectus is being delivered, the names of such agents, underwriters or
dealers and any applicable commissions or discounts will be set forth in or may
be calculated from the Prospectus Supplement with respect to such Senior Notes,
Junior Subordinated Notes or Preferred Securities.
---------------------------
, 199
<PAGE>
AVAILABLE INFORMATION
The Company and the Trusts have filed with the Securities and Exchange
Commission (the "Commission") a combined registration statement on Form S-3 (the
"Registration Statement," which term encompasses any amendments thereof and
exhibits thereto) under the Securities Act of 1933, as amended (the "1933 Act").
As permitted by the rules and regulations of the Commission, this Prospectus
does not contain all of the information set forth in the Registration Statement
and the exhibits and schedules thereto, to which reference is hereby made.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and in accordance therewith
files reports and other information with the Commission. Such reports and other
information can be inspected and copied at the public reference facilities of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
Commission's Regional Offices at 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661 and Seven World Trade Center, 13th Floor, New York, New York
10048. Copies of such material can also be obtained at prescribed rates by
writing to the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549. The Commission maintains a Web site that contains
reports, proxy and information statements and other information regarding
registrants including the Company that file electronically at
http://www.sec.gov. In addition, reports and other material concerning the
Company can be inspected at the offices of the New York Stock Exchange, 20 Broad
Street, New York, New York 10005, on which Exchange certain of the Company's
securities are listed.
No separate financial statements of any Trust are included herein. The
Company considers that such statements would not be material to holders of the
Preferred Securities because each Trust has no independent operations and exists
for the sole purpose of investing the proceeds of the sale of its Trust
Securities in Junior Subordinated Notes.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed with the Commission pursuant to the
1934 Act and are incorporated herein by reference and made a part of this
Prospectus:
(a) the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997;
(b) the Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1998; and
(c) the Company's Current Reports on Form 8-K dated February 11, 1998,
February 20, 1998 and April 17, 1998.
All documents filed by the Company with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the 1934 Act subsequent to the date of this
Prospectus and prior to the termination of this offering shall be deemed to be
incorporated herein by reference and made a part of this Prospectus from the
date of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON TO WHOM THIS
PROSPECTUS IS DELIVERED, ON THE WRITTEN OR ORAL REQUEST OF ANY SUCH PERSON, A
COPY OF ANY OR ALL DOCUMENTS INCORPORATED HEREIN BY REFERENCE (OTHER THAN THE
EXHIBITS TO SUCH DOCUMENTS UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY
REFERENCE). SUCH REQUESTS SHOULD BE DIRECTED TO WILLIAM B. HUTCHINS, III,
EXECUTIVE VICE PRESIDENT, CHIEF FINANCIAL OFFICER AND TREASURER, ALABAMA POWER
COMPANY, 600 NORTH 18TH STREET, BIRMINGHAM, ALABAMA 35291, TELEPHONE: (205)
257-2505.
2
<PAGE>
SELECTED INFORMATION
The following material, which is presented herein solely to furnish limited
introductory information regarding the Company, has been selected from, or is
based upon, the detailed information and financial statements appearing in the
documents incorporated herein by reference or elsewhere in this Prospectus, is
qualified in its entirety by reference thereto and, therefore, should be read
together therewith.
ALABAMA POWER COMPANY
Business......................... Generation, transmission, distribution and
sale of electric energy
Service Area..................... Approximately 44,500 square miles
comprising most of the State of Alabama
Service Area Population (1990
Census)......................... Approximately 3,224,000
Customers at December 31, 1997... 1,275,327
Generating Capacity at
December 31, 1997 (kilowatts)... 10,641,263
Sources of Generation during 1997
(kilowatt-hours)............... Coal (72%), Nuclear (19%), Hydro (8%), Oil
and Gas (1%)
Sources of Generation Estimated
for 1998 (kilowatt-hours)....... Coal (74%), Nuclear (18%), Hydro (7%), Oil
and Gas (1%)
SELECTED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
12 MONTHS
YEAR ENDED DECEMBER 31, ENDED
-------------------------------------------------------------- MARCH 31,
1993 1994(2) 1995 1996 1997 1998(1)
---------- ---------- ---------- ---------- ---------- ----------
(THOUSANDS, EXCEPT RATIOS)
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Operating Revenues..... $3,007,609 $2,935,142 $3,024,774 $3,120,775 $3,149,111 $3,160,848
Income Before Interest
Charges.............. 606,093 592,540 625,850 625,354 643,142 656,171
Net Income After
Dividends on
Preferred Stock...... 346,494 356,338 360,894 371,490 375,939 384,173
Ratio of Earnings to
Fixed Charges(3)..... 3.45 3.75 3.45 3.57 3.31 3.29
Ratio of Earnings to
Fixed Charges Plus
Preferred Dividend
Requirements (Pre-
Income Tax
Basis)(4)............ 2.90 3.16 2.96 3.05 3.06 3.08
</TABLE>
3
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<TABLE>
<CAPTION>
CAPITALIZATION (UNAUDITED) AS OF
MARCH 31, 1998
----------------------------------
ACTUAL AS ADJUSTED(5)
----------- --------------------
(THOUSANDS, EXCEPT PERCENTAGES)
<S> <C> <C> <C>
Common Stock Equity......................................... $2,724,177 $2,724,177 39.0%
Cumulative Preferred Stock.................................. 255,512 255,512 3.7
Company Obligated Mandatorily Redeemable Preferred
Securities of Subsidiary Trusts Holding Company Junior
Subordinated Notes(6)..................................... 297,000 547,000 7.8
Senior Notes................................................ 393,800 1,050,000 15.1
Junior Subordinated Notes................................... -- 250,000 3.6
Other Long-Term Debt........................................ 2,149,726 2,149,726 30.8
---------- ---------- -----
Total, excluding amounts due within one year...... $5,820,215 $6,976,415 100.0%
========== ========== =====
</TABLE>
- ---------------
(1) See "Recent Results of Operations" herein.
(2) "Operating Revenues" for the year ended December 31, 1994, include an
adjustment due to a change in the estimating procedure for unbilled
kilowatt-hours and associated revenues.
(3) This ratio is computed as follows: (i) "Earnings" have been calculated by
adding to "Income Before Interest Charges" all income taxes deducted
therefrom and the debt portion of allowance for funds used during
construction, and (ii) "Fixed Charges" consist of "Net Interest Charges"
plus the debt portion of allowance for funds used during construction.
(4) In computing this ratio, "Preferred Dividend Requirements" represent the
before tax earnings necessary to pay such dividends, computed at the
effective tax rates for the applicable periods.
(5) Reflects (i) the issuance in April 1998 of $190,000,000 aggregate principal
amount of Series C 7% Senior Notes due March 31, 2048; and (ii) the
issuance of $250,000,000 of new Preferred Securities, $466,200,000 of new
Senior Notes and $250,000,000 of new Junior Subordinated Notes. Does not
reflect the potential redemption of any other outstanding securities with
proceeds from new security issuances. The pro forma amounts used in
connection with this capitalization table are assumed solely for the
purpose of this calculation and the amounts and types that will be
ultimately issued will depend upon market conditions prevailing at the time
of issuance.
(6) As described in this Prospectus, substantially all of the assets of the
respective Trusts will be the Junior Subordinated Notes of the Company, and
upon redemption of such debt, the related Preferred Securities will be
mandatorily redeemable.
ALABAMA POWER COMPANY
The Company is a corporation organized under the laws of the State of
Alabama on November 10, 1927, by the consolidation of the predecessor Alabama
Power Company, Gulf Electric Company and Houston Power Company. The predecessor
Alabama Power Company had a continuous existence since its incorporation in
1906. The principal executive offices of the Company are located at 600 North
18th Street, Birmingham, Alabama 35291, and the telephone number is (205)
257-1000.
The Company is a wholly owned subsidiary of The Southern Company, a holding
company registered under the Public Utility Holding Company Act of 1935. The
Company is engaged, within the State of Alabama, in the generation and purchase
of electricity and the distribution and sale of such electricity at retail in
over 1,000 communities (including Anniston, Birmingham, Gadsden, Mobile,
Montgomery and Tuscaloosa), and at wholesale to 15 municipally owned electric
distribution systems, 11 of which are served indirectly through sales to the
Alabama Municipal Electric Authority, and two rural distributing cooperative
associations. The Company also supplies steam service in downtown Birmingham.
The Company owns coal reserves near its Gorgas Steam Electric Generating Plant
and uses the output of coal from the reserves in its generating plants. It also
sells, and cooperates with dealers in promoting the sale of, electric
appliances.
The Company and one of its affiliates, Georgia Power Company ("GEORGIA"),
each own 50% of the common stock of Southern Electric Generating Company
("SEGCO"). SEGCO owns generating units with an aggregate capacity of 1,019,680
kilowatts at the Ernest C. Gaston Steam Plant ("Plant Gaston") on the
4
<PAGE>
Coosa River near Wilsonville, Alabama. The Company and GEORGIA are each entitled
to one-half of the capacity and energy of these units. The Company acts as
SEGCO's agent in the operation of SEGCO's units and furnishes coal to SEGCO as
fuel for its units. SEGCO also owns three 230,000 volt transmission lines
extending from Plant Gaston to the Georgia state line.
THE TRUSTS
Each Trust is a statutory business trust created under Delaware law
pursuant to the filing of a certificate of trust with the Delaware Secretary of
State on November 27, 1996, with respect to Alabama Power Capital Trust III and
Alabama Power Capital Trust IV, and November 18, 1997, with respect to Alabama
Power Capital Trust V. Each Trust's business is defined in a trust agreement,
executed by the Company, as Depositor, and the Delaware Trustee thereunder. This
trust agreement of each Trust will be amended and restated in its entirety
substantially in the form filed as an exhibit to the Registration Statement of
which this Prospectus forms a part (the "Trust Agreement"). Each Trust Agreement
will be qualified as an indenture under the Trust Indenture Act of 1939, as
amended (the "1939 Act"). Each Trust exists for the exclusive purposes of (i)
issuing its Trust Securities representing undivided beneficial interests in the
assets of such Trust, (ii) investing the gross proceeds of its Trust Securities
in a related series of Junior Subordinated Notes, and (iii) engaging in only
those other activities necessary, appropriate, convenient or incidental thereto.
Each Trust's business and affairs will be conducted by its trustees, which
shall be appointed by the Company as the holder of the Common Securities: two
employees of the Company as Administrative Trustees; The Chase Manhattan Bank as
Property Trustee; and Chase Manhattan Bank Delaware as Delaware Trustee. The
Property Trustee of each Trust will act as the indenture trustee with respect to
such Trust for purposes of compliance with the provisions of the 1939 Act.
The principal place of business of each Trust shall be c/o the Company, 600
North 18th Street, Birmingham, Alabama 35291, telephone (205) 257-2505, Attn:
Treasurer.
Reference is made to the Prospectus Supplement relating to the Preferred
Securities of a Trust for further information concerning such Trust.
ACCOUNTING TREATMENT
For financial reporting purposes, the Trusts will be treated as
subsidiaries of the Company and, accordingly, the accounts of the Trusts will be
included in the consolidated financial statements of the Company. The Preferred
Securities will be presented as a separate line item in the consolidated balance
sheet of the Company, and appropriate disclosures concerning the Preferred
Securities, the Guarantees and the Junior Subordinated Notes will be included in
the notes to the consolidated financial statements. For financial reporting
purposes, the Company will record distributions payable on the Preferred
Securities as an expense.
USE OF PROCEEDS
Each Trust will invest the proceeds received from the sale of its Preferred
Securities in Junior Subordinated Notes. Except as may be otherwise described in
an applicable Prospectus Supplement, the net proceeds received by the Company
from such investment and any proceeds received from the sale of its Senior Notes
or other sales of its Junior Subordinated Notes will be used in connection with
its ongoing construction program, to pay scheduled maturities and/or refundings
of its securities, to repay short-term indebtedness to the extent outstanding
and for other general corporate purposes.
RECENT RESULTS OF OPERATIONS
For the twelve months ended March 31, 1998, "Operating Revenues", "Income
Before Interest Charges", and "Net Income After Dividends on Preferred Stock"
were $3,160,848,000, $656,171,000 and $384,173,000, respectively. In the opinion
of the management of the Company, the above amounts for the
5
<PAGE>
twelve months ended March 31, 1998 reflect all adjustments (which were only
normal recurring adjustments) necessary to present fairly the results of
operations for such period. The "Ratio of Earnings to Fixed Charges" and the
"Ratio of Earnings to Fixed Charges Plus Preferred Dividend Requirements
(Pre-Income Tax Basis)" for the twelve months ended March 31, 1998 were 3.29 and
3.08, respectively.
DESCRIPTION OF THE SENIOR NOTES
Set forth below is a description of the general terms of the Senior Notes.
The following description does not purport to be complete and is subject to, and
is qualified in its entirety by reference to, the Senior Note Indenture, dated
as of December 1, 1997, between the Company and The Chase Manhattan Bank, as
trustee (the "Senior Note Indenture Trustee"), as to be supplemented by a
supplemental indenture thereto establishing the Senior Notes of each series (the
Senior Note Indenture, as so supplemented, is hereinafter referred to as the
"Senior Note Indenture"), the forms of which are filed as exhibits to the
Registration Statement of which this Prospectus forms a part. The terms of the
Senior Notes will include those stated in the Senior Note Indenture and those
made a part of the Senior Note Indenture by reference to the 1939 Act. Certain
capitalized terms used herein are defined in the Senior Note Indenture.
GENERAL
The Senior Notes will be issued as unsecured senior debt securities under
the Senior Note Indenture and will rank pari passu with all other unsecured and
unsubordinated debt of the Company. The Senior Notes will be effectively
subordinated to all secured debt of the Company, including its first mortgage
bonds, aggregating approximately $2,429,000,000 outstanding at March 31, 1998.
The Senior Note Indenture does not limit the aggregate principal amount of
Senior Notes that may be issued thereunder and provides that Senior Notes may be
issued from time to time in one or more series pursuant to an indenture
supplemental to the Senior Note Indenture.
Reference is made to the Prospectus Supplement that will accompany this
Prospectus for the following terms of the series of Senior Notes being offered
thereby: (i) the title of such Senior Notes; (ii) any limit on the aggregate
principal amount of such Senior Notes; (iii) the date or dates on which the
principal of such Senior Notes is payable; (iv) the rate or rates at which such
Senior Notes shall bear interest, if any, or any method by which such rate or
rates will be determined, the date or dates from which such interest will
accrue, the interest payment dates on which such interest shall be payable, and
the regular record date for the interest payable on any interest payment date;
(v) the place or places where the principal of (and premium, if any) and
interest, if any, on such Senior Notes shall be payable; (vi) the period or
periods within which, the price or prices at which and the terms and conditions
on which such Senior Notes may be redeemed, in whole or in part, at the option
of the Company; (vii) the obligation, if any, of the Company to redeem or
purchase such Senior Notes; (viii) the denominations in which such Senior Notes
shall be issuable; (ix) if other than the principal amount thereof, the portion
of the principal amount of such Senior Notes which shall be payable upon
declaration of acceleration of the maturity thereof; (x) any deletions from,
modifications of or additions to the Events of Default or covenants of the
Company as provided in the Senior Note Indenture pertaining to such Senior
Notes; (xi) whether such Senior Notes shall be issued in whole or in part in the
form of a Global Security; and (xii) any other terms of such Senior Notes.
The Senior Note Indenture does not contain provisions that afford holders
of Senior Notes protection in the event of a highly leveraged transaction
involving the Company.
EVENTS OF DEFAULT
The Senior Note Indenture provides that any one or more of the following
described events with respect to the Senior Notes of any series, which has
occurred and is continuing, constitutes an "Event of Default" with respect to
the Senior Notes of such series:
(a) failure for 10 days to pay interest on the Senior Notes of such
series, when due on an Interest Payment Date other than at maturity or upon
earlier redemption; or
6
<PAGE>
(b) failure to pay principal or premium, if any, or interest on the
Senior Notes of such series when due at maturity or upon earlier
redemption; or
(c) failure for three Business Days to deposit any sinking fund
payment when due by the terms of a Senior Note of such series; or
(d) failure to observe or perform any other covenant or warranty of
the Company in the Senior Note Indenture (other than a covenant or warranty
which has expressly been included therein solely for the benefit of one or
more series of Senior Notes other than such series) for 90 days after
written notice to the Company from the Senior Note Indenture Trustee or the
holders of at least 25% in principal amount of the outstanding Senior Notes
of such series; or
(e) certain events of bankruptcy, insolvency, or reorganization of the
Company.
The holders of not less than a majority in aggregate outstanding principal
amount of the Senior Notes of any series have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Senior Note Indenture Trustee with respect to the Senior Notes of such series.
If a Senior Note Indenture Event of Default occurs and is continuing with
respect to the Senior Notes of any series, then the Senior Note Indenture
Trustee or the holders of not less than 25% in aggregate outstanding principal
amount of the Senior Notes of such series may declare the principal amount
thereof due and payable immediately by notice in writing to the Company (and to
the Senior Note Indenture Trustee if given by the holders), and upon any such
declaration such principal amount shall become immediately due and payable. At
any time after such a declaration of acceleration with respect to the Senior
Notes of any series has been made and before a judgment or decree for payment of
the money due has been obtained as provided in Article Five of the Senior Note
Indenture, the holders of not less than a majority in aggregate outstanding
principal amount of the Senior Notes of such series may rescind and annul such
declaration and its consequences if the default has been cured or waived and the
Company has paid or deposited with the Senior Note Indenture Trustee a sum
sufficient to pay all matured installments of interest and principal due
otherwise than by acceleration and all sums paid or advanced by the Senior Note
Indenture Trustee, including reasonable compensation and expenses of the Senior
Note Indenture Trustee.
The holders of not less than a majority in aggregate outstanding principal
amount of the Senior Notes of any series may, on behalf of the holders of all
the Senior Notes of such series, waive any past default with respect to such
series, except (i) a default in the payment of principal or interest or (ii) a
default in respect of a covenant or provision which under Article Nine of the
Senior Note Indenture cannot be modified or amended thereunder without the
consent of the holder of each outstanding Senior Note of such series affected
thereby.
REGISTRATION AND TRANSFER
The Company shall not be required to (i) issue, register the transfer of or
exchange Senior Notes of any series during a period of 15 days immediately
preceding the date notice is given identifying the Senior Notes of such series
called for redemption, or (ii) register the transfer of or exchange any Senior
Notes so selected for redemption, in whole or in part, except the unredeemed
portion of any Senior Note being redeemed in part.
PAYMENT AND PAYING AGENT
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of principal of any Senior Notes will be made only against surrender to the
Paying Agent of such Senior Notes. Principal of and interest on Senior Notes
will be payable, subject to any applicable laws and regulations, at the office
of such Paying Agent or Paying Agents as the Company may designate from time to
time, except that, at the option of the Company, payment of any interest may be
made by wire transfer or by check mailed to the address of the person entitled
thereto as such address shall appear in the Security Register with respect to
the Senior Notes. Payment of interest on Senior Notes on any interest payment
date will be made to the person in whose name the Senior Notes (or predecessor
security) are registered at the close of business on the Record Date for such
interest payment (the fifteenth calendar day before such interest payment date).
7
<PAGE>
Unless otherwise indicated in an applicable Prospectus Supplement, the
Senior Indenture Trustee will act as Paying Agent with respect to the Senior
Notes. The Company may at any time designate additional Paying Agents or rescind
the designation of any Paying Agents or approve a change in the office through
which any Paying Agent acts.
All moneys paid by the Company to a Paying Agent for the payment of the
principal of or interest on the Senior Notes of any series which remain
unclaimed at the end of two years after such principal or interest shall have
become due and payable will be repaid to the Company, and the holder of such
Senior Notes will thereafter look only to the Company for payment thereof.
MODIFICATION
The Senior Note Indenture contains provisions permitting the Company and
the Senior Indenture Trustee, with the consent of the holders of not less than a
majority in principal amount of the outstanding Senior Notes of each series
affected thereby, to modify the Senior Note Indenture or the rights of the
holders of the Senior Note of such series; provided, that no such modification
may, without the consent of the holder of each outstanding Senior Note affected
thereby, (i) change the stated maturity of the principal of, or any installment
of principal of or interest on, any Senior Note, or reduce the principal amount
thereof or the rate of interest thereon or any premium payable upon the
redemption thereof, or change the method of calculating the rate of interest
thereon, or impair the right to institute suit for the enforcement of any such
payment on or after the stated maturity thereof (or, in the case of redemption,
on or after the redemption date), or (ii) reduce the percentage of principal
amount of the outstanding Senior Notes of any series, the consent of whose
holders is required for any such supplemental indenture, or the consent of whose
holders is required for any waiver (of compliance with certain provisions of the
Senior Note Indenture or certain defaults thereunder and their consequences)
provided for in the Senior Note Indenture, or (iii) modify any of the provisions
of the Senior Note Indenture relating to supplemental indentures, waiver of past
defaults, or waiver of certain covenants, except to increase any such percentage
or to provide that certain other provisions of the Senior Note Indenture cannot
be modified or waived without the consent of the holder of each outstanding
Senior Note affected thereby.
In addition, the Company and the Senior Note Indenture Trustee may execute,
without the consent of any holders of Senior Notes, any supplemental indenture
for certain other usual purposes, including the creation of any new series of
senior notes.
CONSOLIDATION, MERGER AND SALE
The Company shall not consolidate with or merge into any other corporation
or convey, transfer or lease its properties and assets substantially as an
entirety to any person, unless (1) such other corporation or person is a
corporation organized and existing under the laws of the United States, any
state thereof or the District of Columbia and such other corporation or person
expressly assumes, by supplemental indenture executed and delivered to the
Senior Note Indenture Trustee, the payment of the principal of (and premium, if
any) and interest on all the Senior Notes and the performance of every covenant
of the Senior Note Indenture on the part of the Company to be performed or
observed; (2) immediately after giving effect to such transactions, no Event of
Default, and no event which, after notice or lapse of time or both, would become
an Event of Default, shall have happened and be continuing; and (3) the Company
has delivered to the Senior Note Indenture Trustee an officers' certificate and
an opinion of counsel, each stating that such transaction complies with the
provisions of the Senior Note Indenture governing consolidation, merger,
conveyance, transfer or lease and that all conditions precedent thereto have
been complied with.
INFORMATION CONCERNING THE SENIOR NOTE INDENTURE TRUSTEE
The Senior Note Indenture Trustee, prior to an Event of Default with
respect to Senior Notes of any series, undertakes to perform, with respect to
Senior Notes of such series, only such duties as are specifically set forth in
the Senior Note Indenture and, in case an Event of Default with respect to
Senior Notes of any series has occurred and is continuing, shall exercise, with
respect to Senior Notes of such series, the same degree of care as a prudent
individual would exercise in the conduct of his or her own affairs. Subject to
such
8
<PAGE>
provision, the Senior Note Indenture Trustee is under no obligation to exercise
any of the powers vested in it by the Senior Note Indenture at the request of
any holder of Senior Notes of any series, unless offered reasonable indemnity by
such holder against the costs, expenses and liabilities which might be incurred
thereby. The Senior Note Indenture Trustee is not required to expend or risk its
own funds or otherwise incur any financial liability in the performance of its
duties if the Senior Note Indenture Trustee reasonably believes that repayment
or adequate indemnity is not reasonably assured to it.
The Chase Manhattan Bank, the Senior Note Indenture Trustee, also serves as
Subordinated Note Indenture Trustee, as Property Trustee and as Guarantee
Trustee. The Company and certain of its affiliates maintain deposit accounts and
banking relationships with The Chase Manhattan Bank. The Chase Manhattan Bank
also serves as trustee under other indentures pursuant to which securities of
the Company and affiliates of the Company are outstanding.
GOVERNING LAW
The Senior Note Indenture and the Senior Notes will be governed by, and
construed in accordance with, the internal laws of the State of New York.
MISCELLANEOUS
The Company will have the right at all times to assign any of its rights or
obligations under the Senior Note Indenture to a direct or indirect wholly-owned
subsidiary of the Company; provided, that, in the event of any such assignment,
the Company will remain primarily liable for all such obligations. Subject to
the foregoing, the Senior Note Indenture will be binding upon and inure to the
benefit of the parties thereto and their respective successors and assigns.
DESCRIPTION OF THE JUNIOR SUBORDINATED NOTES
Set forth below is a description of the general terms of the Junior
Subordinated Notes. The following description does not purport to be complete
and is subject to, and is qualified in its entirety by reference to, the
Subordinated Note Indenture, dated as of January 1, 1997, between the Company
and The Chase Manhattan Bank, as trustee (the "Subordinated Note Indenture
Trustee"), as to be supplemented by a supplemental indenture thereto
establishing the Junior Subordinated Notes of each series (the Subordinated Note
Indenture, as so supplemented, is hereinafter referred to as the "Subordinated
Note Indenture"), the forms of which are filed as exhibits to the Registration
Statement of which this Prospectus forms a part. The terms of the Junior
Subordinated Notes will include those stated in the Subordinated Note Indenture
and those made a part of the Subordinated Note Indenture by reference to the
1939 Act. Certain capitalized terms used herein are defined in the Subordinated
Note Indenture.
GENERAL
The Junior Subordinated Notes will be issued as unsecured junior
subordinated debt securities under the Subordinated Note Indenture. The
Subordinated Note Indenture does not limit the aggregate principal amount of
Junior Subordinated Notes that may be issued thereunder and provides that Junior
Subordinated Notes may be issued from time to time in one or more series
pursuant to an indenture supplemental to the Subordinated Note Indenture.
Reference is made to the Prospectus Supplement that will accompany this
Prospectus for the following terms of the series of Junior Subordinated Notes
being offered thereby: (i) the title of such Junior Subordinated Notes; (ii) any
limit on the aggregate principal amount of such Junior Subordinated Notes; (iii)
the date or dates on which the principal of such Junior Subordinated Notes is
payable; (iv) the rate or rates at which such Junior Subordinated Notes shall
bear interest, if any, or any method by which such rate or rates will be
determined, the date or dates from which such interest will accrue, the interest
payment dates on which such interest shall be payable, and the regular record
date for the interest payable on any interest payment date; (v) the place or
places where the principal of (and premium, if any) and interest, if any, on
such Junior Subordinated Notes shall be payable; (vi) the period or periods
within which, the price or prices
9
<PAGE>
at which and the terms and conditions on which such Junior Subordinated Notes
may be redeemed, in whole or in part, at the option of the Company; (vii) the
obligation, if any, of the Company to redeem or purchase such Junior
Subordinated Notes; (viii) the denominations in which such Junior Subordinated
Notes shall be issuable; (ix) if other than the principal amount thereof, the
portion of the principal amount of such Junior Subordinated Notes which shall be
payable upon declaration of acceleration of the maturity thereof; (x) any
deletions from, modifications of or additions to the Events of Default or
covenants of the Company as provided in the Subordinated Note Indenture
pertaining to such Junior Subordinated Notes; (xi) whether such Junior
Subordinated Notes shall be issued in whole or in part in the form of a Global
Security; (xii) the right, if any, of the Company to extend the interest payment
periods of such Junior Subordinated Notes; and (xiii) any other terms of such
Junior Subordinated Notes. The terms of each series of Junior Subordinated Notes
issued to a Trust will correspond to those of the related Preferred Securities
of such Trust as described in the Prospectus Supplement relating to such
Preferred Securities.
The Subordinated Note Indenture does not contain provisions that afford
holders of Junior Subordinated Notes protection in the event of a highly
leveraged transaction involving the Company.
SUBORDINATION
The Junior Subordinated Notes are subordinated and junior in right of
payment to all Senior Indebtedness (as defined below) of the Company. No payment
of principal of (including redemption payments, if any), or premium, if any, or
interest on (including Additional Interest (as defined herein)) the Junior
Subordinated Notes may be made if (a) any Senior Indebtedness is not paid when
due and any applicable grace period with respect to such default has ended with
such default not being cured or waived or otherwise ceasing to exist, or (b) the
maturity of any Senior Indebtedness has been accelerated because of a default,
or (c) notice has been given of the exercise of an option to require repayment,
mandatory payment or prepayment or otherwise. Upon any payment or distribution
of assets of the Company to creditors upon any liquidation, dissolution,
winding-up, reorganization, assignment for the benefit of creditors, marshalling
of assets or liabilities, or any bankruptcy, insolvency or similar proceedings
of the Company, the holders of Senior Indebtedness shall be entitled to receive
payment in full of all amounts due or to become due on or in respect of all
Senior Indebtedness before the holders of the Junior Subordinated Notes are
entitled to receive or retain any payment or distribution. Subject to the prior
payment of all Senior Indebtedness, the rights of the holders of the Junior
Subordinated Notes will be subrogated to the rights of the holders of Senior
Indebtedness to receive payments and distributions applicable to such Senior
Indebtedness until all amounts owing on the Junior Subordinated Notes are paid
in full.
The term "Senior Indebtedness" means, with respect to the Company, (i) any
payment due in respect of indebtedness of the Company, whether outstanding at
the date of execution of the Subordinated Note Indenture or thereafter incurred,
created or assumed, (a) in respect of money borrowed (including any financial
derivative, hedging or futures contract or similar instrument) and (b) evidenced
by securities, debentures, bonds, notes or other similar instruments issued by
the Company that, by their terms, are senior or senior subordinated debt
securities including, without limitation, all obligations under its indentures
with various trustees; (ii) all capital lease obligations; (iii) all obligations
issued or assumed as the deferred purchase price of property, all conditional
sale obligations and all obligations of the Company under any title retention
agreement (but excluding trade accounts payable arising in the ordinary course
of business and long-term purchase obligations); (iv) all obligations for the
reimbursement of any letter of credit, banker's acceptance, security purchase
facility or similar credit transaction; (v) all obligations of the type referred
to in clauses (i) through (iv) above of other persons the payment of which the
Company is responsible or liable as obligor, guarantor or otherwise; and (vi)
all obligations of the type referred to in clauses (i) through (v) above of
other persons secured by any lien on any property or asset of the Company
(whether or not such obligation is assumed by the Company), except for (1) any
such indebtedness that is by its terms subordinated to or pari passu with the
Junior Subordinated Notes and (2) any unsecured indebtedness between or among
the Company or its affiliates. Such Senior Indebtedness shall continue to be
Senior Indebtedness and be entitled to the benefits of the subordination
provisions contained in the Subordinated Note Indenture irrespective of any
amendment, modification or waiver of any term of such Senior Indebtedness.
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<PAGE>
The Subordinated Note Indenture does not limit the aggregate amount of
Senior Indebtedness that may be issued by the Company. As of March 31, 1998,
Senior Indebtedness of the Company aggregated approximately $2,574,000,000.
ADDITIONAL INTEREST
"Additional Interest" is defined in the Subordinated Note Indenture as (i)
such additional amounts as may be required so that the net amounts received and
retained by a holder of Junior Subordinated Notes (if the holder is a Trust)
after paying taxes, duties, assessments or governmental charges of whatever
nature (other than withholding taxes) imposed by the United States or any other
taxing authority will not be less than the amounts the holder would have
received had no such taxes, duties, assessments, or other governmental charges
been imposed; and (ii) any interest due and not paid on an interest payment
date, together with interest thereon from such interest payment date to the date
of payment, compounded quarterly, on each interest payment date.
CERTAIN COVENANTS
The Company covenants in the Subordinated Note Indenture, for the benefit
of the holders of each series of Junior Subordinated Notes, that, (i) if at such
time the Company shall have given notice of its election to extend an interest
payment period for such series of Junior Subordinated Notes and such extension
shall be continuing, (ii) if at such time the Company shall be in default with
respect to its payment or other obligations under the Guarantee with respect to
the Trust Securities, if any, related to such series of Junior Subordinated
Notes, or (iii) if at such time an Event of Default thereunder with respect to
such series of Junior Subordinated Notes shall have occurred and be continuing,
(a) the Company shall not declare or pay any dividend or make any distributions
with respect to, or redeem, purchase, acquire or make a liquidation payment with
respect to, any of its capital stock, and (b) the Company shall not make any
payment of interest, principal or premium, if any, on or repay, repurchase or
redeem any debt securities (including guarantees other than the Guarantees)
issued by the Company which rank pari passu with or junior to the Junior
Subordinated Notes. None of the foregoing, however, shall restrict (i) any of
the actions described in the preceding sentence resulting from any
reclassification of the Company's capital stock or the exchange or conversion of
one class or series of the Company's capital stock for another class or series
of the Company's capital stock, or (ii) the purchase of fractional interests in
shares of the Company's capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or exchanged.
The Subordinated Note Indenture further provides that, for so long as the
Trust Securities of any Trust remain outstanding, the Company covenants (i) to
directly or indirectly maintain 100% ownership of the Common Securities of such
Trust; provided, however, that any permitted successor of the Company under the
Subordinated Note Indenture may succeed to the Company's ownership of such
Common Securities, and (ii) to use its reasonable efforts to cause such Trust
(a) to remain a statutory business trust, except in connection with the
distribution of Junior Subordinated Notes to the holders of Trust Securities in
liquidation of such Trust, the redemption of all of the Trust Securities of such
Trust, or certain mergers, consolidations or amalgamations, each as permitted by
the related Trust Agreement, and (b) to otherwise continue to be classified as a
grantor trust for United States federal income tax purposes.
EVENTS OF DEFAULT
The Subordinated Note Indenture provides that any one or more of the
following described events with respect to the Junior Subordinated Notes of any
series, which has occurred and is continuing, constitutes an "Event of Default"
with respect to the Junior Subordinated Notes of such series:
(a) failure for 10 days to pay interest on the Junior Subordinated
Notes of such series, including any Additional Interest (as defined in
clause (ii) of the definition thereof in the Subordinated Note Indenture)
in respect thereof, when due on an Interest Payment Date other than at
maturity or upon earlier redemption; provided, however, that a valid
extension of the interest payment period by the Company shall not
constitute a default in the payment of interest for this purpose; or
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(b) failure for 10 days to pay Additional Interest (as defined in
clause (i) of the definition thereof in the Subordinated Note Indenture);
or
(c) failure to pay principal or premium, if any, or interest,
including Additional Interest (as defined in clause (ii) of the definition
thereof in the Subordinated Note Indenture), on the Junior Subordinated
Notes of such series when due at maturity or upon earlier redemption; or
(d) failure for three Business Days to deposit any sinking fund
payment when due by the terms of a Junior Subordinated Note of such series;
or
(e) failure to observe or perform any other covenant or warranty of
the Company in the Subordinated Note Indenture (other than a covenant or
warranty which has expressly been included therein solely for the benefit
of one or more series of Junior Subordinated Notes other than such series)
for 90 days after written notice to the Company from the Subordinated Note
Indenture Trustee or the holders of at least 25% in principal amount of the
outstanding Junior Subordinated Notes of such series; or
(f) certain events of bankruptcy, insolvency, or reorganization of the
Company.
The holders of not less than a majority in aggregate outstanding principal
amount of the Junior Subordinated Notes of any series have the right to direct
the time, method and place of conducting any proceeding for any remedy available
to the Subordinated Note Indenture Trustee with respect to the Junior
Subordinated Notes of such series. If a Subordinated Note Indenture Event of
Default occurs and is continuing with respect to the Junior Subordinated Notes
of any series, then the Subordinated Note Indenture Trustee or the holders of
not less than 25% in aggregate outstanding principal amount of the Junior
Subordinated Notes of such series may declare the principal amount thereof due
and payable immediately by notice in writing to the Company (and to the
Subordinated Note Indenture Trustee if given by the holders), and upon any such
declaration such principal amount shall become immediately due and payable. At
any time after such a declaration of acceleration with respect to the Junior
Subordinated Notes of any series has been made and before a judgment or decree
for payment of the money due has been obtained as provided in Article Five of
the Subordinated Note Indenture, the holders of not less than a majority in
aggregate outstanding principal amount of the Junior Subordinated Notes of such
series may rescind and annul such declaration and its consequences if the
default has been cured or waived and the Company has paid or deposited with the
Subordinated Note Indenture Trustee a sum sufficient to pay all matured
installments of interest (including any Additional Interest) and principal due
otherwise than by acceleration and all sums paid or advanced by the Subordinated
Note Indenture Trustee, including reasonable compensation and expenses of the
Subordinated Note Indenture Trustee.
A holder of Preferred Securities may institute a legal proceeding directly
against the Company, without first instituting a legal proceeding against the
Property Trustee or any other person or entity, for enforcement of payment to
such holder of principal of or interest on the Junior Subordinated Notes of the
related series having a principal amount equal to the aggregate stated
liquidation amount of the Preferred Securities of such holder on or after the
due dates specified in the Junior Subordinated Notes of such series.
The holders of not less than a majority in aggregate outstanding principal
amount of the Junior Subordinated Notes of any series may, on behalf of the
holders of all the Junior Subordinated Notes of such series, waive any past
default with respect to such series, except (i) a default in the payment of
principal or interest or (ii) a default in respect of a covenant or provision
which under Article Nine of the Subordinated Note Indenture cannot be modified
or amended thereunder without the consent of the holder of each outstanding
Junior Subordinated Note of such series affected thereby.
REGISTRATION AND TRANSFER
The Company shall not be required to (i) issue, register the transfer of or
exchange Junior Subordinated Notes of any series during a period of 15 days
immediately preceding the date notice is given identifying the Junior
Subordinated Notes of such series called for redemption, or (ii) register the
transfer of or exchange any
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Junior Subordinated Notes so selected for redemption, in whole or in part,
except the unredeemed portion of any Junior Subordinated Note being redeemed in
part.
PAYMENT AND PAYING AGENT
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of principal of any Junior Subordinated Notes will be made only against
surrender to the Paying Agent of such Junior Subordinated Notes. Principal of
and interest on Junior Subordinated Notes will be payable, subject to any
applicable laws and regulations, at the office of such Paying Agent or Paying
Agents as the Company may designate from time to time, except that, at the
option of the Company, payment of any interest may be made by wire transfer or
by check mailed to the address of the person entitled thereto as such address
shall appear in the Security Register with respect to the Junior Subordinated
Notes. Payment of interest on Junior Subordinated Notes on any interest payment
date will be made to the person in whose name the Junior Subordinated Notes (or
predecessor security) are registered at the close of business on the Record Date
for such interest payment (the fifteenth calendar day before such interest
payment date).
Unless otherwise indicated in an applicable Prospectus Supplement, the
Subordinated Note Indenture Trustee will act as Paying Agent with respect to the
Junior Subordinated Notes. The Company may at any time designate additional
Paying Agents or rescind the designation of any Paying Agents or approve a
change in the office through which any Paying Agent acts.
All moneys paid by the Company to a Paying Agent for the payment of the
principal of or interest on the Junior Subordinated Notes of any series which
remain unclaimed at the end of two years after such principal or interest shall
have become due and payable will be repaid to the Company, and the holder of
such Junior Subordinated Notes will thereafter look only to the Company for
payment thereof.
MODIFICATION
The Subordinated Note Indenture contains provisions permitting the Company
and the Subordinated Note Indenture Trustee, with the consent of the holders of
not less than a majority in principal amount of the outstanding Junior
Subordinated Notes of each series affected thereby, to modify the Subordinated
Note Indenture or the rights of the holders of the Junior Subordinated Note of
such series; provided, that no such modification may, without the consent of the
holder of each outstanding Junior Subordinated Note affected thereby, (i) change
the stated maturity of the principal of, or any installment of principal of or
interest on, any Junior Subordinated Note, or reduce the principal amount
thereof or the rate of interest (including Additional Interest) thereon or any
premium payable upon the redemption thereof, or change the method of calculating
the rate of interest thereon, or impair the right to institute suit for the
enforcement of any such payment on or after the stated maturity thereof (or, in
the case of redemption, on or after the redemption date), or (ii) reduce the
percentage of principal amount of the outstanding Junior Subordinated Notes of
any series, the consent of whose holders is required for any such supplemental
indenture, or the consent of whose holders is required for any waiver (of
compliance with certain provisions of the Subordinated Note Indenture or certain
defaults thereunder and their consequences) provided for in the Subordinated
Note Indenture, or (iii) modify any of the provisions of the Subordinated Note
Indenture relating to supplemental indentures, waiver of past defaults, or
waiver of certain covenants, except to increase any such percentage or to
provide that certain other provisions of the Subordinated Note Indenture cannot
be modified or waived without the consent of the holder of each outstanding
Junior Subordinated Note affected thereby, or (iv) modify the provisions of the
Subordinated Note Indenture with respect to the subordination of the Junior
Subordinated Notes in a manner adverse to such holder.
In addition, the Company and the Subordinated Note Indenture Trustee may
execute, without the consent of any holders of Junior Subordinated Notes, any
supplemental indenture for certain other usual purposes, including the creation
of any new series of junior subordinated notes.
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CONSOLIDATION, MERGER AND SALE
The Company shall not consolidate with or merge into any other corporation
or convey, transfer or lease its properties and assets substantially as an
entirety to any person, unless (1) such other corporation or person is a
corporation organized and existing under the laws of the United States, any
state thereof or the District of Columbia and such other corporation or person
expressly assumes, by supplemental indenture executed and delivered to the
Subordinated Note Indenture Trustee, the payment of the principal of (and
premium, if any) and interest (including Additional Interest) on all the Junior
Subordinated Notes and the performance of every covenant of the Subordinated
Note Indenture on the part of the Company to be performed or observed; (2)
immediately after giving effect to such transactions, no Event of Default, and
no event which, after notice or lapse of time or both, would become an Event of
Default, shall have happened and be continuing; and (3) the Company has
delivered to the Subordinated Note Indenture Trustee an officers' certificate
and an opinion of counsel, each stating that such transaction complies with the
provisions of the Subordinated Note Indenture governing consolidation, merger,
conveyance, transfer or lease and that all conditions precedent thereto have
been complied with.
INFORMATION CONCERNING THE SUBORDINATED NOTE INDENTURE TRUSTEE
The Subordinated Note Indenture Trustee, prior to an Event of Default with
respect to Junior Subordinated Notes of any series, undertakes to perform, with
respect to Junior Subordinated Notes of such series, only such duties as are
specifically set forth in the Subordinated Note Indenture and, in case an Event
of Default with respect to Junior Subordinated Notes of any series has occurred
and is continuing, shall exercise, with respect to Junior Subordinated Notes of
such series, the same degree of care as a prudent individual would exercise in
the conduct of his or her own affairs. Subject to such provision, the
Subordinated Note Indenture Trustee is under no obligation to exercise any of
the powers vested in it by the Subordinated Note Indenture at the request of any
holder of Junior Subordinated Notes of any series, unless offered reasonable
indemnity by such holder against the costs, expenses and liabilities which might
be incurred thereby. The Subordinated Note Indenture Trustee is not required to
expend or risk its own funds or otherwise incur any financial liability in the
performance of its duties if the Subordinated Note Indenture Trustee reasonably
believes that repayment or adequate indemnity is not reasonably assured to it.
The Chase Manhattan Bank, the Subordinated Note Indenture Trustee, also
serves as Senior Note Indenture Trustee, as Property Trustee and as Guarantee
Trustee. The Company and certain of its affiliates maintain deposit accounts and
banking relationships with The Chase Manhattan Bank. The Chase Manhattan Bank
also serves as trustee under other indentures pursuant to which securities of
the Company and affiliates of the Company are outstanding.
GOVERNING LAW
The Subordinated Note Indenture and the Junior Subordinated Notes will be
governed by, and construed in accordance with, the internal laws of the State of
New York.
MISCELLANEOUS
The Company will have the right at all times to assign any of its rights or
obligations under the Subordinated Note Indenture to a direct or indirect
wholly-owned subsidiary of the Company; provided, that, in the event of any such
assignment, the Company will remain primarily liable for all such obligations.
Subject to the foregoing, the Subordinated Note Indenture will be binding upon
and inure to the benefit of the parties thereto and their respective successors
and assigns.
DESCRIPTION OF THE PREFERRED SECURITIES
Each Trust may issue only one series of Preferred Securities having terms
described in the Prospectus Supplement relating thereto. The Trust Agreement of
each Trust will authorize the Administrative Trustees, on behalf of the Trust,
to issue the Preferred Securities of such Trust. The Preferred Securities of
each Trust will have such terms, including distributions, redemption, voting,
liquidation rights and such other preferred, deferral or other special rights or
such restrictions as shall be set forth in the Trust Agreement of such Trust.
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Reference is made to the Prospectus Supplement relating to the Preferred
Securities of a Trust for specific terms, including (i) the distinctive
designation of such Preferred Securities; (ii) the number of Preferred
Securities issued by such Trust; (iii) the annual distribution rate (or method
of determining such rate) for Preferred Securities of such Trust and the date or
dates on which such distributions shall be payable; (iv) whether distributions
on such Preferred Securities shall be cumulative and, in the case of Preferred
Securities having cumulative distribution rights, the date or dates, or method
of determining the date or dates, from which distributions on such Preferred
Securities shall be cumulative; (v) the amount or amounts that shall be paid out
of the assets of such Trust to the holders of the Preferred Securities of such
Trust upon voluntary or involuntary dissolution, winding-up or termination of
such Trust; (vi) the obligation, if any, of such Trust to purchase or redeem
such Preferred Securities and the price or prices at which, the period or
periods within which, and the terms and conditions upon which such Preferred
Securities shall be purchased or redeemed, in whole or in part, pursuant to such
obligation; (vii) the voting rights, if any, of such Preferred Securities in
addition to those required by law, including the number of votes per Preferred
Security and any requirement for the approval by the holders of Preferred
Securities as a condition to specified action or amendments to the Trust
Agreement of such Trust; (viii) the rights, if any, to defer distributions on
the Preferred Securities by extending the interest payment period on the related
Junior Subordinated Notes; and (ix) any other relative rights, preferences,
privileges, limitations or restrictions of such Preferred Securities not
inconsistent with the Trust Agreement of such Trust or applicable law. All
Preferred Securities offered hereby will be guaranteed by the Company to the
extent set forth under "Description of the Guarantees." Any material United
States federal income tax considerations applicable to an offering of Preferred
Securities will be described in the Prospectus Supplement relating thereto.
DESCRIPTION OF THE GUARANTEES
Set forth below is a summary of information concerning the Guarantees that
will be executed and delivered by the Company for the benefit of the holders of
Preferred Securities of the respective Trusts from time to time. Each Guarantee
will be qualified as an indenture under the 1939 Act. The Chase Manhattan Bank
will act as indenture trustee under each Guarantee (the "Guarantee Trustee") for
purposes of the 1939 Act. The terms of the respective Guarantees will be those
set forth therein and those made part thereof by the 1939 Act. The following
summary does not purport to be complete and is subject in all respects to the
provisions of, and is qualified in its entirety by reference to, the Guarantees,
the form of which is filed as an exhibit to the Registration Statement of which
this Prospectus forms a part, and the 1939 Act. Each Guarantee will be held by
the Guarantee Trustee for the benefit of holders of the Preferred Securities to
which it relates.
GENERAL
Pursuant to each Guarantee, the Company will irrevocably and
unconditionally agree, to the extent set forth therein, to pay in full, to the
holders of the related Preferred Securities, the Guarantee Payments (as defined
herein), to the extent not paid by, or on behalf of, the related Trust,
regardless of any defense, right of set-off or counterclaim that the Company may
have or assert against any person. The following payments or distributions with
respect to the Preferred Securities of any Trust to the extent not paid or made
by, or on behalf of, such Trust will be subject to the Guarantee related thereto
(without duplication): (i) any accrued and unpaid distributions required to be
paid on the Preferred Securities of such Trust but if and only if and to the
extent that such Trust has funds legally and immediately available therefor,
(ii) the redemption price, including all accrued and unpaid distributions to the
date of redemption (the "Redemption Price"), with respect to any Preferred
Securities called for redemption by such Trust, but if and only to the extent
such Trust has funds legally and immediately available therefor, and (iii) upon
a dissolution, winding-up or termination of such Trust (other than in connection
with the distribution of Junior Subordinated Notes to the holders of Trust
Securities of such Trust or the redemption of all of the Preferred Securities of
such Trust), the lesser of (a) the aggregate of the liquidation amount and all
accrued and unpaid distributions on the Preferred Securities of such Trust to
the date of payment, to the extent such Trust has funds legally and immediately
available therefor, and (b) the amount of assets of such Trust remaining
available for distribution
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to holders of Preferred Securities of such Trust in liquidation of such Trust
(the "Guarantee Payments"). The Company's obligation to make a Guarantee Payment
may be satisfied by direct payment of the required amounts by the Company to the
holders of the related Preferred Securities or by causing the related Trust to
pay such amounts to such holders.
Each Guarantee will be a guarantee of the Guarantee Payments with respect
to the related Preferred Securities from the time of issuance of such Preferred
Securities, but will not apply to the payment of distributions and other
payments on such Preferred Securities when the related Trust does not have
sufficient funds legally and immediately available to make such distributions or
other payments. IF THE COMPANY DOES NOT MAKE INTEREST PAYMENTS ON THE JUNIOR
SUBORDINATED NOTES HELD BY THE PROPERTY TRUSTEE UNDER ANY TRUST, SUCH TRUST WILL
NOT MAKE DISTRIBUTIONS ON ITS PREFERRED SECURITIES.
SUBORDINATION
The Company's obligations under each Guarantee to make the Guarantee
Payments will constitute an unsecured obligation of the Company and will rank
(i) subordinate and junior in right of payment to all other liabilities of the
Company, including the Junior Subordinated Notes, except those obligations or
liabilities made pari passu or subordinate by their terms, (ii) pari passu with
the most senior preferred or preference stock now or hereafter issued by the
Company and with any guarantee now or hereafter entered into by the Company in
respect of any preferred or preference securities of any affiliate of the
Company, and (iii) senior to all common stock of the Company. The terms of the
Preferred Securities will provide that each holder of Preferred Securities by
acceptance thereof agrees to the subordination provisions and other terms of the
Guarantee related thereto. The Company has outstanding preferred stock that
ranks pari passu to the Guarantees and common stock that ranks junior to the
Guarantees. See "Selected Information -- Selected Financial Information."
Each Guarantee will constitute a guarantee of payment and not of collection
(that is, the guaranteed party may institute a legal proceeding directly against
the guarantor to enforce its rights under the guarantee without first
instituting a legal proceeding against any other person or entity).
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes that do not materially and adversely
affect the rights of holders of the related Preferred Securities (in which case
no consent will be required), each Guarantee may be amended only with the prior
approval of the holders of not less than 66 2/3% in liquidation amount of such
outstanding Preferred Securities. The manner of obtaining any such approval of
holders of the Preferred Securities will be as set forth in an accompanying
Prospectus Supplement. All guarantees and agreements contained in each Guarantee
shall bind the successors, assigns, receivers, trustees and representatives of
the Company and shall inure to the benefit of the holders of the related
Preferred Securities then outstanding.
TERMINATION
Each Guarantee will terminate and be of no further force and effect as to
the related Preferred Securities upon full payment of the Redemption Price of
all such Preferred Securities, upon distribution of Junior Subordinated Notes to
the holders of such Preferred Securities, or upon full payment of the amounts
payable upon liquidation of the related Trust. Each Guarantee will continue to
be effective or will be reinstated, as the case may be, if at any time any
holder of the related Preferred Securities must restore payment of any sums paid
with respect to such Preferred Securities or under such Guarantee.
EVENTS OF DEFAULT
An event of default under each Guarantee will occur upon the failure by the
Company to perform any of its payment obligations thereunder. The holders of a
majority in liquidation amount of the Preferred Securities to which any
Guarantee relates have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Guarantee Trustee in
respect of such Guarantee or to direct the exercise of any trust or power
conferred upon the Guarantee Trustee under such Guarantee. Any holder of the
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related Preferred Securities may institute a legal proceeding directly against
the Company to enforce its rights under such Guarantee without first instituting
a legal proceeding against the Guarantee Trustee or any other person or entity.
The holders of a majority in liquidation amount of Preferred Securities of any
series may, by vote, on behalf of the holders of all the Preferred Securities of
such series, waive any past event of default and its consequences.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, prior to the occurrence of any event of default with
respect to any Guarantee and after the curing or waiving of all events of
default with respect to such Guarantee, undertakes to perform only such duties
as are specifically set forth in such Guarantee and, in case an event of default
has occurred, shall exercise the same degree of care as a prudent individual
would exercise in the conduct of his or her own affairs. Subject to such
provisions, the Guarantee Trustee is under no obligation to exercise any of the
powers vested in it by any Guarantee at the request of any holder of the related
Preferred Securities, unless offered reasonable indemnity against the costs,
expenses and liabilities which might be incurred thereby.
The Chase Manhattan Bank, the Guarantee Trustee, also serves as Property
Trustee, as Senior Note Indenture Trustee and as Subordinated Note Indenture
Trustee. The Company and certain of its affiliates maintain deposit accounts and
banking relationships with The Chase Manhattan Bank. The Chase Manhattan Bank
serves as trustee under other indentures pursuant to which securities of the
Company and affiliates of the Company are outstanding.
GOVERNING LAW
Each Guarantee will be governed by, and construed in accordance with, the
internal laws of the State of New York.
THE AGREEMENTS AS TO EXPENSES AND LIABILITIES
Pursuant to an Agreement as to Expenses and Liabilities to be entered into
by the Company under each Trust Agreement, the Company will irrevocably and
unconditionally guarantee to each person or entity to whom each Trust becomes
indebted or liable the full payment of any indebtedness, expenses or liabilities
of such Trust, other than obligations of such Trust to pay to the holders of the
related Preferred Securities or other similar interests in such Trust the
amounts due such holders pursuant to the terms of such Preferred Securities or
such other similar interests, as the case may be.
RELATIONSHIP AMONG THE PREFERRED SECURITIES,
THE JUNIOR SUBORDINATED NOTES AND THE GUARANTEES
As long as payments of interest and other payments are made when due on
each series of Junior Subordinated Notes issued to a Trust, such payments will
be sufficient to cover distributions and payments due on the related Trust
Securities of such Trust primarily because (i) the aggregate principal amount of
each series of Junior Subordinated Notes will be equal to the sum of the
aggregate stated liquidation amount of the related Trust Securities; (ii) the
interest rate and interest and other payment dates on each series of Junior
Subordinated Notes will match the distribution rate and distribution and other
payment dates for the related Preferred Securities; (iii) the Company shall pay
for all costs and expenses of each Trust pursuant to the Agreements as to
Expenses and Liabilities; and (iv) each Trust Agreement provides that the
Securities Trustees thereunder shall not cause or permit the Trust to, among
other things, engage in any activity that is not consistent with the purposes of
the Trust.
Payments of distributions (to the extent funds therefor are legally and
immediately available) and other payments due on the Preferred Securities (to
the extent funds therefor are legally and immediately available) will be
guaranteed by the Company as and to the extent set forth under "Description of
the Guarantees." If the Company does not make interest payments on any series of
Junior Subordinated Notes, it is not expected that the related Trust will have
sufficient funds to pay distributions on its Preferred Securities. Each
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Guarantee is a guarantee from the time of its issuance, but does not apply to
any payment of distributions unless and until the related Trust has sufficient
funds legally and immediately available for the payment of such distributions.
If the Company fails to make interest or other payments on any series of
Junior Subordinated Notes when due (taking into account any extension period as
described in the applicable Prospectus Supplement), the Trust Agreement provides
a mechanism whereby the holders of the related Preferred Securities may appoint
a substitute Property Trustee. Such holders may also direct the Property Trustee
to enforce its rights under the Junior Subordinated Notes of such series,
including proceeding directly against the Company to enforce such Junior
Subordinated Notes. If the Property Trustee fails to enforce its rights under
any series of Junior Subordinated Notes, to the fullest extent permitted by
applicable law, any holder of related Preferred Securities may institute a legal
proceeding directly against the Company to enforce the Property Trustee's rights
under such series of Junior Subordinated Notes without first instituting any
legal proceeding against the Property Trustee or any other person or entity.
Notwithstanding the foregoing, a holder of Preferred Securities may institute a
legal proceeding directly against the Company, without first instituting a legal
proceeding against the Property Trustee or any other person or entity, for
enforcement of payment to such holder of principal of or interest on Junior
Subordinated Notes of the related series having a principal amount equal to the
aggregate stated liquidation amount of the Preferred Securities of such holder
on or after the due dates specified in the Junior Subordinated Notes of such
series.
If the Company fails to make payments under any Guarantee, such Guarantee
provides a mechanism whereby the holders of the Preferred Securities to which
such Guarantee relates may direct the Guarantee Trustee to enforce its rights
thereunder. In addition, any holder of Preferred Securities may institute a
legal proceeding directly against the Company to enforce the Guarantee Trustee's
rights under the related Guarantee without first instituting a legal proceeding
against the Guarantee Trustee or any other person or entity.
Each Guarantee, the Subordinated Note Indenture, the Junior Subordinated
Notes of the related series, the related Trust Agreement and the related
Agreement as to Expenses and Liabilities, as described above, constitute a full
and unconditional guarantee by the Company of the payments due on the related
series of Preferred Securities.
Upon any voluntary or involuntary dissolution, winding-up or termination of
any Trust, unless Junior Subordinated Notes of the related series are
distributed in connection therewith, the holders of Preferred Securities of such
Trust will be entitled to receive, out of assets legally available for
distribution to holders, a liquidation distribution in cash as described in the
applicable Prospectus Supplement. Upon any voluntary or involuntary liquidation
or bankruptcy of the Company, the Property Trustee, as holder of the related
series of Junior Subordinated Notes, would be a subordinated creditor of the
Company, subordinated in right of payment to all Senior Indebtedness, but
entitled to receive payment in full of principal and interest, before any
stockholders of the Company receive payments or distributions. Because the
Company is guarantor under each Guarantee and has agreed to pay for all costs,
expenses and liabilities of each Trust (other than the Trust's obligations to
holders of the Preferred Securities) pursuant to the related Agreement as to
Expenses and Liabilities, the positions of a holder of Preferred Securities and
a holder of Junior Subordinated Notes of the related series relative to other
creditors and to stockholders of the Company in the event of liquidation or
bankruptcy of the Company would be substantially the same.
A default or event of default under any Senior Indebtedness would not
constitute a default or Event of Default under the Subordinated Note Indenture.
However, in the event of payment defaults under, or acceleration of, Senior
Indebtedness, the subordination provisions of the Junior Subordinated Notes
provide that no payments may be made in respect of the Junior Subordinated Notes
until such Senior Indebtedness has been paid in full or any payment default
thereunder has been cured or waived. Failure to make required payments on the
Junior Subordinated Notes of any series would constitute an Event of Default
under the Subordinated Note Indenture with respect to the Junior Subordinated
Notes of such series except that failure to make interest payments on the Junior
Subordinated Notes of such series will not be an Event of Default during an
extension period as described in the applicable Prospectus Supplement.
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PLAN OF DISTRIBUTION
The Company may sell the Senior Notes and the Junior Subordinated Notes and
the Trusts may sell the Preferred Securities in one or more of the following
ways from time to time: (i) to underwriters for resale to the public or to
institutional investors; (ii) directly to institutional investors; or (iii)
through agents to the public or to institutional investors. The Prospectus
Supplement with respect to each series of Senior Notes, Junior Subordinated
Notes or Preferred Securities will set forth the terms of the offering of such
Senior Notes, Junior Subordinated Notes or Preferred Securities, including the
name or names of any underwriters or agents, the purchase price of such Senior
Notes, Junior Subordinated Notes or Preferred Securities and the proceeds to the
Company or the applicable Trust from such sale, any underwriting discounts or
agency fees and other items constituting underwriters' or agents' compensation,
any initial public offering price, any discounts or concessions allowed or
reallowed or paid to dealers and any securities exchange on which such Senior
Notes, Junior Subordinated Notes or Preferred Securities may be listed.
If underwriters participate in the sale, such Senior Notes, Junior
Subordinated Notes or Preferred Securities will be acquired by the underwriters
for their own account and may be resold from time to time in one or more
transactions, including negotiated transactions, at a fixed public offering
price or at varying prices determined at the time of sale.
Unless otherwise set forth in the Prospectus Supplement, the obligations of
the underwriters to purchase any series of Senior Notes, Junior Subordinated
Notes or Preferred Securities will be subject to certain conditions precedent
and the underwriters will be obligated to purchase all of such series of Senior
Notes, Junior Subordinated Notes or Preferred Securities, if any are purchased.
Underwriters and agents may be entitled under agreements entered into with
the Company and/or the applicable Trust to indemnification against certain civil
liabilities, including liabilities under the 1933 Act. Underwriters and agents
may engage in transactions with, or perform services for, the Company in the
ordinary course of business.
Each series of Senior Notes, Junior Subordinated Notes or Preferred
Securities will be a new issue of securities and will have no established
trading market. Any underwriters to whom Senior Notes, Junior Subordinated Notes
or Preferred Securities are sold for public offering and sale may make a market
in such Senior Notes, Junior Subordinated Notes or Preferred Securities, but
such underwriters will not be obligated to do so and may discontinue any market
making at any time without notice. The Senior Notes, Junior Subordinated Notes
or Preferred Securities may or may not be listed on a national securities
exchange.
LEGAL MATTERS
Certain matters of Delaware law relating to the validity of the Preferred
Securities will be passed upon on behalf of the Company and the Trusts by
Richards, Layton & Finger, P.A., Wilmington, Delaware, special Delaware counsel
to the Company and the Trusts. The validity of the Senior Notes, the Junior
Subordinated Notes, the Guarantees and certain matters relating thereto will be
passed upon on behalf of the Company by Balch & Bingham LLP, Birmingham,
Alabama, and by Troutman Sanders LLP, Atlanta, Georgia. Certain legal matters
will be passed upon for the Underwriters by Dewey Ballantine LLP, New York, New
York.
EXPERTS
The financial statements and schedules of the Company included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1997,
incorporated by reference in this Prospectus, have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their reports with
respect thereto, and are incorporated herein in reliance upon the authority of
said firm as experts in accounting and auditing in giving said reports. With
respect to the Company's unaudited interim financial information for the periods
ended March 31, 1998 and 1997, included in the Company's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1998 and incorporated by reference
herein, Arthur Andersen LLP has applied limited procedures in accordance with
professional standards for review of such information. However, their
19
<PAGE>
separate reports thereon state that they did not audit and they do not express
an opinion on such interim financial information. Accordingly, the degree of
reliance on their reports on such information should be restricted in light of
the limited nature of the review procedures employed. In addition, the
accountants are not subject to the liability provisions of Section 11 of the
1933 Act for their reports on the unaudited interim financial information
because these reports are not "reports" or "parts" of the registration statement
prepared or certified by the accountants within the meaning of Sections 7 and 11
of said Act.
Statements as to matters of law and legal conclusions in the Company's
Annual Report on Form 10-K for the year ended December 31, 1997, relating to
titles to property of the Company under "Item 2 -- Properties -- Titles to
Property", and relating to the Company under "Item 1 -- Business -- Regulation",
"Item 1 -- Business -- Rate Matters" and "Item 1 -- Business -- Competition",
have been reviewed by Balch & Bingham LLP, general counsel for the Company, and
such statements are made upon the authority of such firm as experts.
20
<PAGE>
======================================================
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IN
CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, ALABAMA POWER CAPITAL TRUST [ ]
OR THE UNDERWRITERS. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL UNDER ANY
CIRCUMSTANCE CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS
OF THE COMPANY OR ALABAMA POWER CAPITAL TRUST [ ] SINCE THE DATE HEREOF. THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER OR
SOLICITATION BY ANYONE IN ANY STATE IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION.
---------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
Summary of Offering....................... S-3
Risk Factors.............................. S-7
Alabama Power Capital Trust [ ]........ S-9
Capitalization............................ S-10
Accounting Treatment...................... S-10
Description of the Preferred Securities... S-11
Description of the Series Junior
Subordinated Notes...................... S-20
Relationship Among the Preferred
Securities, the Series Junior
Subordinated Notes and the Guarantee.... S-22
Certain Federal Income Tax
Considerations.......................... S-23
Underwriting.............................. S-27
Legal Opinions............................ S-28
Glossary.................................. S-29
PROSPECTUS
Available Information..................... 2
Incorporation of Certain Documents by
Reference............................... 2
Selected Information...................... 3
Alabama Power Company..................... 4
The Trusts................................ 5
Accounting Treatment...................... 5
Use of Proceeds........................... 5
Recent Results of Operations.............. 5
Description of the Senior Notes........... 6
Description of the Junior Subordinated
Notes................................... 9
Description of the Preferred Securities... 14
Description of the Guarantees............. 15
Relationship Among the Preferred
Securities, the Junior Subordinated
Notes and the Guarantees................ 17
Plan of Distribution...................... 19
Legal Matters............................. 19
Experts................................... 19
</TABLE>
======================================================
======================================================
[ ] PREFERRED SECURITIES
ALABAMA POWER
CAPITAL TRUST [ ]
% TRUST PREFERRED SECURITIES
(LIQUIDATION AMOUNT
$25 PER PREFERRED SECURITY)
FULLY AND UNCONDITIONALLY
GUARANTEED, AS SET FORTH HEREIN, BY
ALABAMA POWER
COMPANY
A SUBSIDIARY OF THE SOUTHERN COMPANY
---------------------------
PROSPECTUS SUPPLEMENT
---------------------------
======================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses of issuance and distribution, other than
underwriting discounts and commissions, to be borne by the Company are as
follows:
<TABLE>
<CAPTION>
EACH
INITIAL ADDITIONAL
SALE SALE
-------- ----------
<S> <C> <C>
*Filing Fees -- Securities and Exchange
Commission -- registration statement...................... $285,029 $ --
Charges of trustees (including counsel)..................... 9,500 9,500
*Listing fees of New York Stock Exchange.................... 166,800 --
Printing and preparation of registration statement,
prospectus, etc........................................... 40,000 15,000
Rating fees --
Moody's Investors Service, Inc............................ 15,000 15,000
Standard & Poor's Corporation............................. 120,772 --
Duff and Phelps, Inc...................................... 40,000 40,000
Services of Southern Company Services, Inc.................. 30,000 15,000
Fees and expenses of counsel................................ 90,000 65,000
Blue sky fees and expenses.................................. 3,500 3,500
Fees of accountants, Arthur Andersen LLP.................... 42,000 25,000
Miscellaneous, including telephone charges and traveling
expenses.................................................. 17,399 7,000
-------- --------
Total............................................. $860,000 $195,000
======== ========
</TABLE>
- ---------------
* The Prospectus Supplement will reflect actual filing and listing fees based
upon the amount of the related offering.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Code of Alabama, 1975, Section 10-2B-8.51 and 10-2B-8.56 gives a
corporation power to indemnify any person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative and whether
formal or informal by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, partner, trustee, employee or agent of
another foreign or domestic corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise, against expenses (including
attorneys' fees), judgments, penalties, fines and amounts paid in settlement
reasonably incurred by him in connection with such action, suit or proceeding if
he acted in good faith and in a manner he reasonably believed to be in the best
interests of the corporation, when acting in his or her official capacity with
the corporation, or, in all other cases, not opposed to the best interests of
the corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The same Sections also
give a corporation power to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding by or in the right of the corporation to procure a judgment
in its favor by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, partner, trustee, employee or agent of
another corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise, against expenses (including attorneys' fees) reasonably
incurred by him in connection with the defense or settlement of such action or
suit if he acted in good faith and in a manner he reasonably believed to be in
the best interests of the corporation, when acting in his or her official
capacity with the corporation or, in all other cases, not opposed to the best
interest of the corporation. No indemnification shall be made, however, in
respect of any claim, issue or matter as to which such person shall
II-1
<PAGE>
have not met the applicable standard of conduct, shall have been adjudged to be
liable to the corporation or, in connection with any other action, suit or
proceeding charging improper personal benefit to such person, if such person was
adjudged liable on the basis that personal benefit was improperly received by
him, unless and only to the extent that the court in which such action or suit
was brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which such court
shall deem proper. Also, Section 10-2B-8.52 states that, to the extent that a
director, officer, employee or agent of a corporation has been successful on the
merits or otherwise in defense of any such action, suit or proceeding, or in
defense of any claim, issue or matter therein, he shall be indemnified against
expenses (including attorneys' fees) reasonably incurred by him in connection
therewith, notwithstanding that he has not been successful on any other claim,
issue or matter in any such action, suit or proceeding.
Article XIII of the By-laws of the Company provides in pertinent part as
follows:
Each person who is or was a director of the corporation, officer of the
corporation or employee of the corporation holding one or more positions of
management and who was or is a party or was or is threatened to be made a party
to any threatened, pending or completed claim, action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that he is or was a director of the corporation or officer of the corporation,
or is or was serving at the request of the corporation as a director, officer,
employee, agent or trustee of another corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise, shall be indemnified by the
corporation as a matter of right against any and all expenses (including
attorneys' fees) actually and reasonably incurred by him and against any and all
claims, judgments, fines, penalties, liabilities and amounts paid in settlement
actually incurred by him in defense of such claim, action, suit or proceeding,
including appeals, to the full extent permitted by applicable law. The
indemnification provided by this Section shall inure to the benefit of the
heirs, executors and administrators of such person.
Expenses (including attorneys' fees) incurred by a director or officer of
the corporation, or by an employee of the corporation holding one or more
positions of management, with respect to the defense of any such claim, action,
suit or proceeding may be advanced by the corporation prior to the final
disposition of such claim, action, suit or proceeding, as authorized by the
board of directors in the specific case, upon receipt of an undertaking by or on
behalf of such person to repay such amount unless it shall ultimately be
determined that such person is entitled to be indemnified by the corporation
under this Section or otherwise; provided, however, that the advancement of such
expenses shall not be deemed to be indemnification unless and until it shall
ultimately be determined that such person is entitled to be indemnified by the
corporation.
The corporation may purchase and maintain insurance at the expense of the
corporation on behalf of any person who is or was a director, officer, employee
or agent of the corporation, or any person who is or was serving at the request
of the corporation as a director (or the equivalent), officer, employee, agent
or trustee of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise, against any liability or expense (including
attorneys' fees) asserted against him and incurred by him in any such capacity,
or arising out of his status as such, whether or not the corporation would have
the power to indemnify him against such liability or expense under this Section
or otherwise.
Without limiting the generality of the foregoing provisions of this
Section, no present or future director or officer of the corporation, or his
heirs, executors, or administrators, shall be liable for any act, omission,
step, or conduct taken or had in good faith, which is required, authorized, or
approved by any order or orders issued pursuant to the Public Utility Holding
Company Act of 1935, the Federal Power Act, or any federal or state statute or
municipal ordinance regulating the corporation, its parent or its subsidiaries
by reason of their being holding or investment companies, public utility
companies, public utility holding companies, or subsidiaries of public utility
holding companies. In any action, suit, or proceeding based on any act,
omission, step, or conduct, as in this paragraph described, the provisions
hereof shall be brought to the attention of the court. In the event that the
foregoing provisions of this paragraph are found by the court not to constitute
a valid defense on the grounds of not being applicable to the particular class
of plaintiff, each such director and officer, and his heirs, executors, and
administrators, shall be reimbursed for, or indemnified against, all expenses
and liabilities incurred by him or imposed on him, in connection with, or
arising out of, any such
II-2
<PAGE>
action, suit, or proceeding based on any act, omission, step, or conduct taken
or had in good faith as in this paragraph described. Such expenses and
liabilities shall include, but shall not be limited to, judgments, court costs,
and attorneys' fees.
The foregoing rights shall not be exclusive of any other rights to which
any such director or officer may otherwise be entitled and shall be available
whether or not the director or officer continues to be a director or officer at
the time of incurring any such expenses and liabilities.
The Company has an insurance policy covering its liabilities and expenses
which might arise in connection with its lawful indemnification of its directors
and officers for certain of their liabilities and expenses and also covering its
officers and directors against certain other liabilities and expenses.
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
- -------
<C> <C> <S>
1.1 -- Form of Underwriting Agreement relating to Senior Notes.*
1.2 -- Form of Underwriting Agreement relating to Junior
Subordinated Notes.*
1.3 -- Form of Underwriting Agreement relating to Preferred
Securities.*
4.1 -- Senior Note Indenture dated as of December 1, 1997 between
Alabama Power Company and The Chase Manhattan Bank, as
Trustee, and indentures supplemental thereto through that
dated April 23, 1998. (Designated in Form 8-K dated
December 4, 1997, File No. 1-3164, as Exhibits 4.1 and
4.2, in Form 8-K dated February 20, 1998, File No. 1-3164,
as Exhibit 4.2 and in Form 8-K dated April 17, 1998, File
No. 1-3164, as Exhibit 4.2.)
4.2 -- Form of Supplemental Indenture to Senior Note Indenture to
be used in connection with the issuance of Senior Notes.*
4.3 -- Subordinated Note Indenture dated as of January 1, 1997
between Alabama Power Company and The Chase Manhattan
Bank, as Trustee (Designated in the Company's Current
Report on Form 8-K dated January 9, 1997 as Exhibit 4.1).
4.4 -- Form of Supplemental Indenture to Subordinated Note
Indenture to be used in connection with the issuance of
Junior Subordinated Notes (Designated in Registration No.
333-17333 as Exhibit 4.2).
4.5-A -- Certificate of Trust of Alabama Power Capital Trust III
(Designated in Registration No. 333-17333 as Exhibit
4.3-B).
4.6-B -- Certificate of Trust of Alabama Power Capital Trust IV
(Designated in Registration No. 333-17333 as Exhibit
4.3-C).
4.5-C -- Certificate of Trust of Alabama Power Capital Trust
V.(Designated in Registration No. 333-40629 as Exhibit
4.5-C.)
4.6-A -- Trust Agreement of Alabama Power Capital Trust III
(Designated in Registration No. 333-17333 as Exhibit
4.4-B).
4.6-B -- Trust Agreement of Alabama Power Capital Trust IV
(Designated in Registration No. 333-17333 as Exhibit
4.4-C).
4.6-C -- Trust Agreement of Alabama Power Capital Trust V.(Designated
in Registration No. 333-40629 as Exhibit 4.6-C.)
4.7-A -- Form of Amended and Restated Trust Agreement of Alabama
Power Capital Trust III (Designated in Registration No.
333-17333 as Exhibit 4.5-B).
4.7-B -- Form of Amended and Restated Trust Agreement of Alabama
Power Capital Trust IV (Designated in Registration No.
333-17333 as Exhibit 4.5-C).
4.7-C -- Form of Amended and Restated Trust Agreement of Alabama
Power Capital Trust V.(Designated in Registration No.
333-40629 as Exhibit 4.7-C.)
4.8-A -- Form of Preferred Security of Alabama Power Capital Trust
III (included in Exhibit 4.7-A above).
4.8-B -- Form of Preferred Security of Alabama Power Capital Trust IV
(included in Exhibit 4.7-B above).
4.8-C -- Form of Preferred Security of Alabama Power Capital Trust V
(included in Exhibit 4.7-C above).
4.9 -- Form of Senior Note (included in Exhibit 4.2 above).
4.10 -- Form of Junior Subordinated Note (included in Exhibit 4.4
above).
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
- -------
<C> <C> <S>
4.11-A -- Form of Guarantee relating to Alabama Power Capital Trust
III (Designated in Registration No. 333-17333 as Exhibit
4.8-B).
4.11-B -- Form of Guarantee relating to Alabama Power Capital Trust IV
(Designated in Registration No. 333-17333 as Exhibit
4.8-C).
4.11-C -- Form of Guarantee relating to Alabama Power Capital Trust
V.(Designated in Registration No. 333-40629 as Exhibit
4.11-C.)
4.12-A -- Form of Agreement as to Expenses and Liabilities relating to
Alabama Power Capital Trust III (included in Exhibit 4.7-A
above).
4.12-B -- Form of Agreement as to Expenses and Liabilities relating to
Alabama Power Capital Trust IV (included in Exhibit 4.7-B
above).
4.12-C -- Form of Agreement as to Expenses and Liabilities relating to
Alabama Power Capital Trust V (included in Exhibit 4.7-C
above).
5.1 -- Opinion of Balch & Bingham LLP.
5.2-A -- Opinion of Richards, Layton & Finger, P.A. relating to
Alabama Power Capital Trust III.
5.2-B -- Opinion of Richards, Layton & Finger, P.A. relating to
Alabama Power Capital Trust IV.
5.2-C -- Opinion of Richards, Layton & Finger, P.A. relating to
Alabama Power Capital Trust V.
8.1 -- Tax Opinion of Balch & Bingham LLP.
12.1 -- Computation of ratio of earnings to fixed charges.
12.2 -- Computation of ratio of earnings to fixed charges plus
preferred dividend requirements (pre-income tax basis).
15.1 -- Letter re unaudited interim financial information.
23.1 -- Consent of Arthur Andersen LLP.
23.2 -- Consent of Balch & Bingham LLP (included in Exhibit 5.1
above).
23.3 -- Consent of Balch & Bingham LLP (included in Exhibit 8.1
above).
23.4 -- Consent of Richards, Layton & Finger, P.A. (included in
Exhibits 5.2-A, 5.2-B and 5.2-C above).
24.1 -- Powers of Attorney and Resolution.
25.1 -- Statement of Eligibility under Trust Indenture Act of 1939,
as amended, of The Chase Manhattan Bank, as Senior Note
Indenture Trustee. (Designated in Registration No. 333-
40629 as Exhibit 25.1.)
25.2 -- Statement of Eligibility under Trust Indenture Act of 1939,
as amended, of The Chase Manhattan Bank, as Subordinated
Note Indenture Trustee (Designated in Registration No.
333-17333 as Exhibit 25.1).
25.3 -- Statement of Eligibility under Trust Indenture Act of 1939,
as amended, of The Chase Manhattan Bank, as Property
Trustee, relating to Alabama Power Capital Trust III
(Designated in Registration No. 333-17333 as Exhibit
25.4).
25.4 -- Statement of Eligibility under Trust Indenture Act of 1939,
as amended, of The Chase Manhattan Bank, as Guarantee
Trustee, relating to Alabama Power Capital Trust III
(Designated in Registration No. 333-17333 as Exhibit
25.5).
25.5 -- Statement of Eligibility under Trust Indenture Act of 1939,
as amended, of The Chase Manhattan Bank, as Property
Trustee, relating to Alabama Power Capital Trust IV
(Designated in Registration No. 333-17333 as Exhibit
25.6).
25.6 -- Statement of Eligibility under Trust Indenture Act of 1939,
as amended, of The Chase Manhattan Bank, as Guarantee
Trustee, relating to Alabama Power Capital Trust IV
(Designated in Registration No. 333-17333 as Exhibit
25.7).
25.7 -- Statement of Eligibility under Trust Indenture Act of 1939,
as amended, of The Chase Manhattan Bank, as Property
Trustee, relating to Alabama Power Capital Trust V.
(Designated in Registration No. 333-40629 as Exhibit
25.7.)
25.8 -- Statement of Eligibility under Trust Indenture Act of 1939,
as amended, of The Chase Manhattan Bank, as Guarantee
Trustee, relating to Alabama Power Capital Trust V.
(Designated in Registration No. 333-40629 as Exhibit
25.8.)
</TABLE>
II-4
<PAGE>
Exhibits listed above which have heretofore been filed with the Commission
and which were designated as noted above are hereby incorporated herein by
reference and made a part hereof with the same effect as if filed herewith.
- ---------------
* To be subsequently filed or incorporated by reference.
ITEM 17. UNDERTAKINGS.
(a) Undertaking related to Rule 415 offering:
The undersigned registrants hereby undertake:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set
forth in the registration statement; Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which
was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement.
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the registration statement is on Form S-3, S-8 or F-3 and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrants
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(b) Undertaking related to filings incorporating subsequent Securities
Exchange Act of 1934 documents by reference:
The undersigned registrants hereby undertake that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the Company's annual report pursuant to Section 13(a) or Section 15(d) of
the Securities Exchange Act of 1934 that is incorporated by reference in
the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona fide
offering thereof.
II-5
<PAGE>
(c) Undertaking related to acceleration of effectiveness:
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrants pursuant to the foregoing provisions
or otherwise, the registrants have been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the registrants of expenses incurred or paid by a director,
officer or controlling person of the registrants in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrants will, unless in the opinion of their counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(d) The undersigned registrants hereby undertake that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrants pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-6
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, ALABAMA POWER
COMPANY CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF
THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF BIRMINGHAM, STATE OF ALABAMA, ON THE 21ST DAY OF MAY,
1998.
ALABAMA POWER COMPANY
By: ELMER B. HARRIS,
President and Chief Executive
Officer
By: WAYNE BOSTON,
Attorney-in-fact
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, ALABAMA POWER
CAPITAL TRUST III CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT
MEETS ALL OF THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS
REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO
DULY AUTHORIZED, IN THE CITY OF BIRMINGHAM, STATE OF ALABAMA, ON THE 21ST DAY
OF MAY, 1998.
ALABAMA POWER CAPITAL TRUST III
By: ALABAMA POWER COMPANY,
Depositor
By: WAYNE BOSTON,
Assistant Secretary
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, ALABAMA POWER
CAPITAL TRUST IV CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT
MEETS ALL OF THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS
REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO
DULY AUTHORIZED, IN THE CITY OF BIRMINGHAM, STATE OF ALABAMA, ON THE 21ST DAY OF
MAY, 1998.
ALABAMA POWER CAPITAL TRUST IV
By: ALABAMA POWER COMPANY,
Depositor
By: WAYNE BOSTON,
Assistant Secretary
II-7
<PAGE>
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, ALABAMA POWER
CAPITAL TRUST V CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT
MEETS ALL OF THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS
REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO
DULY AUTHORIZED, IN THE CITY OF BIRMINGHAM, STATE OF ALABAMA, ON THE 21ST DAY OF
MAY, 1998.
ALABAMA POWER CAPITAL TRUST V
By: ALABAMA POWER COMPANY,
Depositor
By: WAYNE BOSTON,
Assistant Secretary
II-8
<PAGE>
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING DIRECTORS AND OFFICERS
OF ALABAMA POWER COMPANY IN THE CAPACITIES AND ON THE DATE INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
ELMER B. HARRIS President, Chief Executive
Officer and Director
(Principal Executive
Officer)
WILLIAM B. HUTCHINS, III Executive Vice President,
Chief Financial Officer
and Treasurer (Principal
Financial Officer)
ART P. BEATTIE Vice President, Comptroller
and Secretary (Principal
Accounting Officer)
WHIT ARMSTRONG
A. W. DAHLBERG
PETER V. GREGERSON, SR.
BILL M. GUTHRIE
CARL E. JONES, JR.
PATRICIA M. KING
JAMES K. LOWDER
WALLACE D. MALONE, JR. Directors
JOHN T. PORTER
ROBERT D. POWERS
C. DOWD RITTER
JAMES H. SANFORD
JOHN COX WEBB, IV
By WAYNE BOSTON May 21, 1998
(WAYNE BOSTON, ATTORNEY-IN-FACT)
</TABLE>
II-9
EXHIBIT INDEX
EXHIBIT
NUMBER
- -------
1.1 -- Form of Underwriting Agreement relating to Senior Notes.*
1.2 -- Form of Underwriting Agreement relating to Junior
Subordinated Notes.*
1.3 -- Form of Underwriting Agreement relating to Preferred
Securities.*
4.1 -- Senior Note Indenture dated as of December 1, 1997 between
Alabama Power Company and The Chase Manhattan Bank, as
Trustee, and indentures supplemental thereto through that
dated April 23, 1998. (Designated in Form 8-K dated
December 4, 1997, File No. 1-3164, as Exhibits 4.1 and
4.2, in Form 8-K dated February 20, 1998, File No. 1-3164,
as Exhibit 4.2 and in Form 8-K dated April 17, 1998, File
No. 1-3164, as Exhibit 4.2.)
4.2 -- Form of Supplemental Indenture to Senior Note Indenture to
be used in connection with the issuance of Senior Notes.*
4.3 -- Subordinated Note Indenture dated as of January 1, 1997
between Alabama Power Company and The Chase Manhattan
Bank, as Trustee (Designated in the Company's Current
Report on Form 8-K dated January 9, 1997 as Exhibit 4.1).
4.4 -- Form of Supplemental Indenture to Subordinated Note
Indenture to be used in connection with the issuance of
Junior Subordinated Notes (Designated in Registration No.
333-17333 as Exhibit 4.2).
4.5-A -- Certificate of Trust of Alabama Power Capital Trust III
(Designated in Registration No. 333-17333 as Exhibit
4.3-B).
4.6-B -- Certificate of Trust of Alabama Power Capital Trust IV
(Designated in Registration No. 333-17333 as Exhibit
4.3-C).
4.5-C -- Certificate of Trust of Alabama Power Capital Trust
V.(Designated in Registration No. 333-40629 as Exhibit
4.5-C.)
4.6-A -- Trust Agreement of Alabama Power Capital Trust III
(Designated in Registration No. 333-17333 as Exhibit
4.4-B).
4.6-B -- Trust Agreement of Alabama Power Capital Trust IV
(Designated in Registration No. 333-17333 as Exhibit
4.4-C).
4.6-C -- Trust Agreement of Alabama Power Capital Trust V.(Designated
in Registration No. 333-40629 as Exhibit 4.6-C.)
4.7-A -- Form of Amended and Restated Trust Agreement of Alabama
Power Capital Trust III (Designated in Registration No.
333-17333 as Exhibit 4.5-B).
4.7-B -- Form of Amended and Restated Trust Agreement of Alabama
Power Capital Trust IV (Designated in Registration No.
333-17333 as Exhibit 4.5-C).
4.7-C -- Form of Amended and Restated Trust Agreement of Alabama
Power Capital Trust V.(Designated in Registration No.
333-40629 as Exhibit 4.7-C.)
4.8-A -- Form of Preferred Security of Alabama Power Capital Trust
III (included in Exhibit 4.7-A above).
4.8-B -- Form of Preferred Security of Alabama Power Capital Trust IV
(included in Exhibit 4.7-B above).
4.8-C -- Form of Preferred Security of Alabama Power Capital Trust V
(included in Exhibit 4.7-C above).
4.9 -- Form of Senior Note (included in Exhibit 4.2 above).
4.10 -- Form of Junior Subordinated Note (included in Exhibit 4.4
above).
<PAGE>
EXHIBIT
NUMBER
- -------
4.11-A -- Form of Guarantee relating to Alabama Power Capital Trust
III (Designated in Registration No. 333-17333 as Exhibit
4.8-B).
4.11-B -- Form of Guarantee relating to Alabama Power Capital Trust IV
(Designated in Registration No. 333-17333 as Exhibit
4.8-C).
4.11-C -- Form of Guarantee relating to Alabama Power Capital Trust
V.(Designated in Registration No. 333-40629 as Exhibit
4.11-C.)
4.12-A -- Form of Agreement as to Expenses and Liabilities relating to
Alabama Power Capital Trust III (included in Exhibit 4.7-A
above).
4.12-B -- Form of Agreement as to Expenses and Liabilities relating to
Alabama Power Capital Trust IV (included in Exhibit 4.7-B
above).
4.12-C -- Form of Agreement as to Expenses and Liabilities relating to
Alabama Power Capital Trust V (included in Exhibit 4.7-C
above).
5.1 -- Opinion of Balch & Bingham LLP.
5.2-A -- Opinion of Richards, Layton & Finger, P.A. relating to
Alabama Power Capital Trust III.
5.2-B -- Opinion of Richards, Layton & Finger, P.A. relating to
Alabama Power Capital Trust IV.
5.2-C -- Opinion of Richards, Layton & Finger, P.A. relating to
Alabama Power Capital Trust V.
8.1 -- Tax Opinion of Balch & Bingham LLP.
12.1 -- Computation of ratio of earnings to fixed charges.
12.2 -- Computation of ratio of earnings to fixed charges plus
preferred dividend requirements (pre-income tax basis).
15.1 -- Letter re unaudited interim financial information.
23.1 -- Consent of Arthur Andersen LLP.
23.2 -- Consent of Balch & Bingham LLP (included in Exhibit 5.1
above).
23.3 -- Consent of Balch & Bingham LLP (included in Exhibit 8.1
above).
23.4 -- Consent of Richards, Layton & Finger, P.A. (included in
Exhibits 5.2-A, 5.2-B and 5.2-C above).
24.1 -- Powers of Attorney and Resolution.
25.1 -- Statement of Eligibility under Trust Indenture Act of 1939,
as amended, of The Chase Manhattan Bank, as Senior Note
Indenture Trustee. (Designated in Registration No. 333-
40629 as Exhibit 25.1.)
25.2 -- Statement of Eligibility under Trust Indenture Act of 1939,
as amended, of The Chase Manhattan Bank, as Subordinated
Note Indenture Trustee (Designated in Registration No.
333-17333 as Exhibit 25.1).
25.3 -- Statement of Eligibility under Trust Indenture Act of 1939,
as amended, of The Chase Manhattan Bank, as Property
Trustee, relating to Alabama Power Capital Trust III
(Designated in Registration No. 333-17333 as Exhibit
25.4).
25.4 -- Statement of Eligibility under Trust Indenture Act of 1939,
as amended, of The Chase Manhattan Bank, as Guarantee
Trustee, relating to Alabama Power Capital Trust III
(Designated in Registration No. 333-17333 as Exhibit
25.5).
25.5 -- Statement of Eligibility under Trust Indenture Act of 1939,
as amended, of The Chase Manhattan Bank, as Property
Trustee, relating to Alabama Power Capital Trust IV
(Designated in Registration No. 333-17333 as Exhibit
25.6).
25.6 -- Statement of Eligibility under Trust Indenture Act of 1939,
as amended, of The Chase Manhattan Bank, as Guarantee
Trustee, relating to Alabama Power Capital Trust IV
(Designated in Registration No. 333-17333 as Exhibit
25.7).
25.7 -- Statement of Eligibility under Trust Indenture Act of 1939,
as amended, of The Chase Manhattan Bank, as Property
Trustee, relating to Alabama Power Capital Trust V.
(Designated in Registration No. 333-40629 as Exhibit
25.7.)
25.8 -- Statement of Eligibility under Trust Indenture Act of 1939,
as amended, of The Chase Manhattan Bank, as Guarantee
Trustee, relating to Alabama Power Capital Trust V.
(Designated in Registration No. 333-40629 as Exhibit
25.8.)
EXHIBIT 5.1
Balch & Bingham LLP
1901 Sixth Avenue North, Suite 2600
Birmingham, Alabama 35203
205-226-8799
May 21, 1998
Alabama Power Company
600 North 18th Street
Birmingham, Alabama 35291
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as counsel to Alabama Power Company (the
"Company") in connection with the preparation of a Registration Statement on
Form S-3, including a preliminary prospectus and preliminary prospectus
supplement (the "Registration Statement"), which is to be filed with the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1933, as amended (the "Act"), for the registration under the Act of (1)
Junior Subordinated Notes (the "Junior Subordinated Notes") to be issued by the
Company, (2) Trust Preferred Securities (liquidation amount $25 per Trust
Preferred Security) to be issued by Alabama Power Capital Trust III, Alabama
Power Capital Trust IV and Alabama Power Capital Trust V, (3) the Company's
Guarantees (as defined in the Registration Statement) with respect to such Trust
Preferred Securities, and (4) Senior Notes (the "Senior Notes") to be issued by
the Company. The Junior Subordinated Notes will be issued pursuant to a
subordinated note indenture, as supplemented, between the Company and the
trustee named therein (the "Subordinated Note Indenture"), the Guarantees will
be issued pursuant to separate guaranty agreements between the Company and the
trustee named therein (the "Guaranty Agreements") and the Senior Notes will be
issued pursuant to a senior note indenture, as supplemented, between the Company
and the trustee named therein (the "Senior Note Indenture"), in each case in the
respective forms filed as exhibits to the Registration Statement.
We are of the opinion that, upon compliance with the pertinent
provisions of the Act, the Trust Indenture Act of 1939, as amended, and the
Public Utility Holding Company Act of 1935, as amended, upon compliance with
applicable securities or blue sky laws of various jurisdictions, upon the
adoption of appropriate resolutions by the Board of Directors of the Company,
when the Junior Subordinated Notes, the Guarantees and the Senior Notes have
been issued and sold upon the terms specified in the order of the Alabama Public
Service Commission, when the Subordinated Note Indenture, the Guaranty
Agreements and the Senior Note Indenture have been duly executed and delivered
by the proper officers of the Company and the trustees named therein, and when
the Junior Subordinated Notes, the Guarantees and the Senior Notes have been
executed, authenticated and delivered in accordance with the terms of the
Subordinated Note Indenture, the Guarantees and the Senior Note Indenture, as
the case may be, the Junior Subordinated Notes, the Guarantees and the Senior
Notes will be valid, binding and legal obligations of the Company (subject to
applicable
<PAGE>
Alabama Power Company
May 21, 1998
Page 2
bankruptcy, moratorium and similar laws from time to time in force and to
general principles of equity, whether considered in a proceeding at law or in
equity).
We also advise you that we have reviewed certain statements in
the Company's Annual Report on Form 10-K for the year ended December 31, 1997,
as indicated under the caption "Experts" in the prospectus, as to matters of law
and legal conclusions and, in our opinion, such statements are correct.
We hereby consent to the filing of this opinion as an exhibit
to the aforementioned Registration Statement and to the statements with respect
to our firm under the captions "Legal Matters" and "Experts" in the prospectus.
Very truly yours,
/s/Balch & Bingham LLP
Richards, Layton & Finger, P.A.
One Rodney Square
Wilmington, Delaware 19899
302-658-6541
May 21, 1998
Alabama Power Capital Trust III
c/o Alabama Power Company
600 North 18th Street
Birmingham, Alabama 35291
Re: Alabama Power Capital Trust III
Ladies and Gentlemen:
We have acted as special Delaware counsel for Alabama Power Company, an
Alabama corporation (the "Company"), and Alabama Power Capital Trust III, a
Delaware business trust (the "Trust" ), in connection with the matters set forth
herein. At your request, this opinion is being furnished to you.
For purposes of giving the opinions hereinafter set forth, our
examination of documents has been limited to the examination of originals or
copies of the following:
(a) The Certificate of Trust of the Trust, dated November 27, 1996 as
filed with the office of the Secretary of State of the State of Delaware (the
"Secretary of State") on November 27, 1996;
(b) The Trust Agreement of the Trust, dated as of November 27, 1996
between the Company and the trustees of the Trust named therein;
(c) The Registration Statement (the "Registration Statement") on Form
S-3, including a preliminary prospectus and a prospectus supplement with respect
to the Trust (the "Prospectus"), relating to the Preferred Securities of the
Trust representing preferred undivided beneficial interests in the assets of the
Trust (each, a "Preferred Security" and collectively, the
<PAGE>
Alabama Power Capital Trust III
May 21, 1998
Page 2
"Preferred Securities"), filed by the Company and the Trust with the Securities
and Exchange Commission on May 21, 1998;
(d) A form of Amended and Restated Trust Agreement for the Trust, to be
entered into between the Company, the trustees of the Trust named therein, and
the holders, from time to time, of the undivided beneficial interests in the
assets of the Trust (including Exhibits C and E thereto) (the "Trust
Agreement"), attached as an exhibit to the Registration Statement; and
(e) A Certificate of Good Standing for the Trust, dated May 21, 1998,
obtained from the Secretary of State.
Initially capitalized terms used herein and not otherwise defined are
used as defined in the Trust Agreement.
For purposes of this opinion, we have not reviewed any documents other
than the documents listed in paragraphs (a) through (e) above. In particular, we
have not reviewed any document (other than the documents listed in paragraphs
(a) through (e) above) that is referred to in or incorporated by reference into
the documents reviewed by us. We have assumed that there exists no provision in
any document that we have not reviewed that is inconsistent with the opinions
stated herein. We have conducted no independent factual investigation of our own
but rather have relied solely upon the foregoing documents, the statements and
information set forth therein and the additional matters recited or assumed
herein, all of which we have assumed to be true, complete and accurate in all
material respects.
With respect to all documents examined by us, we have assumed (i) the
authenticity of all documents submitted to us as authentic originals, (ii) the
conformity with the originals of all documents submitted to us as copies or
forms, and (iii) the genuineness of all signatures.
For purposes of this opinion, we have assumed (i) that the Trust
Agreement and the Certificate of Trust are in full force and effect and have not
been amended, (ii) except to the extent provided in paragraph 1 below, the due
organization or due formation, as the case may be, and valid existence in good
standing of each party to the documents examined by us under the laws of the
jurisdiction governing its creation, organization or formation, (iii) the legal
capacity of natural persons who are parties to the documents examined by us,
(iv) that each of the parties to the documents examined by us has the power and
authority to execute and deliver, and to perform its obligations under, such
documents, (v) the due authorization, execution and delivery by all parties
thereto of all documents examined by us, (vi) the receipt by each Person to whom
a Preferred Security is to be issued by the Trust (collectively, the "Preferred
Security Holders") of a Preferred Security Certificate for such Preferred
Security and the payment for such Preferred Security, in accordance with the
Trust Agreement and the Registration Statement, and (vii) that the Preferred
Securities are issued and sold to the Preferred Security Holders in accordance
with
<PAGE>
Alabama Power Capital Trust III
May 21, 1998
Page 3
the Trust Agreement and the Registration Statement. We have not participated in
the preparation of the Registration Statement and assume no responsibility for
its contents.
This opinion is limited to the laws of the State of Delaware (excluding
the securities laws of the State of Delaware), and we have not considered and
express no opinion on the laws of any other jurisdiction, including federal laws
and rules and regulations relating thereto. Our opinions are rendered only with
respect to Delaware laws and rules, regulations and orders thereunder which are
currently in effect.
Based upon the foregoing, and upon our examination of such questions of
law and statutes of the State of Delaware as we have considered necessary or
appropriate, and subject to the assumptions, qualifications, limitations and
exceptions set forth herein, we are of the opinion that:
1. The Trust has been duly created and is validly existing in good
standing as a business trust under the Delaware Business Trust Act.
2. The Preferred Securities of the Trust will represent valid and,
subject to the qualifications set forth in paragraph 3 below, fully paid and
nonassessable undivided beneficial interests in the assets of the Trust.
3. The Preferred Security Holders, as beneficial owners of the Trust,
will be entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware. We note that the Preferred Security
Holders may be obligated to make payments as set forth in the Trust Agreement.
We consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement. We hereby
consent to the use of our name under the heading "Legal Matters" in the
Prospectus and "Legal Opinions" in the Prospectus Supplement. In giving the
foregoing consents, we do not thereby admit that we come within the category of
persons whose consent is required under Section 7 of the Securities Act of 1933,
as amended, or the rules and regulations of the Securities and Exchange
Commission thereunder. Except as stated above, without our prior written
consent, this opinion may not be furnished or quoted to, or relied upon by, any
other person for any purpose.
Very truly yours,
Richards, Layton & Finger, P.A.
Richards, Layton & Finger, P.A.
One Rodney Square
Wilmington, Delaware 19899
302-658-6541
May 21, 1998
Alabama Power Capital Trust IV
c/o Alabama Power Company
600 North 18th Street
Birmingham, Alabama 35291
Re: Alabama Power Capital Trust IV
Ladies and Gentlemen:
We have acted as special Delaware counsel for Alabama Power Company, an
Alabama corporation (the "Company"), and Alabama Power Capital Trust IV, a
Delaware business trust (the "Trust" ), in connection with the matters set forth
herein. At your request, this opinion is being furnished to you.
For purposes of giving the opinions hereinafter set forth, our
examination of documents has been limited to the examination of originals or
copies of the following:
(a) The Certificate of Trust of the Trust, dated November 27, 1996 as
filed with the office of the Secretary of State of the State of Delaware (the
"Secretary of State") on November 27, 1996;
(b) The Trust Agreement of the Trust, dated as of November 27, 1996
between the Company and the trustees of the Trust named therein;
(c) The Registration Statement (the "Registration Statement") on Form
S-3, including a preliminary prospectus and a prospectus supplement with respect
to the Trust (the "Prospectus"), relating to the Preferred Securities of the
Trust representing preferred undivided beneficial interests in the assets of the
Trust (each, a "Preferred Security" and collectively, the "Preferred
Securities"), filed by the Company and the Trust with the Securities and
Exchange Commission on May 21, 1998;
<PAGE>
Alabama Power Capital Trust IV
May 21, 1998
Page 2
(d) A form of Amended and Restated Trust Agreement for the Trust, to be
entered into between the Company, the trustees of the Trust named therein, and
the holders, from time to time, of the undivided beneficial interests in the
assets of the Trust (including Exhibits C and E thereto) (the "Trust
Agreement"), attached as an exhibit to the Registration Statement; and
(e) A Certificate of Good Standing for the Trust, dated May 21, 1998,
obtained from the Secretary of State.
Initially capitalized terms used herein and not otherwise defined are
used as defined in the Trust Agreement.
For purposes of this opinion, we have not reviewed any documents other
than the documents listed in paragraphs (a) through (e) above. In particular, we
have not reviewed any document (other than the documents listed in paragraphs
(a) through (e) above) that is referred to in or incorporated by reference into
the documents reviewed by us. We have assumed that there exists no provision in
any document that we have not reviewed that is inconsistent with the opinions
stated herein. We have conducted no independent factual investigation of our own
but rather have relied solely upon the foregoing documents, the statements and
information set forth therein and the additional matters recited or assumed
herein, all of which we have assumed to be true, complete and accurate in all
material respects.
With respect to all documents examined by us, we have assumed (i) the
authenticity of all documents submitted to us as authentic originals, (ii) the
conformity with the originals of all documents submitted to us as copies or
forms, and (iii) the genuineness of all signatures.
For purposes of this opinion, we have assumed (i) that the Trust
Agreement and the Certificate of Trust are in full force and effect and have not
been amended, (ii) except to the extent provided in paragraph 1 below, the due
organization or due formation, as the case may be, and valid existence in good
standing of each party to the documents examined by us under the laws of the
jurisdiction governing its creation, organization or formation, (iii) the legal
capacity of natural persons who are parties to the documents examined by us,
(iv) that each of the parties to the documents examined by us has the power and
authority to execute and deliver, and to perform its obligations under, such
documents, (v) the due authorization, execution and delivery by all parties
thereto of all documents examined by us, (vi) the receipt by each Person to whom
a Preferred Security is to be issued by the Trust (collectively, the "Preferred
Security Holders") of a Preferred Security Certificate for such Preferred
Security and the payment for such Preferred Security, in accordance with the
Trust Agreement and the Registration Statement, and (vii) that the Preferred
Securities are issued and sold to the Preferred Security Holders in accordance
with the Trust Agreement and the Registration Statement. We have not
participated in the preparation of the Registration Statement and assume no
responsibility for its contents.
<PAGE>
Alabama Power Capital Trust IV
May 21, 1998
Page 3
This opinion is limited to the laws of the State of Delaware (excluding
the securities laws of the State of Delaware), and we have not considered and
express no opinion on the laws of any other jurisdiction, including federal laws
and rules and regulations relating thereto. Our opinions are rendered only with
respect to Delaware laws and rules, regulations and orders thereunder which are
currently in effect.
Based upon the foregoing, and upon our examination of such questions of
law and statutes of the State of Delaware as we have considered necessary or
appropriate, and subject to the assumptions, qualifications, limitations and
exceptions set forth herein, we are of the opinion that:
1. The Trust has been duly created and is validly existing in good
standing as a business trust under the Delaware Business Trust Act.
2. The Preferred Securities of the Trust will represent valid and,
subject to the qualifications set forth in paragraph 3 below, fully paid and
nonassessable undivided beneficial interests in the assets of the Trust.
3. The Preferred Security Holders, as beneficial owners of the Trust,
will be entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware. We note that the Preferred Security
Holders may be obligated to make payments as set forth in the Trust Agreement.
We consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement. We hereby
consent to the use of our name under the heading "Legal Matters" in the
Prospectus and "Legal Opinions" in the Prospectus Supplement. In giving the
foregoing consents, we do not thereby admit that we come within the category of
persons whose consent is required under Section 7 of the Securities Act of 1933,
as amended, or the rules and regulations of the Securities and Exchange
Commission thereunder. Except as stated above, without our prior written
consent, this opinion may not be furnished or quoted to, or relied upon by, any
other person for any purpose.
Very truly yours,
Richards, Layton & Finger, P.A.
Richards, Layton & Finger, P.A.
One Rodney Square
Wilmington, Delaware 19899
302-658-6541
May 21, 1998
Alabama Power Capital Trust V
c/o Alabama Power Company
600 North 18th Street
Birmingham, Alabama 35291
Re: Alabama Power Capital Trust V
Ladies and Gentlemen:
We have acted as special Delaware counsel for Alabama Power Company, an
Alabama corporation (the "Company"), and Alabama Power Capital Trust V, a
Delaware business trust (the "Trust" ), in connection with the matters set forth
herein. At your request, this opinion is being furnished to you.
For purposes of giving the opinions hereinafter set forth, our
examination of documents has been limited to the examination of originals or
copies of the following:
(a) The Certificate of Trust of the Trust, dated November 18, 1997 as
filed with the office of the Secretary of State of the State of Delaware (the
"Secretary of State") on November 18, 1997;
(b) The Trust Agreement of the Trust, dated as of November 18, 1997
between the Company and the trustees of the Trust named therein;
(c) The Registration Statement (the "Registration Statement") on Form
S-3, including a preliminary prospectus and a prospectus supplement with respect
to the Trust (the "Prospectus"), relating to the Preferred Securities of the
Trust representing preferred undivided beneficial interests in the assets of the
Trust (each, a "Preferred Security" and collectively, the "Preferred
Securities"), filed by the Company and the Trust with the Securities and
Exchange Commission on May 21, 1998;
<PAGE>
Alabama Power Capital Trust V
May 21, 1998
Page 2
(d) A form of Amended and Restated Trust Agreement for the Trust, to be
entered into between the Company, the trustees of the Trust named therein, and
the holders, from time to time, of the undivided beneficial interests in the
assets of the Trust (including Exhibits C and E thereto) (the "Trust
Agreement"), attached as an exhibit to the Registration Statement; and
(e) A Certificate of Good Standing for the Trust, dated May 21, 1998,
obtained from the Secretary of State.
Initially capitalized terms used herein and not otherwise defined are
used as defined in the Trust Agreement.
For purposes of this opinion, we have not reviewed any documents other
than the documents listed in paragraphs (a) through (e) above. In particular, we
have not reviewed any document (other than the documents listed in paragraphs
(a) through (e) above) that is referred to in or incorporated by reference into
the documents reviewed by us. We have assumed that there exists no provision in
any document that we have not reviewed that is inconsistent with the opinions
stated herein. We have conducted no independent factual investigation of our own
but rather have relied solely upon the foregoing documents, the statements and
information set forth therein and the additional matters recited or assumed
herein, all of which we have assumed to be true, complete and accurate in all
material respects.
With respect to all documents examined by us, we have assumed (i) the
authenticity of all documents submitted to us as authentic originals, (ii) the
conformity with the originals of all documents submitted to us as copies or
forms, and (iii) the genuineness of all signatures.
For purposes of this opinion, we have assumed (i) that the Trust
Agreement and the Certificate of Trust are in full force and effect and have not
been amended, (ii) except to the extent provided in paragraph 1 below, the due
organization or due formation, as the case may be, and valid existence in good
standing of each party to the documents examined by us under the laws of the
jurisdiction governing its creation, organization or formation, (iii) the legal
capacity of natural persons who are parties to the documents examined by us,
(iv) that each of the parties to the documents examined by us has the power and
authority to execute and deliver, and to perform its obligations under, such
documents, (v) the due authorization, execution and delivery by all parties
thereto of all documents examined by us, (vi) the receipt by each Person to whom
a Preferred Security is to be issued by the Trust (collectively, the "Preferred
Security Holders") of a Preferred Security Certificate for such Preferred
Security and the payment for such Preferred Security, in accordance with the
Trust Agreement and the Registration Statement, and (vii) that the Preferred
Securities are issued and sold to the Preferred Security Holders in accordance
with the Trust Agreement and the Registration Statement. We have not
participated in the preparation of the Registration Statement and assume no
responsibility for its contents.
<PAGE>
Alabama Power Capital Trust V
May 21, 1998
Page 3
This opinion is limited to the laws of the State of Delaware (excluding
the securities laws of the State of Delaware), and we have not considered and
express no opinion on the laws of any other jurisdiction, including federal laws
and rules and regulations relating thereto. Our opinions are rendered only with
respect to Delaware laws and rules, regulations and orders thereunder which are
currently in effect.
Based upon the foregoing, and upon our examination of such questions of
law and statutes of the State of Delaware as we have considered necessary or
appropriate, and subject to the assumptions, qualifications, limitations and
exceptions set forth herein, we are of the opinion that:
1. The Trust has been duly created and is validly existing in good
standing as a business trust under the Delaware Business Trust Act.
2. The Preferred Securities of the Trust will represent valid and,
subject to the qualifications set forth in paragraph 3 below, fully paid and
nonassessable undivided beneficial interests in the assets of the Trust.
3. The Preferred Security Holders, as beneficial owners of the Trust,
will be entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware. We note that the Preferred Security
Holders may be obligated to make payments as set forth in the Trust Agreement.
We consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement. We hereby
consent to the use of our name under the heading "Legal Matters" in the
Prospectus and "Legal Opinions" in the Prospectus Supplement. In giving the
foregoing consents, we do not thereby admit that we come within the category of
persons whose consent is required under Section 7 of the Securities Act of 1933,
as amended, or the rules and regulations of the Securities and Exchange
Commission thereunder. Except as stated above, without our prior written
consent, this opinion may not be furnished or quoted to, or relied upon by, any
other person for any purpose.
Very truly yours,
/s/Richards, Layton & Finger, P.A.
EXHIBIT 8.1
Balch & Bingham LLP
1901 Sixth Avenue North, Suite 2600
Birmingham, Alabama 35203
205-226-8799
May 21, 1998
Alabama Power Company
600 North 18th Street
Birmingham, Alabama 35291
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as counsel to Alabama Power Company in
connection with the preparation of a Registration Statement on Form S-3,
including a preliminary prospectus and form of preliminary prospectus supplement
(the "Registration Statement"), which is to be filed with the Securities and
Exchange Commission under the Securities Act of 1933, as amended (the "Act").
We have reviewed copies of the Registration Statement and such
other documents as we have deemed necessary or appropriate as a basis for the
opinion set forth below.
Based on the foregoing, we are of the opinion that the
statements and legal conclusions contained in the Registration Statement under
the caption "Certain Federal Income Tax Considerations" are correct and that the
discussion thereunder does not omit any material provision with respect to the
matters covered.
We consent to the filing of this opinion as an exhibit to the
Registration Statement. We also consent to the reference to Balch & Bingham LLP
under the caption "Certain Federal Income Tax Considerations" and "Legal
Matters" in the Registration Statement.
Very truly yours,
/s/Balch & Bingham, LLP
Exhibit 12.1
5/18/98
ALABAMA POWER COMPANY
Computation of ratio of earnings to fixed charges for the
the five years ended December 31, 1997
and the twelve months ended March 31, 1998
<TABLE>
<CAPTION>
Twelve
Months
Ended
Year ended December 31, March 31,
=========================================================================
1993 1994 1995 1996 1997 1998
==== ==== ==== ==== ==== ====
--------------------------Thousands of Dollars---------------------------
EARNINGS AS DEFINED IN ITEM 503 OF REGULATION S-K:
<S> <C> <C> <C> <C> <C> <C>
Income Before Interest Charges $608,050 $594,669 $628,304 $627,627 $645,449 $658,505
Federal and state income taxes 167,021 242,569 186,856 191,167 222,956 236,538
Deferred income taxes, net 34,467 (32,536) 32,047 16,715 (12,879) (21,871)
Deferred investment tax credits (2,106) (4) (75) - - -
AFUDC - Debt funds 3,016 3,590 7,109 6,517 4,855 4,538
--------- --------- --------- --------- --------- ---------
Earnings as defined $810,448 $808,288 $854,241 $842,026 $860,381 $877,710
========= ========= ========= ========= ========= =========
FIXED CHARGES AS DEFINED IN ITEM 503 OF REGULATION S-K:
Interest on long-term debt $186,779 $180,182 $183,199 $171,689 $169,536 $174,738
Interest on interim obligations 3,760 5,939 16,917 20,617 22,787 21,622
Amort of debt disc, premium and expense, net 8,999 9,655 20,270 9,520 9,657 9,684
Other interest charges 35,475 19,909 27,064 34,227 57,799 60,610
--------- --------- --------- --------- --------- ---------
Fixed charges as defined $235,013 $215,685 $247,450 $236,053 $259,779 $266,654
========= ========= ========= ========= ========= =========
RATIO OF EARNINGS TO FIXED CHARGES 3.45 3.75 3.45 3.57 3.31 3.29
==== ==== ==== ==== ==== ====
</TABLE>
Note: The above figures have been adjusted to give effect to Alabama
Power Company's 50% ownership of Southern Electric Generating
Company.
Exhibit 12.2
5/18/98
ALABAMA POWER COMPANY
Computation of ratio of earnings to fixed charges
plus preferred dividend requirements for the five
years ended December 31, 1997
and the twelve months ended March 31, 1998
<TABLE>
<CAPTION>
Twelve
Months
Ended
March 31,
========================================================================
1993 1994 1995 1996 1997 1998
==== ==== ==== ==== ==== ====
---------------------------Thousands of Dollars-------------------------
EARNINGS AS DEFINED IN ITEM 503 OF REGULATION S-K:
<S> <C> <C> <C> <C> <C> <C>
Income Before Interest Charges $608,050 $594,669 $628,304 $627,627 $645,449 $658,505
Federal and state income taxes 167,021 242,569 186,856 191,167 222,956 236,538
Deferred income taxes, net 34,467 (32,536) 32,047 16,715 (12,879) (21,871)
Deferred investment tax credits (2,106) (4) (75) - - -
AFUDC - Debt funds 3,016 3,590 7,109 6,517 4,855 4,538
--------- --------- --------- --------- --------- ---------
Earnings as defined $810,448 $808,288 $854,241 $842,026 $860,381 $877,710
========= ========= ========= ========= ========= =========
FIXED CHARGES AS DEFINED IN ITEM 503 OF REGULATION S-K:
Interest on long-term debt $186,779 $180,182 $183,199 $171,689 $169,536 $174,738
Interest on interim obligations 3,760 5,939 16,917 20,617 22,787 21,622
Amort of debt disc, premium and expense, net 8,999 9,655 20,270 9,520 9,657 9,684
Other interest charges 35,475 19,909 27,064 34,227 57,799 60,610
--------- --------- --------- --------- --------- ---------
Fixed charges as defined 235,013 215,685 247,450 236,053 259,779 266,654
Tax deductible preferred dividends 1,830 1,605 1,605 1,605 1,589 1,497
--------- --------- --------- --------- --------- ---------
236,843 217,290 249,055 237,658 261,368 268,151
--------- --------- --------- --------- --------- ---------
Non-tax deductible preferred dividends 27,729 24,630 25,464 24,997 12,997 10,719
Ratio of net income before taxes to net income x 1.530 x 1.549 x 1.564 x 1.522 x 1.538 x 1.542
--------- --------- --------- --------- --------- ---------
Pref dividend requirements before income taxes 42,425 38,152 39,826 38,045 19,989 16,529
--------- --------- --------- --------- --------- ---------
Fixed charges plus pref dividend requirements $279,268 $255,442 $288,881 $275,703 $281,357 $284,680
========= ========= ========= ========= ========= =========
RATIO OF EARNINGS TO FIXED CHARGES PLUS
PREFERRED DIVIDEND REQUIREMENTS 2.90 3.16 2.96 3.05 3.06 3.08
==== ==== ==== ==== ==== ====
</TABLE>
Note: The above figures have been adjusted to give effect to Alabama
Power Company's 50% ownership of Southern Electric Generating
Company.
Exhibit 12.2
5/18/98
ALABAMA POWER COMPANY
Computation of ratio of earnings to fixed charges
plus preferred dividend requirements for the five
years ended December 31, 1997
and the twelve months ended March 31, 1998
<TABLE>
<CAPTION>
Twelve
Months
Ended
March 31,
========================================================================
1993 1994 1995 1996 1997 1998
==== ==== ==== ==== ==== ====
---------------------------Thousands of Dollars-------------------------
EARNINGS AS DEFINED IN ITEM 503 OF REGULATION S-K:
<S> <C> <C> <C> <C> <C> <C>
Income Before Interest Charges $608,050 $594,669 $628,304 $627,627 $645,449 $658,505
Federal and state income taxes 167,021 242,569 186,856 191,167 222,956 236,538
Deferred income taxes, net 34,467 (32,536) 32,047 16,715 (12,879) (21,871)
Deferred investment tax credits (2,106) (4) (75) - - -
AFUDC - Debt funds 3,016 3,590 7,109 6,517 4,855 4,538
--------- --------- --------- --------- --------- ---------
Earnings as defined $810,448 $808,288 $854,241 $842,026 $860,381 $877,710
========= ========= ========= ========= ========= =========
FIXED CHARGES AS DEFINED IN ITEM 503 OF REGULATION S-K:
Interest on long-term debt $186,779 $180,182 $183,199 $171,689 $169,536 $174,738
Interest on interim obligations 3,760 5,939 16,917 20,617 22,787 21,622
Amort of debt disc, premium and expense, net 8,999 9,655 20,270 9,520 9,657 9,684
Other interest charges 35,475 19,909 27,064 34,227 57,799 60,610
--------- --------- --------- --------- --------- ---------
Fixed charges as defined 235,013 215,685 247,450 236,053 259,779 266,654
Tax deductible preferred dividends 1,830 1,605 1,605 1,605 1,589 1,497
--------- --------- --------- --------- --------- ---------
236,843 217,290 249,055 237,658 261,368 268,151
--------- --------- --------- --------- --------- ---------
Non-tax deductible preferred dividends 27,729 24,630 25,464 24,997 12,997 10,719
Ratio of net income before taxes to net income x 1.530 x 1.549 x 1.564 x 1.522 x 1.538 x 1.542
--------- --------- --------- --------- --------- ---------
Pref dividend requirements before income taxes 42,425 38,152 39,826 38,045 19,989 16,529
--------- --------- --------- --------- --------- ---------
Fixed charges plus pref dividend requirements $279,268 $255,442 $288,881 $275,703 $281,357 $284,680
========= ========= ========= ========= ========= =========
RATIO OF EARNINGS TO FIXED CHARGES PLUS
PREFERRED DIVIDEND REQUIREMENTS 2.90 3.16 2.96 3.05 3.06 3.08
==== ==== ==== ==== ==== ====
</TABLE>
Note: The above figures have been adjusted to give effect to Alabama
Power Company's 50% ownership of Southern Electric Generating
Company.
EXHIBIT 15.1
Arthur Andersen LLP
May 20, 1998
Alabama Power Company
600 North 18th Street
Birmingham, AL 35291
Ladies and Gentlemen:
We are aware that Alabama Power Company has incorporated by reference in this
Registration Statement its Form 10-Q for the quarter ended March 31, 1998 which
includes our report on Alabama Power Company dated May 6, 1998 covering the
unaudited interim financial information contained therein. Pursuant to
Regulation C of the Securities Act of 1933 (the "Act"), such report is not
considered a part of the Registration Statement prepared or certified by our
firm or a report prepared or certified by our firm within the meaning of
Sections 7 and 11 of the Act.
Very truly yours,
/s/Arthur Andersen LLP
EXHIBIT 23.1
Arthur Andersen LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement on Form S-3 (relating to Alabama Power
Capital Trust lII Preferred Securities, Alabama Power Capital Trust lV Preferred
Securities, Alabama Power Capital Trust V Preferred Securities, Alabama Power
Company Junior Subordinated Notes, Alabama Power Company Senior Notes and
Alabama Power Company Guarantees with respect to Preferred Securities of Alabama
Power Capital Trust III, Alabama Power Capital Trust IV and Alabama Power
Capital Trust V) of our reports on Alabama Power Company dated February 11, 1998
included in Alabama Power Company's Form 10-K for the year ended December 31,
1997 and to all references to our firm included in this Registration Statement.
/s/Arthur Andersen LLP
Birmingham, Alabama
May 20, 1998
Exhibit 24.1
April 24, 1998
W. L. Westbrook Wayne Boston
The Southern Company Southern Company Services, Inc.
270 Peachtree Street, N.W. 64 Perimeter Center East
Atlanta, Georgia 30303 Atlanta, Georgia 30346
Dear Sirs:
Alabama Power Company proposes to file with the Securities and Exchange
Commission a registration statement or statements on Form S-3 under the
Securities Act of 1933 with respect to its debt instruments, preferred and
capital securities of a statutory business trust or trusts (or other special
purpose entity or entities) and related guarantee or guarantees of the Company,
in any combination of such securities, in an aggregate principal amount of up to
$800 million.
Alabama Power Company and the undersigned directors and officers of
said Company, individually as a director and/or as an officer of the Company,
hereby make, constitute and appoint each of you our true and lawful Attorney
(with full power of substitution) for each of us and in each of our names,
places and steads to sign and cause to be filed with the Securities and Exchange
Commission the aforementioned registration statement or statements and
appropriate amendment or amendments thereto (including post-effective
amendments), to be accompanied in each case by a prospectus and any
appropriately amended prospectus or supplement thereto and any necessary
exhibits.
Alabama Power Company hereby authorizes you or any one of you to
execute said registration statement or statements and any amendments thereto
(including post-effective amendments) on its behalf as attorney-in-fact for it
and its authorized officers, and to file the same as aforesaid.
The undersigned directors and officers of Alabama Power Company hereby
authorize you or any one of you to sign said registration statement or
statements on their behalf as attorney-in-fact and to amend, or remedy any
deficiencies with respect to, said registration statement or statements by
appropriate amendment or amendments (including post-effective amendments) and to
file the same as aforesaid.
Yours very truly,
ALABAMA POWER COMPANY
By /s/Elmer B. Harris
Elmer B. Harris
<PAGE>
- 2 -
/s/Whit Armstrong /s/John T. Porter
Whit Armstrong John T. Porter
/s/A. W. Dahlberg /s/Robert D. Powers
A. W. Dahlberg Robert D. Powers
/s/Peter V. Gregerson, Sr. ______________________________
Peter V. Gregerson, Sr. Andreas Renschler
/s/Bill M. Guthrie /s/C. Dowd Ritter
Bill M. Guthrie C. Dowd Ritter
/s/Elmer B. Harris ______________________________
Elmer B. Harris William J. Rushton, III
/s/Carl E. Jones, Jr. /s/James H. Sanford
Carl E. Jones, Jr. James H. Sanford
/s/Patricia M. King /s/John Cox Webb, IV
Patricia M. King John Cox Webb, IV
/s/James K. Lowder /s/William B. Hutchins, III
James K. Lowder William B. Hutchins, III
/s/Wallace D. Malone, Jr. /s/Art P. Beattie
Wallace D. Malone, Jr. Art P. Beattie
- ------------------------------
William V. Muse
<PAGE>
- 3 -
Extract from minutes of meeting of the board of directors of Alabama Power
Company.
- - - - - - - - - - - -
RESOLVED FURTHER: That for the purpose of signing and filing
with the Securities and Exchange Commission a registration statement
under the Securities Act of 1933, as amended, with respect to the issue
and sale of debt instruments and preferred and capital securities of a
statutory business trust or trusts (or other special purpose entity or
entities) and related guarantee or guarantees by Alabama Power Company,
or any combination of such securities, and of amending such
registration statement or statements or remedying any deficiencies with
respect thereto by appropriate amendment or amendments (both before and
after such statements become effective), Alabama Power Company, the
members of its Board of Directors and its officers are authorized to
give their several powers of attorney to W. L. Westbrook and Wayne
Boston in substantially the form of power of attorney presented to this
meeting.
- - - - - - - - - - - -
The undersigned officer of Alabama Power Company does hereby certify
that the foregoing is a true and correct copy of a resolution duly and regularly
adopted at a meeting of the Board of Directors of Alabama Power Company, duly
held on April 24, 1998, at which a quorum was in attendance and voting
throughout, and that said resolution has not since been rescinded but is still
in full force and effect.
Dated May 21, 1998 ALABAMA POWER COMPANY
By /s/Wayne Boston
Wayne Boston
Assistant Secretary
